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Operator
Good morning around welcome ladies and gentlemen to the Tower Semiconductor first quarter earnings release.
At this time, I would like to inform you that this conference is being recorded, and that all participants are in a listen-only mode.
At the request of the company, we will open the conference up for questions and answers after the presentation.
I will now turn the conference over to Yoav Nissan-Cohen.
Please go ahead, sir.
Yoav Nissan-Cohen - co-CEO and Director
Thank you.
Good morning, everyone, and thank you for participating in Tower Semiconductor first quarter conference call.
I'm Yoav Nissan-Cohen, I'm here in our California office with me on the line are Amir Harel, our CFO, and Harold Blomquist, our senior VP for business operations.
Both of them are on the line on the other side of the ocean in Israel.
They will also participate in the opening statements and then of course we will be available to answer your questions as well.
This is a very special conference call for me.
It is the last conference call that I do as a CEO.
As you know, by the end of the month, Rafael and I end our term as co-CEO of the company.
We feel very fortunate that we can pass on the leadership when the company is enjoying a positive momentum.
Let's start by discussing Fab 1.
We can see that the recovery of Fab 1 continues.
We had almost 10% quarterly growth in revenues in Fab 1.
We are also expecting further growth in the second quarter.
We generated positive cash flow, almost $4 million, of positive cash flow from operations in Fab 1.
And in fact we are very close to growth possibility in the fab.
Looking in Fab 2, we met our goals and commenced commercial production.
Two of our partners,, Alliance and SanDisk are now in production.
I’d like to note that one cannot stress enough the significance of this milestone.
It is an indication that we meet all the required performance and quality criteria in Fab 2 which can now can continue with our plans to ramp the facility to a high volume.
So now with Fab 2 in production, clearly now is a different company with much greater potential for future growth.
Tower has three great assets, which I would like to note now.
First, looking at the physical assets, we have two operating fabs, with one of them, Fab 2, being a state of the art facility, and now, both fabs are in production.
Second, we really believe that we have the best people in our industry.
As a good indication for that, we were honored again by Motorola with the goal, the Excellence Award.
This is the fourth year in a row that we received this award.
And in fact, we are the only foundry that achieved that.
And third point, as you know, fabs and excellent people are not sufficient.
And in our industry today, you cannot develop alone all the capabilities that you need.
And you need to develop great partnerships with leading companies.
And we did just that.
We started from Toshiba who is our partner on the .8 micron technology.
And now with Motorola we have a great partner for the .13 micron in particular because of their experience in corporal technology, and then we have Matsushita with whom we developed the embedded flash for the .18 micron.
We have plenty of other partners when it comes to the IP area that we have developed, starting with Synopsis, Cadence, QuickLogic [ph], Artisan, [inaudible] many great leading companies in their area to help us to develop the IP which is required.
And last, I have to remind, to mention here, the Wafer Partners.
These are great partners which are supporting the company, both financially from the investment point of view, and as customers of the company, and we depend to a great extent, extent, our success depends on their continued support.
Before I conclude, let me say that we are very proud that we took part in building these assets for Tower, and bringing Tower to where it is today.
We feel that we pass on to the new management an excellent company with all elements which are required for future success.
As this stage, I would like now to introduce Harold Blomquist.
Harold joined us at the beginning of the year.
He is our senior VP for business operations for Tower Semiconductor.
He is the CEO of Tower U.S.A., and he is definitely a part of the plan.
He will now cover our current activities, and the plans in the business area.
Harold, please.
Harold Blomquist - Senior VP for Business Operations
Thank you, Yoav.
As a member of the new management team, I'm pleased to step in and to participate in leading Tower into the future.
Thank you, Yoav, and Rafael, for establishing a sound foundation on which to build for the future.
There is a solid foundation of tier 1 customers.
You mentioned Motorola, National Semiconductor, and that is a foundation on which we can build.
There is an excellent platform to start production in the fab with the Wafer Partners.
We do have devices from all of the Wafer Partners that are in early stages of preproduction development and in the case of both SanDisk and Alliance are already in production ordering and looking forward to ramping that into production in the middle of the year.
Also the sound technology partners that have been established for the company give Tower and Tower's customers access to world class technologies. .18 micron world class technology, .13 micron world class technology, and microflash or embedded Flash technologies are available to our customers as a result of the strong partnerships that have been established.
There's also an organization comprised of dedicated and loyal employees which is a really good sound foundation on which to build, and as we build access to customers on a global basis, through extending our sales and marketing efforts, establishing a presence for the company in the European market, establishing a presence for the company in a Japanese market and increasing our presence in both the U.S. markets and the Asian markets to increase sales, marketing and business development through increase technical services and support, we are looking forward to a growth period in the company that is built on a very sound and solid foundation in markets that are also expected to achieve modest to sustainable growth over the next several years.
Thank you, and with that I will turn the table back to you, Yoav.
Yoav Nissan-Cohen - co-CEO and Director
Okay, thank you, Harold.
At this stage, for the description of the financial results, I'd like to turn the call over to our CFO, Amir Harel in Israel.
Amir.
Amir Harel - CFP
Hi, everyone.
I would like to share with you the financial highlights of the first quarter.
Fab 1 sales were $12.6 million, versus $11.6 in Q4 '02 and $8.4 in Q1 '02.
Tower sales were $12.6 in Q1 all from Fab 1 versus $15.6, including $4 million from a technology deal in Fab 2 in Q4 '02, and $8.4 in Q1 '02.
Reviewing that net loss of Fab 1 shows that most of the improvement in sales went all the way down to the bottom line.
Net loss decreased by $3.9 million from $5.6 in Q1 '02, to $1.7 this quarter as a result of increased sales, cost reduction and better manufacturing efficiencies.
The consolidated net loss was $14.4 million this quarter, versus $10.6 in Q4, and $12 million in Q1, ‘02.
Cash from operations in Fab 1, significantly improved, and was positive 3.9 in Q1 '03, versus 1.9 in Q4, and versus .5 negative in Q1 '02.
The consolidated cash closing balance as of '03 was $55 million.
The total consolidated balance sheet as of March was $738 million.
The total cash out in Fab 2 was $66 million this quarter, including $44 million equipment, and approximately $670 million including over $300 in equipment and over $200 in building and facilities, project to date as of March '03.
As to total shareholders equity, it was $284 million as of March, at which point we had 43.4 outstanding shares and $5.2 million options including options to employees, directors, banks and a construction company.
No shares were issued in Q1 '03, and 400,000 warrants were issued in that quarter to the construction company.
I would like to remind you that some statements made during this call may be forward-looking, and that actual results may be different from what is currently expected.
The risk factors which may influence our results are listed in form 20F filed in April '03 with the S.E.C. Yoav.
Yoav Nissan-Cohen - co-CEO and Director
Okay, thank you Amir.
I think that with that, we concluded our opening statements, and we are ready to address your questions.
Please.
Operator
Thank you, sir.
The question-and-answer session will begin at this time.
If you are using a speaker phone, please pick up the handset before pressing any numbers.
Should you have a question, in Israel or the United States, you may ask your question by pressing star 1 on your push button telephone.
If you wish to withdraw your question, please press star 2.
Your question will be taken in the order it is received.
Please stand by for your first question.
The first question comes from Ali Irani [ph] with CIBC World Markets.
Please state your question.
Ali Irani - Analyst
Good morning or I should good afternoon, gentlemen.
It looks like you're making progress moving your Wafer Partners to production in Fab 2.
Could you give us an idea how you see the progress in moving the other Wafer Partners into the fab production and perhaps a question for Harold, how you see the ability to bring in new customers other than the Wafer Partners into the fab through year?
Yoav Nissan-Cohen - co-CEO and Director
Okay, Harold, I think I'm going to let you answer that question.
Harold Blomquist - Senior VP for Business Operations
Okay, thank you for that.
The other Wafer Partners, the remaining two Wafer Partners,, QuickLogics and Micronics, [ph] both have devices that are in various stages of development.
QuickLogic has multiple devices that are very close to getting to the point of complete implementation and preproduction.
And we would expect in the middle of this year to be prepared to bring those products up into the status of the SanDisk and Alliance orders, meaning volume early production orders.
And with Micronics, we have logic devices that have been originating from their design teams both in the U.S. and in Taiwan.
Those devices are not as far along in the development phase but are expected to be moving through the development preproduction phases toward the end of the year and are likely to represent 2004 production programs.
To comment on the ability to bring in customers that are not Wafer Partners, we also have a number of early adopters of our Fab 2 technologies who have products that are near the same stage of completion as the Wafer Partners.
We expect some of those customer programs to transition into the production phase by about the middle of this year, and as we complete and solidify the process qualification data and the collateral material that is coming out of the early production products from Fab 2, we would expect to have a tool kit which, when combined with our intellectual property and libraries and design tool kits, will make it possible for us to show a high degree of confidence to customers that are not as early adopters as some of those that I have referred to earlier, but which are quite open to and we expect will be engaging with Tower in the development of new products starting later this year.
Ali Irani - Analyst
Great.
Thank you, Harold.
And perhaps you could shed some light on the progress of volume build on the I CMOS technology.
Obviously that [application] is in the forefront of digital media technology.
Are you seeing that as a potential volume builder for Fab 2, and I was hoping if you could give us an idea of the wafer starts at this point if you had visibility to the exit rate wafer start year end 2002?
Thank you.
Yoav Nissan-Cohen - co-CEO and Director
Harold, go ahead.
Harold Blomquist - Senior VP for Business Operations
In terms of the potential for the image sensor applications, in Fab 1 we have a very well established position in the marketplace, considered to be one of the leaders in image sensor technology.
And we do have customer programs that are in early stages of development to move those image sensor applications into reduced feature sizes in Fab 2 technologies.
They are key differentiator for the company and with a number of different potential applications at different image sensor companies, we see that being a very, very important part of our strategy going forward.
I wouldn't be able to comment at this point on the wafer loading going out at the end of the year.
Yoav, would you prefer to take that comment?
Yoav Nissan-Cohen - co-CEO and Director
Let me just adhere, there are major activities in both Fab 1 and Fab 2.
In Fab 1, no question that image sensor became a very significant part of the business, and about a quarter of our business in Fab 1 is already in the image sensor area.
And these are leading devices which are leading in terms of quality and positioning like the 14 million pixel devices that we make for Kodak for their professional camera.
So this is definitely already a major business in Fab 1.
And we expect Fab 1 to continue to have different product and ramp other type of -- other type of products in this technology.
With respect to Fab 2, that's in the .18, the market is only now starting to move to the .18 micron when it comes to image sensor.
And volumes or high volumes are still not there.
But we are working very aggressively to verify that our Fab 2 offering will, indeed, require all that's required in terms of additional capabilities, like adding color filters and all these features which are required for a high performance or high quality image sensor.
And we expect to see this business coming not before at some point at the end of the year.
Ali Irani - Analyst
Thank you.
Operator
Once again ladies and gentlemen, if you do have a question, please press star 1 on your push button telephone at this time.
The next question comes again from Ali Irani, please state your question.
Ali Irani - Analyst
Couple of follow-ups for you.
I was hoping that you could give the depreciation amortization expense or Fab 1 and Fab 2 and perhaps, Yoav, comments on the mix of revenues by product and end markets in the first quarter.
And the utilization of Fab 1?
Yoav Nissan-Cohen - co-CEO and Director
Okay.
I'll start, thank you Ali.
I will start with utilization.
We definitely see improvement in the utilization, which is pretty much in line with what other foundries are seeing today.
I will go to be as bullish as to speak about an extremely strong signs of recovery, but definitely, it is a gradual recovery that we continue to see and utilization levels are between -- at about 65% level, between 60% and 70%, or where it can grow to 75%.
So definitely Fab 1 improved utilization.
When we talk about the Fab 1 sales, which is what we have now, then 70% of the fab is already not standard, standard [inaudible], about quarter is in mixed signal, about quarter or little bit more than a quarter, is CMOS image sensor.
And about 15% to 20% are in the embedded flash or nonvolatile memory technology.
So this is the segment, how we are by segment.
If you look at geographical distribution, then the U.S. continues to go down when we go to more specialized product.
And only about 60% of the business went to the U.S.
Europe became a relatively big one in image sensor, and the Far East is stronger on embedded nonvolatile memory.
Now when you look at Fab 2, I have to tell you that the majority of the customers that we are, either have started, or plan to start manufacturing are from the U.S.
The U.S. is typically showing more stronger requirement for their advanced technology.
So our initial business in Fab 2 will be more towards or heavily towards the U.S. sort of customers.
Ali Irani - Analyst
And the depreciation?
Yoav Nissan-Cohen - co-CEO and Director
Okay, oh, sorry about that.
The depreciation, Amir, why don't you answer the part related to the depreciation.
Amir Harel - CFP
It was 4.2 million in Fab 1 and practically zero in Fab 2.
And Fab 2 will probably start depreciating probably in the third quarter.
After, from an accounting perspective, Fab 2 would be considered fully qualified at the same time when sales will start.
Zero in Fab 2, 4.2 in Fab 1.
Ali Irani - Analyst
Does that mean you'll give guidance for revenues for Fab 2 in the third quarter?
Amir Harel - CFP
Yoav.
Yoav Nissan-Cohen - co-CEO and Director
Yes, I would say that again, it's too early for us to give the guidance right now for -- for Fab 2.
We'll be in possession of a few thousand wafers, okay, according to our plan, and we'll be on our way to -- and it is very much dependent on exact timing of wafer shipments and so on.
It is very sensitive but when you ramp fast, but let me tell you as sort of a guidelines, we started as we said our capacity at the beginning of the year, or more or less now is between 2,000 to 3,000 wafers per month.
And we are on our execution of our end plan with the plan to get through anywhere between 8,000 or so or -- to 10,000 by the end of the year, and be at 10,000 wafer capacity at some point at the beginning of 2004.
So this is more or less the plan that we are executing right now.
Ali Irani - Analyst
terrific.
Thank you very much.
Yoav Nissan-Cohen - co-CEO and Director
Thank you.
Operator
The next question comes from Jim Busson [ph] with Delphi management.
Please state jury question.
Jim Busson - Analyst
What is the time frame for the amendment to the credit facility with the banks?
Yoav Nissan-Cohen - co-CEO and Director
This is going to happen, we hope at some point in June.
But it's an ongoing process of continuing to discuss with them the different aspect of the plan, the different aspect of the adjustments which are required to the plan, based on the changing market conditions and situations.
As you know, we have been in these kinds of phases of discussions with the banks and the partners a few times in the past, there is nothing new there, and it's going to take its time.
It is also dependent to a degree on the shareholders meeting that we have on May 14th, in this meeting we are going to approve the required changes from the Wafer Partners point of view when it comes to changing the condition conditions for milestone 5 and actually starting giving us the funds which are related to milestone 5 in fact as quick, this part of them as quickly as a few days after this shareholders meeting.
So all of this is included, in one package, and we expect to be able to close it in late June, early July.
Jim Busson - Analyst
Okay, thank you.
Operator
The next question comes from Joseph Asia, private investor.
Please state your question.
Joseph Asia - private investor
Good morning, Yoav.
I haven't spoken to you in quite a while.
Yoav Nissan-Cohen - co-CEO and Director
Uh-huh.
Joseph Asia - private investor
And I hope you still going to be on the conference calls in the future.
Yoav Nissan-Cohen - co-CEO and Director
Well, I'll tell you that I can tell you for sure that at least as a participant, and as a listener, I'll be there.
I plan to continue to be involved to maybe even not too small degree in supporting the company and maybe doing something which I can do with the company in order to continue to help with what I can.
I have to tell that you I have the full confidence, one of the reasons that I can leave the company so content, is that I feel we have reached a very significant milestone, two operating fabs starting production, that say number one.
But number two is that I really feel that I pass on the responsibility of the leadership of the company to very competent hands.
There are great people in the management team of Tower, that really are among the best in the industry, when I comes to running the operation, developing the technology and so on.
We now added Harold, which really adds an international angle, and great level of experience in the business area, and marketing and sales, which is a crucial element for our future success.
And Carmel which provide very, very strong leadership to orchestrate all these efforts also.
I feel that the company is really moving into very good hands.
As I said, I will continue to do whatever I can to be a part of this success, which of course will continue to be very dear to my heart.
Joseph Asia - private investor
I have a couple of questions.
Yoav Nissan-Cohen - co-CEO and Director
Sure enough.
Joseph Asia - private investor
What percent would all the Wafer Partners approximately take up of Fab 2, the five Wafer Partners, what percent do you approximately take up?
Yoav Nissan-Cohen - co-CEO and Director
Okay, if we are talking about four Wafer Partners.
Joseph Asia - private investor
All right, the fifth is the Israeli Corp., I'm sorry.
Yoav Nissan-Cohen - co-CEO and Director
You're right.
So the four Wafer Partners, I would say, as follows.
At the beginning, it will be a larger -- a larger portion.
Of course, as we said, starting now, our only Wafer Partners, so right now it's going to be 100%.
But we hope that it will not stay 100% for a long time, maybe only for a couple of months or so, and then we'll start ramping other customers.
And if I say couple of months, it means that the products are already very, very deep into the process of a qualification, and so far the results look very good, and very promising.
So we'll be actually starting to ramp other customers when the initial Wafer Partners, very soon, very soon.
I would say before all of the Wafer Partners will be online.
So I think that by the end of this year, the numbers should be in the vicinity of 50%, maybe somewhat more on the Wafer Partners, and the long term goal is to be around a third of the facility, with the Wafer Partners.
Unless, and I have to continue to work on it unless we add more Wafer Partners, which is definitely continuing to be a part of the long term plan.
And then we may up it a little bit to, again, to the 50%, 50% level, depend on the size of a potential additional Wafer Partners.
But basically, this is the number.
Starting from 100 moving quite fast to a smaller range which will be no far from -- not too far from the 50% range and moving eventually to about a third.
Joseph Asia - private investor
Does Tower need a Fab 3 the way it needed a Fab 2?
Yoav Nissan-Cohen - co-CEO and Director
I would say -- look, the Tower -- this is a longer-term issue.
Let's start from this way, with Fab 3 will have to build on the success of Fab 2.
And if you ask me, the level of importance, it is important but definitely not the same critical importance as Fab 2 was for establishing Tower as a real leading company in the foundry area.
We need it, state of the art technology.
Now, the pace of moving into new technologies is slowing down, there is no question about it.
So from that point of view, the lead is a little bit less than what we had anticipated a couple of years ago.
At the same time, we don't believe that foundries can be small.
So you don't have to be huge if -- because our strategy is never -- is definitely not to become a [‘me too’] after TSMC but to be able to provide the base of similar technologies, but also to add unique technologies.
And for that, you don't need to be the same size as the leading.
But at the same time, the company definitely wants to continue to grow, feels that it is important for a foundry not to be small, and Fab 3 will be important at some point.
So definitely, it continues to be a part of the plan.
It's hard to discuss exact timing, because it is going to depend on how quickly the market recovers in '03-'04, and how quickly the results of Fab 2 will enable us to embark on a Fab 3 project.
Joseph Asia - private investor
Looking back to the slow down in the semiconductor industry help Tower in its -- in the building of Fab 2, or did it hurt it?
Yoav Nissan-Cohen - co-CEO and Director
It's mixed bag.
And I'll explain what I mean more clearly, okay?
On one hand, definitely, it helps us to purchase tools at substantially lower price than what it would have been without this downturn.
Let me tell you that today, we even take a part of that, and we have started to at some cases purchase used tools in the market, because there are some great opportunities of tools which are practically brand-new.
And not going to be used by the purchasers, because people have changed their plans.
So there are some very good opportunities out there in the market, and we are benefiting from this opportunity.
That's number one which is positive.
Number two that is positive is that I believe that after such a deep down -- deep and long--downturn, when we see is upturn start again, then it will be a stronger upturn.
Because the companies in particular IBM, did not invest.
If I don't really recall, but I believe that 2002 was maybe the first year in our industry that actual capacity in terms of square inches of silicon actually came down.
Okay?
And you -- while at the same year the unit demand grows or grew.
So when you have a combination of continuous growth at maybe not as quickly as we wanted, but really continuous growth quarter to quarter, in demand for semiconductor product and units, and at the same time, capacity really falls behind, at some point there will be shortage.
There is no question this is something that the future bears.
And the only question is, when exactly it will move from an oversupply to -- from an oversupply to over demand.
And at that stage, there will be a very, very strong upturn turn that Tower will be able to benefit.
So I think it positions the company, because we are -- continue to be bullish with our plans, and we will be there when the wind changes direction, and the upturn kicks in.
We will be there to enjoy and benefit from this.
On the negative side, I should mention that, hey, we became different towards more money.
None of us is happy with the dilution in the company.
And we hope that the market turns very quickly, and that raising the more funds will be less complicated.
I have to tell you that one thing that we did in order to help in the situation is that we adjusted our plans, and this year, we don't have to raise a substantial amount of money of external cash.
It's only on the range of about $20 million or somewhat more than $20 million of additional cash on top of the committed funds from the Wafer Partners and moneys from the banks and from the government.
So we really tried to control that as much as possible.
So back to the question.
It's a mixed bag.
I believe that in most cases, from most aspects, this is positive.
It enables us to position the company in a place that we can be very successful and benefit from the next upturn in the industry.
Joseph Asia - private investor
So you believe that I was going to ask a question if the semiconductor industry will never have another upturn and it will just stay flat.
You say that's basically impossible.
Yoav Nissan-Cohen - co-CEO and Director
At least in my mind, it is basically impossible.
And we had--any veterans in this industry, remembers, and probably have scars on his back, from previous down cycles.
But we all know that every -- we had seven times, seven cycles in the industry, and every downturn ended up with an upturn.
And every strong downturn ended with strong upturn.
And because of the dynamics which I described.
Unit growth, I think that except for 2001, units continue to grow in this industry, because of a huge number of new applications.
You have substantially more automotive, take substantially more, consumer is a strong growth segment.
You have DVD which are a growing part.
You have digital cameras which became a real effect.
I think '02 was the first year that you had more digital cameras sold in the market than traditional cameras.
This is phenomenal.
Cell phones continue to grow.
Now, what we are really waiting in order to see substantial growth is communication.
Because communications is pretty much still down there.
There are some segments of communications which are starting to show some recovery.
But generally speaking, people are still not investing, not heavily investing in additional infrastructure.
But also that will come at some point.
And there is no question in my mind that when you have continuous growth of unit demand, and the investment level is very low.
And we see the investment level if we watch, and we watch very carefully, the level of the revenues that you see in the semiconductor equipment companies.
So couple these two elements, it is clear to me that eventually that we'll move to a different balance, and that that will be the upside in the industry.
Of course I'll not be as bullish as to say to tell you the date of this.
But there are many people out there that give forecasts which are based on the assumption that this is going to happen in the second half of 2003.
Let me tell you that while we are seeing the increased demand for Fab 1, you know, 50% more than what it was a year ago, and continue to grow as maybe single digit level in Q1, and will continue to do so in Q2, but it is not only us.
Because you see if you watch other companies in our space, if you watch TSMC, UMC, Charter [ph], all of them, all of them reported moderate growth in the next--in the coming quarter as well.
But still, the general feeling, you know, after so many scars, is that you have to be, I would say, cautiously optimistic, understand that the upturn will come at some point, but be careful and not to commit when exactly that happens.
Joseph Asia - private investor
Right now Tower, is it better that Tower is -- Tower is not fully ramped in Fab 2, so is it better for Tower that the full recovery hasn't happened in the semiconductor industry yet?
Yoav Nissan-Cohen - co-CEO and Director
I would say now that we are ready for that.
Because when -- it takes time to bring the tools, it takes time to ramp the facility from the point of view of the capacity.
But we are really set to do it.
All systems ready to go.
We have the relations with the vendors which you should not take lightly, okay? this is -- the fact that we were among the only ones really purchasing tools in the downturn, and maybe that is to create, to form great partnerships and great relations with the equipment vendors.
And this is going to be very important when the market turns up again and delivery times are going to be extended.
And it's going to be difficult to get new tools in a timely manner.
But we have agreement with all of the -- or with most of our suppliers on short delivery times.
And this will continue, because these are not agreements that are supposed to take place or be -- or stay valid only in the downturn.
Supposed to still be valid in the coming year.
And this is a great asset.
These relations are great assets because it will enable us to ramp the facility fast.
We have the clean room which is ready, okay, so you have the space to put the tools in.
We have the teams that are able to do it and do a good job in ramping fast.
So that takes time admittedly.
But we are now with all system ready to go.
So -- and because it also takes, you know, roughly six months depending on how hot the market is, to bring a new customer and to bring the prototype, run the prototype, qualify it and start production.
So coupling this too, anyhow it takes two quarters or so, two, three quarters, to bring the customer, and also to bring the tools, I would say that right now we could definitely benefit from a strong change in the market, in the [wind] direction or at least speed, and because what it's going to do is, it's going to help us to get the customers that we want and need in a faster way.
Because right now, when people are still sitting on the fence, not exactly sure, some of them, whether the market is turning up fast or not, then they are moving slower their production to a place like Tower.
And they will have substantially more enthusiasm about doing a quick project, taking more risks and moving fast if the market turns on -- and becomes hot again.
Joseph Asia - private investor
I remember in 2001, the first quarter, you said you predicted that the shareholders would be rewarded.
Do you care to say the same thing in 2003?
Yoav Nissan-Cohen - co-CEO and Director
You know, many times during the last few years, I said that what I can see is how our stock will stay this kind of what I consider to be funny, funnily said, maybe, but values, there are always risks.
And that's why I always said ‘look, I don't know’.
There are always risks, and suppose the market does not turn on completely for a few years.
Then this is not -- this is going to be very tough to the company.
But suppose all these elements that I just discussed kick in.
Then I'm very optimistic about the reward of the shareholders, by the way I expect to personally, because I'm also still holding the shares in the company, and definitely believe that this is going to be not a small part of my future personal wealth.
I'm optimistic about the potential direction, but when you say something like that, you really have to remind everybody that it's a risky industry, it's not an easy industry, and there are also dependencies like dependency on the global market economy which nobody can be wise enough to predict exactly where it goes with all the matters you have in the world from different aspects.
But I'm optimistic.
Joseph Asia - private investor
I have just have two small comments.
So there is what a person asked Mr. Irani, traps Tower, I wanted to thank him for the down grade, because therefore Tower went up because of his down grade.
The person that asked that $20 million of bank credit, the scheme of things, a $1.5 million plant he is worried about $20 million, seems to me pretty ridiculous, the math doesn't add up.
To Harold, historically has never done updates through the quarters.
I mean they've always said we need better communications and they really haven't done that.
Do you think we can start having that maybe?
Everybody knows that semiconductor industry is ups and downs, ups and downs, nobody will be upset if Tower says it is going up, and two weeks later it went down, that's the semiconductor industry.
Do you think we can have a little better idea of what's going on with orders?
Harold Blomquist - Senior VP for Business Operations
I hope that in the future we can enhance and improve and solidify our relationships with our analysts our investors and our friends in the market.
The philosophy of that will very likely be developed by the gentleman who is to be confirmed as the new chairman, CEO, pending the May 14th shareholder resolution.
But I believe that he will likewise support that kind of a relationship building approach.
Joseph Asia - private investor
Okay.
And Yoav, and [inaudible] whatever you do.
Yoav Nissan-Cohen - co-CEO and Director
Okay, well, thank you very much.
Joseph Asia - private investor
Yeah, thank you.
Operator
Once again ladies and gentlemen if you do have a question, please press star 1 on your push button telephone at this time.
Gentlemen, at this time, I'm receiving no further questions.
Yoav Nissan-Cohen - co-CEO and Director
Okay.
Well, thank you everybody for participating in our conference call.
I would also like to thank you for the support over the years, supporting the company, supporting us.
We are very proud that we had the opportunity to lead Tower in this year.
And of course, we will continue to support in whatever we can.
Support the company.
And together with you, we'll watch the company's future success.
Thank you and good day everybody.
Operator
Thank Ladies and gentlemen if you wish to access the replay for this call you may do so by dialing 1-800-428-6051 or 973, 709-2089 with ID of 291722.
This concludes the conference.
Have a nice day.
All parties may now disconnect.