x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2015
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Or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-3320580
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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4321 Jamboree Road
Newport Beach, California
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92660
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer x
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Smaller reporting companyo
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1
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1
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1
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2
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3
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4
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5
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9
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12
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12
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12
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12
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12
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13
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13
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June 30, 2015
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December 31, 2014
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|||||||
(unaudited)
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||||||||
ASSETS
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
|
$ | 21,003 | $ | 73,387 | ||||
Receivables:
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||||||||
Trade receivables, net of allowance for doubtful accounts of $0 at June 30, 2015 and December 31, 2014
|
31,406 | 30,351 | ||||||
Other receivables
|
2,645 | 3,301 | ||||||
Inventories
|
31,499 | 30,794 | ||||||
Deferred tax asset
|
4,951 | 4,951 | ||||||
Other current assets
|
1,463 | 1,245 | ||||||
Total current assets
|
92,967 | 144,029 | ||||||
Property, plant and equipment, net
|
75,700 | 71,527 | ||||||
Intangible assets, net
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22,072 | 24,097 | ||||||
Goodwill
|
7,000 | 7,000 | ||||||
Other assets
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23,480 | 3,945 | ||||||
Total assets
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$ | 221,219 | $ | 250,598 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
Current liabilities:
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||||||||
Current maturities of notes
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$ | -- | $ | 45,577 | ||||
Accounts payable
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26,460 | 25,485 | ||||||
Accrued compensation and benefits
|
5,473 | 6,350 | ||||||
Deferred revenue
|
4,052 | 2,220 | ||||||
Other current liabilities
|
15,572 | 9,031 | ||||||
Total current liabilities
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51,557 | 88,663 | ||||||
Long term liabilities:
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||||||||
Long-term bank debt
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19,100 | 19,100 | ||||||
Notes
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44,295 | 42,889 | ||||||
Employee related liabilities
|
4,071 | 4,387 | ||||||
Other long-term liabilities
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1,807 | 14,842 | ||||||
Total liabilities
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120,830 | 169,881 | ||||||
Stockholders' equity:
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||||||||
Ordinary shares of $1 par value;
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||||||||
Authorized: 200 shares;
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||||||||
Issued: 100 shares;
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||||||||
Outstanding: 100 shares;
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||||||||
Additional paid-in capital
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74,986 | 74,986 | ||||||
Cumulative stock based compensation
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3,398 | 2,802 | ||||||
Accumulated other comprehensive loss
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(1,103 | ) | (503 | ) | ||||
Retained earnings
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23,108 | 3,432 | ||||||
Total stockholders' equity
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100,389 | 80,717 | ||||||
Total liabilities and stockholders' equity
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$ | 221,219 | $ | 250,598 |
Three months ended
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Six months ended
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|||||||||||||||
June 30, 2015
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June 30, 2014
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June 30, 2015
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June 30, 2014
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Revenue
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$ | 65,850 | $ | 47,458 | $ | 131,856 | $ | 94,377 | ||||||||
Cost of revenue
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48,652 | 38,636 | 97,153 | 78,555 | ||||||||||||
Gross profit
|
17,198 | 8,822 | 34,703 | 15,822 | ||||||||||||
Operating expenses:
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||||||||||||||||
Research and development
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4,592 | 2,845 | 8,716 | 5,560 | ||||||||||||
Selling, general and administrative
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4,581 | 3,494 | 9,246 | 6,749 | ||||||||||||
Total operating expenses
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9,173 | 6,339 | 17,962 | 12,309 | ||||||||||||
Operating profit
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8,025 | 2,483 | 16,741 | 3,513 | ||||||||||||
Interest expenses, net
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(1,295 | ) | (2,179 | ) | (2,631 | ) | (4,103 | ) | ||||||||
Other financing expense, net
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(702 | ) | (2,343 | ) | (1,426 | ) | (14,219 | ) | ||||||||
Profit (loss) before income tax
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6,028 | (2,039 | ) | 12,684 | (14,809 | ) | ||||||||||
Income tax benefit (expense)
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(2,202 | ) | 710 | 6,992 | 4,350 | |||||||||||
Net income (loss)
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$ | 3,826 | $ | (1,329 | ) | $ | 19,676 | $ | (10,459 | ) |
Three months ended
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Six months ended
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|||||||||||||||
June 30, 2015
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June 30, 2014
|
June 30, 2015
|
June 30, 2014
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|||||||||||||
Net income (loss)
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$ | 3,826 | $ | (1,329 | ) | $ | 19,676 | $ | (10,459 | ) | ||||||
Change in employees plan assets and benefit obligations
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(300 | ) | (565 | ) | (600 | ) | (1,130 | ) | ||||||||
Comprehensive income (loss)
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$ | 3,526 | $ | (1,894 | ) | $ | 19,076 | $ | (11,589 | ) |
Six months ended
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||||||||
June 30, 2015
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June 30, 2014
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|||||||
Operating activities:
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Net income (loss)
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$ | 19,676 | $ | (10,459 | ) | |||
Adjustments to reconcile net profit (loss) for the period to net cash provided by operating activities:
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||||||||
Financing cost relating to the 2014 Exchange Agreement
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-- | 9,817 | ||||||
Depreciation and amortization of intangible assets
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20,254 | 21,591 | ||||||
Notes accretion and amortization of deferred financing costs
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1,479 | 3,907 | ||||||
Stock based compensation expense
|
596 | 308 | ||||||
Changes in operating assets and liabilities:
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||||||||
Trade receivables
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(1,537 | ) | (941 | ) | ||||
Inventories
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(705 | ) | (3,655 | ) | ||||
Other receivables and other assets
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47 | 1,942 | ||||||
Accounts payable
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(5,791 | ) | 2,813 | |||||
Due to related parties, net
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5,756 | 1,591 | ||||||
Accrued compensation and benefits
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(877 | ) | (250 | ) | ||||
Deferred Revenue
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2,086 | (440 | ) | |||||
Other current liabilities
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3,682 | (1,027 | ) | |||||
Deferred tax asset, net
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961 | (4,162 | ) | |||||
Employee related liabilities and other long-term liabilities
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(13,351 | ) | 519 | |||||
Net cash provided by operating activities
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32,276 | 21,554 | ||||||
Investing activities:
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||||||||
Purchases of property and equipment
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(19,371 | ) | (11,135 | ) | ||||
Proceeds related to property and equipment
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394 | 1,224 | ||||||
Advance payment to related party
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(21,000 | ) | -- | |||||
Net cash used in investing activities
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(39,977 | ) | (9,911 | ) | ||||
Financing activities:
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||||||||
Debt repayment
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(44,683 | ) | (4,250 | ) | ||||
Proceeds from issuance of notes, net
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-- | 9,214 | ||||||
Net cash provided by (used in) financing activities
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(44,683 | ) | 4,964 | |||||
Net increase (decrease) in cash and cash equivalents
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(52,384 | ) | 16,607 | |||||
Cash and cash equivalents at beginning of period
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73,387 | 51,351 | ||||||
Cash and cash equivalents at end of period
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$ | 21,003 | $ | 67,958 | ||||
Non cash activities:
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Investments in property, plant and equipment
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$ | 5,580 | $ | 5,498 | ||||
Equity increase arising from exchange of straight to convertible debt
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$ | -- | $ | 9,609 | ||||
Supplemental disclosure of cash flow information:
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||||||||
Cash paid during the period for interest
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$ | 2,713 | $ | 4,835 | ||||
Cash paid during the period for income taxes
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$ | 1,134 | $ | -- |
June 30, 2015
|
December 31, 2014
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|||||||
Customer 1
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41 | % | 44 | % | ||||
Customer 2
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14 | * |
Three months ended
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Six months ended
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|||||||||||||||
June 30, 2015
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June 30, 2014
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June 30, 2015
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June 30, 2014
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Customer A
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39 | % | 32 | % | 39 | % | 31 | % | ||||||||
Customer B
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10 | * | * | * |
June 30, 2015
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December 31, 2014
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Raw material
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$ | 4,575 | $ | 5,493 | ||||
Work in process
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25,774 | 24,299 | ||||||
Finished goods
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1,150 | 1,002 | ||||||
$ | 31,499 | $ | 30,794 |
Useful life (in years)
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June 30, 2015
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December 31, 2014
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|||||||||
Building (including facility infrastructure)
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10-14 | $ | 31,501 | $ | 27,496 | ||||||
Machinery and equipment
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3-15 | 247,664 | 229,409 | ||||||||
279,165 | 256,905 | ||||||||||
Accumulated depreciation
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(203,465 | ) | (185,378 | ) | |||||||
$ | 75,700 | $ | 71,527 |
Useful life (in years)
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Cost
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Accumulated Amortization
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Net
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||||||||||||
Technology
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4;9 | $ | 3,300 | $ | 2,699 | $ | 601 | ||||||||
Patents and other core technology rights
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9 | 15,100 | 11,386 | 3,714 | |||||||||||
In-process research and development
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-- | 1,800 | 1,800 | -- | |||||||||||
Customer relationships
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15 | 2,600 | 1,177 | 1,423 | |||||||||||
Trade name
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9 | 5,200 | 3,921 | 1,279 | |||||||||||
Facilities lease
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19 | 33,500 | 18,445 | 15,055 | |||||||||||
Total identifiable intangible assets
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$ | 61,500 | $ | 39,428 | $ | 22,072 |
Useful life (in years)
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Cost
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Accumulated Amortization
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Net
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||||||||||||
Technology
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4;9 | $ | 3,300 | $ | 2,533 | $ | 767 | ||||||||
Patents and other core technology rights
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9 | 15,100 | 10,547 | 4,553 | |||||||||||
In-process research and development
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-- | 1,800 | 1,800 | -- | |||||||||||
Customer relationships
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15 | 2,600 | 1,090 | 1,510 | |||||||||||
Trade name
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9 | 5,200 | 3,632 | 1,568 | |||||||||||
Facilities lease
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19 | 33,500 | 17,801 | 15,699 | |||||||||||
Total identifiable intangible assets
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$ | 61,500 | $ | 37,403 | $ | 24,097 |
As of June 30, 2015
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As of December 31, 2014
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|||||||
Due from related parties (included in the accompanying balance sheets)
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$ | 23,436 | $ | 3,828 | ||||
Due to related parties (included in the accompanying balance sheets)
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$ | 8,193 | $ | 4,842 |
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·
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anticipated trends in revenues;
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·
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growth opportunities in domestic and international markets;
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·
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new and enhanced channels of distribution;
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·
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customer acceptance and satisfaction with our products;
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·
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expected trends in operating and other expenses;
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·
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purchase of raw materials at levels to meet forecasted demand;
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·
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anticipated cash and intentions regarding usage of cash;
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·
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changes in effective tax rates; and
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·
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anticipated product enhancements or releases.
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Six Months Ended
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||||||||
June 30, 2015
|
June 30, 2014
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|||||||
Revenue
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100 | % | 100 | % | ||||
Cost of revenue
|
73.7 | 83.2 | ||||||
Gross profit
|
26.3 | 16.8 | ||||||
Operating expenses:
|
||||||||
Research and development
|
6.6 | 5.9 | ||||||
Selling, general and administrative
|
7.0 | 7.2 | ||||||
Total operating expenses
|
13.6 | 13.1 | ||||||
Operating profit
|
12.7 | 3.7 | ||||||
Interest expenses, net
|
(2.0 | ) | (4.3 | ) | ||||
Other financing expense, net
|
(1.1 | ) | (15.1 | ) | ||||
Income tax benefit
|
5.3 | 4.6 | ||||||
Net income (loss)
|
14.9 | % | (11.1 | )% |
Number
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Description
|
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31.1
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Principal Executive Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a).
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31.2
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Principal Financial Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a).
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32.1
|
Principal Executive Officer Certification required by Section 1350.
|
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32.2
|
Principal Financial Officer Certification required by Section 1350.
|
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101
|
Financial information from the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL
|
Date: August 28, 2015
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JAZZ TECHNOLOGIES, INC.
|
||
By:
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/s/ MARCO RACANELLI
|
||
Senior Vice President and Site General Manager
(Principal Executive Officer)
|
|||
By:
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/s/ RONIT VARDI
|
||
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Number
|
Description
|
|
31.1
|
Principal Executive Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
31.2
|
Principal Financial Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
|
32.1
|
Principal Executive Officer Certification required by Section 1350.
|
|
32.2
|
Principal Financial Officer Certification required by Section 1350.
|
|
101
|
Financial information from the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 of Jazz Technologies, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ MARCO RACANELLI
|
||||
Marco Racanelli
|
||||
_____
|
||||
Senior Vice President and Site General Manager
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 of Jazz Technologies, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ RONIT VARDI
|
||
Ronit Vardi
|
||
Chief Financial Officer
|
||
/s/ MARCO RACANELLI
--------------------------------------------
Marco Racanelli
Senior Vice President and Site General Manager
(Principal Executive Officer)
|
/s/ RONIT VARDI
--------------------------------------
Ronit Vardi, Chief Financial Officer
|
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