10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark one)

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

¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from              to             

Commission file number 001-33834

RUBICON TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	36-4419301
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
900 East Green Street Bensenville, Illinois	60106
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (847) 295-7000

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  ¨

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  ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  x

As of August 5, 2011 the Registrant had 23,039,548 shares of common stock, par value $0.001 per share, outstanding.

RUBICON TECHNOLOGY, INC.

Quarterly Report on Form 10-Q

For the quarterly period ended June 30, 2011

TABLE OF CONTENTS

			Page
Part I		Financial Information		2
	Item 1.	Consolidated Financial Statements (unaudited)		2
		Consolidated Balance Sheets (unaudited) – June 30, 2011 and December 31, 2010		2
		Consolidated Statements of Operations (unaudited) – Three and six months ended June 30, 2011 and 2010		3
		Consolidated Statements of Cash Flows (unaudited) – Six months ended June 30, 2011 and 2010		4
		Notes to Consolidated Financial Statements (unaudited)		5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		23
	Item 4.	Controls and Procedures		23
Part II		Other Information		23
	Item 1.	Legal Proceedings		23
	Item 1A.	Risk Factors		23
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23
	Item 3.	Defaults Upon Senior Securities		24
	Item 4.	Reserved		24
	Item 5.	Other Information		24
	Item 6.	Exhibits		24
Signatures				25
Exhibit Index				26

1

PART I FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements

Rubicon Technology, Inc.

Consolidated balance sheets

	June 30, 2011			December 31, 2010
	(unaudited) (in thousands other than share data)
Assets
Cash and cash equivalents	$	19,973		$	16,073
Restricted cash		542			533
Short-term investments		63,000			66,131
Accounts receivable, net		31,243			18,676
Inventories, net		12,615			11,135
Other inventory supplies		11,437			7,821
Prepaid expenses and other current assets		1,725			1,862
Deferred tax assets		1,990			—
Total current assets		142,525			122,231
Property and equipment, net		103,624			82,511
Investments		2,000			2,000
Deferred tax assets		1,339			—
Total assets	$	249,488		$	206,742
Liabilities and stockholders’ equity
Accounts payable	$	8,465		$	9,255
Accrued payroll		1,652			2,538
Corporate income and franchise taxes		2,084			407
Advance payments		385			1,103
Accrued and other current liabilities		2,614			1,345
Total current liabilities		15,200			14,648
Commitments and contingencies (Note 9)
Stockholders’ equity
Preferred stock, $0.001 par value, 5,000,000 undesignated shares authorized, no shares issued or outstanding		—			—
Common stock, $0.001 par value, 45,000,000 and 85,000,000 shares authorized and 24,289,523 and 24,210,644 shares issued; 23,039,548 and 22,960,669 shares outstanding		24			23
Additional paid-in capital		340,716			327,515
Treasury stock, at cost, 1,249,975 shares		(5,661	)		(5,661	)
Accumulated other comprehensive deficit		(30	)		(10	)
Accumulated deficit		(100,761	)		(129,773	)
Total stockholders’ equity		234,288			192,094
Total liabilities and stockholders’ equity	$	249,488		$	206,742

The accompanying notes are an integral part of these consolidated statements.

2

Rubicon Technology, Inc.

Consolidated statements of operations

	Three months ended June 30,					Six months ended June 30,
	2011		2010			2011			2010
	(unaudited) (in thousands, other than share data)
Revenue	$	43,028	$	15,787		$	80,998		$	27,303
Cost of goods sold		15,828		8,562			29,823			15,925
Gross profit		27,200		7,225			51,175			11,378
Operating expenses:
General and administrative		3,056		2,436			5,977			4,577
Sales and marketing		388		306			765			563
Research and development		410		234			837			446
Loss on disposal of assets		7		305			7			305
Income from operations		23,339		3,944			43,589			5,487
Other income:
Interest income		64		56			151			153
Realized loss on foreign currency translation		—		(19	)		(6	)		(59	)
Realized gain (loss) on investments		—		(7	)		—			8
Total other income (expense)		64		30			145			102
Income before income taxes		23,403		3,974			43,734			5,589
Income tax expense		13,495		86			14,722			126
Net income	$	9,908	$	3,888		$	29,012		$	5,463
Net income per common share
Basic	$	0.43	$	0.19		$	1.26		$	0.27
Diluted	$	0.41	$	0.18		$	1.21		$	0.25
Weighted average common shares outstanding used in computing net income per common share
Basic		23,031,039		20,790,208			23,012,326			20,517,277
Diluted		23,928,408		21,912,520			23,936,026			21,675,190

The accompanying notes are an integral part of these consolidated statements.

3

Rubicon Technology, Inc.

Consolidated statements of cash flows

	Six months ended June 30,
	2011			2010
	(unaudited) (in thousands)
Cash flows from operating activities
Net income	$	29,012		$	5,463
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		4,265			2,790
Net loss on disposal of assets		7			305
Stock-based compensation		1,750			1,013
Realized gain on investments		—			(8	)
Deferred tax assets		(3,329	)		—
Excess tax benefits from stock-based compensation		(10,711	)		—
Changes in operating assets and liabilities:
Accounts receivable		(12,567	)		(4,272	)
Inventories		(1,442	)		(237	)
Other inventory supplies		(3,589	)		(1,270	)
Prepaid expenses and other current assets		141			(295	)
Accounts payable		(825	)		1,213
Accrued payroll		(888	)		725
Corporate income and franchise taxes		12,389			(20	)
Advanced payments		(719	)		(17	)
Accrued and other current liabilities		1,264			954
Net cash provided by operating activities		14,758			6,344
Cash flows from investing activities
Purchases of property and equipment		(25,385	)		(19,692	)
Purchases of investments		—			(47,687	)
Proceeds from sale of investments		3,113			15,500
Net cash (used in) investing activities		(22,272	)		(51,879	)
Cash flows from financing activities
Proceeds from issuance of common stock, net of issuance costs of $4,063		—			61,789
Proceeds from exercise of options		741			1,251
Restricted cash		(9	)		(498	)
Excess tax benefits from stock-based compensation		10,711			—
Net cash provided by financing activities		11,443			62,542
Net effect of currency translation		(29	)		43
Net increase in cash and cash equivalents		3,900			17,050
Cash and cash equivalents, beginning of period		16,073			3,860
Cash and cash equivalents, end of period	$	19,973		$	20,910
Supplemental disclosures of cash flow information
Cash paid for income taxes	$	5,420		$	—
Supplemental disclosures of non-cash transactions
Unrealized loss on investments	$	18		$	86

The accompanying notes are an integral part of these consolidated statements.

4

Rubicon Technology, Inc.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

1. BASIS OF PRESENTATION

Interim financial data

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete consolidated financial statements and should be read in conjunction with Rubicon Technology, Inc.’s (the “Company”) annual report filed on Form 10-K for the fiscal year ended December 31, 2010. In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the results of operations have been included. Consolidated operating results for the three and six month periods ended June 30, 2011 are not necessarily indicative of results that may be expected for the year ending December 31, 2011.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Rubicon Worldwide LLC and Rubicon Sapphire Technology (Malaysia) SDN BHD. All intercompany transactions and balances have been eliminated in consolidation.

Foreign currency translation and transactions

Rubicon Worldwide LLC’s assets and liabilities are translated into US dollars at exchange rates existing at the respective balance sheet dates and capital accounts at historical exchange rates. The results of operations are translated into US dollars at the average exchange rates during the respective period. Translation adjustments resulting from fluctuations in exchange rates for Rubicon Worldwide LLC are recorded as a separate component of accumulated other comprehensive income (loss) within stockholders’ equity.

The Company has determined that the functional currency of Rubicon Sapphire Technology (Malaysia) SDN BHD is the US dollar. Rubicon Sapphire Technology (Malaysia) SDN BHD’s assets and liabilities are translated into US dollars using the remeasurement method. Non-monetary assets are translated at historical exchange rates and monetary assets are translated at exchange rates existing at the respective balance sheet dates. Translation adjustments for Rubicon Sapphire Technology (Malaysia) SDN BHD are included in determining net income (loss) for the period. The results of operations are translated into US dollars at the average exchange rates during the respective period. The Company records these gains and losses in other income (expense).

Foreign currency transaction gains and losses are generated from the effects of exchange rate changes on transactions denominated in a currency other than the functional currency of the Company, which is the US dollar. Gains and losses on foreign currency transactions are generally required to be recognized in the determination of net income (loss) for the period. The Company records these gains and losses in other income (expense).

Investments

The Company invests available cash primarily in investment grade commercial paper, corporate notes and government securities. Investments classified as available-for-sale securities are carried at fair market value with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Investments in trading securities are reported at fair value, with both realized and unrealized gains and losses recorded in other income (expense), in the Consolidated Statement of Operations. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations, are classified as short-term.

The Company reviews its available-for-sale securities investments at the end of each quarter for other-than-temporary declines in fair value based on the specific identification method. The Company considers various factors in determining whether an impairment is other-than-temporary, including the severity and duration of the impairment, changes in underlying credit ratings, forecasted recovery, its ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. When the Company concludes that an other-than-temporary impairment has resulted, the difference between the fair value and carrying value is written off and recorded as a charge on the Consolidated Statement of Operations. As of June 30, 2011, no impairment was recorded.

5

Auction-rate securities put options (“ARS Put Options”)

In October 2008, the Company entered into an agreement that provided the Company with the right, but not the obligation, to sell all of its auction-rate securities to UBS, AG for par value during the period from June 30, 2010 to July 2, 2012. The ARS Put Options provided the Company with the opportunity to recover the estimated unrealized loss on its ARS investments. The Company recorded the fair value of the ARS Put Options upon receipt. The Company valued ARS Put Options at fair value using a discounted cash flow model. Unrealized gains and losses related to the ARS Put Options were recognized in earnings. The Company exercised these put options on June 30, 2010. At June 30, 2011, the Company had no investments in auction rate security put options or auction rate securities. The Company’s investment policy no longer allows auction rate securities as an approved investment. See Note 4—Investments for additional information regarding the ARS Put Options.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out method, and includes materials, labor and overhead. The Company reduces the carrying value of its inventories for differences between the cost and the estimated net realizable value, taking into account usage, expected demand, technological obsolescence and other information. Inventories are composed of the following:

	June 30, 2011			December 31, 2010
	(in thousands)
Raw materials	$	5,833		$	5,196
Work in progress		3,206			3,135
Finished goods		4,045			3,358
		13,084			11,689
Reserve for obsolescence and realization		(469	)		(554	)
	$	12,615		$	11,135

Property and equipment

Property and equipment consisted of the following:

	June 30, 2011			December 31, 2010
	(in thousands)
Land and land improvements	$	2,504		$	2,500
Buildings		24,382			22,897
Machinery, equipment and tooling		76,856			56,956
Leasehold improvements		7,712			7,712
Furniture and fixtures		835			824
Information systems		906			869
Construction in progress		18,966			15,353
Total cost		132,161			107,111
Accumulated depreciation and amortization		(28,537	)		(24,600	)
Property and equipment, net	$	103,624		$	82,511

Revenue recognition

The Company recognizes revenue from product sales when earned. Revenue is recognized when, and if, evidence of an arrangement is obtained and the other criteria to support revenue recognition are met, including:

• Persuasive evidence of an arrangement exists. The Company requires evidence of a purchase order with the customer specifying the terms and specifications of the product to be delivered, typically in the form of a signed quotation or purchase order from the customer.

• Title has passed and the product has been delivered. Title passage and product delivery generally occur when the product is delivered to a common carrier.

• The price is fixed or determinable. All terms are fixed in the signed quotation or purchase order received from the customer. The purchase orders do not contain rights of cancellation, return, exchange or refund.

6

• Collection of the resulting receivable is reasonably assured. The Company’s standard arrangement with customers includes payment terms. Customers are subject to a credit review process that evaluates each customer’s financial position and its ability to pay. Collectability is determined by considering the length of time the customer has been in business and history of collections. If it is determined that collection is not probable, no product is shipped and no revenue is recognized unless cash is received in advance.

The Company does not provide maintenance or other services and it does not have sales that involve multiple elements or deliverables.

Net income per common share

Net income per share of common stock is as follows for the three and six months ended June 30, 2011 and 2010:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Net income (in thousands)	$	9,908	$	3,888	$	29,012	$	5,463
Net income per common share:
Basic	$	0.43	$	0.19	$	1.26	$	0.27
Diluted	$	0.41	$	0.18	$	1.21	$	0.25
Weighted average common shares outstanding used in:
Basic		23,031,039		20,790,208		23,012,326		20,517,277
Diluted		23,928,408		20,912,520		23,936,026		21,675,190

Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted-average number of diluted common shares outstanding during the period. Diluted shares outstanding are calculated by adding to the weighted-average shares any outstanding stock options and warrants based on the treasury stock method.

Recent accounting pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and IFRS,” (“ASU 2011-04”). These amendments, effective for the interim and annual periods beginning on or after December 15, 2011 (early adoption is prohibited), result in common definition of fair value and common requirements for measurement of and disclosure requirements between US GAAP and IFRS. ASU 2011-04 clarifies or changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. The adoption of ASU 2011-04 is not expected to have a material impact on the Company’s financial condition or results of operation.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”) which amends current comprehensive income guidance. This guidance is effective retrospectively for the interim and annual periods beginning on or after December 15, 2011 (early adoption is permitted), requires presentation of total 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. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The pronouncement does not change the current option for presenting components of other comprehensive income, gross, or net of the effect of income taxes, provided that such tax effects are presented in the statement in which other comprehensive income is presented or disclosed in the notes to the financial statements. Additionally, the pronouncement does not affect the calculation or reporting of earnings per share. The pronouncement also does not change the items which must be reported in other comprehensive income, how such items are measured, or when such items must be reclassified to net income. The adoption of ASU 2011-05 is not expected to have a material impact on the Company’s financial condition or results of operation.

Reclassifications

Certain prior period amounts on the balance sheet have been reclassified to conform to the current period presentation.

3. SEGMENT INFORMATION

The Company evaluates operations as one reportable segment, as it only reports profit and loss information on an aggregate basis to its chief operating decision maker.

7

Revenue is attributed by geographic region based on ship-to location of the Company’s customers. The following table summarizes revenue by geographic region:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
	(in thousands)				(in thousands)
Asia	$	38,698	$	13,421	$	74,084	$	22,523
North America		3,537		1,929		5,452		4,040
Europe		793		437		1,462		740
Total Revenue	$	43,028	$	15,787	$	80,998	$	27,303

The following table summarizes assets by geographic region:

	June 30, 2011		December 31, 2010
	(in thousands)
North America	$	221,934	$	186,511
Asia		27,554		20,231
Total Assets	$	249,488	$	206,742

4. INVESTMENTS

The Company invests available cash primarily in investment grade commercial paper, corporate notes and government securities. The Company’s short-term investments balance of $63.0 million as of June 30, 2011, is comprised of US Treasury securities of $4.0 million, corporate notes and bonds of $37.5 million and commercial paper of $21.5 million. The Company’s investments are classified as available-for-sale securities and are carried at fair market value with unrealized gains and losses recorded in accumulated other comprehensive income (loss).

Until July 1, 2010, the Company held auction-rate securities as part of the investment portfolio. The auction-rate securities were trading securities recorded at fair value and unrealized gains and losses were reported as part of gain on investments in the Consolidated Statements of Operations. In February 2008, the Company began experiencing failed auctions of its entire auction-rate securities portfolio, resulting in its inability to sell these securities in the short term. The Company held put options associated with an agreement with UBS, AG related to the auction-rate securities purchased through them. The Company exercised these put options on June 30, 2010 with a settlement date of July 1, 2010. The ARS Put Options provided the Company with the opportunity to recover the estimated unrealized loss on its ARS investments. The Company recorded the fair value of the ARS Put Options upon receipt and valued the put options at their estimated fair value using a discounted cash flow model that weighs various factors, including interest rates and expected holding period. Unrealized gains and losses related to the ARS Put Options were recognized in earnings. During the three and six months ended June 30, 2010, the Company recorded a gain (loss) of ($7,337) and $63,466 representing the changes in fair value of the auction-rate securities. The Company also recorded during the six months ended June 30, 2010 a loss of $55,279, representing the changes in fair value of the put options. Both the gain and loss from recording the change in fair value of the put options and auction-rate securities were recorded in gain on investments in the Consolidated Statements of Operations. The Company’s investment policy no longer allows auction rate securities as an approved investment.

The Company’s long-term investment at June 30, 2011 consists of a $2.0 million investment in Peregrine Semiconductor, Corp. (a customer) Series D-1 Preferred shares and is accounted for as a cost method investment. The value is adjusted for impairment based on review of Peregrine’s financial position. No impairment was noted as of June 30, 2011.

8

The following table presents the amortized cost and gross unrealized gains and losses on all securities at June 30, 2011:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Short-term Investments:
US Treasury securities and agency (taxable)	$	4,000	$	4	$	—		$	4,004
Corporate Notes and Bonds (taxable)		37,530		—		(31	)		37,499
Commercial Paper (taxable)		21,496		1		—			21,497
Total short-term investments	$	63,026	$	5	$	(31	)	$	63,000
Long-term Investments:
Peregrine Semiconductor, Corp. Series D-1 Preferred shares	$	2,000	$	—	$	—		$	2,000

The Company values its investments at fair value, defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard below describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s fixed income available-for-sale securities consist of high quality, investment grade commercial paper, corporate notes and government securities. The Company values these securities based on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. The valuation techniques used to measure the fair value of the Company’s financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2011:

	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash Equivalents:
Money market funds	$	13,293	$	—	$	—	$	13,293
Investments:
Available-for-sales securities—current
US Treasury securities and agency		—		4,004		—		4,004
Corporate notes/bonds		—		37,499		—		37,499
Commercial paper		—		21,497		—		21,497
Total	$	13,293	$	63,000	$	—	$	76,293

9

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2010:

	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash Equivalents:
Money market funds	$	10,042	$	—	$	—	$	10,042
Investments:
Available-for-sales securities—current:
US Treasury securities and agency		—		9,496		—		9,496
Corporate notes/bonds		—		38,081		—		38,081
Commercial paper		—		18,554		—		18,554
Total	$	10,042	$	66,131	$	—	$	76,173

In addition to the debt securities noted above, the Company had approximately $6.7 million and $6.0 million of time deposits included in cash and cash equivalents as of June 30, 2011 and December 31, 2010, respectively.

5. RELATED PARTY TRANSACTIONS

In November 2008, the Company purchased 1,345,444 shares of Peregrine Series D-1 Preferred shares for a total of $2.0 million, which represents less than 1% of Peregrine’s shares outstanding. The terms and stock price of the purchase were the same as for the other investors who participated. Peregrine is a customer of the Company. For the three and six months ended June 30, 2011, revenue from Peregrine was $542,500 and $647,500, respectively. As of June 30, 2011 and December 31, 2010, accounts receivable from Peregrine were $315,000 and $630,000, respectively. The pricing terms and conditions of the sales to Peregrine are similar to those available to the Company’s other non-related customers.

6. SIGNIFICANT CUSTOMERS

For the three months ended June 30, 2011, the Company had three customers that accounted for approximately 26%, 22% and 17% of revenue and for the three months ended June 30, 2010, the Company had two customers that accounted for approximately 19% and 15% of revenue. For the six months ended June 30, 2011, the Company had three customers that accounted for approximately 28%, 20% and 18% of revenue and for the six months ended June 30, 2010, the Company had two customers that accounted for approximately 22% and 12% of revenue.

Customers individually representing more than 10% of trade receivables accounted for approximately 85% and 62% of accounts receivable as of June 30, 2011 and December 31, 2010, respectively. The Company grants credit to customers based on an evaluation of their financial condition. Losses from credit sales are provided for in the financial statements.

7. STOCKHOLDERS’ EQUITY

Common Stock

On June 22, 2011, the shareholders of the Company approved a reduction of the shares of common stock authorized with a par value of $0.001 by 40,000,000 from 85,000,000 to 45,000,000. As of June 30, 2011 the Company had reserved 1,883,592 shares of common stock for issuance upon the exercise of outstanding common stock options. Also, 2,609,703 shares of the Company’s common stock were reserved for future grants of stock options (or other similar equity instruments) under the Company’s 2001 Equity Plan (the “2001 Plan”) and 2007 Stock Incentive Plan (the “2007 Plan”) as of June 30, 2011. In addition, 281,561 shares of the Company’s common stock were reserved for future exercise of outstanding warrants as of June 30, 2011.

On June 21, 2010, the Company completed a public offering of common stock in which a total of 3,029,100 shares were sold at a price of $30.00 per share. The Company sold 2,195,100 shares of common stock, including 395,100 shares pursuant to the full exercise of the underwriter’s over-allotment option, and 834,000 shares of common stock were sold by certain stockholders of the Company. The Company raised a total of $65.9 million in gross proceeds from the offering, or approximately $61.8 million in net proceeds after deducting the underwriting discount and commissions of $3.5 million and estimated other offering costs of approximately $642,000. The Company did not receive any of the proceeds from the sale of common stock by the selling stockholders.

Warrants

For the three and six months ended June 30, 2011, no common stock warrants were exercised. At June 30, 2011 and December 31, 2010, there were 281,561 common stock warrants outstanding.

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Treasury Stock

In November 2008, the Company authorized a stock repurchase program to purchase up to $15.0 million of common stock over a period of two years. The stock repurchase program authorized the Company to repurchase shares of its common stock in the open market at times and prices considered appropriate by the Company depending upon prevailing market conditions and other corporate considerations. The treasury shares are accounted for using the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. During 2010, no shares were repurchased and the program terminated on its terms on December 31, 2010.

8. STOCK INCENTIVE PLANS

The Company sponsors a stock option plan, the 2001 Plan, which allows for the grant of incentive and nonqualified stock options for the purchase of common stock. The maximum number of shares which may be awarded or sold under the 2001 Plan is 1,449,667 shares. Each option entitles the holder to purchase one share of common stock at the specified option exercise price. The exercise price of each incentive stock option granted must not be less than the fair market value on the grant date. At the discretion of management and with the approval of the Board of Directors, the Company may grant options under the 2001 Plan. Management and the Board of Directors determine vesting periods and expiration dates at the time of the grant.

In August 2007, the Company adopted the 2007 Plan, which allows for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and bonus shares. On June 22, 2011, the shareholders of the Company approved an amendment to the 2007 Plan to increase the maximum number of shares which may be awarded or sold under the 2007 Plan by 2,100,000 from 2,307,692 to 4,407,692 shares. The Board of Directors has appointed a committee to administer the plan. The plan committee determines the type of award to be granted, the fair market value, the number of shares covered by the award, and the time when the award vests and may be exercised.

The Company uses the Black-Scholes option pricing model to value stock options issued after January 1, 2006. The Company uses historical stock prices of companies which it considers as a peer group as the basis for its volatility assumptions. The assumed risk-free rates were based on US Treasury rates in effect at the time of grant with a term consistent with the expected option lives. The expected term is based upon the vesting term of the Company’s options, a review of a peer group of companies, and expected exercise behavior. The forfeiture rate is based on past history of forfeited options. The expense is being allocated using the straight-line method. For the three and six months ended June 30, 2011, the Company recorded $843,000 and $1.7 million, respectively, of stock compensation expense. For the three and six months ended June 30, 2010, the Company recorded $504,000 and $941,000, respectively, of stock compensation expense. As of June 30, 2011, the Company has $6.2 million of total unrecognized compensation cost related to non-vested awards granted under the Company’s stock-based plans that it expects to recognize over a weighted-average period of 2.53 years. The Company accounts for options issued prior to January 1, 2006 under the intrinsic value method.

The following table summarizes the activity of the stock incentive and equity plans as of June 30, 2011 and changes during the six months then ended:

	Shares available for grant			Number of options outstanding			Weighted- average option exercise price		Number of restricted stock and board shares issued
At December 31, 2010		643,850			1,830,397		$	12.98		34,863
Authorized		2,100,000			—			—		—
Granted		(158,874	)		151,150			22.86		7,724
Exercised		—			(73,228	)		10.80		—
Cancelled/forfeited		24,727			(24,727	)		19.48		—
At June 30, 2011		2,609,703			1,883,592		$	13.86		42,587

The Company’s aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock. Based on the fair market value of the common stock at June 30, 2011 and 2010, the intrinsic value for options outstanding was $5.6 million and $31.4 million, respectively. The weighted average fair value per share of options granted for the six months ended June 30, 2011 was $24.03 and the fair value of each option grant was estimated at the date of grant using the Black-Scholes option pricing model using an expected term of 5.0 years, risk-free interest rates of 1.87%-2.24%, expected volatility of 51% and no dividend yield. The Company used an expected forfeiture rate of 24.53%.

For the three and six months ended June 30, 2011, the Company recorded $41,000 and $84,000, respectively, of stock compensation expense related to restricted stock. For the three and six months ended June 30, 2010, the Company recorded $44,000 and $73,000, respectively, of stock compensation expense related to restricted stock.

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A summary of the Company’s non-vested options during the six month period ended June 30, 2011 is presented below:

	Options			Weighted-average exercise price
Non-vested at January 1, 2011		1,339,384		$	13.55
Granted		151,150			24.03
Vested		(238,198	)		9.26
Forfeited		(23,475	)		19.83
Non-vested at June 30, 2011		1,228,861		$	16.18

An analysis of restricted stock issued is as follows:

Non-vested restricted stock as of December 31, 2010	1,762
Granted	7,724
Vested	(3,693	)
Non-vested restricted stock as of June 30, 2011	5,793

9. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company has entered into agreements to purchase equipment and components to construct furnaces. These agreements will result in the Company purchasing equipment or components for a total cost of approximately $18.7 million with deliveries occurring through February 2012.

Litigation

From time to time, the Company experiences routine litigation in the normal course of its business. The management of the Company does not believe any pending litigation will have a material adverse effect on the financial condition or results of operations of the Company.

10. INCOME TAXES

The Company is subject to income taxes in the US and Malaysia. In accordance with the provisions of ASC Topic 740, “Income Taxes” the Company assesses on a quarterly basis its ability to realize its deferred tax assets. During the three months ended June 30, 2011, the Company concluded that based on the current level of sustainable profitability that generates taxable income, that it is more likely than not that the Company’s deferred tax assets will be realizable. The Company recognized a tax benefit of $3.3 million to record current and long-term deferred tax assets. With the release of the valuation allowance, the Company began recording federal and certain state and non-US income taxes attributable to the fiscal year’s pre-tax income. The Company recorded for the three and six months ended June 30, 2011, a tax provision of $13.5 million and $14.7 million, respectively, for an effective tax rate of 57.7% and 33.7%. The effective tax rate for the three months ended June 30, 2011, reflects a tax charge of approximately $5.5 million, or 23.7%, to provide for additional taxes on pre-tax income earned in the first three months of 2011 as a result of releasing the valuation reserve.

11. SUBSEQUENT EVENT

On August 4, 2011, the Company authorized a stock repurchase program to purchase up to $25.0 million of its common stock over a period of two years. The stock repurchase program authorizes the Company to repurchase its shares of common stock in the open market at times and prices considered appropriate by the Company depending upon prevailing market conditions and other corporate considerations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All statements, other than statements of historical facts, included in this Quarterly Report on Form 10-Q regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, results of operations, financial position, net sales, projected costs, prospects and plans and objectives of management for future operations may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward looking statements can be identified by the use of terms and phrases such as “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions such as “will,” “may,” “could,” “should,” etc. (or the negative thereof). Items contemplating or making assumptions about actual or potential future sales, market size and trends or operating results also constitute forward-looking statements.

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Before investing in our common stock, investors should be aware that the occurrence of the risks, uncertainties and events described in the section entitled “Risk Factors” in our Annual Report on Form 10-K and elsewhere in this Quarterly Report could have a material adverse effect on our business, results of operations and financial condition.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are inherently subject to known and unknown business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report, other than as may be required by applicable law or regulation. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

You should read this Quarterly Report, the documents that we reference in this Quarterly Report and have filed with the SEC as exhibits and our Annual Report on Form 10-K for the year ended December 31, 2010 with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

Unless otherwise indicated, the terms “Rubicon,” the “Company,” “we,” “us,” and “our” refer to Rubicon Technology, Inc.

OVERVIEW

We are an advanced electronic materials provider that develops, manufactures and sells monocrystalline sapphire and other innovative crystalline products for Light-Emitting Diodes (“LEDs”), radio frequency integrated circuits (“RFICs”), blue laser diodes, optoelectronics and other optical applications. The emergence of sapphire in commercial volumes at competitive prices has enabled the development of new technologies such as high brightness (“HB”) white, blue and green LEDs and highly-integrated RFICs. We apply our proprietary crystal growth technology to produce high-quality sapphire products efficiently to supply our end-markets, and we work closely with our customers to meet their quality and delivery needs.

We are a vertically-integrated manufacturer of high-quality sapphire substrates and optical windows that are used in a variety of high-growth, high-volume end-market applications. Our largest product line is two inch to six inch sapphire cores and wafers for use in LEDs and blue laser diodes for solid state lighting and electronic applications. For the LED market we sell two inch to four inch material primarily in core form and six and eight inch material primarily in polished wafer form. Eight inch wafers are sold primarily for research and development efforts at this time. In addition, we sell six inch sapphire wafers that are used for Silicon-on-Sapphire (“SOS”) RFICs, as well as products for military, aerospace, sensor and other applications. We have also extended our technology, which gives us the ability to produce cores and wafers of up to twelve inches in diameter to support next-generation LED and SOS RFIC production. In addition, we have developed the ability to produce large diameter circular and rectangular sapphire windows for use in various optical window applications.

Our revenue consists of sales of sapphire materials sold in core, as-cut, as-ground and polished wafer forms in two, three, four, six and eight inch diameters as well as optical materials sold as blanks or polished windows. Products are made to varying specifications, such as crystal planar orientations and thicknesses.

Historically, a significant portion of our revenue has been derived from sales to relatively few customers. For the three months ended June 30, 2011, we had three customers that accounted for approximately 26%, 22% and 17% of our revenue and for the three months ended June 30, 2010, we had two customers that accounted for approximately 19% and 15% of our revenue. For the six months ended June 30, 2011, we had three customers that accounted for approximately 28%, 20% and 18% of our revenue and for the six months ended June 30, 2010, we had two customers that accounted for approximately 22% and 12% of our revenue. Other than as

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discussed above, none of our customers accounted for more than 10% of our revenue for such periods. Although we are continuing to diversify and expand our customer base, we expect our revenue to continue to be concentrated among a small number of customers. We expect that our significant customers may change from period to period.

We recognize revenue upon shipment to our customers. We derive a significant portion of our revenue from customers outside of the US. The majority of our sales are to the Asian market and we expect that region to continue to be a major source of revenue for us. All of our revenue is denominated in US dollars.

We manufacture and ship our products from our facilities in the Chicago metropolitan area and from our facility in Penang, Malaysia. We have approximately 102,600 square feet of manufacturing and office space in Franklin Park and Bensenville, Illinois. In 2010, we completed construction of a 65,000 square foot facility in Penang, Malaysia, which is processing sapphire grown by us in our Illinois facilities into finished cores and wafers. Our Malaysia facility currently finishes essentially all cores and is now producing production volumes of six inch polished wafers. During the three months ended June 30, 2011, this facility was qualified by a key customer and was awarded ISO 9001 certification. We also acquired in April 2010 a 134,400 square foot building in Batavia, Illinois to expand our crystal growth operations. This facility began operations in the fourth quarter of 2010 and additional capacity came on line during the six months ended June 30, 2011.

Our cost of goods sold consists primarily of manufacturing materials, labor, manufacturing-related overhead such as utilities, depreciation and rent, provisions for excess and obsolete inventory reserves, freight and warranties. We manufacture our products at our Illinois and Malaysia manufacturing facilities based on customer orders. We purchase materials and supplies to support such demand. We are subject to variations in the cost of raw materials and consumables from period to period because we do not have long-term fixed-price agreements with most of our suppliers.

Our operating expenses are comprised of sales and marketing, research and development (“R&D”), and general and administrative (“G&A”) expenses. G&A expenses consist primarily of salaries and associated costs for employees in finance, human resources, information technology and administrative activities, charges for accounting, legal, and insurance fees, and stock-based compensation. The majority of our stock-based compensation relates to administrative personnel and is accounted for as a G&A expense.

Other income (expense) consists of interest income and realized gains and losses on investments and currency translation.

We account for income taxes under the asset and liability method whereby the expected future tax consequences of temporary differences between the book value and the tax basis of assets and liabilities are recognized as deferred tax assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to be recognized. At December 31, 2010, we had $49.5 million in net operating loss carryforwards (“NOLs”). We have updated our analysis of ownership changes that limit the utilization of the NOLs. This analysis shows an ownership change, but we believe that we are not restricted in our ability to use the full amount of the NOLs. A full valuation allowance was provided and no tax benefit was recorded until management could conclude that it is more likely than not that our deferred tax assets will be realized. During the three months ended June 30, 2011, management concluded that based on the current level of sustainable profitability that generates taxable income, that it is more likely than not that our deferred tax assets will be realizable. We recognized a tax benefit of $3.3 million to record current and long-term deferred tax assets during the three months ended June 30, 2011. With the release of the valuation allowance, we began recording federal and certain state and non-US income taxes attributable to the fiscal year’s pre-tax income. The reversal of the valuation allowance favorably impacts our effective tax rate in 2011. The Illinois State Legislature has suspended the use of NOLs for taxable years ending after December 31, 2010 and before December 31, 2014 and has increased the corporate income tax rate which unfavorably impacts our effective tax rate. Our effective tax rate could fluctuate significantly on a quarterly basis and could be adversely affected to the extent earnings are lower than anticipated. Our effective tax rate could also fluctuate due to changes in the valuation of our deferred tax assets or liabilities, or by changes in tax laws, regulations, or accounting principles, as well as certain discrete items. We expect our full year tax rate to be approximately 34%.

We anticipate our capital expenditures will be between $45 million and $55 million for the full year 2011. These expenditures will be primarily focused on equipping our crystal growth facility in Batavia, Illinois and post crystal growth facility in Penang, Malaysia and purchasing land and beginning construction on our next crystal growth facility in Illinois. Our capital expenditures in the three and six months ended June 30, 2011 were $14.3 million and $25.4 million.

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RESULTS OF CONSOLIDATED OPERATIONS THREE MONTHS ENDED JUNE 30, 2011 AND 2010

The following table sets forth our consolidated statements of operations for the periods indicated:

	Three months ended June 30,
	2011		2010
	(in millions)
Revenue	$	43.0	$	15.8
Cost of goods sold		15.8		8.6
Gross profit		27.2		7.2
Operating expenses:
General and administrative		3.1		2.4
Sales and marketing		0.4		0.3
Research and development		0.4		0.2
Loss on disposal of assets		—		0.3
Total operating expenses		3.9		3.2
Income from operations		23.3		4.0
Other income		0.1		—
Income before income taxes		23.4		4.0
Income tax expense		13.5		0.1
Net income	$	9.9	$	3.9

The following table sets forth our consolidated statements of operations as a percentage of revenue for the periods indicated:

	Three months ended June 30,
	2011			2010
	(percentage of total)
Revenue		100	%		100	%
Cost of goods sold		37			54
Gross profit		63			46
Operating expenses:
General and administrative		7			15
Sales and marketing		1			2
Research and development		1			1
Loss on disposal of assets		—			2
Total operating expenses		9			20
Income from operations		54			26
Other income		—			—
Income before income taxes		54			26
Income tax expense		31			1
Net income		23	%		25	%

Revenue. Revenue was $43.0 million for the three months ended June 30, 2011 and $15.8 million for the three months ended June 30, 2010, an increase of $27.2 million. We experienced a significant increase in revenue in core and polished product lines across all diameters due to increased demand for our products and an improved market and pricing environment. Revenue from the sale of core products for the three months ended June 30, 2011 increased by $16.9 million, of which $17.1 million was attributed to an increase in pricing, partially offset by a decrease in the volume of core sales of $221,000 as we directed more of our crystal production to the large diameter wafer product. As a result, we increased our sales of polished wafers by $9.7 million as demand for these products increased in both the LED and SOS RFIC markets. In addition, we had higher revenue of $667,000 from optical products due to increased sales of sapphire for military, sensor and instrumentation applications. For the remainder of 2011, we expect continued strong demand for large diameter polished wafers. However, due to softness in the LED backlighting market, which has impacted the LED chip manufacturers, demand is currently weak for core products and as a result pricing for core products is currently down as much as 60% below pricing in the three months ended June 30, 2011. We believe demand for core products should improve by the end of the third quarter but the pricing decrease will impact third quarter results.

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Gross profit. Gross profit was $27.2 million for the three months ended June 30, 2011 compared to a gross profit of $7.2 million for the three months ended June 30, 2010, an increase of $20.0 million. The increase in gross profit is primarily attributable to increased pricing on our products. Due to the recent softening in pricing for core products, we expect gross profit to be impacted in the second half of 2011, resulting in lower gross margins.

General and administrative expenses. G&A expenses were $3.1 million for the three months ended June 30, 2011 and $2.4 million for the three months ended June 30, 2010, an increase of $700,000. The increase was due in part to increased employee compensation costs of $142,000; increased bad debt expense of $154,000 related to overall higher receivable balances resulting from increased revenue, and increased investor relations expense of $141,000 related to additional outside consulting resources associated with investor and media relations. We also incurred an increase in general and administrative costs from our Malaysia facility of $141,000 as there were minimal costs in 2010 as the facility was not yet operating.

Sales and marketing expenses. Sales and marketing expenses were $388,000 for the three months ended June 30, 2011 and $306,000 for the three months ended June 30, 2010, an increase of $82,000. The increase in sales and marketing expenses is attributable to additional employee compensation costs from additional sales hires to support expansion, annual salary increases, and employee stock option expense.

Research and development expenses. R&D expenses were $410,000 for the three months ended June 30, 2011 and $234,000 for the three months ended June 30, 2010, an increase of $176,000. The increase was primarily attributable to additional employee compensation costs of $59,000 and additional spending on various projects of $108,000.

Other income. Other income was $64,000 for the three months ended June 30, 2011 and $30,000 for the three months ended June 30, 2010, an increase in other income of $34,000. The increase was primarily due to higher interest income.

Income tax expenses Income tax expenses were $13.5 million for the three months ended June 30, 2011 and $86,000 for the three months ended June 30, 2010, an increase of $13.4 million. Our effective tax rate was 57.7% for the three months ended June 30, 2011 and 2.1% for the three months ended June 30, 2010. During the three months ended June 30, 2011, management concluded that based on the current level of sustainable profitability that generates taxable income, that it is more likely than not that our deferred tax assets will be realizable. With the release of the valuation allowance, we began recording federal and certain state and non-US income taxes attributable to the fiscal year’s pre-tax income at the statutory rates adjusted for various tax benefits that lower the rate. The effective rate for the three months ended June 30, 2011, reflects a tax charge of approximately $5.5 million or 23.7% to provide for additional taxes on pre-tax income earned in the first three months of 2011 as a result of releasing the valuation reserve. For the three months ended June 30, 2010 we were subject only to alternative minimum taxes at a 2.1% rate. The tax provision is based on an estimated annual effective rate which requires us to make our best estimate of annual pretax income. To the extent this pretax income varies from estimates made at the end of the most recent interim period, the actual tax provision recognized in 2011 could be different than the forecasted amount used to estimate the tax provision for the three months ended June 30, 2011. Based on our current estimated pretax income, we expect our full year tax rate to be about 34%.

RESULTS OF CONSOLIDATED OPERATIONS SIX MONTHS ENDED JUNE 30, 2011 AND 2010

The following table sets forth our consolidated statements of operations for the periods indicated:

	Six months ended June 30,
	2011		2010
	(in millions)
Revenue	$	81.0	$	27.3
Cost of goods sold		29.8		15.9
Gross profit		51.2		11.4
Operating expenses:
General and administrative		6.0		4.6
Sales and marketing		0.8		0.6
Research and development		0.8		0.4
Loss on disposal of assets		—		0.3
Total operating expenses		7.6		5.9

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	Six months ended June 30,
	2011		2010
	(in millions)
Income from operations		43.6		5.5
Other income		0.1		0.1
Income before income taxes		43.7		5.6
Income tax expense		14.7		0.1
Net income	$	29.0	$	5.5

The following table sets forth our consolidated statements of operations as a percentage of revenue for the periods indicated:

	Six months ended June 30,
	2011			2010
	(percentage of total)
Revenue		100	%		100	%
Cost of goods sold		37			58
Gross profit		63			42
Operating expenses:
General and administrative		7			17
Sales and marketing		1			2
Research and development		1			1
Loss on disposal of assets		—			1
Total operating expenses		9			21
Income from operations		54			21
Other		—			—
Income before income taxes		54			21
Income tax expense		18			1
Net income		36	%		20	%

Revenue. Revenue was $81.0 million for the six months ended June 30, 2011 and $27.3 million for the six months ended June 30, 2010, an increase of $53.7 million. We experienced a significant increase in revenue across most product lines and diameters due to increased demand for our products which led to a large price increase. Revenue from the sale of core products for the six months ended June 30, 2011 increased by $36.0 million, of which $35.7 million was due to an increase in pricing and $256,000 was attributed to volume. We directed most of our additional crystal growth production capacity to support the growing demand for six inch polished wafers. As a result, we increased our sales of polished wafers by $16.7 million primarily on higher volume, as demand for these products increased in both the LED and SOS RFIC markets. We also had higher revenue of $1.2 million from optical products due to increased sales of sapphire for military, sensor and instrumentation applications. We expect the demand for large diameter polished wafers to continue to be strong through 2011, but have recently experienced softening in current prices of our core products due to lower demand in the LED backlighting market.

Gross profit. Gross profit was $51.2 million for the six months ended June 30, 2011 and $11.4 million for the six months ended June 30, 2010, an increase of $39.8 million. The increase in gross profit is primarily attributable to higher revenue of $53.7 million due to increased pricing. We have experienced a softening in core prices and expect that to impact our gross profit for the remainder of 2011.

General and administrative expenses. G&A expenses were $6.0 million for the six months ended June 30, 2011 and $4.6 million for the six months ended June 30, 2010, an increase of $1.4 million. The increase was primarily due to an increase in employee compensation costs of $473,000 from annual salary increases and expenses associated with employee stock options. Bad debt expense increased $217,000 as a result of higher receivables balance. Also, investor relations expense increased $210,000, primarily due to increased outside support services, audit and consulting expenses increased $209,000, primarily due to an increase in tax consulting fees and timing on audit fees and we incurred $244,000 in general and administrative costs from our Malaysia facility as there were minimal costs in 2010 as the facility was not yet operating.

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Sales and marketing expenses. Sales and marketing expenses were $765,000 for the six months ended June 30, 2011 and $563,000 for the six months ended June 30, 2010, an increase of $202,000. The increase in sales and marketing expenses is attributable to increased employee compensation costs primarily due to annual salary increases, employee stock options expense and additional sales hires to support expansion.

Research and development expenses. R&D expenses were $837,000 for the six months ended June 30, 2011 and $446,000 for the six months ended June 30, 2010, an increase of $391,000. The increase is primarily attributable to higher employee compensation costs of $130,000 and an increase in spending on various projects of $257,000.

Other income. Other income was $145,000 for the six months ended June 30, 2011 and $102,000 for the six months ended June 30, 2010, an increase in other income of $43,000. The increase was primarily due to lower losses on currency translation transactions.

Income tax expenses Income tax expenses were $14.7 million for the three months ended June 30, 2011 and $126,000 for the three months ended June 30, 2010, an increase of $14.6 million. Our effective tax rate was 33.7% for the six months ended June 30, 2011 and 2.3% for the six months ended June 30, 2010. During the six months ended June 30, 2011, management concluded that based on the current level of sustainable profitability that generates taxable income, that it is more likely than not that our deferred tax assets will be realizable. With the release of the valuation allowance, we began recording federal and certain state and non-US income taxes attributable to the fiscal year’s pre-tax income at the statutory rates adjusted for various tax benefits that lower the rate. For the six months ended June 30, 2010 we were subject only to alternative minimum taxes at a 2.3% rate. The tax provision is based on an estimated annual effective rate which requires us to make our best estimate of annual pretax income. To the extent this pretax income varies from estimates made at the end of the most recent interim period, the actual tax provision recognized in 2011 could be different than the forecasted amount used to estimate the tax provision for the six months ended June 30, 2011. Based on our current estimated pretax income, we expect our full year tax rate to be about 34%.

LIQUIDITY AND CAPITAL RESOURCES

We have historically funded our operations using a combination of issuances of common stock and preferred stock, a working capital line of credit and term loans, and cash generated from our operations.

As of June 30, 2011, we had cash and short term investments totaling $83.0 million, including cash of $6.7 million held in deposits at major banks, $13.3 million invested in money market funds and $63.0 million invested in commercial paper, corporate notes and bonds and US treasury securities. Our long term investment consists of a $2.0 million investment in Peregrine Semiconductor, Corp. (one of our customers) Series D1 preferred stock. In February 2008, we began experiencing failed auctions of our entire auction-rate securities portfolio, resulting in our inability to sell these securities in the short term. We held put options associated with an agreement with UBS, AG related to all of our auction-rate securities purchased through them, which represented all of our auction-rate securities. We had the option to sell these securities to UBS, AG at par value from June 30, 2010 through July 2, 2012. We exercised these put options on June 30, 2010 with settlement on July 1, 2010 for a payment equal to full par value of the auction-rate securities.

Our right to sell the auction-rate securities to UBS, AG commencing on June 30, 2010, represented put options for a payment equal to the par value of the auction-rate securities. During the six months ended June 30, 2010, we recorded a realized loss of $55,279, representing the changes in fair value of the put options. We also recorded a realized gain $63,466 during the six months ended June 30, 2010, representing the changes in fair value of the auction-rate securities. Both the gain and loss from recording the change in fair value of the put options and auction-rate securities were recorded in gain (loss) on investments in the Consolidated Statements of Operations. Our investment policy no longer allows auction-rate securities as an approved investment.

Cash flows from operating activities

The following table represents the major components of our cash flows from operating activities for the six months ended June 30, 2011 and 2010:

	Six months ended June 30,
	2011			2010
	(in thousands)
Net income	$	29,012		$	5,463
Non-cash items:
Depreciation and amortization		4,265			2,790
Stock based compensation and other, net		1,757			1,310
Deferred tax assets		(3,329	)		—

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	Six months ended June 30,
	2011			2010
	(in thousands)
Excess tax benefits from stock-based compensation		(10,711	)		—
Total non-cash items:		(8,018	)		4,100
Working capital:
Accounts receivable		(12,567	)		(4,272	)
Inventories		(1,442	)		(237	)
Prepaid expenses and other current assets		(3,448	)		(1,565	)
Accounts payable		(825	)		1,213
Other accruals		12,046			1,642
Total working capital items:		(6,236	)		(3,219	)
Net cash provided by operating activities	$	14,758		$	6,344

Cash provided by operating activities was $14.8 million for the six months ended June 30, 2011. During such period, we generated net income of $29.0 million and we incurred non-cash expense of $8.2 million, including depreciation and amortization expense of $4.3 million and stock-based compensation expense of $1.8 million offset by other non-cash items of $14.0 million consisting of a $10.7 million tax benefit related to stock based compensation and $3.3 million in deferred tax assets. During such period, cash from net working capital decreased $6.2 million, which was comprised of an increase in accounts receivable of $12.6 million due to increased sales and timing of collections, a decrease in accounts payable of $825,000 due to timing of payments, an increase in other accruals of $12.0 million consisting primarily of a increase in accrued corporate income and franchise taxes of $12.3 million, and an increase in prepaid expenses of $3.4 million due to an increase in purchases of furnace construction and replacement parts.

Cash used in operating activities was $6.3 million for the six months ended June 30, 2010. During such period, we generated a net income of $5.5 million and we incurred non-cash expenses of $4.1 million, including depreciation expense of $2.8 million and stock-based compensation expense of $1.3 million. During such period, cash from net working capital decreased $3.2 million, which was comprised of an increase in accounts receivable of $4.3 million, an increased in accounts payable of $1.2 million due to increased purchases and an increase in prepaid expenses and other current assets of $1.6 million. We also experienced an increase in accrued payroll of $725,000.

Cash flows from investing activities

Net cash used in investing activities was $22.3 million and $51.9 million for the six months ended June 30, 2011 and 2010, respectively. During the six months ended June 30, 2011, we used approximately $18.1 million on building improvements and equipment for our new crystal growth facility in Batavia, Illinois, and approximately $2.4 million to upgrade our other facilities and add existing capacity in other post crystal growth areas. We also used $4.8 million to continue to equip our post crystal growth facility in Penang, Malaysia. This was partially offset by sales of investments of $3.1 million used to fund operations and capital spending. During the six months ended June 30, 2010, we used approximately $13.0 million on building and equipment for our new crystal growth facility under construction in Batavia, Illinois and approximately $5.8 million on building and equipping of our new post crystal growth facility under construction in Malaysia. We also used $904,000 to upgrade our current facilities and add to existing capacity in other post crystal growth areas. We used proceeds from our common stock offering completed June 21, 2010 of approximately $47.7 million to purchase investment securities. This was partially offset by sales of investments of $15.5 million which were used to fund operations and capital spending.

We are continuing to equip our facilities in both Batavia, Illinois and Malaysia. It is difficult to predict the timing of capital expenditures on these projects, but we anticipate spending an additional $5 to $10 million completing these two new facilities in 2011 and we estimate our total capital expenditures for 2011 to be between $45 and $55 million, which includes purchasing land and beginning construction on our next crystal growth facility in Illinois.

Cash flows from financing activities

Net cash provided by financing activities was $11.4 million and $62.5 million for the six months ended June 30, 2011 and 2010, respectively. Net cash provided by financing activities for the six months ended June 30, 2011 represents $10.7 million in excess tax benefits related to stock based compensation, and $741,000 in net proceeds from the exercise of stock options. Net cash provided by financing activities for the six months ended June 30, 2010 represents $61.8 million in net proceeds from the common stock offering completed on June 21, 2010, as well as proceeds from the exercise of stock options of $1.3 million, partially offset by an increase in restricted cash of $498,000.

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Future liquidity requirements

We believe that our existing cash, cash equivalents, investments and anticipated cash flows from operating activities will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our cash needs include cash required to fund our operations, and the capital needed to fund our planned expansions in the US and Asia. If the assumptions underlying our business plan regarding future revenues and expenses change, or if unexpected opportunities or needs arise, we may seek to raise additional cash by selling equity or convertible debt securities. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders. If we obtain debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, and the terms of the debt securities issued could impose significant restrictions on our operations. If we are unable to obtain financing on terms favorable to us, we may be unable to successfully execute our business plan.

Contractual obligations

The contractual obligations presented in the table below represent our estimates of future payments under fixed contractual obligations and commitments at June 30, 2011. Changes in our business needs, as well as actions by third parties and other factors, may cause these estimates to change. Because these estimates are complex and necessarily subjective, our actual payments in future periods are likely to vary from those presented in the table. The following table sets forth information relating to our contractual obligations at June 30, 2011:

	Payments due in
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in millions)
Purchase order obligations	$	15,634,000	$	15,634,000		—		—		—
Building construction obligations	$	3,081,000	$	3,081,000		—		—		—
Total contractual obligations	$	18,715,000	$	18,715,000	$	—	$	—	$	—

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We consider to be critical those accounting policies that require our most subjective or complex judgments, which often result from a need to make estimates about the effect of matters that are inherently uncertain, and that are among the most important of our accounting policies in the portrayal of our financial condition and results of operations. We believe the following to be our critical accounting policies, including the more significant estimates and assumptions used in preparation of our financial statements.

Foreign currency translation and transaction

Rubicon Worldwide LLC’s assets and liabilities are translated into US dollars at exchange rates existing at the respective balance sheet dates and capital accounts at historical exchange rates. The results of operations are translated into US dollars at the average exchange rates during the respective period. Translation adjustments resulting from fluctuations in exchange rates for Rubicon Worldwide LLC are recorded as a separate component of accumulated other comprehensive income (loss) within stockholders’ equity.

We have determined that the functional currency of Rubicon Sapphire Technology (Malaysia) SDN BHD is the US dollar. Rubicon Sapphire Technology (Malaysia) SDN BHD’s assets and liabilities are translated into US dollars using the remeasurement method. Non-monetary assets are translated at historical exchange rates and monetary assets are translated at exchange rates existing at the respective balance sheet dates. Translation adjustments for Rubicon Sapphire Technology (Malaysia) SDN BHD are included in determining net income (loss) for the period. The results of operations are translated into US dollars at the average exchange rates during the respective period. We record these gains and losses in other income (expense).

Foreign currency transaction gains and losses are generated from the effects of exchange rate changes on transactions denominated in a currency other than our functional currency, which is the US dollar. Gains and losses on foreign currency transactions are generally required to be recognized in the determination of net income (loss) for the period. We record these gains and losses in other income (expense).

Revenue recognition

We recognize revenue from sales of products when:

• Persuasive evidence of an arrangement exists. We require evidence of a purchase order with the customer specifying the terms and specifications of the product to be delivered, typically in the form of a signed quotation or purchase order from the customer.

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• Title has passed and the product has been delivered. Title passage and product delivery generally occurs when the product is delivered to a common carrier.

• The price is fixed or determinable. All terms are fixed in the signed quotation or purchase order received from the customer. The purchase orders do not contain rights of cancellation, return, exchanges or refunds.

• Collection of the resulting receivable is reasonably assured. Our standard arrangement with customers includes payment terms. Customers are subject to a credit review process that evaluates each customer’s financial position and its ability to pay. We determine collectibility by considering the length of time the customer has been in business and our history of collections with that customer. If we determine that collection is not probable, no product is shipped and no revenue is recognized unless cash is received in advance.

All of our revenue is denominated in US dollars.

Inventory valuation

We value our inventory at the lower of cost or market. Market is determined based on net realizable value. Cost for raw materials, work in process and finished goods are based on actual costs on a first-in, first-out basis. We establish inventory reserves when conditions exist that suggest inventory may be in excess of anticipated demand or is obsolete based on customer required specifications. We evaluate the ability to realize the value of our inventory based on a combination of factors, including forecasted sales, estimated current and future market value and changes in customers’ product specifications. Recoveries of previously written-down inventory are recognized only when the related inventory is sold and revenue has been recognized. Our method of estimating excess and obsolete inventory has remained consistent for all periods presented. However, if our recognition of excess or obsolete inventory is, or if our estimates of our inventory’s potential utility become, less favorable than currently expected, additional inventory reserves may be required. We determine our normal operating capacity and record as expense costs attributable to lower utilization of equipment and staff. For the six months ended June 30, 2010, we determined we were not operating at capacity and recorded as expense costs associated with lower utilization of equipment and staff of $462,000. With the improved demand, we believe that it is unlikely that significant adjustments for lower utilization of equipment and staff will occur in 2011.

Investments

We invest available cash primarily in investment grade commercial paper, corporate notes and government securities. Investments classified as available-for-sale securities are carried at fair market value with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Investments in trading securities are reported at fair value, with both realized and unrealized gains and losses recorded in other income (expense), net in the Consolidated Statement of Operations. Investments in which we have the ability and intent, if necessary, to liquidate in order to support our current operations are classified as short-term. Our long-term investments at June 30, 2011, consist of a $2.0 million investment in Peregrine Semiconductor Corp. (a customer) Series D-1 Preferred shares.

We review our available-for-sale securities investments at the end of each quarter for other-than-temporary declines in fair value based on the specific identification method. We consider various factors in determining whether an impairment is other-than-temporary, including the severity and duration of the impairment, changes in underlying credit ratings, forecasted recovery, our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. When we conclude that an other-than-temporary impairment has resulted, the difference between the fair value and carrying value is written off and recorded as a charge on the Consolidated Statement of Operations. As of June 30, 2011, no impairment was recorded.

In October 2008, we entered into an agreement that provides us with the right, but not the obligation, to sell all our auction-rate securities to UBS, AG for par value during the period from June 30, 2010 to July 2, 2012 (the “ARS Put Options”). The ARS Put Options provided us with the opportunity to recover the estimated unrealized loss on our ARS investments. We recorded the fair value of the ARS Put Options upon receipt. We exercised these put options on June 30, 2010 with a settlement date of July 1, 2010. At June 30, 2011 we have no auction rate securities or put options in our investment portfolio. We valued the auction-rate securities and ARS Put Options using a discounted cash flow model that weighs various factors, including interest rates and expected holding period. Unrealized gains and losses related to the ARS Put Options were recognized in earnings.

Allowance for doubtful accounts

We estimate the allowance for doubtful accounts based on an assessment of the collectability of specific customer accounts. The determination of risk for collection is assessed on a customer-by-customer basis considering our historical experience and future orders with the customer, changes in payment patterns, and recent information we have about the current status of our accounts receivable balances. If we determine that a specific customer is a risk for collection, we provide a specific allowance for credit losses to reduce the net recognized receivable to the amount we reasonably believe will be collected. We believe that, based on the customers to whom we sell and the nature of our agreements with them, our estimates are reasonable. Our method of estimating collectability has remained consistent for all periods presented and with past collections experience. We believe that it is unlikely that significant adjustments to allowances for doubtful accounts will be necessary.

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Stock-based compensation

We expense stock options based upon the fair market value on the date of grant. We use the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model will be affected by assumptions regarding a number of complex and subjective variables. These variables include our expected stock volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates, forfeitures and expected dividends.

The expected term represents the weighted-average period that our stock options are expected to be outstanding and is based upon the vesting term of our options, a review of a peer group of companies, and expected exercise behavior. Until November 2007, we were operating as a private company, and, as a result, we were unable to use our actual price volatility data. Therefore, we estimate the volatility of our common stock based on volatility of similar entities over the expected term of our stock options. We base the risk-free interest rate that we use in the option pricing model on US Treasury zero-coupon issues with remaining terms similar to the expected term on the options. We do not anticipate paying any cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero in the option pricing model. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The current forfeiture rate of 24.53% was based on our past history of forfeitures.

We allocate stock based compensation costs using a straight-line method which amortizes the fair value of each option on a straight-line basis over the service period. Based on the variables affecting the valuation of our common stock and the method used for allocating compensation costs, we recognized $843,000 and $1.7 million in stock compensation expense during the three and six months ended June 30, 2011. All option grants made during the three and six months ended June 30, 2011 and 2010 were granted at an exercise price per share equal to the closing market price of our common stock on the date of grant. Therefore, there is no intrinsic value because the exercise price per share of each option was equal to the fair value of the common stock on the date of grant.

Based on the fair market value of the common stock at June 30, 2011, the aggregate intrinsic value of all stock options outstanding at June 30, 2011 was $5.6 million.

Income tax valuation allowance

Evaluating the need for and amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all the positive and negative evidence available to determine whether all or some portion of the deferred tax assets will not be realized. A valuation allowance must be established for deferred tax assets when it is more likely than not (a probability level of more than 50 percent) that they will not be realized. In general, “realization” refers to the incremental benefit achieved through the reduction in future taxes payable or an increase in future taxes refundable from the deferred tax assets, assuming that the underlying deductible differences and carryforwards are the last items to enter into the determination of future taxable income. In determining our valuation allowance, we consider the source of taxable income, including taxable income in prior carryback years, future reversals of existing temporary differences, the required use of tax planning strategies, and future taxable income exclusive of reversing temporary differences and carryforwards. During the three months ended June 30, 2011, management concluded that based on the current level of sustainable profitability that generates taxable income, that it is more likely than not that our deferred tax assets will be realizable. With the release of the valuation allowance, federal and certain state and non-US income taxes attributable to the fiscal year’s pre-tax income were provided for in the period. The reversal of the valuation allowance favorably impacted our effective tax rate.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and IFRS, “ (“ASU 2011-04”). These amendments, effective for the interim and annual periods beginning on or after December 15, 2011 (early adoption is prohibited), result in common definition of fair value and common requirements for measurement of and disclosure requirements between US GAAP and IFRS. ASU 2011-04 clarifies or changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. The adoption of ASU 2011-04 is not expected to have a material impact on our financial condition or results of operation.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”) which amends current comprehensive income guidance. This guidance is effective retrospectively for the interim and annual periods beginning on or after December 15, 2011 (early adoption is permitted), requires presentation of total comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of

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comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The pronouncement does not change the current option for presenting components of other comprehensive income, gross, or net of the effect of income taxes, provided that such tax effects are presented in the statement in which other comprehensive income is presented or disclosed in the notes to the financial statements. Additionally, the pronouncement does not affect the calculation or reporting of earnings per share. The pronouncement also does not change the items which must be reported in other comprehensive income, how such items are measured, or when such items must be reclassified to net income. The adoption of ASU 2011-05 is not expected to have a material impact on our financial condition or results of operation.

OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2011, there have been no material changes in the off-balance sheet arrangements disclosed in the Management’s Discussion and Analysis section of our Annual Report on Form 10-K for the year ended December 31, 2010.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

For the first six months ended June 30, 2011, , there were no material changes in the information regarding market risk contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

ITEM 4. CONTROLS AND PROCEDURES

Management’s evaluation of disclosure controls and procedures

Based on evaluations at June 30, 2011, our chief executive officer and chief financial officer (together, our “certifying officers”), with the participation of the management team, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that material information relating to the Company is accumulated and communicated to management, including our certifying officers, as appropriate to allow timely decisions regarding required disclosures.

Changes in internal control over financial reporting

Our certifying officers have concluded that there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended June 30, 2011, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

From time to time we may be named in claims arising in the ordinary course of business. Currently, there are no legal proceedings or claims pending against us or involving us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business or financial condition.

ITEM 1A. RISK FACTORS

Our business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond our control. We have identified a number of these risk factors in our Annual Report on Form 10-K for the year ended December 31, 2010, which factors should be taken into consideration when reviewing the information contained in this report. There have been no material changes with regard to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. RESERVED

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits filed or incorporated by reference as a part of this report are listed in the Index to Exhibits which appears following the signature page to this Quarterly Report on Form 10-Q and is incorporated by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 8, 2011.

Rubicon Technology, Inc.
By	/s/ Raja M. Parvez
	Raja M. Parvez
	Chief Executive Officer and President
	(Principal Executive Officer)
By	/s/ William F. Weissman
	William F. Weissman
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

25

EXHIBIT INDEX

The Exhibits listed below are filed or incorporated by reference as part of this Quarterly Report on Form 10-Q.

Exhibit No.	Description	Incorporation by Reference
3.1	Eighth Amended and Restated Certificate of Incorporation of Rubicon Technology, Inc.	Filed as Exhibit 3.1 to Amendment No. 2, to the registrant’s Registration Statement on Form S-1 (File No. 333-145880) filed on November 1, 2007
3.2	Amendment No. 1 to Eight Amended and Restated Certificate of Incorporation	Filed as Appendix A to the registrant’s Definitive Proxy statement on Schedule 14A, filed on April 29, 2011
3.3	Amended and Restated Bylaws of Rubicon Technology, Inc.	Filed as Exhibit 3.3 to Amendment No. 2, to the registrant’s Registration Statement on Form S-1 (File No. 333-145880) filed on November 1, 2007
10.1	Rubicon Technology, Inc. Stock Incentive Plan, as amended and restated effective March 23, 2011	Filed as Appendix B to the registrant’s Definitive Proxy statement on Schedule 14A, filed on April 29, 2011
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.SC. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from our quarterly report on Form 10-Q for the quarter ended June 30, 2011 are formatted in eXtensible Business Reporting Language (XBRL): (i) consolidated balance sheets, (ii) consolidated statements of operation, (iii) consolidated statements of cash flows and (iv) notes to the consolidated financial statements

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EX-31.1

Exhibit 31.1

Certifications

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Raja M. Parvez, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Rubicon Technology, Inc. (the “registrant”);

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 the 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 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.

Date: August 8, 2011	By:	/s/ Raja M. Parvez
		Raja M. Parvez
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, William F. Weissman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Rubicon Technology, Inc. (the “registrant”);

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 the 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 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.

Date: August 8, 2011	By:	/s/ William F. Weissman
		William F. Weissman
		Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002,

18 U.S.C. Section 1350

In connection with the Quarterly Report of Rubicon Technology, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Raja M. Parvez, President and Chief Executive Officer of the Company, and I, William F. Weissman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2011	By:	/s/ Raja M. Parvez
		Raja M. Parvez
		President and Chief Executive Officer

Date: August 8, 2011	By:	/s/ William F. Weissman
		William F. Weissman
		Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Consolidated Balance Sheets
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	45,000,000	85,000,000
Common stock, shares issued	24,289,523	24,210,644
Common stock, shares outstanding	23,039,548	22,960,669
Treasury stock, shares	1,249,975	1,249,975

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Consolidated Statements Of Operations (USD $) In Thousands, except Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Consolidated Statements Of Operations
Revenue	$ 43,028	$ 15,787	$ 80,998	$ 27,303
Cost of goods sold	15,828	8,562	29,823	15,925
Gross profit	27,200	7,225	51,175	11,378
Operating expenses:
General and administrative	3,056	2,436	5,977	4,577
Sales and marketing	388	306	765	563
Research and development	410	234	837	446
Loss on disposal of assets	7	305	7	305
Income from operations	23,339	3,944	43,589	5,487
Other income:
Interest income	64	56	151	153
Realized loss on foreign currency translation		(19)	(6)	(59)
Realized gain (loss) on investments		(7)		8
Total other income (expense)	64	30	145	102
Income before income taxes	23,403	3,974	43,734	5,589
Income tax expense	13,495	86	14,722	126
Net income	$ 9,908	$ 3,888	$ 29,012	$ 5,463
Net income per common share
Basic	$ 0.43	$ 0.19	$ 1.26	$ 0.27
Diluted	$ 0.41	$ 0.18	$ 1.21	$ 0.25
Weighted average common shares outstanding used in computing net income per common share
Basic	23,031,039	20,790,208	23,012,326	20,517,277
Diluted	23,928,408	21,912,520	23,936,026	21,675,190

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Document And Entity Information	6 Months Ended
	Jun. 30, 2011	Aug. 05, 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	Rubicon Technology, Inc.
Entity Central Index Key	0001410172
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		23,039,548

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Significant Customers

6 Months Ended

Jun. 30, 2011

Significant Customers

Significant Customers

6. SIGNIFICANT CUSTOMERS

For the three months ended June 30, 2011, the Company had three customers that accounted for approximately 26%, 22% and 17% of revenue and for the three months ended June 30, 2010, the Company had two customers that accounted for approximately 19% and 15% of revenue. For the six months ended June 30, 2011, the Company had three customers that accounted for approximately 28%, 20% and 18% of revenue and for the six months ended June 30, 2010, the Company had two customers that accounted for approximately 22% and 12% of revenue.

Customers individually representing more than 10% of trade receivables accounted for approximately 85% and 62% of accounts receivable as of June 30, 2011 and December 31, 2010, respectively. The Company grants credit to customers based on an evaluation of their financial condition. Losses from credit sales are provided for in the financial statements.

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Subsequent Event

6 Months Ended

Jun. 30, 2011

Subsequent Event [Abstract]

Subsequent Event

11. SUBSEQUENT EVENT

On August 4, 2011, the Company authorized a stock repurchase program to purchase up to $25.0 million of its common stock over a period of two years. The stock repurchase program authorizes the Company to repurchase its shares of common stock in the open market at times and prices considered appropriate by the Company depending upon prevailing market conditions and other corporate considerations.

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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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Rubicon Worldwide LLC and Rubicon Sapphire Technology (Malaysia) SDN BHD. All intercompany transactions and balances have been eliminated in consolidation.

Foreign currency translation and transactions

Rubicon Worldwide LLC's assets and liabilities are translated into US dollars at exchange rates existing at the respective balance sheet dates and capital accounts at historical exchange rates. The results of operations are translated into US dollars at the average exchange rates during the respective period. Translation adjustments resulting from fluctuations in exchange rates for Rubicon Worldwide LLC are recorded as a separate component of accumulated other comprehensive income (loss) within stockholders' equity.

The Company has determined that the functional currency of Rubicon Sapphire Technology (Malaysia) SDN BHD is the US dollar. Rubicon Sapphire Technology (Malaysia) SDN BHD's assets and liabilities are translated into US dollars using the remeasurement method. Non-monetary assets are translated at historical exchange rates and monetary assets are translated at exchange rates existing at the respective balance sheet dates. Translation adjustments for Rubicon Sapphire Technology (Malaysia) SDN BHD are included in determining net income (loss) for the period. The results of operations are translated into US dollars at the average exchange rates during the respective period. The Company records these gains and losses in other income (expense).

Foreign currency transaction gains and losses are generated from the effects of exchange rate changes on transactions denominated in a currency other than the functional currency of the Company, which is the US dollar. Gains and losses on foreign currency transactions are generally required to be recognized in the determination of net income (loss) for the period. The Company records these gains and losses in other income (expense).

Investments

The Company invests available cash primarily in investment grade commercial paper, corporate notes and government securities. Investments classified as available-for-sale securities are carried at fair market value with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Investments in trading securities are reported at fair value, with both realized and unrealized gains and losses recorded in other income (expense), in the Consolidated Statement of Operations. Investments in which the Company has the ability and intent, if necessary, to liquidate in order to support its current operations, are classified as short-term.

The Company reviews its available-for-sale securities investments at the end of each quarter for other-than-temporary declines in fair value based on the specific identification method. The Company considers various factors in determining whether an impairment is other-than-temporary, including the severity and duration of the impairment, changes in underlying credit ratings, forecasted recovery, its ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. When the Company concludes that an other-than-temporary impairment has resulted, the difference between the fair value and carrying value is written off and recorded as a charge on the Consolidated Statement of Operations. As of June 30, 2011, no impairment was recorded.

Auction-rate securities put options ("ARS Put Options")

In October 2008, the Company entered into an agreement that provided the Company with the right, but not the obligation, to sell all of its auction-rate securities to UBS, AG for par value during the period from June 30, 2010 to July 2, 2012. The ARS Put Options provided the Company with the opportunity to recover the estimated unrealized loss on its ARS investments. The Company recorded the fair value of the ARS Put Options upon receipt. The Company valued ARS Put Options at fair value using a discounted cash flow model. Unrealized gains and losses related to the ARS Put Options were recognized in earnings. The Company exercised these put options on June 30, 2010. At June 30, 2011, the Company had no investments in auction rate security put options or auction rate securities. The Company's investment policy no longer allows auction rate securities as an approved investment. See Note 4—Investments for additional information regarding the ARS Put Options.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out method, and includes materials, labor and overhead. The Company reduces the carrying value of its inventories for differences between the cost and the estimated net realizable value, taking into account usage, expected demand, technological obsolescence and other information. Inventories are composed of the following:

	June 30, 2011			December 31, 2010
	(in thousands)
Raw materials	$	5,833		$	5,196
Work in progress		3,206			3,135
Finished goods		4,045			3,358
		13,084			11,689
Reserve for obsolescence and realization		(469	)		(554	)
	$	12,615		$	11,135

Property and equipment

Property and equipment consisted of the following:

	June 30, 2011			December 31, 2010
	(in thousands)
Land and land improvements	$	2,504		$	2,500
Buildings		24,382			22,897
Machinery, equipment and tooling		76,856			56,956
Leasehold improvements		7,712			7,712
Furniture and fixtures		835			824
Information systems		906			869
Construction in progress		18,966			15,353
Total cost		132,161			107,111
Accumulated depreciation and amortization		(28,537	)		(24,600	)
Property and equipment, net	$	103,624		$	82,511

Revenue recognition

The Company recognizes revenue from product sales when earned. Revenue is recognized when, and if, evidence of an arrangement is obtained and the other criteria to support revenue recognition are met, including:

• Persuasive evidence of an arrangement exists. The Company requires evidence of a purchase order with the customer specifying the terms and specifications of the product to be delivered, typically in the form of a signed quotation or purchase order from the customer.

• Title has passed and the product has been delivered. Title passage and product delivery generally occur when the product is delivered to a common carrier.

• The price is fixed or determinable. All terms are fixed in the signed quotation or purchase order received from the customer. The purchase orders do not contain rights of cancellation, return, exchange or refund.

• Collection of the resulting receivable is reasonably assured. The Company's standard arrangement with customers includes payment terms. Customers are subject to a credit review process that evaluates each customer's financial position and its ability to pay. Collectability is determined by considering the length of time the customer has been in business and history of collections. If it is determined that collection is not probable, no product is shipped and no revenue is recognized unless cash is received in advance.

The Company does not provide maintenance or other services and it does not have sales that involve multiple elements or deliverables.

Net income per common share

Net income per share of common stock is as follows for the three and six months ended June 30, 2011 and 2010:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Net income (in thousands)	$	9,908	$	3,888	$	29,012	$	5,463
Net income per common share:
Basic	$	0.43	$	0.19	$	1.26	$	0.27
Diluted	$	0.41	$	0.18	$	1.21	$	0.25
Weighted average common shares outstanding used in:
Basic		23,031,039		20,790,208		23,012,326		20,517,277
Diluted		23,928,408		20,912,520		23,936,026		21,675,190

Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted-average number of diluted common shares outstanding during the period. Diluted shares outstanding are calculated by adding to the weighted-average shares any outstanding stock options and warrants based on the treasury stock method.

Recent accounting pronouncements

In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-04, "Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and IFRS," ("ASU 2011-04"). These amendments, effective for the interim and annual periods beginning on or after December 15, 2011 (early adoption is prohibited), result in common definition of fair value and common requirements for measurement of and disclosure requirements between US GAAP and IFRS. ASU 2011-04 clarifies or changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. The adoption of ASU 2011-04 is not expected to have a material impact on the Company's financial condition or results of operation.

In June 2011, the FASB issued ASU No. 2011-05, "Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income," ("ASU 2011-05") which amends current comprehensive income guidance. This guidance is effective retrospectively for the interim and annual periods beginning on or after December 15, 2011 (early adoption is permitted), requires presentation of total 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. ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. The pronouncement does not change the current option for presenting components of other comprehensive income, gross, or net of the effect of income taxes, provided that such tax effects are presented in the statement in which other comprehensive income is presented or disclosed in the notes to the financial statements. Additionally, the pronouncement does not affect the calculation or reporting of earnings per share. The pronouncement also does not change the items which must be reported in other comprehensive income, how such items are measured, or when such items must be reclassified to net income. The adoption of ASU 2011-05 is not expected to have a material impact on the Company's financial condition or results of operation.

Reclassifications

Certain prior period amounts on the balance sheet have been reclassified to conform to the current period presentation.

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Stock Incentive Plans

6 Months Ended

Jun. 30, 2011

Stock Incentive Plans

Stock Incentive Plans

8. STOCK INCENTIVE PLANS

The Company sponsors a stock option plan, the 2001 Plan, which allows for the grant of incentive and nonqualified stock options for the purchase of common stock. The maximum number of shares which may be awarded or sold under the 2001 Plan is 1,449,667 shares. Each option entitles the holder to purchase one share of common stock at the specified option exercise price. The exercise price of each incentive stock option granted must not be less than the fair market value on the grant date. At the discretion of management and with the approval of the Board of Directors, the Company may grant options under the 2001 Plan. Management and the Board of Directors determine vesting periods and expiration dates at the time of the grant.

In August 2007, the Company adopted the 2007 Plan, which allows for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and bonus shares. On June 22, 2011, the shareholders of the Company approved an amendment to the 2007 Plan to increase the maximum number of shares which may be awarded or sold under the 2007 Plan by 2,100,000 from 2,307,692 to 4,407,692 shares. The Board of Directors has appointed a committee to administer the plan. The plan committee determines the type of award to be granted, the fair market value, the number of shares covered by the award, and the time when the award vests and may be exercised.

The Company uses the Black-Scholes option pricing model to value stock options issued after January 1, 2006. The Company uses historical stock prices of companies which it considers as a peer group as the basis for its volatility assumptions. The assumed risk-free rates were based on US Treasury rates in effect at the time of grant with a term consistent with the expected option lives. The expected term is based upon the vesting term of the Company's options, a review of a peer group of companies, and expected exercise behavior. The forfeiture rate is based on past history of forfeited options. The expense is being allocated using the straight-line method. For the three and six months ended June 30, 2011, the Company recorded $843,000 and $1.7 million, respectively, of stock compensation expense. For the three and six months ended June 30, 2010, the Company recorded $504,000 and $941,000, respectively, of stock compensation expense. As of June 30, 2011, the Company has $6.2 million of total unrecognized compensation cost related to non-vested awards granted under the Company's stock-based plans that it expects to recognize over a weighted-average period of 2.53 years. The Company accounts for options issued prior to January 1, 2006 under the intrinsic value method.

The following table summarizes the activity of the stock incentive and equity plans as of June 30, 2011 and changes during the six months then ended:

	Shares available for grant			Number of options outstanding			Weighted- average option exercise price		Number of restricted stock and board shares issued
At December 31, 2010		643,850			1,830,397		$	12.98		34,863
Authorized		2,100,000			—			—		—
Granted		(158,874	)		151,150			22.86		7,724
Exercised		—			(73,228	)		10.80		—
Cancelled/forfeited		24,727			(24,727	)		19.48		—
At June 30, 2011		2,609,703			1,883,592		$	13.86		42,587

The Company's aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company's common stock. Based on the fair market value of the common stock at June 30, 2011 and 2010, the intrinsic value for options outstanding was $5.6 million and $31.4 million, respectively. The weighted average fair value per share of options granted for the six months ended June 30, 2011 was $24.03 and the fair value of each option grant was estimated at the date of grant using the Black-Scholes option pricing model using an expected term of 5.0 years, risk-free interest rates of 1.87%-2.24%, expected volatility of 51% and no dividend yield. The Company used an expected forfeiture rate of 24.53%.

For the three and six months ended June 30, 2011, the Company recorded $41,000 and $84,000, respectively, of stock compensation expense related to restricted stock. For the three and six months ended June 30, 2010, the Company recorded $44,000 and $73,000, respectively, of stock compensation expense related to restricted stock.

A summary of the Company's non-vested options during the six month period ended June 30, 2011 is presented below:

	Options			Weighted-average exercise price
Non-vested at January 1, 2011		1,339,384		$	13.55
Granted		151,150			24.03
Vested		(238,198	)		9.26
Forfeited		(23,475	)		19.83
Non-vested at June 30, 2011		1,228,861		$	16.18

An analysis of restricted stock issued is as follows:

Non-vested restricted stock as of December 31, 2010	1,762
Granted	7,724
Vested	(3,693	)
Non-vested restricted stock as of June 30, 2011	5,793

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Commitments And Contingencies

6 Months Ended

Jun. 30, 2011

Commitments And Contingencies

Commitments And Contingencies

9. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

The Company has entered into agreements to purchase equipment and components to construct furnaces. These agreements will result in the Company purchasing equipment or components for a total cost of approximately $18.7 million with deliveries occurring through February 2012.

Litigation

From time to time, the Company experiences routine litigation in the normal course of its business. The management of the Company does not believe any pending litigation will have a material adverse effect on the financial condition or results of operations of the Company.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity

Stockholders' Equity

7. STOCKHOLDERS' EQUITY

Common Stock

On June 22, 2011, the shareholders of the Company approved a reduction of the shares of common stock authorized with a par value of $0.001 by 40,000,000 from 85,000,000 to 45,000,000. As of June 30, 2011 the Company had reserved 1,883,592 shares of common stock for issuance upon the exercise of outstanding common stock options. Also, 2,609,703 shares of the Company's common stock were reserved for future grants of stock options (or other similar equity instruments) under the Company's 2001 Equity Plan (the "2001 Plan") and 2007 Stock Incentive Plan (the "2007 Plan") as of June 30, 2011. In addition, 281,561 shares of the Company's common stock were reserved for future exercise of outstanding warrants as of June 30, 2011.

On June 21, 2010, the Company completed a public offering of common stock in which a total of 3,029,100 shares were sold at a price of $30.00 per share. The Company sold 2,195,100 shares of common stock, including 395,100 shares pursuant to the full exercise of the underwriter's over-allotment option, and 834,000 shares of common stock were sold by certain stockholders of the Company. The Company raised a total of $65.9 million in gross proceeds from the offering, or approximately $61.8 million in net proceeds after deducting the underwriting discount and commissions of $3.5 million and estimated other offering costs of approximately $642,000. The Company did not receive any of the proceeds from the sale of common stock by the selling stockholders.

Warrants

For the three and six months ended June 30, 2011, no common stock warrants were exercised. At June 30, 2011 and December 31, 2010, there were 281,561 common stock warrants outstanding.

Treasury Stock

In November 2008, the Company authorized a stock repurchase program to purchase up to $15.0 million of common stock over a period of two years. The stock repurchase program authorized the Company to repurchase shares of its common stock in the open market at times and prices considered appropriate by the Company depending upon prevailing market conditions and other corporate considerations. The treasury shares are accounted for using the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. During 2010, no shares were repurchased and the program terminated on its terms on December 31, 2010.

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Consolidated Statements Of Cash Flows (Parenthetical) (USD $) In Thousands	6 Months Ended
	Jun. 30, 2010
Consolidated Statements Of Cash Flows
Proceeds from issuance of common stock, issuance costs	$ 4,063

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Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information

Segment Information

3. SEGMENT INFORMATION

The Company evaluates operations as one reportable segment, as it only reports profit and loss information on an aggregate basis to its chief operating decision maker.

Revenue is attributed by geographic region based on ship-to location of the Company's customers. The following table summarizes revenue by geographic region:

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
	(in thousands)				(in thousands)
Asia	$	38,698	$	13,421	$	74,084	$	22,523
North America		3,537		1,929		5,452		4,040
Europe		793		437		1,462		740
Total Revenue	$	43,028	$	15,787	$	80,998	$	27,303

The following table summarizes assets by geographic region:

	June 30, 2011		December 31, 2010
	(in thousands)
North America	$	221,934	$	186,511
Asia		27,554		20,231
Total Assets	$	249,488	$	206,742

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Investments

6 Months Ended

Jun. 30, 2011

Investments

Investments

4. INVESTMENTS

The Company invests available cash primarily in investment grade commercial paper, corporate notes and government securities. The Company's short-term investments balance of $63.0 million as of June 30, 2011, is comprised of US Treasury securities of $4.0 million, corporate notes and bonds of $37.5 million and commercial paper of $21.5 million. The Company's investments are classified as available-for-sale securities and are carried at fair market value with unrealized gains and losses recorded in accumulated other comprehensive income (loss).

Until July 1, 2010, the Company held auction-rate securities as part of the investment portfolio. The auction-rate securities were trading securities recorded at fair value and unrealized gains and losses were reported as part of gain on investments in the Consolidated Statements of Operations. In February 2008, the Company began experiencing failed auctions of its entire auction-rate securities portfolio, resulting in its inability to sell these securities in the short term. The Company held put options associated with an agreement with UBS, AG related to the auction-rate securities purchased through them. The Company exercised these put options on June 30, 2010 with a settlement date of July 1, 2010. The ARS Put Options provided the Company with the opportunity to recover the estimated unrealized loss on its ARS investments. The Company recorded the fair value of the ARS Put Options upon receipt and valued the put options at their estimated fair value using a discounted cash flow model that weighs various factors, including interest rates and expected holding period. Unrealized gains and losses related to the ARS Put Options were recognized in earnings. During the three and six months ended June 30, 2010, the Company recorded a gain (loss) of ($7,337) and $63,466 representing the changes in fair value of the auction-rate securities. The Company also recorded during the six months ended June 30, 2010 a loss of $55,279, representing the changes in fair value of the put options. Both the gain and loss from recording the change in fair value of the put options and auction-rate securities were recorded in gain on investments in the Consolidated Statements of Operations. The Company's investment policy no longer allows auction rate securities as an approved investment.

The Company's long-term investment at June 30, 2011 consists of a $2.0 million investment in Peregrine Semiconductor, Corp. (a customer) Series D-1 Preferred shares and is accounted for as a cost method investment. The value is adjusted for impairment based on review of Peregrine's financial position. No impairment was noted as of June 30, 2011.

The following table presents the amortized cost and gross unrealized gains and losses on all securities at June 30, 2011:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
Short-term Investments:
US Treasury securities and agency (taxable)	$	4,000	$	4	$	—		$	4,004
Corporate Notes and Bonds (taxable)		37,530		—		(31	)		37,499
Commercial Paper (taxable)		21,496		1		—			21,497
Total short-term investments	$	63,026	$	5	$	(31	)	$	63,000
Long-term Investments:
Peregrine Semiconductor, Corp. Series D-1 Preferred shares	$	2,000	$	—	$	—		$	2,000

The Company values its investments at fair value, defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard below describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company's fixed income available-for-sale securities consist of high quality, investment grade commercial paper, corporate notes and government securities. The Company values these securities based on pricing from pricing vendors, who may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. The valuation techniques used to measure the fair value of the Company's financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models, such as discounted cash flow techniques.

The following table summarizes the Company's financial assets measured at fair value on a recurring basis as of June 30, 2011:

	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash Equivalents:
Money market funds	$	13,293	$	—	$	—	$	13,293
Investments:
Available-for-sales securities—current
US Treasury securities and agency		—		4,004		—		4,004
Corporate notes/bonds		—		37,499		—		37,499
Commercial paper		—		21,497		—		21,497
Total	$	13,293	$	63,000	$	—	$	76,293

The following table summarizes the Company's financial assets measured at fair value on a recurring basis as of December 31, 2010:

	Level 1		Level 2		Level 3		Total
	(in thousands)
Cash Equivalents:
Money market funds	$	10,042	$	—	$	—	$	10,042
Investments:
Available-for-sales securities—current:
US Treasury securities and agency		—		9,496		—		9,496
Corporate notes/bonds		—		38,081		—		38,081
Commercial paper		—		18,554		—		18,554
Total	$	10,042	$	66,131	$	—	$	76,173

In addition to the debt securities noted above, the Company had approximately $6.7 million and $6.0 million of time deposits included in cash and cash equivalents as of June 30, 2011 and December 31, 2010, respectively.

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Related Party Transactions

6 Months Ended

Jun. 30, 2011

Related Party Transactions

Related Party Transactions

5. RELATED PARTY TRANSACTIONS

In November 2008, the Company purchased 1,345,444 shares of Peregrine Series D-1 Preferred shares for a total of $2.0 million, which represents less than 1% of Peregrine's shares outstanding. The terms and stock price of the purchase were the same as for the other investors who participated. Peregrine is a customer of the Company. For the three and six months ended June 30, 2011, revenue from Peregrine was $542,500 and $647,500, respectively. As of June 30, 2011 and December 31, 2010, accounts receivable from Peregrine were $315,000 and $630,000, respectively. The pricing terms and conditions of the sales to Peregrine are similar to those available to the Company's other non-related customers.

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Consolidated Statements Of Cash Flows (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities
Net income	$ 29,012	$ 5,463
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,265	2,790
Loss on disposal of assets	7	305
Stock-based compensation	1,750	1,013
Realized gain on investments		(8)
Deferred tax assets	(3,329)
Excess tax benefits from stock-based compensation	(10,711)
Changes in operating assets and liabilities:
Accounts receivable	(12,567)	(4,272)
Inventories	(1,442)	(237)
Other inventory supplies	(3,589)	(1,270)
Prepaid expenses and other current assets	141	(295)
Accounts payable	(825)	1,213
Accrued payroll	(888)	725
Corporate income and franchise taxes	12,389	(20)
Advanced payments	(719)	(17)
Accrued and other current liabilities	1,264	954
Net cash provided by operating activities	14,758	6,344
Cash flows from investing activities
Purchases of property and equipment	(25,385)	(19,692)
Purchases of investments		(47,687)
Proceeds from sale of investments	3,113	15,500
Net cash (used in) investing activities	(22,272)	(51,879)
Cash flows from financing activities
Proceeds from issuance of common stock, net of issuance costs of $4,063		61,789
Proceeds from exercise of options	741	1,251
Restricted cash	(9)	(498)
Excess tax benefits from stock-based compensation	10,711
Net cash provided by financing activities	11,443	62,542
Net effect of currency translation	(29)	43
Net increase in cash and cash equivalents	3,900	17,050
Cash and cash equivalents, beginning of period	16,073	3,860
Cash and cash equivalents, end of period	19,973	20,910
Supplemental disclosures of cash flow information Cash paid for income taxes	5,420
Supplemental disclosures of non-cash transactions Unrealized loss on investments	$ 18	$ 86

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Basis Of Presentation

6 Months Ended

Jun. 30, 2011

Basis Of Presentation

Basis Of Presentation

1. BASIS OF PRESENTATION

Interim financial data

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete consolidated financial statements and should be read in conjunction with Rubicon Technology, Inc.'s (the "Company") annual report filed on Form 10-K for the fiscal year ended December 31, 2010. In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the results of operations have been included. Consolidated operating results for the three and six month periods ended June 30, 2011 are not necessarily indicative of results that may be expected for the year ending December 31, 2011.

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Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

10. INCOME TAXES

The Company is subject to income taxes in the US and Malaysia. In accordance with the provisions of ASC Topic 740, "Income Taxes" the Company assesses on a quarterly basis its ability to realize its deferred tax assets. During the three months ended June 30, 2011, the Company concluded that based on the current level of sustainable profitability that generates taxable income, that it is more likely than not that the Company's deferred tax assets will be realizable. The Company recognized a tax benefit of $3.3 million to record current and long-term deferred tax assets. With the release of the valuation allowance, the Company began recording federal and certain state and non-US income taxes attributable to the fiscal year's pre-tax income. The Company recorded for the three and six months ended June 30, 2011, a tax provision of $13.5 million and $14.7 million, respectively, for an effective tax rate of 57.7% and 33.7%. The effective tax rate for the three months ended June 30, 2011, reflects a tax charge of approximately $5.5 million, or 23.7%, to provide for additional taxes on pre-tax income earned in the first three months of 2011 as a result of releasing the valuation reserve.

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Consolidated Balance Sheets (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Assets
Cash and cash equivalents	$ 19,973	$ 16,073
Restricted cash	542	533
Short-term investments	63,000	66,131
Accounts receivable, net	31,243	18,676
Inventories, net	12,615	11,135
Other inventory supplies	11,437	7,821
Prepaid expenses and other current assets	1,725	1,862
Deferred tax assets	1,990
Total current assets	142,525	122,231
Property and equipment, net	103,624	82,511
Investments	2,000	2,000
Deferred tax assets	1,339
Total assets	249,488	206,742
Liabilities and stockholders' equity
Accounts payable	8,465	9,255
Accrued payroll	1,652	2,538
Corporate income and franchise taxes	2,084	407
Advance payments	385	1,103
Accrued and other current liabilities	2,614	1,345
Total current liabilities	15,200	14,648
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, $0.001 par value, 5,000,000 undesignated shares authorized, no shares issued or outstanding
Common stock, $0.001 par value, 45,000,000 and 85,000,000 shares authorized and 24,289,523 and 24,210,644 shares issued; 23,039,548 and 22,960,669 shares outstanding	24	23
Additional paid-in capital	340,716	327,515
Treasury stock, at cost, 1,249,975 shares	(5,661)	(5,661)
Accumulated other comprehensive deficit	(30)	(10)
Accumulated deficit	(100,761)	(129,773)
Total stockholders' equity	234,288	192,094
Total liabilities and stockholders' equity	$ 249,488	$ 206,742