Tower US Holdings Inc. - FORM 10-Q

Attached files

file	filename
EX-32.2 - EXHIBIT 32.2 - Tower US Holdings Inc.	exhibit_32-2.htm
EX-31.2 - EXHIBIT 31.2 - Tower US Holdings Inc.	exhibit_31-2.htm
EX-31.1 - EXHIBIT 31.1 - Tower US Holdings Inc.	exhibit_31-1.htm
EXCEL - IDEA: XBRL DOCUMENT - Tower US Holdings Inc.	Financial_Report.xls
EX-32.1 - EXHIBIT 32.1 - Tower US Holdings Inc.	exhibit_32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

Or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-32832

Jazz Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware		20-3320580
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4321 Jamboree Road Newport Beach, California		92660
(Address of principal executive offices)		(Zip Code)

(949) 435-8000

Registrant’s telephone number, including area code

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

Yes x No o

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

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

Yes x No o

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

Smaller reporting company o

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

Yes o No x

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

JAZZ TECHNOLOGIES, INC.

Table of Contents

PART I — FINANCIAL INFORMATION			1

	Item 1.	Financial Statements	1

		Unaudited Condensed Consolidated Balance Sheets	1

		Unaudited Condensed Consolidated Statements of Operations	2

		Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	3

		Unaudited Condensed Consolidated Statements of Cash Flows	4

		Notes to Unaudited Condensed Consolidated Financial Statements	5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9

	Item 4.	Controls and Procedures	11

PART II — OTHER INFORMATION			11

	Item 1.	Legal Proceedings	11

	Item 1A.	Risk Factors	11

	Item 6.	Exhibits	11

SIGNATURES			12

Index to Exhibits			12

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Jazz Technologies, Inc. (A Wholly Owned Subsidiary of

Tower Semiconductor, Ltd.) and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

	June 30, 2012			December 31, 2011
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	41,174		$	19,471
Receivables:
Trade receivables, net of allowance for doubtful accounts of $907 and $1,020 at June 30, 2012 and December 31, 2011, respectively		22,939			17,032
Other receivables		2,730			4,485
Inventories		23,080			25,376
Deferred tax asset		4,357			4,357
Prepaid expenses and other current assets		4,025			4,147
Total current assets		98,305			74,868
Property, plant and equipment, net		95,119			101,537
Intangible assets, net		41,443			43,760
Goodwill		7,000			7,000
Other assets – related parties		4,806			15,185
Other assets – others		2,201			2,350
Total assets	$	248,874		$	244,700
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank debt	$	9,100		$	5,300
Accounts payable		12,411			12,050
Due to related parties		2,992			2,049
Accrued compensation and benefits		6,270			5,328
Deferred revenues		2,118			2,597
Accrued interest		3,784			3,764
Other current liabilities		3,150			4,427
Total current liabilities		39,825			35,515
Long term liabilities:
Long-term debt from bank		10,000			10,000
Notes		71,682			69,061
Deferred tax liability		5,722			5,722
Employee related liabilities		11,846			12,227
Other long-term liabilities		16,485			15,699
Total liabilities		155,560			148,224
Stockholders’ equity:
Additional paid-in capital		63,576			63,576
Cumulative stock based compensation		1,855			1,539
Accumulated other comprehensive loss (*)		(1,433	)		(1,433	)
Retained earnings		29,316			32,794
Total stockholders’ equity		93,314			96,476
Total liabilities and stockholders’ equity	$	248,874		$	244,700

(*)	Accumulated other comprehensive loss includes mainly plan assets and benefit obligation, net of taxes.

See accompanying notes.

Jazz Technologies, Inc. (A Wholly Owned Subsidiary of

Tower Semiconductor, Ltd.) and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands)

	Three months ended						Six months ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Revenues	$	42,172		$	45,829		$	83,247		$	96,626
Cost of revenues		33,198			31,231			66,801			66,016
Gross profit		8,974			14,598			16,446			30,610
Operating expenses:
Research and development		3,530			2,801			6,743			5,958
Selling, general and administrative		3,550			3,653			7,594			7,472
Amortization of intangible assets		197			197			394			394
Total operating expenses		7,277			6,651			14,731			13,824
Operating income		1,697			7,947			1,715			16,786
Financing expense and other expense, net		(3,454	)		(4,493	)		(6,549	)		(8,786	)
Net income (loss) before income taxes		(1,757	)		3,454			(4,834	)		8,000
Income tax benefit (expense)		267			(1,249	)		1,356			(2,713	)
Net income (loss)	$	(1,490	)	$	2,205		$	(3,478	)	$	5,287

See accompanying notes.

Jazz Technologies, Inc. (A Wholly Owned Subsidiary of

Tower Semiconductor, Ltd.) and Subsidiaries

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

	Three months ended						Six months ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Net income (loss)	$	(1,490	)	$	2,205		$	(3,478	)	$	5,287
Foreign currency translation adjustment		--			(42	)		--			(42	)
Comprehensive income (loss)	$	(1,490	)	$	2,163		$	(3,478	)	$	5,245

Jazz Technologies, Inc. (A Wholly Owned Subsidiary of

Tower Semiconductor, Ltd.) and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

	Six months ended June 30, 2012			Six months ended June 30, 2011
Operating activities:
Net income (loss)	$	(3,478	)	$	5,287
Adjustments to reconcile net income (loss) for the period to net cash provided by operating activities:
Depreciation and amortization of intangible assets		16,731			17,196
Notes accretion and amortization of deferred financing costs		2,807			3,409
Stock based compensation expense		316			346
Other expenses, net		7			320
Changes in operating assets and liabilities:
Trade receivables		(3,913	)		4,057
Inventories		2,296			(7,865	)
Prepaid expenses and other current assets		122			115
Accounts payable		2,472			(449	)
Due to related parties, net		(1,151	)		(1,705	)
Accrued compensation and benefits		942			(337	)
Deferred Revenue		(479	)		425
Accrued interest		20			(239	)
Other current liabilities		(1,277	)		(1,763	)
Employee related liabilities and other long-term liabilities		405			299
Net cash provided by operating activities		15,820			19,096
Investing activities:
Purchases of property and equipment		(10,069	)		(16,991	)
Proceeds related to property and equipment		12,152			4,820
Net cash used in investing activities		2,083			(12,171	)
Financing activities:
Short-term debt from bank		3,800			--
Debt repayment		--			(8,644	)
Net cash used in financing activities		3,800			(8,644	)
Effect of foreign currency on cash		--			(42	)
Net decrease (increase) in cash and cash equivalents		21,703			(1,761	)
Cash and cash equivalents at beginning of period		19,471			29,031
Cash and cash equivalents at end of period	$	41,174		$	27,270
Non cash activities:

Investments in property, plant and equipment	$	3,061	$	4,803

Supplemental disclosure of cash flow information:

Cash paid during the period for interest		$	3,880			$	5,938
Cash paid (received) during the period for income taxes		$	(1,085	)		$	3,403

See accompanying notes.

Jazz Technologies, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2012

Note 1: Business and Formation

Unless specifically noted otherwise, as used throughout these notes to the unaudited condensed consolidated financial statements, “Jazz” or the “Company” refers to the business of Jazz Technologies, Inc., and “Jazz Semiconductor” refers only to the business of Jazz Semiconductor, Inc.

The Company

Since the merger with Tower in 2008, the Company is a 100% subsidiary of Tower.

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

Note 2: Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

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

The condensed consolidated financial statements included herein are unaudited; however, they contain all normal recurring adjustments that, in the opinion of management, are necessary to present fairly the Company’s consolidated financial position at June 30, 2012 and December 31, 2011, and the consolidated results of its operations and cash flows for the three months and six months ended June 30, 2012 and 2011. All intercompany accounts and transactions have been eliminated. Certain amounts have been reclassified in order to conform to 2012 presentation.

Use of Estimates

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

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with US GAAP. For financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities.

Concentrations

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable.

The Company generally does not require collateral for insurance of receivables, however, in certain circumstances the Company may require letters of credit. An allowance for doubtful accounts is determined with respect to those amounts that were determined to be doubtful of collection. The Company performs ongoing credit evaluations of its customers.

Accounts receivable from significant customers representing 10% or more of the net accounts receivable balance as of June 30, 2012 and December 31, 2011 consists of 2 customers:

	June 30, 2012			December 31, 2011
Customer 1		18	%		19	%
Customer 2		12			5

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

	Three months ended						Six months ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Customer A		15	%		16	%		17	%		18	%
Customer B		12			5			12			3
Customer C		5			7			5			10

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

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

Initial Adoption of New Standards

In the first quarter of 2012, the Company adopted amended standards that increase the prominence of items reported in other comprehensive income. These amended standards eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity and require that all changes in stockholders’ equity – except investments by, and distributions to, owners – be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The adoption of these amended standards did impact the presentation of other comprehensive income, as we have elected to present two separate but consecutive statements, but did not have an impact on our financial position or results of operations.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). ASU 2011-04 was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between GAAP and International Financial Reporting Standards. ASU 2011-04 clarifies the FASB’s intent about the application of existing fair value measurement and disclosure requirements, changes certain fair value measurement principles and enhances fair value disclosure requirements. Effective January 1, 2012, the Company adopted the disclosure provisions included in ASU 2011-04. The adoption of ASU 2011-04 had no impact on our financial position or results of operations

Note 3: Other Balance Sheet Details

Inventories

Inventories, net of reserves, consist of the following at June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012		December 31, 2011
Raw material	$	3,526	$	3,856
Work in process		12,304		9,359
Finished goods		7,250		12,161
	$	23,080	$	25,376

Property, Plant and Equipment

Property, plant and equipment consist of the following at June 30, 2012 and December 31, 2011 (in thousands):

	Useful life (In years)		June 30, 2012			December 31, 2011
Building improvements		10-12	$	24,305		$	24,305
Machinery and equipment		7		153,492			145,047
Furniture and equipment		5-7		2,213			2,213
Computer software		3		3,138			3,138
				183,148			174,703
Accumulated depreciation				(88,029	)		(73,166	)
			$	95,119		$	101,537

Intangible Assets

Intangible assets consist of the following at June 30, 2012 (in thousands):

	Useful life (In years)		Cost		Accumulated Amortization		Net
Technology		4;9	$	2,300	$	1,203	$	1,097
Patents and other core technology rights		9		15,100		6,353		8,747
In-process research and development		--		1,800		1,800		--
Customer relationships		15		2,600		657		1,943
Trade name		9		5,200		2,188		3,012
Facilities lease		19		33,500		6,856		26,644
Total identifiable intangible assets			$	60,500	$	19,057	$	41,443

Intangible assets consist of the following at December 31, 2011 (in thousands):

	Useful life (In years)		Cost		Accumulated Amortization		Net
Technology		4;9	$	2,300	$	1,006	$	1,294
Patents and other core technology rights		9		15,100		5,514		9,586
In-process research and development		--		1,800		1,800		--
Customer relationships		15		2,600		570		2,030
Trade name		9		5,200		1,899		3,301
Facilities lease		19		33,500		5,951		27,549
Total identifiable intangible assets			$	60,500	$	16,740	$	43,760

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

Note 4: Credit Facility

Borrowing availability under the facility as of June 30, 2012, was $28 million. Outstanding borrowings were $19.1 million and $1.3 million of the facility supporting outstanding letters of credits on that date. The Company considers borrowings of $10 million to be long-term debt as of June 30, 2012. As of June 30, 2012, the Company was in compliance with all the covenants under this facility.

Note 5: Notes

In 2006, the Company privately placed convertible notes which bore interest at a rate of 8% per annum payable semi-annually, and were scheduled to mature in December, 2011 (“Old Notes”).

On July 2010, the Company, together with its domestic subsidiaries and its parent, Tower, entered into an exchange agreement (the “Exchange Agreement”) with certain note holders (the “Participating Holders”) holding approximately $79.6 million principal amount of the Old Notes. Under the Exchange Agreement, the Participating Holders exchanged their Old Notes for newly-issued 8% non-convertible notes of the Company due June 2015 (the “New Notes”) at an exchange ratio of 1.175 face amount of New Notes for each 1.000 face amount of Old Notes. In October 2011, the Company completed a voluntary transaction to redeem early the entire remaining outstanding amount of the Old Notes held by holders other than the Participating Holders.

In addition to the New Notes, the Participating Holders received warrants to purchase approximately 25.3 million ordinary shares of Tower at an exercise price of $1.70 per share (“Warrants J”). Interest on the New Notes at a rate of 8% per annum is payable semiannually. As of June 30, 2012, approximately $93.6 million in principal amount of New Notes remained outstanding.

The New Notes constitute unsecured obligations of the Company, rank on parity in right of payment with all other indebtedness of the Company, and are effectively subordinated to all secured indebtedness of the Company to the extent of the value of the collateral securing such indebtedness and are not guaranteed by Tower. The New Notes shall rank senior to all future indebtedness of the Company to the extent the future indebtedness is expressly subordinated to the New Notes. The New Notes are jointly and severally guaranteed on a senior unsecured basis by the Company’s domestic subsidiaries.

Beginning July 1, 2013, the Company may redeem some or all of the New Notes for cash at a redemption price equal to par plus accrued and unpaid interest plus a redemption premium equal to 4% if redemption occurs prior to July 1, 2014 and 2% if redemption occurs between July 1, 2014 and maturity.

The Indenture contains certain covenants including covenants restricting the Company’s ability and the ability of its subsidiaries to, among other things, incur additional debt, incur additional liens, make specified payments and make certain asset sales.

Holders of the New Notes are entitled, subject to certain conditions and restrictions, to require the Company to repurchase the New Notes at par plus accrued interest and a 1% redemption premium in the event of certain change of control transactions.

The Company’s obligations under the New Notes are guaranteed by the Company’s wholly owned domestic subsidiaries. The Company has not provided condensed consolidated financial information for such subsidiaries because the Company has no independent assets or operations, the subsidiary guarantees are full and unconditional and joint and several, and subsidiaries of the Company other than the subsidiary guarantors are minor. Other than the restrictions in the Loan Agreement, there are no significant restrictions on the ability of the Company and its subsidiaries to obtain funds from their subsidiaries by loan or dividend.

Note 6: Income Taxes

In February 2012, the U.S. tax authorities commenced an audit of the Company’s tax returns, and required certain reports and data in connection with the tax returns for the audited years. There is no indication to date whether the Company will be required to pay any additional taxes pursuant to said audit.

Note 7: Employee Benefit Plans

The pension and other post retirement benefit plans expenses for the three months and six months ended June 30, 2012 were $0.1 million and $0.2 million, respectively. The amounts for the pension and other post retirement benefit plans expenses for the three months and six months ended June 30, 2011 were $0.3 million and $0.5 million, respectively.

Note 8: Employee Stock Option Expense

During the six months ended June 30, 2012, Tower awarded 5,000 non-qualified stock options exercisable to Tower’s ordinary shares to the Company’s employees. The Company recorded $0.2 million and $0.3 million of compensation expenses relating to options granted to employees for the three months and six months ended June 30, 2012. The Company recorded $0.2 million and $0.3 million of compensation expenses relating to employees’ options during the corresponding period in 2011.

Note 9: Related Party Transactions

Related Party Transactions consist of the following at June 30, 2012 (in thousands):

	As of June 30, 2012		As of December 31, 2011
Due from related parties (included in the accompanying balance sheets)	$	10,420	$	20,560
Due to related parties (included in the accompanying balance sheets)	$	2,992	$	2,049

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the financial statements and related notes contained elsewhere in this report. See our Annual Report on Form 10-K and subsequent quarterly reports filed with the Securities and Exchange Commission for information regarding certain risk factors known to us that could cause reported financial information not to be necessarily indicative of future results.

FORWARD LOOKING STATEMENTS

This report on Form 10-Q may contain “forward-looking statements” within the meaning of the federal securities laws made pursuant to the safe harbor provisions of the Private Securities Litigation Report Act of 1995. These statements, which represent our expectations or beliefs concerning various future events, may contain words such as “may,” “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” or other words indicating future results. Such statements may include but are not limited to statements concerning the following:

anticipated trends in revenues;

growth opportunities in domestic and international markets;

new and enhanced channels of distribution;

customer acceptance and satisfaction with our products;

expected trends in operating and other expenses;

purchase of raw materials at levels to meet forecasted demand;

anticipated cash and intentions regarding usage of cash;

changes in effective tax rates; and

anticipated product enhancements or releases.

This report, including these forward-looking statements, are subject to risks and uncertainties, including those risks and uncertainties described in our Annual Report on Form 10-K and subsequent quarterly reports filed with the Securities and Exchange Commission, that could cause actual results to differ materially from those anticipated as of the date of this report. We assume no obligation to update any forward-looking statements to reflect events or circumstances arising after the date of this report.

RESULTS OF OPERATIONS

For the six months ended June 30, 2012, we had a net loss of $3.5 million compared to a net profit of $5.3 million for the six months ended June 30, 2011.

The following table sets forth certain statement of operations data as a percentage of total revenues for the periods indicated.

	Six Months Ended
	June 30, 2012			June 30, 2011
Net revenues		100	%		100	%
Cost of revenues		80.2			68.3
Gross profit		19.8			31.7
Operating expenses:
Research and development		8.1			6.2
Selling, general and administrative		9.1			7.7
Amortization of intangible assets		0.5			0.4
Total operating expenses		17.7			14.3
Operating income		2.1			17.4
Financing expense and other expense, net		(7.9	)		(9.1	)
Income tax benefit (expense)		1.6			(2.8	)
Net income (loss)		(4.2	)%		5.5	%

Comparison of six Months Ended June 30, 2012 and June 30, 2011

Revenues

Our net revenues for the six months ended June 30, 2012 amounted to $83.2 million as compared to $96.6 million for the corresponding period in 2011.The 14% revenue decrease is comprised from 2% lower quantities sold during the six months ended June 30, 2012 and 17% lower average selling price for our products

Cost of Revenues

Our cost of revenues were $66.8 million for the six months ended June 30, 2012, almost similar as compared to $66.0 million for the corresponding period in 2011. There was no reduction in cost of revenues despite the revenue decrease since, as described above, the revenue reduction was caused almost entirely by average selling price reduction.

Gross Profit

Gross profit was $16.4 million in the six months ended June 30, 2012, $14.2 million lower than $30.6 million in the corresponding period in 2011. Such reduction was mainly attributed to the decrease in average wafer prices described above.

Operating Expenses

Operating expenses for the six months ended June 30, 2012 amounted to $14.7 million, slight increase compared to $13.8 million in the six months ended June 30, 2011.

Financing Expense and Other Expense, Net

Financing expense, net for the six months ended June 30, 2012 decreased to $6.5 million, from $8.8 million in the corresponding period in 2011 mainly due to the redemption of the Old Notes in October 2011 as described above. Financing expense net, mainly relates to our notes.

Income Tax Benefit (Expense)

Income tax benefit amounted to $1.4 million in the six months ended June 30, 2012, as compared to income tax expense of $2.7 million in the six months ended June 30, 2011. The $4.1 million decrease in income tax expenses is mainly as a result of the decrease in operating profit.

Net Income (loss)

Net loss for the six months ended June 30, 2012 amounted to $3.5 million as compared to net income of $5.3 million in the six months ended June 30, 2011. Such $8.8 million decrease in net income is a result of the revenue decrease which was partially offset by lower financing and tax expenses, as detailed above.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Based on the evaluation as of the end of the period covered by this report, our principal executive officer and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of the end of the period covered by this report.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and our principal executive officer and our principal financial officer have concluded that these controls and procedures are effective at the “reasonable assurance” level. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we are a party or any of our property is subject.

Item 1A. Risk Factors

In addition to the other information contained in this Form 10-Q, you should carefully consider the risk factors associated with our business previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Our business, financial condition and/or results of operations could be materially adversely affected by any of these risks. Additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations.

Item 6. Exhibits.

Number		Description

31.1		Principal Executive Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a).
31.2		CFO Certification required by Rule 13a-14(a) or Rule 15d-14(a).
32.1		Principal Executive Officer Certification required by Section 1350.
32.2		Principal Financial Officer Certification required by Section 1350.
101		Financial information from the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL

SIGNATURES

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

Date: August 22, 2012	JAZZ TECHNOLOGIES, INC.

	By:	/s/ Rafi Mor
		_____ (Principal Executive Officer)

	By:	/s/ SUSANNA H. BENNETT
		Chief Financial Officer (Principal Financial and Accounting Officer)

INDEX TO EXHIBITS

Number		Description

31.1		Principal Executive Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a).
31.2		CFO Certification required by Rule 13a-14(a) or Rule 15d-14(a).
32.1		Principal Executive Officer Certification required by Section 1350.
32.2		Chief Financial Officer Certification required by Section 1350.
101		Financial information from the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL

Attached files

Tower US Holdings Inc. Reports

Also read