Ladies and gentlemen, thank you for standing by. Welcome to the TowerJazz's Second Quarter and 2015 Results Conference Call. All participants are currently present in a listen-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, August 5, 2015. Joining us today are Mr. Russell Ellwanger, TowerJazz's CEO and Mr. Oren Shirazi, CFO. I would now like to turn the call over to Ms. Noit Levi. Vice President of Investor Relations and Corporation Communications. Mrs. Levi, please begin.

Thank you and welcome to TowerJazz's financial results conference call for the second quarter of 2015. 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 factor 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 filings with the Israeli Securities Authorities. They are also available on our website. TowerJazz assumes no obligation to update any such forward-looking statements. Now, I would like to turn the call to our CEO, Mr. Russell Ellwanger. Russell, please go ahead.

Thank you, Noit and welcome to all of you. Thank you for joining us today. Our second quarter recorded the highest quarterly revenue and the highest EBITDA to date. The margin performance surpassed the interim milestones we have set towards our 40% non-GAAP gross margin Q4 target. The year-over-year organic growth was 35%, more than replacing the $41 million revenue for Mishawaka factory which was mainly micron in the second quarter of last year. This growth dropped to the bottom line at approximately 60% or $25 million in incremental margin dollars. Our top five customers excluding Panasonic grew a 11% in revenue second quarter over the first quarter this year, with the next grouping of customers 6 through 10 having grown at 14% quarter-over-quarter, an extremely strong annualized rate. We are currently experiencing very, very strong customer demand. In order to meet the forecast in customer order demand, we are taking the following action; firstly, we’re qualifying TowerJazz Panasonic Semiconductor Company with additional specialty platforms such as our tower management to enable offloading between our world-wide factories. As previously explained, we had established TPSCo for the ability to bring new customers focused on the Asian area as well as specifically opening up 65 nanometer very high-end 300 mm capability for CMOS image sensor flows. We continue to collaborate well with our partner Panasonic on many projects that benefit both Panasonic Corporation and third-party foundry customers. By providing our customers with both TowerJazz and Panasonic process solutions, TPSCo continues to gain traction in the foundry space by providing the only viable pure play foundry services in Japan. We currently have a total of 60 third-party foundry customer development projects and we expect to surpass $10 million of accumulated third-party revenue in the third quarter growing from there on. In addition, to…

Thank you, Russell and welcome everyone. Earlier today we announced our results for the second quarter of 2015. We achieved all time records in revenue and EBITDA as well as substantial increase in all our margins and shareholders’ equity. Our year-over-year profitability increased while $25 million in EBITDA and we also saw a significant increase in all the other main profit indicators resulting in GAAP net profit. It is important to note that this financial performance over the past year is resulted from our financial model we put in place that we expect will continue to enable GAAP net profits on a sustainable basis. The achievement took an approximately $25 million increase in non-debt gross and operating profit, year-over-year was mainly due to the full replacement of Mishawaka revenues that were mainly from micron with organically grown business with margin betterments and higher utilization rate. Now I will go into detailed analysis of the P&L. As I mentioned, we achieved record revenue of $236 million for the quarter, built on 35% organic growth which enables a front margin increase. We continued our quarter-over-quarter revenue growth trend with an increase as compared to the $20 million to $26 million in the previous quarter and with guidance for continued growth in the first quarter. Growth profit on our non-GAAP basis for the second quarter of 2015 was $87 million representing 37.1% gross margin, a substantial improvement to our gross margins of 26.7% reported in the second quarter of 2014 and 35.7% in the previous quarter. Demonstrating 140 basis points improvement quarter-over-quarter, this is also a 40% increase from the $62 million reported in the second quarter of 2014 and 8% increase from $81 million in the previous quarter. EBITDA for the quarter was an all time record of $59 million, 77% higher…

Thank you, Oren. Before we open up the call to the Q&A session, I would like now to add the general and legal statements to our own results in regards to statements made and to be made during this call. Please note that the second quarter of 2015 financial results have been prepared in accordance with US GAAP and the financial tables in today's earnings include financial information that may be considered non-GAAP financial measures and the Regulation G and related reported requirements established with the Securities and Exchange Commission as they apply to our company. Namely, this release also presented financial data which is reconciled as indicated by the footnote below the table on a non-GAAP basis after deducting one, depreciation and amortization, two, compensation expenses in respect to option grants, and three, finance expenses net other than interest accrued such that non-GAAP financial expenses net include only interest accrued during the resulted period. Non-GAAP financial measures should be evaluated in conjunction with and are not substitute for our GAAP financial measure. The tables also contain the comparable GAAP financial measure to the non-GAAP financial measure as well 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 a required GAAP financial measure and may not be comparable to a similarly titled measure and provided by other companies. EBITDA and the non-GAAP financial information presented herein should not be considered in relation 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 occasional statement that are prepared in accordance with GAAP and is not necessarily consistent with the non-GAAP data presented in previous filings. I would like now to turn the call over to our operator. Operator?

Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] The first question is from Cody Acree of Ascendiant Capital. Please go ahead.

Thanks guys for taking my questions, and congratulations on the very solid results, especially in this environment. Russell, if we can start, there has been a lot of data points over this earnings season, especially from some of your customers even pointing to the slowdown in smartphone activity in China and maybe to some extent globally. Your comments obviously don’t point to those same trends, so just curious if you could talk about the health of your visibility and maybe why you think your visibility or what you’re seeing in activity is different from maybe some of your customers?

So, firstly very specific to China itself, our sales activities directly in China are up about 2.5x year-over-year. So, just specific China sales is going very well for us, we’re growing market share, we’re getting opportunity after opportunity. And as far as I think you’d be referring specifically to front end module activities. As I had stated before, the content in every new generation phone is increasing because of the amount of bands, because of diversity switch, carry aggregation. So, we have a very, very big increase in content. I think even if the amount of front end modules itself was to stay somewhat constant year-over-year which I don’t believe it’s ever be the case. Our business as far as the amount of units that would be provided for switching control would still grow very, very substantially. So the increase of contents for us is a very, very big boon when you’re supplying the specific devices that go into the modules. Now, the entire smartphone market is still growing and it’s growing nicely. I don’t think that any one specific region overrides the overall growth of this market and the need for mobile devices for data transfer. So, if that answers your question, we truly do not see a reduction in the demand that we’re seeing. I could add that if there was some mild decrease for what actually be maybe nicer for us to meet all of the demand that we have with the existing capacity that we’re growing out. So the demand that we’re seeing, the forecast are extremely high and we don’t see any downside in that that would have any type of a market impact in the numbers that we see or the growth that we believe will be seen in 2016 over 2015.

And Russell, with the increase in CapEx this quarter and then your comments about maybe customer funded or specific reservations, could you maybe spend a little more time on the changes in spending maybe what moneys might be dedicated from customers for that capacity and how that maybe extending and helping your current visibility?

We do have major customers that are moving forward towards reserving capacity, and that is against advanced payments to make sure that a certain capacity would be set aside for them. When customers are willing to do that they certainly believe that they’ll need to use the capacity. So, that would be reservations for a specific period of time and if the capacity is not used during that period of time, the reservation fee is then not refunded but the capacity is used than the reservation fee goes against the cost of the wafers. So when you have that type of a model you certainly have customers that believe that they rolled indeed with the capacity that’s a very strong commitment on their side towards their forecast. We have other activities where possibly capital expenditure or capital expansion itself is upfront funded partially or to some extent through the customer in order to again secure capacity for themselves.

And with that jump to $40 million, what are your expectations for CapEx going forward and how might that impact your cash flows given that you have some of this money that might be coming from customers?

Yeah, so it’s Oren, and hi. Like Russell mentioned in [indiscernible], the plan is not to exceed $15 million to $20 million of their each site, each site meaning Fab2 and Fab3, so each one of those two $15 million to $20 million funded. So, and you saw already in this report there are already maybe $12 million from that aggregate of $30 million to $40 million already invested in Q2 [Indiscernible] average run rate that we were like $27 million, $28 million of course that’s to $39 million and the rest will come over the coming few quarters. And like Russell mentioned, all these funded – customer funded brands will come in addition but funded by the customer, so we will not put out from our cash more than the amount that I mentioned which are reasonably running. We have – like I described, $143 million cash on hand less than the EBITDA per year, less than our maturities of debt, of course, we are in a reasonable good situation.

And Oren, just to be clear then, you have not received this customer funds to date but those are future opportunities?

We have received capacity reservation to date on small amounts, we’re not talking huge amounts of money but capacity reservations and right now we’re solidifying all of the plans for 2016.

And then lastly, Oren, you have the change in the differentiation schedule and it’s a little counter to what you might think about companies want to maximize their tax benefits with losses as long as possible. Maybe you can talk about why you changed the depreciation schedule and you had a unusual movement in your tax base this quarter, what do we should think about for taxes going forward?

No, for tax basis the amount of years that the CapEx is depreciated, this is only under the accounting GAAP. It has nothing to do where started, it does not change the tax payment or receivable, it’s not – because from tax authorities point of view, the depreciation – the CapEx is depreciated whatever amount of field per country, for example, Jazz [indiscernible]. We did not change that, we cannot change that, this is the tax authorities regulation, we didn’t touch that at all. It’s only the booking accounting GAAP which we did a benchmark study and we saw other company’s foundries like us which do it this way, so it’s like this is the current estimation. We explained the numbers in the body of the press release and we said that the net effect was $6.8 million betterment. It did not change at all the tax effect associated with that, in regards with tax we said and we can repeat the same situation. And in Israel for all the profits in Israel we have exempt for any forcible future because we have $1.4 billion of past losses carry forward, so we have like this release. On the California base operation, we are supposed to pay 35% from each taxable income. However, we have someone else there from even before the merger and from either regulations in the U.S., we have some relief. So it seems generally a public company I can relate to that and refer you to the financial statement of 2014 where the Jazz [indiscernible] paid, it was exactly the breakeven amount to pay tax, actually Jazz almost paid no taxes for 2014. The revenue [indiscernible] 2014 which was $217 million, so we feel somewhat growth in that revenue beyond $217 million which of course is always an better assumption. However you have to know that Jazz is limited to amounts of maybe $260 million to $280 million, so if you do a half calculation you will come up that the tax can be maximum $8 million per year in Jazz and minimum of course, low. And on the TPSCo, [indiscernible] of profits which one is profitable actually, this quarter also does not pay tax because we are enjoying the fact that we raised the fixed asset to $240 million which are relevant for tax also. So we get like accelerated depreciation for tax in Japan, so in your model you should assume that we will pay actually taxes in Japan only from the last quarter maybe of 2017, so really only from 2018 the tax payments from Japan [indiscernible].

Thank you very much for all the details. Thank you and congrats.

Thank you, Cody.

The next question is from Jay Srivatsa of Chardan Capital Markets. Please go ahead.

Thanks for taking the question, and congratulations on the numbers and achieving debt profitability. Russell, in the past year you share from data related the number of masks entering the factory in any given quarter. I know you mentioned debt incremental number, can you share what the number was during the quarter?

Sure. For the Q2 quarter, the mass entering the factory than – number of masks was 5,724, for the Q2 quarter 2014 it was 5,478. For the half year it was 11,240 and for the half year of 2014, the first half it was 9,281.

Very good, thank you. In terms of the mix of TPSCo, given some of the transition and kinds of process you’re doing, what is your expectation of the Panasonic versus non-Panasonic business that you’re going to be running at TPSCo as you exit the year?

As we exit the year, so I mentioned that the third-party revenue will have accumulated to greater than $10 million in the third quarter that will continue to ramp in the fourth quarter. But the bulk of our revenue sitting right now is from Panasonic, and we had announced that that was between 90 and 105 a quarter. So the substantial portion of the revenue is still Panasonic. Through 2016 the percentages will come up most likely into the double digit from third-party revenue and our target would be that in the 2017, 2018 timeframe it would somewhat be equal.

Okay. Oren, in terms of the margins obviously you feel comfortable about the Q4 margin of 40%, would it be fair to assume that in Q3 you would see incremental improvement from Q2 towards the 40% number?

Yes, yes.

Okay. Russell, give us a little bit of update on where things are with the India project that in the past you’ve talked about it and it’s kind of been on the shelf. Any progress there or any update there?

Progress, a little bit hard to quantify, it’s been a very long-term activity. We have that ongoing beatings in regards to the project, currently working with the department of electronics and information technology with the entire committee, and some requirements towards getting the letter of commitment from the government. The next milestone is set for the end of September 2015 which is the latest date to submit all of the requirements and what they have claimed as some missing information. As I’ve stated before, it’s very important to note that the India project has not included any of our business times or targets and therefore, if and when it happens, it will be pure upside. Margins of this project would be well above 80%, as our investment there is only human resources and with no upfront cash investment. There is certainly other areas where there is interesting projects similar to the India project, many initiatives right now in China on things that are similar to the India project with governments that maybe move more quickly.

Okay. And then one last question from me, you mentioned lot of your business appears to be running really well given some of the market shifts and market share gains. Can you help us understand are you getting new customers from other – some of your competitors or are there IDMs looking to go fabulous, can you help us understand what the mix is in terms of some of your market share gains?

So the market share gains predominantly in tops business is from IDMs that are going fabulous or more fabulous or more fabulite, I mean that’s – that entire business model is customer specific flows that we bring into our factories, I mean we had specifically mentioned fair child into TPSCo in line with the fact that they had shut down factories and we’re transferring those projects. In the case of power management, it’s a combination of both integrated device makers that are designing to platforms that they might not have in their existing factories, again most power management is still at 0.35 micron. So, many of that are designing now to our point 0.18 bcd as well as the power management’s market itself is such an integral part of the internet of things, agreed everything it’s so critical that a lot of fabulous companies have just come up into that market period. Several of our very, very big growth customers within that market were companies that started off from industry experts that started their own companies that are purely fabulous and just driving it, so it’s not an IDM at all, they’re true fabulous models that are getting into that market. In the case of the RF it’s a combination of many things, I mean we are – our biggest RF customers are truly integrated device makers. If you look at all the front end module markets they are IDMs, they have their own gallium arsenide capabilities but in the cases of what we’re serving to these IDMs therefore technologies that they themselves don’t have internal to their factories. So, if not all, most all of the gallium arsenide IDMs or IDMs that have gallium arsenide that are using the gallium arsenide for the power amplifier or previously used gallium arsenide PM for the switch that do not have RF CMOS capabilities, they do not have silicon germanium capabilities. So, in that case it’s not a fabulite model per se, it’s simply IDMs where the technology has shifted into technologies that we serve and more strongly into technologies that we serve. So the market share gain you can say at the fab list or the fab like model, we look at these customers as fabulous customers because they do not have an internal factory competing with the technologies that we’re giving them, but they really are IDMs that have their own internal capabilities. Does that answer your question, I hope it does. Well, in the case of CIS, for the most part I think – yeah, the bulk of all our CMOS image sensor customers are fabulous customers.

Thank you for the detailed answer. Good quarter.

Thank you very much, Jay.

The next question is from Richard Shannon of Craig-Hallum. Please go ahead.

Hi, Richard.

Hi, Russell and Oren, how you guys doing?

Very well.

Good. Thank you for taking my questions, I got a few from me. First, I just want to confirm, my line is a little scratchy so just want to make sure, I heard you that you’re still greater in your goal of aging this year at the $250 million top line number in the non-GAAP gross margin number 40%. Did I hear that correctly?

Yes you did.

Okay, good. You talked about, you detailed in your press release about a depreciation change here, you’ve clearly got some different CapEx dynamics in here. Would that 40% number be achievable without the depreciation change, can you help us understand the puts and takes there that would lead to that?

It’s unrelated, it was a 40% non-GAAP.

The 40% target was excluding change in depreciation, all right, it’s on the gross profit non-GAAP.

Okay, all right, fair enough. Second, on the catastrophe reservations, are these specific to a particular segmenting and types of ethnology? And can you give us a sense of how much you expect in say couple of quarters could this cover in any particular quarter like 10% or 20% or even 30% of your revenue stream?

The receipt of prepayment like Russell mentioned is not a revenue, it is cashing that we get which will enable us to reserve capacity to maybe buy some profits to fund some profits but it is not revenue.

It turns into [indiscernible] when the wafers get shifted against the capacity reservation.

Okay. All right, maybe I’ll ask you another way. I mean, it seems you’re making reservation in the near term where revenues are coming down the road, you’re looking down the road three quarters or whatever timeframe is appropriate, how much coverage would these reservations before, can you give us a sense of the magnitude we’re talking about here?

I can, but I’ll first just explain it to you a little bit more clearly. You have a certain amount of volume that you’re giving your customer that steady state they should expect that volume. If they now have a forecast that’s for substantially more volume, how do you give them that volume, you’ll either have to grow additional capacity or you have to take it away from someone else or you had underutilized factories. It’s never proper I think to say this is your run rate in the past, I’m going to cut you off of that run rate unless you give me something to pre-reserve, but I don’t want to do that. But for anything that’s substantially above a run rate, you’d say, okay, if I’m going to reserve this to you, put up front some certain amount of that incremental wafer revenue maybe on the order of 30% of what that incremental amount would be. And then you have for those quarters of that 30% that you’re saying is in your forecast, you think that that back over those quarters if you use that incremental capacity. How much money is that – I really wouldn’t want it specific state because it ties into very specific customers, and there is not a lot of customers that we’re doing that with but it’s the biggest growth customers which tie into certain markets and isn’t that difficult to reduce.

Okay, fair enough. I think I know what you’re talking about there, thanks for the clarification. Third question I have regarding your RF business and specifically on SOI, I think you talked last quarter about trying to drive your share over the next few to several quarters towards that 50% level and maybe even beyond. Just want to get an updated thoughts, it sounds like you’re still playing bullish on the trends there but just want to make sure that’s still an expectation? And how much dollar growth can that really drive for Tower in total next year, any way we can get a sense of that please?

So, we’re really looking at what is our present market share and I would think presently probably we’re sitting somewhere in the range of 22% to 24% of the SOI foundry market share. Where we’ll be at the end of this year in Q4 run rate, I’m not sure if you know, I think we’ll be upwards of the 30%, 35%. Our target would be to get to the 50% if we can get there, we’ll see how that really drives. The overall foundry market we think is somewhere of $400 million to $500 million, so if we’re at 50% and let’s say the market growth whatever playing next year, so 50% would be – if it’s $400 million, it’s $200 million, if it’s $500 million, $250 million so that’s the type of numbers that we’re looking at getting into. If we’re right now at 23% it’s $400 million, $500 million you can see what our run rate is presently.

Okay great, that’s great clarification. Last question for me, you mentioned you have talked about this in the past in your prepared comments you talked about potentially adding capacity inorganically here, wondering to the extent to which there are other opportunities out there whether their size and the financial attractiveness of Panasonic that you completed last year. And to the extent to what you think you can manage something of anywhere near that size financially as well?

There is a whole gamete of opportunities that are out there. Would we wish to take on another activity such as TPSCo at present, I’m not sure, I mean we’ve not announced something in that order, we’ve not announced anything. We’re always actively looking at opportunities, I’ve mentioned that during the call that we’re very active in looking at opportunities continuingly. Our model of looking at something is where it really is a win for us and a win for the company that we’re buying from. Panasonic had a very strong benefit from what we did with them. If we were to do another acquisition, capacity based acquisition it would be something that we would make sure is a win for our partner and a win for us, and for us the win is to say that we have a very good ROI and that we in all cases have running costs that’s covered through the contract with the person that we’re acquiring from, and that’s very important for us. We don’t want to do an acquisition to where you could have within a year, within two years and accumulated many, many tens of millions of dollars of loss of running costs. So those are the types of deals that we look at and I think that there are a good variety of them and that are available at any given time. At the point that something is material, meaning that we would find a definitive agreement we would certainly press release and give an update. But does the company need greater capacity in the coming years, it certainly does. Our forecasts are very strong, our markets are strong markets, when we need capacity we will need capacity. We still have available capacity in TPSCo and it was very fortuitous when we did that deal because as I’ve mentioned the movement of the power management which is not just a substantial amount of volume but a very big growth volume. We and our customers need to have that growth capability which is in TPSCo which then gives additional capacity in Migdal HaEmek Fab2 for some other spaces such as RF SOI. But I would think that within the next year and a half to two years we do need more capacity and this is the right time to start thinking about it and structuring deals to have that capacity online.

Okay, appreciate all the details. That’s all my questions guys, thanks.

Thank you very much Richard, good question.

The next question is from Lisa Thompson of ZACKS Equity Research. Please go ahead.

So, let’s just talk a little bit more about the possibilities for M&A. If you were to do something do you have current ideas of how you would fund it or are you open to any possibilities?

If we were to do something in the immediate future we would certainly have ideas of how we would do it, but again we’ve not announced something. As we say that we are continuingly evaluating opportunities, yes, there is certainly models of how we would do an M&A at this point.

So would you do with the same as TPSCo or is there other ideas at this point?

The TPSCo model is a very good model for us. Again there is nothing that is of a point of materiality that we would need to release, so I wouldn’t want to commit or give an expectation of one model or another but the TPSCo structure was a very good structure and that I think has been a nice wind for both companies. So, another 60 old could make sense, or structure could make sense.

And what are possibilities – do you have any preferences for geography or what would be the criteria that most – is most attractive to you?

We do our preferences for geographies but really we shouldn’t get into that at this moment.

Would it be more of a diversification thing where you wanted near where you have other stuff? Does it kind of what’s the logic or is it physically what they make that plan?

In general, you would want to have a facility somewhat close if you could to the geography that you would be transferring the capability from. So that the transfer group could have close proximity to the activity, and that makes things easier for everybody. So, that’s – if you could have your excellent wish list that would be the greatest wish list. And the other thing would be in a region that is amenable so the customers that you expect to fill in the factory. So those are really the two things you’d have to think about is where is the technology coming from, where is it going to and where are the customers located.

Okay, so is that mean that you would be looking for something maybe in China or somewhere where you don’t have a location that will be close to your customers would be like the ideal thing?

Actually from what I said would be more or less the opposite of China.

Okay.

Our main customers are not in China, well the China market is growing for us. The remaining customers aren’t located in China and we have no facility in China we’d be transferring technology from.

Okay, so it’s where the current customers are, not future customers?

It would be where the customers are that you expect to serve with the technologies that you want to bring up in that factory.

Okay, great.

Thank you.

That’s all my questions right now.

Okay, thank you very much.

The next question is from Scott [indiscernible] Capital. Please go ahead.

Hey Russell, I’ve got three questions. Can you just tell me what the mask set growth year-over-year was running this quarter and what that same growth rate was coming into the year?

The growth rate was – I’m sorry. So I had mentioned the Q2 was $57.24, Q2 a year ago was $54.73. So I don’t know the exact percent but it’s…

Okay, perfect.

So yes, maybe 6%.

That same was running pretty high level digit kind of coming into the calendar year correct?

On a year-over-year basis, yes.

Okay. And just on the CapEx, so how much do you guys figure that your maintenance CapEx is versus growth of CapEx in any given quarter?

Yeah, it’s about $25 million, $27 million was our – if you look at the last five years it’s pretty much the average per quarter, which is including also some CapEx tools but that was a stable run rate and the only update from today is that what Russell said in his beginning that we want to add to that in the coming year $15 million to $20 million for new CapEx to extend capacity because we really face a very strong excess demand overall capacities, at least in Fab2 and Fab3. Towards this end of $15 million to $20 million per each of those two Fab we already invested actually 12 to 13 million in Q2.

And then lastly on your potential M&A, what’s your debt capacity or what’s your thoughts about what type of capital UDUs if it’s an actual acquisition type formulation for a fab?

Yes, so already Russell mentioned that if we will structure [indiscernible] transaction it will be similar TPSCo structure, which actually did not involve any cash or material amount of loans or something we’ve done because it’s like a commitment from the seller to – from the seller of the fab to buying product and we are committing to operate the place and we are– bringing into the deal our customer relations, marketing and business.

So let’s just say hypothetically that one of the device manufactures are selling their fab domestically and they’re looking to sell it out right. Could you find a financial partner to buy the actual buildings and equipment as a partner to you or would it usually be one entity that would need to acquire the whole fab?

Well, it is us, I mean we are the acquirer because that’s pretty like in TPSCo.

Okay. All right, thanks.

Yes, for your question on specific percents, first half of 2015 versus first half 2014 was 21% increase in the masks entering the factories.

Okay, thank you.

Okay, thank you.

The next question is from [indiscernible]. Please go ahead.

Yes, thanks for taking my question. Just a couple of clarifying questions. The change into [indiscernible] methods, how much GAAP changed the quarterly depreciation, in other words, what do you expect the appreciation to be in Q3 and Q4 and how much did it change because you extended the life of the assets?

Yes, thank you. The depreciation this quarter is $35 million in growth, you can see it into press release plus $2 million in the R&D and SG&A, so total of $37 million and this is the expectation for the foreseeable future. And that I think the good part of this issue now that now which will be flat and on this amount of $35 million to $37 million leveled.

And if you haven’t changed the depreciation, I’m trying to understand the dollar impact through the change of depreciation a quarterly basis.

Yes, so…

Are you saving depreciation from extending the life of the assets per quarter?

Yes, I mean if you look at for example Q1 2015 was $47.7 million depreciation, going down on to $35 million, so it’s a $12 million net reduction in depreciation. However, due to the spec that now it’s lower depreciation costs for the finished inventory what’s called [indiscernible] is lower and also there is offsetting – it is offset by minority right and tax provision. And then also on the net effect of all these is only $6.8 million but if you look only on depreciation to model, the future depreciation is to $37 million.

Okay, thank you, that’s very helpful. Russell, you mentioned I think that power management business was going to grow 30% to 35%, was that in 2015?

Yes, so I said that 2015 versus 2014 was 30%, by present run rate and forecast second half and that by forecast is actually 60% 2016 over 2015.

So there is a big funnel there obviously?

That’s right.

Okay. Could you maybe tell an expectation or a goal for your RF SOI or your total RF business, what kind of growth rates would you think you’ll see this year and next year in that segment?

So, the total segments this year if you look at RF, CMOS, silicon germanium etc, etc I think for the year should be somewhere about 45%, maybe even little bit higher, maybe 50%.

That’s the growth rate in 2015?

Yes, sir.

Okay, yes thank you. And have you changed your medium term goals for the third-party revenue in the TPSCo? It seems like you’re transferring a lot of business there from your other fabs to RF SOI and silicon germanium and whatnot, so how should we think about the levels of revenue coming through that factory network now?

Actually it’s a very good question. As far as what we had said in the past on the amount of projects and what we believe those projects would turn into and those numbers stay the same. We should see incremental increase by the power management movement over there and of a relatively substantial number. So for the 2016 the TPSCo should be delivering on a third-party revenue basis although it’s – it’s definitely third-party, the transfers hadn’t come out Migdal HaEmek, multiple tons of millions of dollars and really multiple. And that’s on top of the activities that we had talked about which were the TPSCo focused activities themselves.

Thank you.

Very good question, thank you.

There are no further question at this time. Mr. Ellwanger, would you like to make any concluding statements?

Yes, please, seems like I can find it. So next week Tuesday, August 11, we’ll be participating at Oppenheimer 18th Annual Technology Internet and Communications Conference at the Four Seasons Hotel in Boston. [Indiscernible] will be presenting at 3:45 and team, the CFO from the Newport Beach facility. The same body will be attending and be meeting with investors throughout the day. We’d really invite anyone out being in the area to take advantage to meet with [indiscernible], he is the Senior Vice President of the RFI Precision Analog Business Unit and also the Power Management Business Unit. So I think a lot of the questions that people have on that specific segment and would be very good interaction and you have the opportunity to meet with them and as well just the overall finances in the company as what it is I think very, very well to have all those questions. So, just to summarize, I really do thank all of you for your interest and support TowerJazz. The coming quarters promise much good excitement and we look forward to updating as things unfold. Thank you very, very much.