Rubicon Technology, Inc. (NASDAQ:RBCN), a provider of sapphire substrates and products to the LED, optical and semiconductor industries, today reported financial results for its second quarter ended June 30, 2016.

The Company reported second quarter revenue of $3.5 million, $0.8 million lower than the prior quarter revenue, primarily as a result of a temporary reduction of wafer orders. Revenue from wafer sales in the second quarter was $1.8 million as compared with $2.3 million in the prior quarter.

The Company continues to work on re-focusing its business on the optical sapphire market. Continued progress was reported on its two new technologies, LANCE large window growth and SapphirEX coating technologies (patents pending), which are expected to allow the Company to introduce new products into the optical sapphire market. The Company also continues to work with developers of other new applications for sapphire outside of the traditional LED and mobile device markets.

Bill Weissman, the Company's CEO, said, "Given the excess capacity of sapphire serving the LED substrate and mobile device markets, we are placing more emphasis on the optical and industrial sapphire markets where we feel we have a greater competitive advantage. In addition, the Company is reviewing a variety of alternatives with a goal of providing greater value to our stockholders. "

The Company's second quarter loss per share was $0.31 as compared with a loss per share of $0.28 in the prior quarter. The second quarter loss per share was impacted by increased proxy solicitation costs related to the contested director election, which added approximately $0.04 to the loss per share in the second quarter.

Cash used in the quarter was impacted by building a higher consignment inventory for a key wafer customer in response to higher volume orders for the third quarter. In addition timing of receivables collections and payment on the settlement of securities litigation affected cash flow. During the quarter the Company took additional actions to reduce operating costs which it anticipates will positively impact cash flow.

About Rubicon Technology, Inc.

Rubicon Technology, Inc. is a vertically integrated advanced materials provider specializing in monocrystalline sapphire for applications in light-emitting diodes (LEDs), optical systems and specialty electronic devices. The Company has a proprietary technology platform and expertise extending from the preparation of raw aluminum oxide through sapphire crystal growth and fabrication to large-diameter polished sapphire windows and wafers and patterned sapphire substrates (PSS), enabling the Company to supply custom sapphire products with superior quality and precision. The Company is ISO 9001 certified and ITAR registered.

Further information is available at http://www.rubicontechnology.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," "projects," "goal" or similar expressions, or those relating to or anticipating financial results for periods beyond the end of the second quarter of 2016, 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 management's current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by the Company and its management. 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 the outcome of alternatives pursued by the Company to provide greater value to our shareholders, changes in the demand or the average selling prices of sapphire products, the Company's successful development and market acceptance of new products, dependence on key customers, potential disruptions in the Company's supply of electricity, changes in the Company's product mix, the Company's ability to protect its intellectual property rights, the competitive environment, the availability and cost of raw materials, the cost of compliance with environmental standards and other risks and uncertainties described in the Company's Form 10-K as amended, for the year ended December 31, 2015, Form 10-Q for the quarter ended March 31, 2016, Form 10-Q for the quarter ended June 30, 2016 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)
         
  June 30,   June 30,
2016 2015
Assets (unaudited) (unaudited)
Cash and cash equivalents $ 17,067 $ 22,744
Restricted cash 182 196
Short-term investments 1,007 13,208
Accounts receivable, net 2,737 7,944
Inventories 21,210 22,116
Other current assets   7,481   8,044
Total current assets 49,684 74,252
 
Property and equipment, net 53,027 101,394
Other assets   868   1,696
Total assets $ 103,579 $ 177,342
 
Liabilities and Stockholders' Equity
Accounts payable $ 3,664 $ 2,495
Accrued and other current liabilities   2,515   1,889
Total current liabilities 6,179 4,384
 
Deferred tax liability   218   672
Total liabilities 6,397 5,056
 
Stockholders' equity   97,182   172,286
Total liabilities and stockholders' equity $ 103,579 $ 177,342
Rubicon Technology, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(in thousands except share and per share amounts)
 
  Three months ended June 30,   Six months ended June 30,
2016   2015 2016   2015
 
Revenue $ 3,535 $ 7,106 $ 7,822 $ 16,016
Cost of goods sold   7,586     12,261     17,292     26,280  
Gross loss (4,051 ) (5,155 ) (9,470 ) (10,264 )
 
General and administrative expenses 2,695 2,188 4,462 4,256
Sales and marketing expenses 361 354 752 692
Research and development expenses 652 603 1,231 1,036
Loss on disposal of assets 126 22 126 22

Asset impairment charge
  265     -     265     -  
Total operating expenses   4,099     3,167     6,836     6,006  
Loss from operations (8,150 ) (8,322 ) (16,306 ) (16,270 )
 
Other (expense) income:
Interest income, expense and other, net   (233 )   (207 )   439     (571 )
Loss before income taxes (8,383 ) (8,529 ) (15,867 ) (16,841 )
Income tax benefit (expense)   174     (51 )   325     (87 )
Net loss $ (8,209 ) $ (8,580 ) $ (15,542 ) $ (16,928 )
 
Net loss per common share:
Basic $ (0.31 ) $ (0.33 ) $ (0.59 ) $ (0.65 )
Diluted $ (0.31 ) $ (0.33 ) $ (0.59 ) $ (0.65 )
 
Weighted average common shares outstanding used in computing net loss per common share:
Basic 26,296,398 26,142,261 26,261,506 26,135,768
Diluted 26,296,398 26,142,261 26,261,506 26,135,768
Rubicon Technology, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
 
  Three months ended June 30,     Six months ended June 30,
2016   2015 2016   2015
Cash flows from operating activities    
Net loss $ (8,209 ) $ (8,580 ) $ (15,542 ) $ (16,928 )
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 1,649 3,285 3,291 6,602
Other 752 335 1,122 669
Deferred taxes (178 ) 50 (337 ) 79
Changes in operating assets and liabilities
Accounts receivable (800 ) (391 ) (999 ) 379
Inventories (526 ) (523 ) 693 124
Other assets 421 812 1,396 1,244
Accounts payable 207 (119 ) 330 (1,169 )
Accrued expenses and other current liabilities   78     50     (947 )   (88 )
Net cash used in operating activities   (6,606 )   (5,081 )   (10,993 )   (9,088 )
 
Cash flows from investing activities
Purchases of property and equipment, net of disposal of assets 79 (108 ) (470 ) (342 )
Purchases of investments (18 ) (829 ) (18 ) (1,136 )
Proceeds from sale of investments   2,127     3,500     7,912     8,500  
Net cash provided by investing activities   2,188     2,563     7,424     7,022  
 
Cash flows from financing activities
Other financing activities   4     (12 )   (13 )   (16 )
Net cash (used in) provided by financing activities   4     (12 )   (13 )   (16 )
 
Net effect of currency translation 191 147 (567 ) 473
 
Net decrease in cash and cash equivalents (4,223 ) (2,383 ) (4,149 ) (1,609 )
Cash and cash equivalents, beginning of period   21,290     25,127     21,216     24,353  
Cash and cash equivalents, end of period $ 17,067   $ 22,744   $ 17,067   $ 22,744  
Rubicon Technology, Inc.
Revenue by Product Group
(in thousands)
           

Three months ended

June 30,
 

Three months ended

March 31,
 

Three months ended

June 30,
2016 2016 2015
Core
2 Inch $ - $ 2 $ 2,615
4 Inch 689 439 1,243
6 Inch   -   -   171
Total Core   689   441   4,029
Wafers
Polished 488 825 840
PSS   1,342   1,520   902
Total Wafers   1,830   2,345   1,742
R&D 112 97 144
Optical and other   904   1,404   1,191
$ 3,535 $ 4,287 $ 7,106

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