TOWER SEMICONDUCTOR LTD. 
By MIGDAL HAEMEK,
Highlights:
- Achieved record revenue of $79.6 million, growing sequentially by
31 percent and 36 percent year over year
- Achieved record EBITDA of $15 million, representing 8x increase
against similar revenue of Q4'08, first quarter post merger
- Turned-around Jazz into GAAP net profit, with a record net profit
since its inception
- Significant corporate-wide cost efficiencies tied with increased
revenue, have enabled improved non-GAAP gross, operating and net
margins of 32, 16 and 14 percent, respectively
- Twelfth consecutive quarter of positive operating cash flow and
sixteenth consecutive quarter of positive EBITDA
- Record 109 customer design-wins, 31 percent up quarter-over-quarter,
fueling long-term growth
- Guiding continued growth to $90-94 million in the fourth quarter; a
mid-range growth of 16 percent quarter-over-quarter (substantially
higher than industry weighted average) and 19 percent year-over-year
- Considering fourth quarter guidance, TowerJazz will be the only
reporting foundry to post year-over-year growth
Third quarter 2009 revenue was
Calculated in accordance with GAAP, Jazz Technologies, the Company's
fully owned subsidiary, achieved in the third quarter of 2009 a record GAAP
net profit since its inception in 2002, while Tower Semiconductor recorded a
net loss of
EBITDA for the third quarter of 2009 was
Financial Guidance
TowerJazz forecasts revenue in the fourth quarter 2009 to range between
Conference Call and Web Cast Announcement
TowerJazz will host a conference call to discuss third quarter 2009
results today,
To participate, please call:
1-888-668-9141 (U.S. toll-free number) or +972-3-918-0650 (international) and mention ID code: TOWER-JAZZ
Callers in
As previously announced, beginning with the fourth quarter of 2007, the Company has been presenting its financial statements in accordance with U.S. GAAP.
As applied in this release, the term Earnings Before Interest Tax Depreciation and Amortization (EBITDA) consists of loss, according to U.S. GAAP, excluding interest and financing expenses (net), tax, depreciation and amortization and stock based compensation expenses. EBITDA is not a required GAAP financial measure and may not be comparable to a similarly titled measure employed by other companies. EBITDA should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP.
This release, including the financial tables below, presents other financial information that may be considered "non-GAAP financial measures" under Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission as they apply to our company. These non-GAAP financial measures exclude (1) depreciation and amortization, (2) compensation expenses in respect of options granted to directors, officers and employees, (3) write-off of in process research and development and (4) finance expenses, net other than interest paid, such that non-GAAP financial expenses, net include only interest paid during the reported period. Non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables also present the GAAP financial measures, which are most comparable to the non-GAAP financial measures as well as reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures. The non-GAAP financial information presented herein should not be considered in isolation from or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP and is not necessarily consistent to the non-GAAP data presented in previous filings.
Following the merger with Jazz, the amounts presented in this release,
including the financial tables below, include Jazz's results commencing
About TowerJazz
Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), the global specialty
foundry leader and its fully owned U.S. subsidiary Jazz Semiconductor,
operate collectively under the brand name TowerJazz, manufacturing integrated
circuits with geometries ranging from 1.0 to 0.13-micron. TowerJazz provides
industry leading design enablement tools to allow complex designs to be
achieved quickly and more accurately and offers a broad range of customizable
process technologies including SiGe, BiCMOS, Mixed-Signal and RFCMOS, CMOS
Image Sensor, Power Management (BCD), and Non-Volatile Memory (NVM) as well
as MEMS capabilities. To provide world-class customer service, TowerJazz
maintains two manufacturing facilities in
Forward Looking Statements
This press release includes forward-looking statements, which are subject
to risks and uncertainties. Actual results may vary from those projected or
implied by such forward-looking statements and you should not place any undue
reliance on such forward-looking statements. Potential risks and
uncertainties include, without limitation, risks and uncertainties associated
with: (i) maintaining existing customers and attracting additional customers,
(ii) cancellation of orders, (iii) failure to receive orders currently
expected (iv) the cyclical nature of the semiconductor industry and the
resulting periodic overcapacity, fluctuations in operating results and future
average selling price erosion, (v) the large amount of debt and liabilities
and having sufficient funds to satisfy our debt obligations and other
liabilities on a timely basis, (vi) operating our facilities at high
utilization rates which is critical in order to defray the high level of
fixed costs associated with operating a foundry and reduce our losses, (vii)
our ability to satisfy the covenants stipulated in our agreements with our
lenders, banks and bond holders, (viii) our ability to capitalize on
potential increases in demand for foundry services, (ix) meeting the
conditions to receive Israeli government grants and tax benefits approved for
Fab2, the possibility of the government requiring us to repay all or a
portion of the grants already received and obtaining the approval of the
Israeli Investment Center for an expansion program, (x) our ability to
accurately forecast financial performance, which is affected by limited order
backlog and lengthy sales cycles, (xi) the purchase of equipment to increase
capacity, the completion of the equipment installation, technology transfer
and raising the funds therefor, (xii) our dependence on a relatively small
number of products for a significant portion of our revenue, (xiii) a
substantial portion of our revenues being accounted for by a small number of
customers, (xiv) the concentration of our business in the semiconductor
industry, (xv) product returns, (xvi) our ability to maintain and develop our
technology processes and services to keep pace with new technology, evolving
standards, changing customer and end-user requirements, new product
introductions and short product life cycles, (xvii) competing effectively,
(xviii) achieving acceptable device yields, product performance and delivery
times, (xix) possible production or yield problems in our wafer fabrication
facilities, (xx) our ability to manufacture products on a timely basis, (xxi)
our dependence on intellectual property rights of others, our ability to
operate our business without infringing others' intellectual property rights
and our ability to enforce our intellectual property against infringement,
(xxii) pending resolution of patent infringement claim against the Company,
(xxiii) retention of key employees and retention and recruitment of skilled
qualified personnel, (xxiv) exposure to inflation, currency exchange and
interest rate fluctuations and risks associated with doing business
internationally and in
A more complete discussion of risks and uncertainties that may affect the accuracy of forward-looking statements included in this press release or which may otherwise affect our business is included under the heading "Risk Factors" in Tower's most recent filings on Forms 20-F, F-3, F-4, S-8 and 6-K, as were filed with the Securities and Exchange Commission (the "SEC") and the Israel Securities Authority and Jazz's most recent filings on Forms 10-K and 10-Q, as were filed with the SEC. Future results may differ materially from those previously reported. The Company does not intend to update, and expressly disclaims any obligation to update, the information contained in this release.
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
September 30, December 31,
2009 2008
----------- -----------
unaudited
----------- -----------
A S S E T S
CURRENT ASSETS
Cash and cash equivalents $ 51,708 $ 34,905
Trade accounts receivable 42,121 45,860
Other receivables 3,418 2,320
Inventories 28,746 40,899
Other current assets 7,519 7,657
----------- -----------
Total current assets 133,512 131,641
........... ...........
LONG-TERM INVESTMENTS 29,579 29,499
........... ...........
PROPERTY AND EQUIPMENT, NET 388,234 449,697
........... ...........
INTANGIBLE ASSETS, NET 70,983 81,034
........... ...........
GOODWILL 7,000 7,000
........... ...........
OTHER ASSETS, NET 8,282 8,802
........... ...........
----------- -----------
TOTAL ASSETS $ 637,590 $ 707,673
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of
convertible debenture $ -- $ 8,330
Short term bank loan 4,440 7,000
Trade accounts payable 39,180 49,462
Deferred revenue and short-term
customers' advances 4,100 6,634
Other current liabilities 32,228 35,202
----------- -----------
Total current liabilities 79,948 106,628
LONG-TERM DEBT 416,555 431,501
LONG-TERM CUSTOMERS' ADVANCES 12,412 11,138
OTHER LONG-TERM LIABILITIES 55,020 45,959
----------- -----------
Total liabilities 563,935 595,226
........... ...........
SHAREHOLDERS' EQUITY 73,655 112,447
........... ...........
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 637,590 $ 707,673
----------- -----------
----------- -----------
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands)
Three months ended Three months ended
September 30, December 31, September 3O, December 31,
----------- ----------- ----------- -----------
2009 2008 2009 2008
----------- ----------- ----------- -----------
non-GAAP Adjustments (see a,b,c below)
--------------------------- ---------------------------
REVENUES $ 79,570 $ 77,453 $ -- $ --
COST OF
REVENUES 53,710 61,894 31,205 (a) 26,346 (a)
----------- ----------- ----------- -----------
GROSS
PROFIT (LOSS) 25,860 15,559 (31,205) (26,346)
OPERATING COSTS AND EXPENSES
Research and
development 5,769 4,625 288 (b) 654 (b)
Marketing,
general and
administrative 7,060 9,186 965 (c) 1,352 (c)
Write-off of
in-process research
and development -- -- -- (500)
----------- ----------- ----------- -----------
12,829 13,811 1,253 1,506
----------- ----------- ----------- -----------
OPERATING PROFIT
(LOSS) $ 13,031 $ 1,748 $ (32,458) $ (27,852)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NON-GAAP GROSS
MARGINS 32% 20%
----------- -----------
----------- -----------
NON-GAAP OPERATING 16% 2%
MARGINS
----------- -----------
----------- -----------
Table Continued...
Three months ended
September 3O, December 31,
----------- -----------
2009 2008
----------- -----------
GAAP
---------------------------
REVENUES $ 79,570 $ 77,453
COST OF REVENUES 84,915 88,240
----------- -----------
GROSS PROFIT (LOSS) (5,345) (10,787)
OPERATING COSTS AND EXPENSES
Research and development 6,057 5,279
Marketing, general and
administrative 8,025 10,538
Write-off of in-process research
and development -- (500)
----------- -----------
14,082 15,317
----------- -----------
OPERATING PROFIT (LOSS) $ (19,427) $ (26,104)
----------- -----------
----------- -----------
(a) Includes depreciation and amortization expenses in the amounts of
$31,067 and $26,150 and stock based compensation expenses in the
amounts of $138 and $196 for the three months ended September 30,
2009 and December 31, 2008, respectively.
(b) Includes depreciation and amortization expenses in the amounts of
$154 and $532 and stock based compensation expenses in the amounts
of $134 and $122 for the three months ended September 30, 2009 and
December 31, 2008, respectively.
(c) Includes depreciation and amortization expenses in the amounts of
$357 and $325 and stock based compensation expenses in the amounts
of $608 and $1,027 for the three months ended September 30, 2009 and
December 31, 2008, respectively.
(d) 2008 data are similar to those previously presented, prior to any
adjustments following the inventory change method occurred in 2009.
TOWER SEMICONDUCTOR LTD. AND SUBSIDIARIES
RECONCILIATION OF REPORTED GAAP TO NON-GAAP CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED)
(dollars in thousands)
Three months ended Three months ended
September 30, June 30, September 3O, June 30,
----------- ----------- ----------- -----------
2009 2009 2009 2009
----------- ----------- ----------- -----------
non-GAAP Adjustments (see a,b,c below)
--------------------------- ---------------------------
REVENUES $ 79,570 $ 60,567 $ -- $ --
COST OF SALES 53,710 44,886 31,205 (a) 26,307(a)
----------- ----------- ----------- -----------
GROSS PROFIT
(LOSS) 25,860 15,681 (31,205) (26,307)
........... ........... ........... ...........
OPERATING COSTS AND EXPENSES
Research and
development 5,769 5,929 288 (b) 22(b)
Marketing,
general and
administrative 7,060 6,253 965 (c) 900(c)
----------- ----------- ----------- -----------
12,829 12,182 1,253 922
........... ........... ........... ...........
----------- ----------- ----------- -----------
OPERATING PROFIT
(LOSS) 13,031 3,499 (32,458) (27,229)
FINANCING EXPENSE,
NET (7,738) (224) (9,020)(d) (9,072)(d)
OTHER INCOME,
NET 1,704 459 -- --
----------- ----------- ----------- -----------
PROFIT (LOSS)
BEFORE TAX
BENEFIT 6,997 3,734 (41,478) (36,301)
TAX BENEFIT RELATED
TO JAZZ 4,240 1,633 -- --
----------- ----------- ----------- -----------
NET PROFIT
(LOSS) FOR
THE PERIOD $ 11,237 $ 5,367 $ (41,478) $ (36,301)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NON-GAAP
GROSS MARGINS 32% 26%
----------- -----------
----------- -----------
NON-GAAP
NET MARGINS 14% 9%
----------- -----------
----------- -----------
Table Continues...
Three months ended
September 3O, June 30,
----------- -----------
2009 2009
----------- -----------
GAAP
---------------------------
REVENUES $ 79,570 $ 60,567
COST OF SALES 84,915 71,193
----------- -----------
GROSS PROFIT (LOSS) (5,345) (10,626)
OPERATING COSTS AND EXPENSES
Research and development 6,057 5,951
Marketing, general and administrative 8,025 7,153
----------- -----------
14,082 13,104
----------- -----------
OPERATING PROFIT (LOSS) (19,427) (23,730)
FINANCING EXPENSE, NET (16,758) (9,296)
OTHER INCOME, NET 1,704 459
PROFIT (LOSS) BEFORE TAX BENEFIT (34,481) (32,567)
TAX BENEFIT RELATED TO JAZZ 4,240 1,633
----------- -----------
NET PROFIT (LOSS) FOR THE PERIOD $ (30,241) $ (30,934)
----------- -----------
----------- -----------
(a) Includes depreciation and amortization expenses in the amounts of
$31,067 and $26,201 and stock based compensation expenses in the
amounts of $138 and $106 for the three months ended September 30,
2009 and June 30, 2009, respectively.
(b) Includes depreciation and amortization expenses in the amounts of
$154 and -$103 and stock based compensation expenses in the amounts
of $134 and $125 for the three months ended September 30, 2009 and
June 30, 2009, respectively.
(c) Includes depreciation and amortization expenses in the amounts of
$357 and $245 and stock based compensation expenses in the amounts of
$608 and $655 for the three months ended September 30, 2009 and
June 30, 2009, respectively.
(d) Non-GAAP financing expense, net include only interest paid during the
reported period.
Contacts
TowerJazz Investor Relations GK Investor Relations
Noit Levi Kenny Green
+972-4-604-7066 +1-646-201-9246
noitle@towersemi.com towersemi@gkir.com
SOURCE Tower Semiconductor Ltd
