Revenues were $102 million for the 12 months ended December 31, 2005, including $8 million from a previously announced technology-related agreement, as compared with $126.1 million in 2004, which included $1.9 million from this same agreement. Loss for fiscal 2005 was $203.1 million, or $2.55 per share, including $144.9 million depreciation and amortization expenses, as compared with a loss of $170.1 million, or $2.21 per share in 2004, including $121.1 million depreciation and amortization expenses and excluding a net capital gain of $32.4 million from the previously announced sale of shares of Saifun Semiconductor.
"The company, for the first time since the Fab 2 project was initiated, achieved positive EBITDA, as well as record quarter over quarter sales growth. Positive EBITDA was an important milestone achievement as we continue to execute our growth plan. We have stronger targets in front of us in 2006 and the rate of new product qualifications from both new and existing customers, as well as the general market indicators, provide confidence that we will achieve them", said Russell Ellwanger, chief executive officer, Tower Semiconductor. "A 50% quarter over quarter growth is no small thing in any business, and can only be achieved through performance and customer trust. We will continue to build upon this throughout 2006."
Tower expects further growth in revenues for the first quarter of 2006 over the fourth quarter of 2005, and guides revenues of $33 to $35 million.
During the quarter, Tower shipped its first 0.18-micron RF-CMOS products to a new, high profile customer. In addition, the first production lot of 0.13-micron technology was shipped with good yields, demonstrating Fab 2's readiness for the 0.13-micron ramp, expected in the second quarter of 2006.
As used in this release, the term EBITDA consists of loss, according to GAAP (Generally Accepted Accounting Principles), excluding interest and financing expenses (net), tax and depreciation and amortization expenses, as well as capital gain (net) from the sale of Saifun Semiconductor shares recorded in 2004. 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.
Tower will host a conference call to discuss these results today, February 1, 2006, at 11 a.m. Eastern time /6 p.m. Israel time. To participate, call +1-866-229-7198 (U.S. toll-free number) or +972-3-918-0609 (international) and mention ID code: TOWER. Callers in Israel are invited to call locally 03-918-0609. The conference call will also be web cast live at www.companyboardroom.com and at www.towersemi.com and will be available thereafter on both websites for replay for 90 days, starting at 2 p.m. Eastern time on the day of the call.
About Tower Semiconductor Ltd.
Tower Semiconductor Ltd. is a pure-play independent specialty 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 company 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 standard and specialized process technologies and has a current capacity of up to 15,000 200mm wafers per month. Tower's website 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 forward-looking 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 operate the company and to complete Fab 2, (iii) the cyclical nature of the semiconductor industry and the resulting periodic overcapacity, fluctuations in operating results, future average selling price erosion that may be more severe than our expectations, (iv) operating our facilities at satisfactory utilization rates which is critical in order to cover the high level of fixed costs associated with operating a foundry, (v) our ability to meet certain of the covenants stipulated in our amended facility agreement, (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 expand the five-year investment period under our Fab 2 approved enterprise program, (viii) attracting additional customers, (ix) not receiving orders from our wafer partners, customers and technology providers, (x) failing to maintain and develop our technology processes and services, (xi) competing effectively, (xii) our large amount of debt, (xiii) achieving acceptable device yields, product performance and delivery times, (xiv) the timely development, internal qualification and customer acceptance of new processes and products, and (xv) business interruption due to terror attacks, earthquakes, and other acts of God.
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-1, F-3 and 6-K, as were filed with the Securities and Exchange Commission and the Israel Securities Authority. Future results may differ materially from those previously reported. We do not intend to update the information contained in this release.
Tower Semiconductor Ilanit Vudinsky +972-4-650-6434 Email Contact or Pacifico Inc. PR Agency Contact Mary Curtis +1-408-293-8600 Email Contact TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (dollars in thousands) As of December 31, 2005 2004 A S S E T S CURRENT ASSETS Cash and cash equivalents $ 7,337 $ 27,664 Designated cash and short-term interest-bearing deposits 31,661 53,793 Trade accounts receivable 16,776 19,286 Other receivables 9,043 11,365 Inventories 24,376 25,669 Other current assets 1,048 1,818 Total current assets 90,241 139,595 LONG-TERM INVESTMENTS Long-term interest-bearing deposits designated for Fab 2 -- 5,134 operations PROPERTY AND EQUIPMENT, NET 510,645 609,296 OTHER ASSETS, NET 77,800 93,483 TOTAL ASSETS $ 678,686 $ 847,508 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 21,103 $ -- Current maturities of convertible debentures 6,453 -- Trade accounts payable 59,741 65,326 Other current liabilities 8,972 10,678 Total current liabilities 96,269 76,004 LONG-TERM DEBT 497,000 497,000 CONVERTIBLE DEBENTURES 19,358 26,651 LONG-TERM LIABILITY IN RESPECT OF CUSTOMERS' ADVANCES 59,621 64,428 OTHER LONG-TERM LIABILITIES 11,012 15,445 Total liabilities 683,260 679,528 CONVERTIBLE DEBENTURES 25,493 -- SHAREHOLDERS' EQUITY -30,067 167,980 (DEFICIT) TOTAL LIABILITIES $ 678,686 $ 847,508 AND SHAREHOLDERS' EQUITY TOWER SEMICONDUCTOR LTD. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except share data and per share data) Year ended Three months ended December 31, December 31, 2005 2004 2005 2004 REVENUES 101,991 126,055 31,063 30,065 COST OF SALES 238,358 228,410 58,760 66,168 GROSS LOSS -136,367 -102,355 -27,697 -36,103 OPERATING COSTS AND EXPENSES Research and development 16,029 17,053 3,180 5,845 Marketing, general and administrative 17,418 21,297 3,937 5,121 33,447 38,350 7,117 10,966 OPERATING LOSS -169,814 -140,705 -34,814 -47,069 FINANCING EXPENSE, NET -35,651 -29,745 -10,223 -8,838 OTHER INCOME (EXPENSE), NET 2,383 32,682 -135 32,574 LOSS FOR THE YEAR $ -203,082 $ -137,768 $ -45,172 -23,333 BASIC LOSS PER ORDINARY SHARE Loss per (*) (**) $ -2.55 $ -1.79 $ -0.55 -0.30 share Loss used to compute basic loss per share $ -203,082 $ -137,768 $ -45,172 -23,333 Weighted average number of ordinary shares outstanding - in thousands (**) 79,675 77,071 82,196 78,223