Jazz Technologies, Inc. Announces Second Quarter 2008 Financial Results
July 29 2008 - 4:15PM
Business Wire
Jazz Technologies, Inc. (Amex:JAZ) today announced financial
results for the second quarter ended June 27, 2008. Second Quarter
Financial Results Second quarter 2008 net revenues were $47.5
million. Specialty process business generated $35.1 million, or 74%
of total net revenues. Second quarter net loss was $4.6 million or
$0.24 per share compared to a net loss of $4.0 million or $0.22 per
share in the first quarter. Second quarter net loss includes
merger-related expenses of $1.5 million. First quarter net loss
includes a $0.8 million net gain related to the purchase of a
portion of Jazz Technologies� convertible senior notes at a
discount to their principal amount. Second quarter EBITDA, a
non-GAAP financial measure, was $7.9 million, compared to first
quarter EBITDA of $8.5 million. Second quarter free cash flow, a
non-GAAP financial measure, was $3.8 million, compared to first
quarter free cash flow of $3.5 million. Excluding merger-related
expenses of $1.5 million in the second quarter, EBITDA was $9.4
million or 19.8% of net revenues, and free cash flow was $5.3
million. An explanation of EBITDA and free cash flow and a
reconciliation of both measures to net loss are set forth at the
end of this press release. Second quarter capital expenditures were
$1.4 million. During the quarter, Jazz Technologies had net cash
interest expense of $2.7 million. Second quarter depreciation and
amortization expense was $9.4 million, similar to the prior
quarter. Capacity utilization was approximately 67% during the
second quarter, compared to approximately 88% during the first
quarter. �We exceeded the revenue outlook we had provided for the
second quarter despite a challenging business environment. Our
financial results reflect operational discipline, resulting in our
fourth consecutive quarter of generating positive free cash flows,�
said Gil Amelio, chairman and chief executive officer of Jazz
Technologies. �During the quarter, we also signed an agreement to
merge with Tower Semiconductor in the quarter, with the goal of
accelerating the future growth prospects of both companies.�
Business Highlights On May 19, 2008, Jazz Technologies announced it
had entered into a definitive agreement to merge with Tower
Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM), an independent
specialty wafer foundry. The merger, which is expected to close in
the second half of 2008, is subject to the approval of Jazz
Technologies' stockholders and other customary closing conditions.
The record date for the special meeting of stockholders to consider
and vote on the proposed merger has been set at August 8, 2008, but
Jazz Technologies has not yet set the date for the stockholder
meeting itself. Announced application of 0.18-micron Silicon
Germanium (SiGe) BiCMOS platform (SBC18) and Vertical PNP (VPNP)
module that features low capacitance, high current drive and high
voltage breakdown to next generation green, energy-efficient analog
ICs enabling up to 30% power savings. Jazz Technologies� modular
SiGe process technology offers significant power and efficiency
savings over standard CMOS for integrated wireless and networking
products. Secured five new design wins addressing the growing
10Gbit optical market, leveraging Jazz Technologies� high speed
SiGe BiCMOS platform (SBC18). Capital Structure As of June 27,
2008, Jazz Technologies had approximately $9.8 million in cash and
cash equivalents. Total debt on the balance sheet was $137.2
million, representing $128.2 million of convertible senior notes
and $9 million drawn against a line of credit. As of June 27, 2008,
Jazz Technologies had unused borrowing capacity of an additional
$30.0 million under a three-year senior secured revolving credit
facility with Wachovia Capital Finance Corporation. Third Quarter
2008 Business Outlook In light of the pending merger with Tower
Semiconductor, Jazz Technologies is not providing a business
outlook for the third quarter of 2008. Conference Call Chairman and
chief executive officer, Gil Amelio, and chief financial and
administrative officer, Paul Pittman, will discuss the second
quarter financial and operational performance during a conference
call today at 2:00 p.m. PST (5:00 pm EST). To listen to the call
and have the opportunity to ask questions, please dial 866.543.6403
(domestic) or 617.213.8896 (international) five to ten minutes
before the call and reference the passcode 2446-8623. A
simultaneous live Webcast of the call will be available at the
Investor Relations section of the Jazz Technologies website at
http://www.jazztechnologies.com. An online playback of the Webcast
will be available on Jazz Technologies website for at least 90 days
following the call. A replay of the call can also be accessed by
dialing 888-286-8010 (domestic) or 617-801-6888 (international),
and referencing passcode 7787 - 8633. Reconciliation of Second
Quarter GAAP Net Loss to EBITDA and Free Cash Flow This press
release contains certain non-GAAP financial measures, including
EBITDA (earnings before interest, income taxes, depreciation and
amortization) and free cash flow (EBITDA minus net cash interest
expense and sustaining capital expenditures). Jazz Technologies�
management believes that EBITDA provides insight into the company�s
ability to service its indebtedness and free cash flow provides
insight into the amount of cash that the company has available for
discretionary uses after expenditures for interest and sustaining
capital expenditures. In addition, these measures are presented
because they are frequently used by securities analysts, investors
and others in the evaluation of semiconductor companies. (All
figures in millions of dollars) � � Q208 Q108 Net loss (4.6 ) (4.0
) Net Interest Expense 3.1 3.1 Depreciation and Amortization 9.4 �
9.4 � EBITDA 7.9 � 8.5 � � CAPEX (1.4 ) (2.2 ) Net Cash Interest
Expense (2.7 ) (2.8 ) Free Cash Flow 3.8 � 3.5 � Neither EBITDA nor
free cash flow is defined under GAAP and should not be considered
in isolation or as a substitute for net earnings and other
consolidated earnings data prepared in accordance with GAAP or as a
measure of the company�s profitability. EBITDA and free cash flow
may not be comparable to similarly titled measures used by other
companies. About Jazz Technologies and Jazz Semiconductor Jazz
Technologies(TM) (AMEX:JAZ) is the parent company of Jazz
Semiconductor, Inc., a leading independent wafer foundry focused on
Analog-Intensive Mixed-Signal (AIMS) process technologies. The
company's broad product portfolio includes digital CMOS and
specialty technologies, such as RF CMOS, Analog CMOS, Silicon and
SiGe BiCMOS, SiGe C-BiCMOS, Power CMOS and High Voltage CMOS. These
technologies are designed for customers who seek to produce analog
and mixed-signal semiconductor devices that are smaller and more
highly integrated, power-efficient, feature-rich and cost-effective
than those produced using standard process technologies. Jazz
customers target the wireless and high-speed wireline
communications, consumer electronics, automotive and industrial end
markets. Jazz�s executive offices and its U.S. wafer fabrication
facilities are located in Newport Beach, CA. Jazz Semiconductor
also has engineering and manufacturing support in Shanghai, China.
For more information, please visit http://www.jazztechnologies.com
and http://www.jazzsemi.com. Forward-Looking Statements This press
release contains forward-looking statements within the meaning of
the �safe harbor� provisions of the Private Securities Litigation
Reform Act of 1995, including statements concerning Tower�s
proposed merger with Jazz and the future growth prospects of the
combined company and statements regarding Jazz�s product offerings.
These statements are based on management�s current expectations and
beliefs and are subject to a number of risks, uncertainties and
assumptions that could cause actual results to differ materially
from those described in the forward-looking statements. All
statements other than statements of historical fact are statements
that could be deemed forward-looking statements. For example,
statements of expected synergies, customer benefits, costs savings,
financial guidance, the timing of closing, industry ranking,
execution of integration plans and management and organizational
structure are all forward-looking statements. The potential risks
and uncertainties include, among others, the possibility that the
merger does not close or that the closing may be delayed, that
expected customer benefits, synergies and costs savings will not be
achieved or that the companies are unable to successfully execute
their integration strategies, that the companies may be required to
modify the terms of the transaction to achieve regulatory approval
or for other reasons, that prior to or after the closing of the
merger, the businesses of the companies may suffer due to
uncertainty, as well as other risks applicable to both Tower�s and
Jazz�s business described in the reports filed by Tower and Jazz
with the Securities and Exchange Commission (the �SEC�) and, in the
case of Tower, the Israel Securities Authority. These filings
identify and address other important factors that could cause
Tower�s and Jazz�s respective financial and operational results to
differ materially from those contained in the forward-looking
statements set forth in this document. Accordingly, no assurances
can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what impact they will have on the results of operations
or financial condition of Tower or Jazz. Tower and Jazz are
providing this information as of the date of this press release and
neither Tower nor Jazz undertakes any obligation to update any
forward-looking statements contained in this press release as a
result of new information, future events or otherwise. Additional
Information about the Proposed Merger and Where to Find It In
connection with the proposed merger, Tower filed with the SEC a
Registration Statement on Form F-4 that contains a Proxy
Statement/Prospectus and related materials, and, once declared
effective by the SEC, Jazz expects to mail to its stockholders the
final Proxy Statement/Prospectus containing information about
Tower, Jazz and the proposed merger. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE FINAL PROXY STATEMENT/PROSPECTUS AND THE
OTHER RELEVANT MATERIALS, CAREFULLY AND IN THEIR ENTIRETY, WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT TOWER, JAZZ AND THE PROPOSED MERGER. Investors
and security holders are able to obtain free copies of the
Registration Statement on Form F-4, the Proxy Statement/Prospectus
and other relevant materials and documents filed by Tower or Jazz
with the SEC through the web site maintained by the SEC at
www.sec.gov. In addition, investors and security holders may obtain
free copies of the documents relating to the proposed merger filed
with the SEC by Tower by directing a request by mail to Tower
Semiconductor Ltd, P.O. BOX 619, Migdal Haemek, Israel 23105, Attn:
Investor Relations or by telephone at +972-4-650-6936. Investors
and security holders may obtain free copies of the documents
relating to the proposed merger filed with the SEC by Jazz by
directing a request by mail to Jazz Technologies, Inc., 4321
Jamboree Road, Newport Beach, California 92660, Attn: Investor
Relations or by telephone at 949-435-8181. Tower, Jazz and their
respective executive officers and directors, under SEC rules, may
be deemed to be participants in the solicitation of proxies from
the stockholders of Jazz in connection with the proposed merger.
Investors and security holders may obtain information regarding the
special interests of these executive officers and directors in the
proposed merger by reading the final Proxy Statement/Prospectus
filed with the SEC when it becomes available. Additional
information regarding Tower's executive officers and directors is
included in Tower's Form 20-F for the year ended December 31, 2007,
which was filed with the SEC on June 18, 2008. Additional
information regarding the executive officers and directors of Jazz
is included in Jazz's Proxy Statement for its 2008 Annual Meeting
of Stockholders, which was filed with the SEC on April 7, 2008.
These documents are available free of charge at the SEC's web site
at www.sec.gov and are also available free of charge from Investor
Relations at Tower and Jazz by contacting Tower and Jazz as
described above.
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