2008 Highlights:
EBITDA of $36 million and positive annual cash flow from operations;
Strategic merger with Jazz Technologies in September 2008;
Debt decreased by about $250 million, with favorably adjusted terms on the company’s remaining debt.
Fourth Quarter Highlights:
Record revenue of $77.5 million, up 26% as compared to the fourth quarter of 2007;
Recorded positive cash flow from operations (ninth consecutive quarter) and positive EBITDA (thirteenth consecutive quarter);
Jazz integration has been seamless, including cost reduction that has already exceeded the original $60 million annual run-rate plan, with additional activities under way.
Revenue for the fourth quarter of 2008 was $77.5 million, which was within company’s guidance range, and included the full quarter of results from Jazz Technologies following the close of the merger on September 19, 2008. This compares to revenue of $61.6 million in the fourth quarter of 2007 and $58.5 million in the third quarter of 2008. Calculated in accordance with GAAP, net loss for the fourth quarter of 2008 was $24.2 million, or $0.15 per share, which included about $29 million of depreciation and amortization.
For the full year of 2008, non-GAAP gross and operating profit were $77.4 million and $36.1 million, respectively, which represent 31% gross margin and 14% operating margin. Such high incremental net margin was achieved due to the previously announced cost reduction plans and lower financing expense.
This past year was a very successful year for Tower on a number fronts. Our accomplishments and efforts throughout the year have dramatically improved the company’s financials and future growth opportunities as we work towards our goal of becoming the leading specialty foundry in the world, stated Russell Ellwanger, chief executive officer of Tower Semiconductor. Most notably, in September we completed the merger with Jazz Technologies, which has resulted in a larger, more competitive company with a broader global presence, double the worldwide customer base with the intrinsic cross-selling opportunities and substantial cost savings synergies.
Amir Elstein, chairman of the board of directors of Tower Semiconductor, said, The merger with Jazz and our now undisputed leadership in multiple foundry segments, as well as several not yet released initiatives, have put us in a position to capitalize on many opportunities presented during this global economic downturn and to exit 2009 as the definitive specialty foundry winner.
Commenting on the fourth quarter, Ellwanger said, During the fourth quarter worldwide foundry revenues declined significantly. The strategic Jazz merger was timely in that it allowed us to counter that trend and achieve sequential and year-over-year growth, which places us in a unique position when compared with other foundries that have reported to date. Looking forward, we see a continued weakening in customer demand for the first quarter and, based on our customer’s current degree of visibility, for the second quarter as well. The cost synergies associated with the Jazz merger have positioned us to face the decline in revenue during the first half of 2009 in a successful manner, while also giving us the strength to capitalize on the various opportunities presented by the current economic conditions.
