Rubicon Technology, Inc. Reports Third Quarter 2009 Results and Outlines Two Year Expansion Plan

November 3, 2009 6:30 AM EST

FRANKLIN PARK, Ill.--(BUSINESS WIRE)-- 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 third quarter ended September 30, 2009.

The Company's revenue increased $2.5 million sequentially to $5.7 million in the third quarter driven by increased sales into the LED market. Diluted loss per share for the third quarter was $0.10 compared to $0.15 per share in the previous quarter. The Company cited the continued adoption of LED backlighting for LCD televisions and notebook and netbook computers as drivers for growth in the LED market.

Raja Parvez, President and CEO, noted, "The LED market continued to strengthen in the third quarter and pricing of sapphire substrates stabilized in the quarter as global capacity for sapphire production began to tighten."

The Company also provided commentary on their expansion plans, which includes adding an additional crystal growth facility in the U.S. and building a low cost post crystal growth processing facility in Asia. The Company is currently working to finalize its plans, but it would be expected that both new facilities would be open within twelve months and be fully operational, meaning all equipment installed and operational, within 24 months.

Mr. Parvez continued, "We believe we are at the beginning of a long term growth cycle in the LED industry. These expansion initiatives would be designed to ensure Rubicon maintains its global leadership in high quality, large diameter sapphire substrates and ensure our pricing remains competitive while maximizing our revenue and margins generated from our existing and new manufacturing facilities."

Fourth Quarter 2009 Guidance

Commenting on the outlook for the fourth quarter, William Weissman, Rubicon's Chief Financial Officer said "We estimate revenue for the fourth quarter will further improve to approximately $7.0 million. We expect pricing to begin to increase in the fourth quarter and also expect to see an increase in the percentage of revenue from large diameter substrates. Based on the expected pricing and mix, gross margin should turn positive with a reduction in diluted loss per share to approximately $0.05."

Conference Call Details

Rubicon will host a conference call at 8:30 a.m. Eastern time on November 3, 2009 to review the highlights of the third quarter 2009 results and the fourth quarter 2009 outlook. The conference call will be available to the public through a live audio webcast via the Internet. Log on to 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. November 10, 2009, and can be accessed by dialing (888)-286-8010 or (617) 801-6888 (international). Callers should reference conference ID 98862346. 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 actively developing larger diameter 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 third quarter of 2009, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, 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 managing the expansion of our manufacturing capacity, market acceptance of LED lighting, our ability to adapt to future changes in the LED industry, our successful development and market acceptance of RFIC and other 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)

                                            September 30,  December 31,

                                            2009           2008

Assets                                      (unaudited)    (audited)

Cash and cash equivalents                   $ 3,816        $ 7,629

Restricted cash                               10             5

Short-term investments                        41,594         37,328

Accounts receivable, net                      3,395          2,542

Inventories, net                              7,247          7,882

Other current assets                          2,794          4,926

Total current assets                          58,856         60,312

Property and equipment, net                   38,585         39,337

Investments                                   2,000          12,696

Total assets                                $ 99,441       $ 112,345

Liabilities and Stockholders' Equity

Accounts payable                            $ 868          $ 2,440

Accrued and other current liabilities         998            1,512

Total liabilities                             1,866          3,952

Stockholders' equity                          97,575         108,393

Total liabilities and stockholders' equity  $ 99,441       $ 112,345

Rubicon Technology, Inc.

Condensed Consolidated Statements of Operations (unaudited)

(in thousands except share and per share amounts)

                Three months ended September  Nine months ended September 30,
                30,

                2009            2008          2009            2008

Revenue         $ 5,737         $ 11,758      $ 11,280        $ 33,796

Cost of goods     6,143           7,514         15,956          21,351
sold

Gross profit      (406       )    4,244         (4,676     )    12,445
(loss)

General and
administrative    1,264           1,356         3,424           5,301
expenses

Sales and
marketing         310             218           799             699
expenses

Research and
development       216             179           566             679
expenses

Loss on
disposal of       -               1,215         -               1,215
assets

Total
operating         1,790           2,968         4,789           7,894
expenses

Income (loss)
from              (2,196     )    1,276         (9,465     )    4,551
operations

Other income
(expense):

Interest
income            134             392           590             1,691
(expense) and
other, net

Income (loss)
before income     (2,062     )    1,668         (8,875     )    6,242
taxes

Income tax        -               49            -               173
expense

Net income      $ (2,062     )  $ 1,619       $ (8,875     )  $ 6,069
(loss)

Net income
(loss) per
common share:

Basic           $ (0.10      )  $ 0.08        $ (0.44      )  $ 0.29

Diluted         $ (0.10      )  $ 0.07        $ (0.44      )  $ 0.27

Weighted
average common
shares
outstanding
used in
computing net
income (loss)
per common
share:

Basic             20,032,470      21,222,321    20,112,967      20,891,128

Diluted           20,032,470      22,084,570    20,112,967      22,262,889

Rubicon Technology, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

               Three months ended September 30,  Nine months ended September 30,

               2009         2008                 2009         2008

Cash flows
from
operating
activities

Net income       ($2,062 )  $ 1,619                ($8,875 )  $ 6,069
(loss)

Adjustments
to reconcile
net income
(loss) to net
cash (used
in) provided
by operating
activities

Depreciation
and              1,362        1,187                3,976        3,236
amortization

Net loss on
disposal of      -            1,215                -            1,215
equipment

Other            242          195                  646          571

Changes in
operating
assets and
liabilities

Accounts
receivable,      (1,121  )    (626   )             (853    )    (3,364  )
net

Inventories      723          (2,195 )             635          (3,080  )

Other current    596          (293   )             2,132        (1,509  )
assets

Accounts         (448    )    (1,683 )             (1,572  )    1,341
payable

Accrued
expenses and     207          175                  (514    )    (1,245  )
other current
liabilities

Net cash
(used in)
provided by      (501    )    (406   )             (4,425  )    3,234
operating
activities

Cash flows
from
investing
activities

Purchases of
property and     (1,610  )    (4,935 )             (3,224  )    (15,807 )
equipment

Proceeds from
sale of          2,904        5,985                6,382        12,716
investments

Net cash
provided by
(used in)        1,294        1,050                3,158        (3,091  )
investing
activities

Cash flows
from
financing
activities

Purchase of
treasury         -            -                    (2,577  )    -
stock

Other
financing        30           18                   31           538
activities

Net cash
provided by
(used in)        30           18                   (2,546  )    538
financing
activities

Net increase
(decrease) in    823          662                  (3,813  )    681
cash and cash
equivalents

Cash and cash
equivalents,     2,993        4,399                7,629        4,380
beginning of
period

Cash and cash
equivalents,   $ 3,816      $ 5,061              $ 3,816      $ 5,061
end of period

    Source: Rubicon Technology, Inc.

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