TOWER SEMICONDUCTOR LTD. 
By MIGDAL HAEMEK,
First Quarter Highlights
- Revenue of $58.1 million
- Posted positive cash flow from operations for the tenth
consecutive quarter and positive EBITDA for the fourteenth consecutive
quarter
- Over-achieved post-merger Tower/Jazz $60 million cost
reduction plans, with approximately $80 million of annual cost run-rate
reductions, as evidenced by maintaining $4 million non-GAAP net profit
despite $19 million quarter-over-quarter decrease in revenue
- Achieved record revenue in medical imaging business and, in
conjunction with other specialty businesses, enabled an ASP increase of
10 percent sequentially
First quarter 2009 revenue was
Calculated in accordance with GAAP, net loss for the first quarter
narrowed by
On a non-GAAP basis, as described and reconciled below, the Company
achieved first quarter 2009 gross profit of
"The synergies and operational efficiencies realized through the
Ellwanger further commented, "We are very pleased with customer response to several of our new platforms such as SiGe as a replacement for GaAs power amplifiers; large area, stitched field dental and medical image sensors; and multiple process innovative and integration intense MEMs products."
"Our strategy to enhance Tower's profitable growth, focusing on our
specialty business, is gaining momentum, bringing in the results we were
hoping for, even in today's challenging environment," said
Conference Call/ Web Cast Announcement
Tower will host a conference call to discuss first quarter 2009 results
today,
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, stock based compensation expenses and write-off of in process research and development . 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 and (3) write-off of in process research and development. 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.
Following the merger with Jazz, the amounts presented in this release,
including the financial tables below, include Jazz's results commencing
About Tower Semiconductor Ltd.
Tower Semiconductor Ltd. is a pure-play independent specialty wafer
foundry. Tower manufactures integrated circuits with geometries ranging from
1.0 to 0.13-micron; it also provides complementary technical services and
design support. In addition to digital CMOS process technology, Tower offers
advanced mixed-signal & RF-CMOS, Power Management, CMOS image-sensor and
non-volatile memory technologies. Through access to the process portfolio of
its wholly owned subsidiary, Jazz Semiconductor, Tower offers RF CMOS, Analog
CMOS, Silicon and SiGe BiCMOS, SiGe C-BiCMOS, Power CMOS and High Voltage
CMOS. To provide world-class customer service, Tower maintains two
manufacturing facilities in
Forward Looking Statements
This press release includes forward-looking statements, which are subject
to risks and uncertainties. Actual results, including any expected benefits
and anticipated cost savings, 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) not
receiving orders from our wafer partners and customers, which can result in
excess capacity, (iii) the cyclical nature of the semiconductor industry and
the resulting periodic overcapacity, fluctuations in operating results,
future average selling price erosion, (iv) the large amount of debt and
liabilities and having sufficient funds to satisfy our short-term and
long-term debt obligations and other liabilities on a timely basis, (v)
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, (vi) our ability to satisfy the covenants stipulated
in our agreements with our lenders, banks and bond holders, (vii) our ability
to capitalize on potential increases in demand for foundry services, (viii)
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, (ix) our ability to
accurately forecast financial performance, which is affected by limited order
backlog and lengthy sales cycles, (x) our merger with Jazz, including
possible delays in the integration process, diversion of management's
attention, and not realizing anticipated benefits, (xi) the purchase of
equipment to increase capacity, the completion of the equipment installation,
technology transfer and raising the funds therefore, (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) 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 defend 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 our 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)
March 31, December 31,
2009 2008
Unaudited
------------ -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 40,315 $ 34,905
Trade accounts receivable 32,537 45,860
Other receivables 1,230 2,320
Inventories 27,736 38,729
Other current assets 8,481 7,657
------------ -------------
Total current assets 110,299 129,471
LONG-TERM INVESTMENTS 28,140 29,499
PROPERTY AND EQUIPMENT, NET 428,781 449,697
INTANGIBLE ASSETS, NET 77,688 81,034
GOODWILL 7,000 7,000
OTHER ASSETS, NET 8,629 8,802
----------- ------------
TOTAL ASSETS $ 660,537 $ 705,503
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of
convertible debenture $ -- $ 8,330
Short term bank loan 7,000 7,000
Trade accounts payable 33,058 49,462
Deferred revenue and
short -term customers' advances 5,686 6,634
Other current liabilities 28,411 35,202
----------- ------------
Total current liabilities 74,155 106,628
LONG-TERM LOANS FROM BANKS 226,465 222,989
DEBENTURES 201,563 208,512
LONG-TERM CUSTOMERS' ADVANCES 11,348 11,138
OTHER LONG-TERM LIABILITIES 45,855 45,959
----------- ------------
Total liabilities 559,386 595,226
SHAREHOLDERS' EQUITY 101,151 110,277
----------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 660,537 $ 705,503
=========== ============
Tower Semiconductor Ltd. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(dollars in thousands, except share data and per share data)
Three months ended
March 31,
------------------------
2009 2008
----------- -----------
GAAP GAAP
------------------------
REVENUES $ 58,059 $ 57,607
COST OF REVENUES 74,911 68,255
----------- -----------
GROSS LOSS (16,852) (10,648)
OPERATING COSTS AND EXPENSES
Research and development 4,356 2,976
Marketing, general and administrative 6,735 7,768
----------- -----------
11,091 10,744
OPERATING LOSS (27,943) (21,392)
FINANCING EXPENSE, NET (978) (7,800)
OTHER EXPENSE, NET -- (428)
----------- -----------
LOSS BEFORE INCOME TAX BENEFIT (28,921) (29,620)
INCOME TAX BENEFIT RELATED TO JAZZ 1,277 --
----------- -----------
LOSS FOR THE PERIOD $ (27,644) $ (29,620)
=========== ===========
BASIC AND DILUTED LOSS
PER ORDINARY SHARE
loss per share $ (0.17) $ (0.24)
=========== ===========
Weighted average number of ordinary
shares outstanding - in thousands 160,026 124,228
=========== ===========
Tower Semiconductor Ltd. and Subsidiaries
Reconciliation of Reported GAAP to Non-GAAP Consolidated Statements of
Operations (Unaudited)
(dollars in thousands)
Three months ended
March 31, December 31,
----------- -----------
2009 2008
----------- -----------
Non-GAAP
---------------------------
REVENUES $ 58,059 $ 77,453
COST OF REVENUES 45,749 61,894
----------- -----------
GROSS PROFIT (LOSS) 12,310 15,559
OPERATING COSTS AND EXPENSES
Research and Development 3,793 4,625
Marketing, general and
administrative 6,933 9,186
Write-off of in-process
research and development -- --
----------- -----------
10,726 13,811
----------- -----------
OPERATING PROFIT (LOSS) 1,584 1,748
FINANCING INCOME (EXPENSE), NET 1,507 3,338
OTHER EXPENSE, NET -- (280)
----------- -----------
PROFIT (LOSS) BEFORE INCOME TAX
BENEFIT (PROVISION) 3,091 4,806
INCOME TAX BENEFIT (PROVISION)
RELATED TO JAZZ 1,277 (575)
----------- -----------
NET PROFIT (LOSS) FOR THE PERIOD $ 4,368 $ 4,231
=========== ===========
NON-GAAP GROSS MARGINS 21% 20%
=========== ===========
NON-GAAP NET MARGINS 8% 5%
=========== ===========
- Table Continued -
Tower Semiconductor Ltd. and Subsidiaries
Reconciliation of Reported GAAP to Non-GAAP Consolidated Statements of
Operations (Unaudited)
(dollars in thousands)
Three months ended
March 31, December 31,
----------- -----------
2009 2008
----------- -----------
Adjustments (see a, b, c, d below)
------------------------------------
REVENUES $ -- $ --
COST OF REVENUES 29,162 (a) 26,346 (a)
----------- -----------
GROSS PROFIT (LOSS) (29,162) (26,346)
OPERATING COSTS AND EXPENSES
Research and Development 563 (b) 654 (b)
Marketing, general and
administrative (198) (c) 1,352 (c)
Write-off of in-process
research and development -- (500)
----------- -----------
365 1,506
----------- -----------
OPERATING PROFIT (LOSS) (29,527) (27,852)
FINANCING INCOME (EXPENSE), NET (2,485) (d) (530) (d)
OTHER EXPENSE, NET -- --
----------- -----------
PROFIT (LOSS) BEFORE INCOME TAX
BENEFIT (PROVISION) (32,012) (28,382)
INCOME TAX BENEFIT(PROVISION)
RELATED TO JAZZ -- --
NET PROFIT(LOSS) FOR THE PERIOD $ (32,012) $ (28,382)
=========== ===========
- Table Continued -
Three months ended
March December
31, 31,
----------- -----------
2009 2008
----------- -----------
GAAP
---------------------------
REVENUES $ 58,059 $ 77,453
COST OF REVENUES 74,911 88,240
----------- -----------
GROSS PROFIT (LOSS) (16,852) (10,787)
OPERATING COSTS AND EXPENSES
Research and development 4,356 5,279
Marketing, general and administrative 6,735 10,538
Write-off of in-process
research and development -- (500)
----------- -----------
11,091 15,317
----------- -----------
OPERATING PROFIT (LOSS) (27,943) (26,104)
FINANCING INCOME (EXPENSE), NET (978) 2,808
OTHER EXPENSE, NET -- (280)
----------- -----------
PROFIT (LOSS) BEFORE
INCOME TAX BENEFIT (PROVISION) (28,921) (23,576)
INCOME TAX BENEFIT (PROVISION)
RELATED TO JAZZ 1,277 (575)
----------- -----------
NET PROFIT (LOSS) FOR THE PERIOD $ (27,644) $ (24,151)
=========== ===========
(a) Includes depreciation and amortization expenses in the amounts of
$29,009 and $26,150 and stock based compensation expenses in the
amounts of $153 and $196 for the three months ended March 31, 2009
and December 31, 2008, respectively.
(b) Includes depreciation and amortization expenses in the amounts of
$403 and $532 and stock based compensation expenses in the amounts of
$160 and $122 for the three months ended March 31, 2009 and December
31, 2008, respectively.
(c) Includes depreciation and amortization expenses in the amounts of
$335 and $325 and stock based compensation expenses in the amounts of
-$533 and $1,027 for the three months ended March 31, 2009 and
December 31, 2008, respectively.
(d) Includes amortization expense of debt related vehicles in the amounts
of $2,485 and $530 for the three months ended March 31, 2009 and
December 31, 2008, respectively.
Contact:
Tower Semiconductor
Noit Levi, +972-4-604-7066
noitle@towersemi.com
or:
Shelton Group
Ryan Bright, +972-239-5119 ext. 159
rbright@sheltongroup.com
SOURCE Tower Semiconductor Ltd
