10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
Or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-32832

Jazz Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-3320580
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4321 Jamboree Road Newport Beach, California	92660
(Address of principal executive offices)	(Zip Code)

(949) 435-8000

Registrant’s telephone number, including area code

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

Yes x No o

(Note:  As a voluntary filer not subject to the filing requirements, the Registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months).

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer a non-accelerated filer or a “smaller reporting company”. See definitions of “large accelerated filer” and “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting companyo

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format permitted by General Instruction H(2).

Explanatory Note

This Amendment No. 1 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 originally filed with the Securities and Exchange Commission on August 8, 2011 (“June 2011 form 10-Q”), is being filed solely for the purposes of furnishing Interactive Data File disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T. This Exhibit was not previously filed.

Other than as expressly set forth above, this Form 10-Q/A does not, and does not purport to, amend, update or restate the information in any other item of such Quarterly Report on Form 10-Q, or reflect any events that have occurred after such Report was originally filed.

PART II

Item 6. Exhibits.

In addition to the exhibits originally filed with the Registrant’s Quarterly Report on Form 10-Q, the following exhibit is hereby filed herewith in response to this Item.

Exhibit

101 Financial information from the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, formatted in XBRL

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: September 7, 2011	JAZZ TECHNOLOGIES, INC.
	By:	/s/ Rafi Mor
		_____ (Principal Executive Officer)
	By:	/s/ SUSANNA H. BENNETT
		Chief Financial Officer (Principal Financial and Accounting Officer)

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Consolidated Balance Sheets
Trade receivables, allowance for doubtful accounts	$ 26	$ 326

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Condensed Consolidated Statements Of Operations (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Condensed Consolidated Statements Of Operations
Net revenues	$ 45,829	$ 60,150	$ 96,626	$ 114,056
Cost of revenues	31,231	35,808	66,016	69,780
Gross profit	14,598	24,342	30,610	44,276
Operating expenses:
Research and development	2,801	3,315	5,958	6,596
Selling, general and administrative	3,653	5,868	7,472	10,202
Amortization of intangible assets	197	197	394	394
Total operating expenses	6,651	9,380	13,824	17,192
Operating income	7,947	14,962	16,786	27,084
Financing expense and other expense, net	(4,493)	(3,984)	(8,786)	(7,976)
Net income before income taxes	3,454	10,978	8,000	19,108
Income tax expense	(1,249)	(3,534)	(2,713)	(6,193)
Net income	$ 2,205	$ 7,444	$ 5,287	$ 12,915

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Document And Entity Information	6 Months Ended
	Jun. 30, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Entity Registrant Name	Jazz Technologies, Inc.
Entity Central Index Key	0001337675
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Voluntary Filers	Yes
Entity Common Stock, Shares Outstanding	0

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Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

Note 7:   Income Taxes

The Company's effective tax rate for the six months ended June 30, 2011 of 34% differs from the statutory rate primarily due to the Domestic Production Activities Deduction ("DPAD"). The DPAD reduces the effective tax rate for the six months ended June 30, 2011 by approximately one percent.

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Other Balance Sheet Details

6 Months Ended

Jun. 30, 2011

Other Balance Sheet Details

Other Balance Sheet Details

Note 3:   Other Balance Sheet Details

Inventories

Inventories, net of reserves, consist of the following at June 30, 2011 and December 31, 2010 (in thousands):

	June 30, 2011		December 31, 2010
Raw material	$	4,902	$	4,684
Work in process		12,195		11,821
Finished goods		9,864		2,591
	$	26,961	$	19,096

Property, Plant and Equipment

Property, plant and equipment consist of the following at June 30, 2011 and December 31, 2010 (in thousands):

	Useful life (In years)	June 30, 2011			December 31, 2010
Building improvements	10-12	$	24,305		$	24,230
Machinery and equipment	7		135,907			115,790
Furniture and equipment	5-7		2,308			2,308
Computer software	3		1,280			850
			163,800			143,178
Accumulated depreciation			(61,149	)		(46,270	)
		$	102,651		$	96,908

Intangible Assets

Intangible assets consist of the following at June 30, 2011 (in thousands):

	Weighted Average Life  (years)	Cost		Accumulated Amortization		Net
Technology	4;9	$	2,300	$	809	$	1,491
Patents and other core technology rights	9		15,100		4,675		10,425
In-process research and development	--		1,800		1,800		--
Customer relationships	15		2,600		483		2,117
Trade name	9		5,200		1,610		3,590
Facilities lease	19		33,500		5,046		28,454
Total identifiable intangible assets	14	$	60,500	$	14,423	$	46,077

Intangible assets consist of the following at December 31, 2010 (in thousands):

	Weighted Average Life  (years)	Cost		Accumulated Amortization		Net
Technology	4;9	$	2,300	$	612	$	1,688
Patents and other core technology rights	9		15,100		3,836		11,264
In-process research and development	--		1,800		1,800		--
Customer relationships	15		2,600		396		2,204
Trade name	9		5,200		1,321		3,879
Facilities lease	19		33,500		4,141		29,359
Total identifiable intangible assets	14	$	60,500	$	12,106	$	48,394

The amortization related to technology, patents, other core technologies, and the facilities' lease is charged to cost of revenues. The amortization related to customer relationships and trade name is charged to operating expenses.

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Employee Stock Option Expense

6 Months Ended

Jun. 30, 2011

Employee Stock Option Expense

Employee Stock Option Expense

Note 9:   Employee Stock Option Expense

During the six months ended June 30, 2011, Tower awarded 1.1 million non-qualified stock options exercisable to Tower ordinary shares to the Company employees that vest over a three year period from the date of grant. The weighted average exercise price was $1.42.  The Company recorded $209 thousand and $346 thousand of compensation expenses relating to options granted to employees, for the three months and six months ended June 30, 2011, respectively. The Company recorded $142 thousand and $305 thousand of compensation expenses relating to employees options, during the corresponding periods in 2010.

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Related Party Transactions

6 Months Ended

Jun. 30, 2011

Related Party Transactions

Related Party Transactions

Note 10: Related Party Transactions

	As of June 30, 2011		As of December 31, 2010
Due from related party (included in the accompanying balance sheets)	$	21,974	$	25,768
Due to related party (included in the accompanying balance sheets)	$	2,858	$	3,389

Related party balances are with Tower and TowerJazz Japan Ltd. and are mainly for purchases and payments on behalf of the other party, tools sale, tools lease and service charges.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2011

Employee Benefit Plans

Employee Benefit Plans

Note 8:   Employee Benefit Plans

The pension and other post retirement benefit plans expenses for the three and six months ended June 30, 2011 were $0.3 million and $0.5 million, respectively. The amounts for the pension and other post retirement benefit plans expenses for the three and six months ended June 30, 2010 were $0.2 million and $0.5 million, respectively.

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Organization

6 Months Ended

Jun. 30, 2011

Organization

Organization

Note 1:   Organization

Unless specifically noted otherwise, as used throughout these notes to the unaudited condensed consolidated financial statements, "Jazz" and "Company" refers to the business of Jazz Technologies, Inc., and "Jazz Semiconductor" refers only to the business of Jazz Semiconductor, Inc. References to the "Company" for dates prior to September 19, 2008 mean the predecessor which on September 19, 2008 was merged with a subsidiary of Tower Semiconductor Ltd., an Israeli company ("Tower"), and references to the "Company" for periods on or after September 19, 2008 are references to the successor Tower subsidiary.

The Company

Jazz, formerly known as Acquicor Technology Inc., was incorporated in Delaware on August 12, 2005. The Company was formed to serve as a vehicle for the acquisition of one or more domestic and/or foreign operating businesses through a merger, capital stock exchange, stock purchase, asset acquisition or other similar business combination.

The Company is based in Newport Beach, California and following the acquisition of Jazz Semiconductor, became an independent semiconductor foundry focused on specialty process technologies for the manufacture of analog intensive mixed-signal semiconductor devices. The Company's specialty process technologies include advanced analog, radio frequency, high voltage, bipolar and silicon germanium bipolar complementary metal oxide ("SiGe") semiconductor processes. The Company's semiconductor devices are used in cellular phones, wireless local area networking devices, digital TVs, set-top boxes, gaming devices, switches, routers and broadband modems.

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Credit Facility

6 Months Ended

Jun. 30, 2011

Credit Facility

Credit Facility

Note 4:   Credit Facility

Borrowing availability under the facility as of June 30, 2011, was $27 million. Outstanding borrowings were $22 million and $1.3 million of the facility supporting outstanding letters of credits on that date. The Company considers borrowings of $10 million to be long-term debt as of June 30, 2011. As of June 30, 2011, the Company was in compliance with all the covenants under this facility.

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Notes

6 Months Ended

Jun. 30, 2011

Notes

Notes

Note 5:   Notes

In 2006, The Company completed private placements of convertible notes. The convertible notes bear interest at a rate of 8% per annum payable semi-annually and mature in December, 2011 ("Old Notes"). In the exchange agreement described below, approximately $79.6 million principal amount of the Old Notes were converted to New Notes. As of June 30, 2011, approximately $35.1 million in principal amount of Old Notes remains outstanding as compared to $43.7million as of December 31, 2010.

On July 2010, the Company, together with its domestic subsidiaries and its parent, Tower, entered into an exchange agreement (the "Exchange Agreement") with certain note holders (the "Participating Holders") holding approximately $79.6 million principal amount of the Old Notes. Under the Exchange Agreement, the Participating Holders exchanged their Old Notes for newly-issued 8% non-convertible notes of the Company due June 2015 (the "New Notes") with an exchange ratio of 1.175 New Notes for each 1.000 Old Notes. In addition, the Participating Holders received warrants to purchase approximately 25.3 million ordinary shares of Tower for a consideration of $1.70 per share ("Warrants J"). The Company's obligations under the Old Notes and New Notes are not guaranteed by Tower. Interest on the New Notes at a rate of 8% per annum is payable semiannually. As of June 30, 2011, approximately $93.6 million in principal amount of New Notes remains outstanding.

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Holdings In Hua Hong Semiconductor Ltd.

6 Months Ended

Jun. 30, 2011

Holdings In Hua Hong Semiconductor Ltd.

Holdings In Hua Hong Semiconductor Ltd.

Note 6:   Holdings in Hua Hong Semiconductor Ltd.

In connection with the acquisition of Jazz Semiconductor in February 2007, the Company acquired an investment in Hua Hong Semiconductor Ltd ("HHSL"), which owns 100% of Shanghai Hua Hong NEC Electronics Company Ltd (also known as "HHNEC"). As of June 30, 2011, the investment represented a minority interest of approximately 10% in HHSL.

In July 2011, the Company signed a definitive agreement to sell its 10% holdings in "HHSL", in an HHSL buyback transaction, for approximately $32 million in cash gross, before tax and other payments. The holding in HHSL is presented in the balance sheet as of June 30, 2011 at an amount of $17.1 million under "short term investments".

The transaction is subject to customary closing conditions and is expected to close during the third quarter of 2011.

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Operating activities:
Net income	$ 5,287	$ 12,915
Adjustments to reconcile net income for the period to net cash provided by operating activities:
Depreciation and amortization of intangible assets	17,196	15,484
Notes accretion and amortization of deferred financing costs	3,409	2,810
Stock based compensation expense	346	305
Other loss, net	320
Changes in operating assets and liabilities:
Receivables	4,057	(7,311)
Inventories	(7,865)	(1,434)
Prepaid expenses and other current assets	115	902
Deferred tax assets		1,958
Accounts payable	(449)	(240)
Due to related party, net	(1,705)	(3,795)
Accrued compensation and benefits	(337)	1,808
Deferred Revenue	425	665
Accrued interest	(239)	4,362
Other current liabilities	(1,763)	3,067
Deferred tax liability
Accrued pension, retirement medical plan obligations and long-term liabilities	299	257
Net cash provided by operating activities	19,096	31,753
Investing activities:
Purchases of property and equipment	(16,991)	(15,560)
Proceeds related to property and equipment	4,820	600
Purchases of intangible assets		(400)
Net cash used in investing activities	(12,171)	(15,360)
Financing activities:
Debt repayment	(8,644)	(5,000)
Net cash used in financing activities	(8,644)	(5,000)
Effect of foreign currency on cash	(42)	46
Net increase in cash and cash equivalents	(1,761)	11,439
Cash and cash equivalents at beginning of period	29,031	28,622
Cash and cash equivalents at end of period	27,270	40,061
Supplemental disclosure of interest and taxes paid and non-cash investing and financing activities:
Investments in property, plant and equipment	4,803	2,381
Interest paid	5,938	878
Tax paid	$ 3,403	$ 2,913

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Summary Of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Summary Of Significant Accounting Policies

Summary Of Significant Accounting Policies

Note 2:   Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

We prepare our consolidated financial statements in accordance with SEC and U.S. generally accepted accounting principles ("US GAAP") requirements and include all adjustments of a normal recurring nature that are necessary to fairly present our condensed consolidated results of operations, financial position, and cash flows for all periods presented. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Interim period results are not necessarily indicative of full year results. This quarterly report should be read in conjunction with our most recent Annual Report on Form 10-K.

The condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring adjustments that, in the opinion of management, are necessary to present fairly the Company's consolidated financial position at June 30, 2011 and December 31, 2010, and the consolidated results of its operations and cash flows for the three months and six months ended June 30, 2011 and 2010. All intercompany accounts and transactions have been eliminated. Certain amounts have been reclassified in order to conform to 2011 presentation.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, approximate fair value due to their short maturities.

Comprehensive Income

	Six months ended June 30, 2011			Six months ended June 30, 2010
	(In thousands)
Net income	$	5,287		$	12,915
Foreign currency translation adjustment		(42	)		46
Comprehensive income	$	5,245		$	12,961

Concentrations

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history, age of the balance and the customer's current creditworthiness, as determined by a review of the customer's current credit information. The Company monitors collections and payments from its customers and maintains an allowance for doubtful accounts based upon historical experience and any specific customer collection issues that have been identified. A considerable amount of judgment is required in assessing the ultimate realization of these receivables. Customer receivables are generally unsecured.

Accounts receivable from significant customers representing 10% or more of the net accounts receivable balance as of June 30, 2011 and December 31, 2010 consists of the following customers:

	June 30, 2011			December 31, 2010
Customer 1		21	%		20	%
Customer 2		8			15
Customer 3		--			16

Net revenues from significant customers representing 10% or more of net revenues consist of the following:

	Three months ended						Six months ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Customer A		16	%		14	%		18	%		14	%
Customer B		7	%		28			10			31

As a result of the Company's concentration of its customer base, loss or cancellation of business from, or significant changes in scheduled deliveries of products sold to these customers or a change in their financial position could materially and adversely affect the Company's consolidated financial position, results of operations and cash flows.

The Company operates a single manufacturing facility located in Newport Beach, California. A major interruption in the manufacturing operations at this facility would have a material adverse affect on the consolidated financial position and results of operations of the Company.

Initial Adoption of New Standards

ASU 2010-28, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (Topic 350) - Intangibles - Goodwill and Other.

In December 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2010-28, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (Topic 350) - Intangibles - Goodwill and Other. ASU 2010-28 which amends the criteria for performing Step 2 of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires performing Step 2 if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The amendments to this update are effective in the first quarter of 2011. Any impairment to be recorded upon adoption will be recognized as an adjustment to the beginning retained earnings. The adoption of this update did not impact the Company's consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Standards

ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations (Topic 805) - Business Combinations

In December 2010, the FASB issued ASU 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations (Topic 805) - Business Combinations (ASU 2010-29), to improve consistency in how the pro forma disclosures are calculated. Additionally, ASU 2010-29 enhances the disclosure requirements and requires description of the nature and amount of any material, nonrecurring pro forma adjustments directly attributable to a business combination. ASU 2010-29 is effective in fiscal year 2011 and should be applied prospectively to business combinations for which the acquisition date is after the effective date. Early adoption is permitted. The adoption of this update is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

ASU 2011-1, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20

In January 2011, the FASB issued ASU 2011-1, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20 (ASU 2011-1). The FASB determined that certain provisions relating to troubled debt restructurings (TDRs) should be deferred until additional guidance and clarification on the definition of TDRs is issued.  In April 2011, the FASB issued ASU No. 2011-2, A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring (ASU 2011-2). ASU 2011-2 amends ASC Topic 310 - Receivables, by clarifying guidance for creditors in determining whether a concession has been granted and whether a debtor is experiencing financial difficulties.  The amendments are effective for the first interim or annual period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption.  ASU 2011-2 also makes disclosure requirements deferred under ASU 2011-1 effective for interim and annual periods beginning on or after June 15, 2011. The adoption of this update is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

ASU 2011-04, Fair Value Measurement (Accounting Standards Codification ("ASC") Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Accounting Standards Codification ("ASC") Topic 820) - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this ASU result in common fair value measurement and disclosure requirements in U.S. GAAP and international financial reporting standards ("IFRS"). Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. To improve consistency in application across jurisdictions some changes in wording are necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. The ASU also provides for certain changes in current GAAP disclosure requirements, for example with respect to the measurement of level 3 assets and for measuring the fair value of an instrument classified in a reporting entity's shareholders' equity. The amendments in this ASU are to be applied prospectively, and are effective during interim and annual periods beginning after December 15, 2011. The adoption of this guidance is not anticipated to have an impact on our consolidated financial position, results of operations or cash flows.

ASU No. 2011-05, Comprehensive Income (ASC Topic 220) - Presentation of Comprehensive Income.

In May 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (ASC Topic 220) - Presentation of Comprehensive Income. The amendments from this update will result in more converged guidance on how comprehensive income is presented under both U.S. GAAP and IFRS. With this update to ASC 220, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income, nor does it affect how earnings per share is calculated or presented. Current U.S. GAAP allows reporting entities three alternatives for presenting other comprehensive income and its components in financial statements. One of those presentation options is to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. This update eliminates that option. The amendments in this ASU should be applied retrospectively, and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this guidance is not anticipated to have an impact on our consolidated financial position, results of operations or cash flows.

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Litigation

6 Months Ended

Jun. 30, 2011

Litigation

Litigation

Note 11: Litigation

During 2008, an International Trade Commission ("ITC") action was filed by Agere/LSI Corporation ("LSI"), alleging infringement of U.S. patent 5,227,335 (the '335 patent) under Section 337 of the Tariff Act of 1930 (Section 337) by seventeen corporations. Following that initial filing, in October 2008, LSI amended the ITC complaint requesting to add the Company, Tower and three other corporations as additional respondents to the investigation. In September 2009, the ITC administrative law judge ("ALJ") ruled against LSI and in favor of the respondents, determining that the '335 patent claims asserted by LSI are invalid. In November 2009, in response to a Petition for Review filed by LSI, the ITC determined that it would review the ALJ's determination on patent invalidity. In March 2010, the ITC issued a notice of final determination that there was no violation of Section 337, ruling that the LSI '335 patent claims were invalid, and terminated the ITC investigation.

LSI appealed the final determination to the U.S. Court of Appeals for the Federal Circuit ("Federal Circuit").  While that appeal was pending, the '335 patent expired.  The ITC moved to dismiss LSI's appeal as moot, which LSI conceded.  In November, 2010, the Federal Circuit issued an order vacating the ITC's final determination and remanded the investigation to the ITC with instructions to dismiss the investigation as moot.  

LSI also previously filed an action for patent infringement of the '335 patent against the Company and other corporations in the United States District Court for the Eastern District of Texas, which action was stayed pending the conclusion of  the ITC investigation. On June 16, 2011, the District Court granted a motion by LSI to dismiss the Texas action without prejudice.  As a result of that dismissal, there is no longer any legal proceeding currently pending by LSI against the Company or Tower.

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Consolidated Balance Sheets (USD $) In Thousands	Jun. 30, 2011		Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 27,270		$ 29,031
Receivables:
Trade receivables, net of allowance for doubtful accounts of $26 and $326 at June 30, 2011 and December 31, 2010, respectively	26,938		29,687
Other receivables	2,922		3,376
Short-term investment	17,100
Inventories	26,961		19,096
Deferred tax asset	4,728		4,728
Prepaid expenses and other current assets	3,653		3,768
Total current assets	109,572		89,686
Property, plant and equipment, net	102,651		96,908
Investments			17,100
Intangible assets, net	46,077		48,394
Goodwill	7,000		7,000
Other assets - related parties	17,744		22,392
Other assets - others	1,903		1,895
Total assets	284,947		283,375
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term bank debt and current maturities of notes	46,106		53,338
Accounts payable	16,206		13,023
Due to related party	2,858		3,389
Accrued compensation and benefits	5,340		5,677
Deferred revenues	2,259		1,834
Accrued interest	5,154		5,393
Other current liabilities	5,655		7,418
Total current liabilities	83,578		90,072
Long term liabilities:
Long-term debt from banks	10,000		10,000
Notes	66,639		64,463
Deferred tax liability	9,876		9,876
Accrued pension, retirement medical plan obligations	12,724		12,522
Other long-term liabilities	5,630		5,533
Total liabilities	188,447		192,466
Stockholder's equity:
Additional paid-in capital	63,531		63,531
Cumulative stock based compensation	1,233		887
Accumulated other comprehensive loss (*)	(1,945)	[1]	(1,903)	[1]
Retained earnings	33,681		28,394
Total stockholders' equity	96,500		90,909
Total liabilities and stockholders' equity	$ 284,947		$ 283,375

[1] Accumulated other comprehensive loss includes mainly plan assets and benefit obligation, net of taxes.