LONDON — Foundry Tower Semiconductor Ltd. (Migdal Haemek, Israel) made a net loss of $31.3 million on revenue of $58.1 million in the second quarter of 2008, which ended June 30, 2008.

The net loss was reduced from $34.1 million in the same quarter a year before. The revenue of $58.1 million was slightly above the mid-point of previous guidance and compared to $57.6 million in the prior quarter and $57.1 million in the same period one year ago.

Along with its results Tower announced it had signed a memorandum of understanding to lower its debt by $250 million and increase shareholders equity by a similar amount. As previously disclosed, Tower announced a definitive agreement to acquire Jazz Technologies, which will create a leading specialty pure-play foundry with trailing twelve month revenues of approximately $440 million.

"We expect that these financial improvements combined with the expected closing of the Jazz merger will maintain our growth trajectory, while substantially improving EBITDA and cash generation in the course of transitioning into the worldwide leading specialty foundry," said Russell Ellwanger, Tower's chief executive officer, in a statement.

"The response from both the Jazz and Tower customers with regard to the combined product platform offerings and roadmaps has been overwhelmingly positive, and we have begun to leverage the cross-selling opportunities through joint meetings with customers of both companies. Integration efforts are well underway in anticipation of the completion of the transaction by the end of this quarter. We have established an inter-company cross-functional team tasked with ensuring a seamless transition, and we expect to realize approximately $40 million in annual cost savings from the Jazz merger."

The proposed transaction is subject to approval by Jazz's shareholders and other customary closing conditions. Jazz announced that August 8, 2008 will serve as the record date for a special meeting of shareholders, which will be convened on September 17, 2008 to vote on, adopt and approve the proposed transaction, with the closing of the transaction expected to occur prior to the end of the third quarter of 2008.

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