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Rubicon Technology, Inc. Reports Fourth Quarter 2012 Results of Operations



  Rubicon Technology, Inc. Reports Fourth Quarter 2012 Results of Operations

Business Wire

BENSENVILLE, Ill. -- February 20, 2013

Rubicon Technology, Inc. (NASDAQ:RBCN), a leading provider of sapphire
substrates and products to the LED, RFIC, semiconductor, and optical
industries, today reported financial results for its fourth quarter ended
December 31, 2012.

The Company reported fourth quarter revenue of $20.0 million as compared with
$19.9 million in the prior quarter. Revenue from six-inch wafer sales showed
another sequential increase to $17.5 million from $16.4 million in the prior
quarter, a 7 percent increase. Due to low industry pricing for two through
four inch core products, the Company decided to sell a limited quantity of
those products in the quarter. Raja Parvez, President and CEO of Rubicon
Technology, commented, “We saw strong demand for our six-inch polished wafers
in the quarter, particularly from the LED market. We continue to be the
largest provider of six-inch polished wafers in the market due to our strength
in both large diameter crystal growth and large diameter polishing, evidenced
by the fact that we have now shipped over 400,000 polished six-inch wafers to
date into the LED and SoS markets.”

While the pricing environment has not improved for two through four inch core
products, the Company has started taking orders for those products for
delivery in the first and second quarters in order to begin reducing inventory
levels and maintain customer relationships. With Rubicon’s resumption of sales
into this market, pricing has decreased further. William Weissman, CFO of
Rubicon Technology, said, “Current pricing of two through four inch core
products is now below our carrying cost in finished goods and WIP inventory
for those products. As a result, we recorded a $1.6 million adjustment in the
period to reflect the value of those products in inventory at the current
market price. We believe that our competitors are now selling smaller diameter
cores at cash cost in order to reduce inventory or to keep utilization rates
high. However, excess capacity in the market is gradually being absorbed and
we believe the pricing environment should eventually improve. Exactly when and
how quickly pricing will improve is difficult to predict.”

The Company reported a sequential reduction in margins due primarily to the
lower smaller diameter product pricing and resulting inventory adjustment. The
loss per share in the fourth quarter was $(0.05) as compared with a diluted
EPS in the third quarter of a positive $0.01 per share.

First Quarter 2013 Guidance

Commenting on the outlook for the first quarter of 2013, Mr. Parvez said,
“With the accelerating growth of the general lighting sector of the LED market
and with the increasing complexity of mobile devices creating greater
opportunity for SoS technology, I am very excited by the longer term growth
potential of the markets we serve. However, they are evolving markets and we
will likely continue to see shorter term volatility. In the first quarter, our
six-inch wafer orders will be lower. Similar to what we experienced last year,
our largest LED customer for six-inch wafers has excess inventory and will not
likely need additional material until the second quarter. Also, our SoS
customer recently announced that their orders are down based on weaker than
expected sales by a key end customer. However, they also expressed confidence
in a strong second half of the year based on the expected introduction of new
smartphone models by their end customers later in the year. As a result,
six-inch revenue will be lower in the first quarter. But, we believe we will
see strong orders for six-inch wafers in the second half from both the SoS and
LED markets.”

The Company expects first quarter revenue to be approximately $8 million, down
sequentially due to lower six-inch wafer sales. With the reduced sales
volumes, utilization rates will be low in both crystal growth and polishing,
putting pressure on the Company’s margins in the quarter. Consequently, the
Company expects a loss per share between $(0.10) and $(0.14) in the first
quarter based on 22.5 million shares outstanding and a 50 percent tax benefit.

Conference Call Details

Rubicon will host a conference call at 5:00 p.m. Eastern time on February 20,
2013 to review the fourth quarter 2012 results and the first quarter 2013
outlook. The conference call will be available to the public through a live
audio web broadcast via the Internet. Log on through the Investor Relations
section of Rubicon's website at http://www.rubicon-es2.com/index.html. An
audio replay of the call will be available approximately two hours after the
conclusion of the call. The audio replay will remain available until 11:59
p.m. Eastern time on February 27, 2013, and can be accessed by dialing (888)
286-8010 or (617) 801-6888 (international). Callers should reference
conference ID 55557446. The webcast will be archived on the Company's website.

About Rubicon Technology, Inc.

Rubicon Technology, Inc. is an advanced electronic materials provider that is
engaged in developing, manufacturing and selling monocrystalline sapphire and
other crystalline products for light-emitting diodes (LEDs), radio frequency
integrated circuits (RFICs), blue laser diodes, optoelectronics and other
optical applications. The Company applies its proprietary crystal growth
technology to produce very high-quality sapphire in a form that allows for
volume production of various sizes and orientations of substrates and windows.
Rubicon is a vertically-integrated manufacturer with capabilities in crystal
growth, high precision core drilling, wafer slicing, surface lapping,
large-diameter polishing and wafer cleaning processes, which the Company
employs to convert the bulk crystal into products with the quality and
precision specified by its customers. The Company is the world leader in
larger diameter sapphire products to support next-generation LED, RFIC and
optical window applications.

Further information is available at http://www.rubicon-es2.com.

Forward-Looking Statements

Certain of the statements in this release, particularly those preceded by,
followed by or including the words “believes,” “expects,” “anticipates,”
“intends,” “should,” “estimates,” or similar expressions, or those relating to
or anticipating financial results for periods beyond the end of the fourth
quarter of 2012, constitute “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. For those statements, the company
claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on our current expectations, estimates
and projections about our industry, management's beliefs and certain
assumptions made by us. These statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in, or implied by, the statements. These risks and uncertainties
include market acceptance of LED lighting, our ability to adapt to future
changes in the LED industry, our successful development and market acceptance
of new products, changes in the average selling prices of sapphire products,
dependence on key customers, potential disruptions in our supply of
electricity, changes in our product mix, our ability to protect our
intellectual property rights, the competitive environment, the availability
and cost of raw materials, the cost of compliance with environmental
standards, the ability to make effective acquisitions and successfully
integrate newly acquired businesses into existing operations and other risks
and uncertainties described in the company's most recent Form 10-K and other
filings with the Securities and Exchange Commission. For these reasons,
readers are cautioned not to place undue reliance on the company's
forward-looking statements. Any forward-looking statement that the company
makes speaks only as of the date of such statement, and the company undertakes
no obligation to update any forward-looking statements, whether as a result of
new information, future events or otherwise. Comparisons of results for
current and any prior periods are not intended to express any future trends or
indications of future performance, unless expressed as such, and should only
be viewed as historical data.

 
Rubicon Technology, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
                                                                     
                                               December 31,     December 31,
                                               2012             2011
Assets                                         (unaudited)      (audited)
Cash and cash equivalents                      $   19,573       $   4,290
Restricted cash                                    171              189
Short-term investments                             24,361           50,528
Accounts receivable, net                           12,669           32,644
Inventories                                        47,354           22,823
Other current assets                               18,166           22,104
Deferred tax assets                                4,427            3,078
Total current assets                               126,721          135,656
Property and equipment, net                        119,850          120,931
Investments                                        -                2,000
Other assets                                       1,525            1,365
Total assets                                   $   248,096      $   259,952
                                                                     
Liabilities and Stockholders' Equity
Accounts payable                               $   8,954        $   12,831
Accrued and other current liabilities              3,430            3,769
Total current liabilities                          12,384           16,600
                                                                     
Deferred tax liability                             10,326           15,121
Total liabilities                                  22,710           31,721
                                                                     
Stockholders' equity                               225,386          228,231
Total liabilities and stockholders’ equity     $   248,096      $   259,952
                                                                     

 
Rubicon Technology, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(in thousands except share and per share amounts)
 
                   Three months ended December 31,       Twelve months ended December 31,
                   2012               2011               2012               2011
                                                                                          
Revenue            $ 20,091           $ 19,365           $ 67,243           $ 134,000
Cost of goods        19,179             17,026             67,283             64,365      
sold
Gross profit         912                2,339              (40        )       69,635
(loss)
                                                                                          
General and
administrative       2,138              2,108              9,018              11,336
expenses
Sales and
marketing            339                374                1,685              1,658
expenses
Research and
development          562                503                2,274              1,806
expenses
Loss on
disposal of          24                 77                 19                 84          
assets
Total
operating            3,063              3,062              12,996             14,884      
expenses
Income (loss)
from                 (2,151     )       (723       )       (13,036    )       54,751
operations
                                                                                          
Other
(expense)
income:
Interest
income and
other                66                 (153       )       450                (118       )
(expense)
income, net
Income (loss)
before income        (2,085     )       (876       )       (12,586    )       54,633
taxes
Income tax
benefit              954                1,737              7,048              (16,574    )
(expense)
Net income         $ (1,131     )     $ 861              $ (5,538     )     $ 38,059      
(loss)
                                                                                          
Net income
(loss) per
common share:
Basic                ($0.05     )     $ 0.04               ($0.25     )     $ 1.67
Diluted              ($0.05     )     $ 0.04               ($0.25     )     $ 1.61
                                                                                          
Weighted
average common
shares
outstanding
used in
computing net
income (loss)
per common
share:
Basic                22,538,292         22,561,883         22,523,951         22,852,205
Diluted              22,538,292         23,102,072         22,523,951         23,596,162
                                                                                          

 
Rubicon Technology, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
 
                  Three months ended December      Twelve months ended
                  31,                              December 31,
                  2012             2011            2012            2011
Cash flows
from
operating
activities
Net income           ($1,131 )     $ 861             ($5,538 )     $ 38,059
(loss)
Adjustments
to reconcile
net income to
net cash
provided by
(used in)
operating
activities
Depreciation
and                  3,069           2,882           12,027          9,724
amortization
Other                496             (114    )       1,975           2,543
Deferred             (749    )       (1,129  )       (6,323  )       13,447
taxes
Excess tax
benefits from        (160    )       2,897           (160    )       (1,404  )
stock-based
compensation
Changes in
operating
assets and
liabilities
Accounts             (224    )       (3,359  )       19,975          (13,968 )
receivable
Inventories          (1,532  )       (6,122  )       (24,258 )       (11,948 )
Other assets         227             (5,931  )       3,927           (13,922 )
Accounts             1,146           6,069           (4,004  )       3,683
payable
Accrued
expenses and         277             (2,240  )       (359    )       (1,602  )
other current
liabilities
Net cash
provided by
(used in)            1,419           (6,186  )       (2,738  )       24,612   
operating
activities
                                                                              
Cash flows
from
investing
activities
Purchases of
property and
equipment,
net of               (1,585  )       (7,572  )       (10,965 )       (48,228 )
proceeds from
disposals of
assets
Purchases of
investments,
net of               11,921          3,224           29,019          15,561   
proceeds from
sales of
investments
Net cash
provided by
(used in)            10,336          (4,348  )       18,054          (32,667 )
investing
activities
                                                                              
Cash flows
from
financing
activities
Purchase of
treasury             -               (1,005  )       -               (6,487  )
stock
Excess tax
benefits from        160             (2,897  )       160             1,404
stock-based
compensation
Other
financing            60              326             90              1,086    
activities
Net cash
provided by
(used in)            220             (3,576  )       250             (3,997  )
financing
activities
                                                                              
Effect of
foreign
exchange rate        (3      )       43              (283    )       269
changes on
cash and cash
equivalents
                                                                              
Net increase
(decrease) in        11,972          (14,067 )       15,283          (11,783 )
cash and cash
equivalents
Cash and cash
equivalents,         7,601           18,357          4,290           16,073   
beginning of
period
Cash and cash
equivalents,      $  19,573        $ 4,290         $ 19,573        $ 4,290    
end of period
                                                                              

Contact:

Rubicon Technology, Inc.
Dee Johnson, 847-457-3426
Vice President, Investor Relations
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