MIGDAL HAEMEK, Israel – October 21, 2004
- Tower Semiconductor Ltd. (NASDAQ: TSEM; TASE: TSEM) today announced results for the third quarter and nine months ended September 30, 2004.
Revenues for the third quarter of 2004 totaled $35.1 million, an increase of 118 percent over $16.1 million reported in the third quarter of 2003. This is compared to revenues of $33.7 million in the second quarter of 2004.
The loss in the third quarter of 2004 was $39.4 million, or $0.60 per share,compared to a loss of $37.1 million, or $0.77 per share, in the third quarter of 2003, and compared to a loss of $36.5 million, or $0.55 per share, for the second quarter of 2004. The loss for the third quarter of 2004 includes $29.7 million of depreciation and amortization.
Revenues for the nine months ended September 30, 2004, were $96.0 million, an increase of 131 percent over revenues of $41.5 million for the nine months ended September 30, 2003. The company reported a loss of $114.4 million, or $1.78 per share in the nine months ended September 30, 2004, compared to a loss of $68.3 million, or $1.49 per share, in the nine months ended September 30, 2003.
The increase in loss, as compared with the nine months ended September 30, 2003, is primarily attributed to depreciation and amortization, which was $83.2 million on the nine months ended September 30, 2004 vs. $29.6 million in the parallel period of 2003.
“Tower achieved quarter over quarter revenues growth, in spite of the industrywide challenging market condition,” said Carmel Vernia, chairman and chief executive officer of Tower. “Looking to the near future, demand and average sale price are expected to decline, resulting in lower Q4-2004 and Q1-2005 sales. Our long-term outlook remains positive based on new customers that are in various stages of designing and prototyping into the fabs. We expect to see demand increase starting in Q2–2005.“
The company expects Q-4 2004 revenues to be in the range of $30 million and $33 million. The company is now targeting for positive EBITDA in the second half of 2005.
“We continue to see progress in our specialized technologies,” added Mr. Vernia. “We’ve added two new 0.18-micron CMOS image sensor committed customers this quarter and are running prototype silicon for a 0.18-micron embedded flash customer. We also increased the amount of mixed signal designs into our fabs, all of which are expected to increase our production levels during 2005.”
Further to the dismissal of the class action filed in the United States District Court for the Southern District of New York on behalf of the shareholders of the company against the company and certain of its directors and shareholders, the company was informed in September 2004 that one of the lead plaintiffs filed a notice of appeal of the decision dismissing the complaint. The Company believes that the complaint is without merit and will continue to vigorously contest it.
The company will host a conference call to discuss these results on Thursday,October 21, 2004 at 10:00 a.m. Eastern time / 16:00 Israel time. To participate, call 1-800-500-0177 (U.S. toll-free number) or 1-719-457-2679 (international) and mention ID code: TOWER. Callers in Israel are invited to call locally, at 03-925-5910. The conference call also will be Webcast live at www.companyboardroom.com and at www.towersemi.com
. The call will be available on both Web sites for replay for 90 days.About Tower Semiconductor Ltd.
Tower Semiconductor LTD. is a pure-play independent wafer foundry established in 1993. The company 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 non-volatile memory solutions, mixed-signal and CMOS image-sensor technologies. To provide world-class customer service, the cmpany maintains two manufacturing facilities: Fab 1 has process technologies from 1.0 to 0.35 micron and can produce up to 16,000 150mm wafers per month. Fab 2 features 0.18-micron and below process technologies, including foundry-standard technology. When fully equipped, Fab 2 is expected to offer full production capacity of 33,000 200mm wafers per month. The Tower Web site is located at www.towersemi.com
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 forwardlooking statements. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with: (i) the completion of the equipment installation, technology transfer and ramp-up of production in Fab 2, (ii) having sufficient funds to complete the Fab 2 project, (iii) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, (iv) operating our facilities at satisfactory utilization rates, (v) the effect that our expected decrease in sales in the coming quarters will have on our ability to meet certain of the covenants stipulated in our amended facility agreement, which we currently forecast we may not meet in the next several quarters, (vi) our ability to capitalize on increases in demand for foundry services, (vii) meeting the conditions to receive Israeli government grants and tax benefits approved for Fab 2 and obtaining the approval of the Israeli Investment Center to extend the five-year investment period under our Fab 2 approved enterprise program, (viii) attracting additional customers, (ix) not receiving orders from our wafer partners and technology providers, (x) failing to maintain and develop our technology processes and services, (xi) competing effectively, (xii) our large amount of debt, and (xiii) achieving acceptable device yields, product performance and delivery times. 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 Annual Report on Form 20-F and in our Form F-3, as amended, as were filed with the Securities and Exchange Commission and the Israel Securities Authority.