MIGDAL HAEMEK, Israel--(BUSINESS WIRE)--May 4, 2003--Tower Semiconductor Ltd.(NASDAQ:TSEM - News):
- Fab 1: Strong first quarter 2003
- Fab 2: First production orders received
Tower Semiconductor Ltd. (NASDAQ: TSEM; TASE: TSEM) today announced results for the first quarter ended March 31, 2003.
Sales for the first quarter of 2003 were $12.6 million, an increase of 50 percent over sales of $8.4 million in the first quarter of 2002. This represents an increase of 9 percent over sales from operations in the prior quarter, when sales from operations were $11.6 million (in the prior quarter, the company recognized an additional $4.0 million in revenue from a technology agreement). Total first quarter loss was $14.4 million, or $0.33 per share, including non-capitalized Fab 2 expenses (net) of $12.6 million, compared to a loss of $13.6 million, or $0.33 per share, including non-capitalized Fab 2 expenses (net) of $10.8 million, for the fourth quarter of 2002 and compared with a loss of $12.0 million, or $0.47 per share, including non-capitalized Fab 2 expenses (net) of $6.4 million, for the first quarter of 2002.
Fab 1 operating results improved in the first quarter of 2003 due to both better unit sales and higher average selling price. Orders for Fab 1 increased relative to the prior quarter, and the company anticipates Fab 1 sales in the second quarter of 2003 to continue to increase modestly over Q1 2003 level. Tower expects to continue to generate positive operating cash flow from Fab 1 operations.
Important advances were made in Tower's new flagship Fab 2 facility, for the production of devices at the 0.18-micron and below technology node. In addition to successful manufacturing of new prototypes for customers, the company has received early orders for volume production from two of its wafer partners. Tower continues the installation of new equipment to ramp up production in Fab 2.
"We are very pleased by the strides that we made in the first quarter of 2003. Both of our fabs performed well, strengthening our current position and laying the groundwork for future growth. In the second quarter Fab 2 is entering commercial 0.18 micron production with its first volume orders from customers," said Dr. Yoav Nissan-Cohen, co-CEO, Tower Semiconductor.
Dr. Nissan-Cohen added, "We are proud that in the first quarter we were honored by Motorola with the Gold Performance Excellence Award, for the fourth consecutive year. This award is another indication of Tower's position as a quality leader in the foundry industry."
Tower continues to negotiate with its banks to amend its credit facility agreement to reflect the company's previously announced amendments to agreements with its major wafer and equity partners, related to their fifth milestone investments and changes to the company's Fab 2 plan, which reflect current conditions in the semiconductor market and the world economy.
Tower will host a conference call to discuss these results on Monday, May 5, 2003 at 11:00 a.m. Eastern time / 18:00 Israel time. To participate, call 1-800-915-4836 (U.S. toll-free number) or 1-973-317-5319 (international) and mention ID code: TOWER. Callers in Israel are invited to call local 03-925-5910. The conference call also will be webcast live at www.companyboardroom.com and at www.towersemi.com and will be available thereafter on both Web sites for replay for 90 days, starting at 2:00 p.m. Eastern time on the day of the call.
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 0.18 microns; it also provides complementary manufacturing 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 company maintains two manufacturing facilities: Fab 1 has process technologies from 1.0 to 0.35 microns and can produce up to 20,000 150mm wafers per month. Fab 2 features 0.18-micron and below process technologies, including foundry-standard technology, and will offer full production capacity of 33,000 200mm wafers per month. The Tower Web site is located at www.towersemi.com.
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Safe Harbor
This press release includes forward-looking statements, which are subject to risks and uncertainties. Our actual results may vary from those projected or implied by such forward-looking statements. Potential risks and uncertainties include, without limitation, risks and uncertainties associated with (i) obtaining required approvals of our shareholders and our banks to the amendment to the Fab 2 investment agreements, (ii) our need to renegotiate our Fab 2 credit facility to extend the deadlines by which were and are required to raise additional financing in 2002 and 2003 and meet the fifth and sixth milestones, which, in the absence of a renegotiated agreement, would result in an event of default under the credit facility in which event the banks would have the right to call our loans and exercise their liens against our assets, (iii) the review of our Fab 2 plan currently being conducted by a leading consulting company engaged by the Company which may affect the renegotiation of the terms of the credit facility, (iv) the possible claim by our wafer partners, financial investors and the Investment Center of the State of Israel of a breach of and suspension of performance under our agreements if an event of default should be declared under the credit facility, (v) raising at least $22 million of additional funding for Fab 2 before the end of 2003, which is a condition to completion of the fifth milestone investment by our major wafer and equity partners, (vi) our ability to obtain additional financing for the Fab 2 project from equity and/or wafer partners, the Israeli Investment Center, our banks, and/or other sources, as required under the Fab 2 business plan and pursuant to our agreements with our wafer and equity partners, banks and the Israeli Investment Center (vii) our satisfaction of all other conditions under our agreements with our Fab 2 equity and wafer partners, the Israeli Investment Center and our banks, (viii) obtaining the approval of the Israeli Investment Center of amendments to our modified business plan, (ix) ramp-up of production at Fab 2, (x) completion of the development and/or transfer of advanced process technologies to be utilized in our existing facility and in Fab 2, (xi) market acceptance and competitiveness of the products to be manufactured by us for customers using these technologies, (xii) obtaining additional business from new and existing customers (xiii) conditions in the market for foundry manufacturing services and in the market for semiconductor products generally and (xiv) possible loss of our exclusive foundry license with Saifun if we fail to meet certain sales levels and other conditions. 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 at "Risk Factors" in our most recent Annual Report on Form 20-F, as filed with the Securities and Exchange Commission and the Israel Securities Authority.
