UNIVERSAL DISPLAY CORP \PA\ [OLED] Filings

10-Q 1 oled-20210930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2021


☐	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 1-12031

UNIVERSAL DISPLAY CORPORATION

(Exact name of registrant as specified in its charter)


Pennsylvania		23-2372688
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

375 Phillips Boulevard, Ewing, New Jersey		08618
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (609) 671-0980

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	OLED	The NASDAQ Stock Market LLC

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial account standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of November 2, 2021, the registrant had outstanding 47,125,672 shares of common stock.

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets – September 30, 2021 and December 31, 2020		1
Consolidated Statements of Income – Three and nine months ended September 30, 2021 and 2020		2
Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2021 and 2020		3
Consolidated Statements of Shareholders’ Equity – Three and nine months ended September 30, 2021 and 2020		4
Consolidated Statements of Cash Flows – Nine months ended September 30, 2021 and 2020		6
Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures About Market Risk		35
Item 4. Controls and Procedures		35

PART II – OTHER INFORMATION

Item 1. Legal Proceedings		35
Item 1A. Risk Factors		36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 3. Defaults Upon Senior Securities		36
Item 4. Mine Safety Disclosures		36
Item 5. Other Information		36
Item 6. Exhibits		37

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)


	September 30, 2021			December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	535,157		$	630,012
Short-term investments		253,786			99,996
Accounts receivable		96,235			82,261
Inventory		121,485			91,591
Other current assets		48,476			20,746
Total current assets		1,055,139			924,606
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $86,962 and $72,493		118,988			102,113
ACQUIRED TECHNOLOGY, net of accumulated amortization of $168,489 and $153,050		54,814			70,253
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $7,206 and $6,155		10,028			10,685
GOODWILL		15,535			15,535
INVESTMENTS		8,500			5,000
DEFERRED INCOME TAXES		32,476			37,695
OTHER ASSETS		133,111			103,341
TOTAL ASSETS	$	1,428,591		$	1,269,228
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	10,939		$	13,801
Accrued expenses		42,736			41,404
Deferred revenue		123,475			105,215
Other current liabilities		3,111			4,540
Total current liabilities		180,261			164,960
DEFERRED REVENUE		43,458			57,086
RETIREMENT PLAN BENEFIT LIABILITY		80,676			78,527
OTHER LIABILITIES		87,874			55,941
Total liabilities		392,269			356,514
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS’ EQUITY:
Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized, 200,000 shares of Series A Nonconvertible Preferred Stock issued and outstanding (liquidation value of $7.50 per share or $1,500)		2			2
Common Stock, par value $0.01 per share, 200,000,000 shares authorized, 49,060,909 and 49,013,476 shares issued, and 47,695,261 and 47,647,828 shares outstanding, at September 30, 2021 and December 31, 2020, respectively		491			490
Additional paid-in capital		646,049			635,595
Retained earnings		463,820			353,930
Accumulated other comprehensive loss		(32,756	)		(36,019	)
Treasury stock, at cost (1,365,648 shares at September 30, 2021 and December 31, 2020)		(41,284	)		(41,284	)
Total shareholders’ equity		1,036,322			912,714
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,428,591		$	1,269,228

The accompanying notes are an integral part of these Consolidated Financial Statements.

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
REVENUE:
Material sales	$	75,609		$	68,709		$	232,855		$	167,211
Royalty and license fees		63,939			44,550			163,037			110,008
Contract research services		4,070			3,820			11,386			10,105
Total revenue		143,618			117,079			407,278			287,324
COST OF SALES		31,481			23,378			82,748			58,480
Gross margin		112,137			93,701			324,530			228,844
OPERATING EXPENSES:
Research and development		25,327			20,814			72,733			61,708
Selling, general and administrative		20,960			13,579			57,603			45,129
Amortization of acquired technology and other intangible assets		5,505			5,494			16,490			16,474
Patent costs		2,359			2,095			6,003			5,591
Royalty and license expense		258			3,293			519			8,195
Total operating expenses		54,409			45,275			153,348			137,097
OPERATING INCOME		57,728			48,426			171,182			91,747
Interest income, net		137			1,029			345			4,444
Other (loss) income, net		(102	)		262			178			634
Interest and other income, net		35			1,291			523			5,078
INCOME BEFORE INCOME TAXES		57,763			49,717			171,705			96,825
INCOME TAX EXPENSE		(11,654	)		(9,217	)		(33,368	)		(17,355	)
NET INCOME	$	46,109		$	40,500		$	138,337		$	79,470
NET INCOME PER COMMON SHARE:
BASIC	$	0.97		$	0.85		$	2.91		$	1.67
DILUTED	$	0.97		$	0.85		$	2.90		$	1.67
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC		47,291,192			47,227,061			47,286,927			47,182,625
DILUTED		47,362,575			47,260,331			47,355,583			47,212,660
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.20		$	0.15		$	0.60		$	0.45

The accompanying notes are an integral part of these Consolidated Financial Statements.

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
NET INCOME	$	46,109		$	40,500		$	138,337		$	79,470
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized (loss) gain on available-for-sale securities, net of tax of $1, $177, $10 and $97, respectively		(3	)		(626	)		(35	)		342
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, net of tax of $334, $181, $1,004 and $543, respectively		1,174			639			3,522			1,917
Change in cumulative foreign currency translation adjustment		(155	)		1			(224	)		(29	)
TOTAL OTHER COMPREHENSIVE INCOME		1,016			14			3,263			2,230
COMPREHENSIVE INCOME	$	47,125		$	40,514		$	141,600		$	81,700

The accompanying notes are an integral part of these Consolidated Financial Statements.

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except for share data)


	Three Months Ended September 30, 2021
	Series A Nonconvertible									Additional						Accumulated Other								Total
	Preferred Stock				Common Stock					Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount		Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, JUNE 30, 2021		200,000	$	2		49,054,059		$	491	$	638,991		$	427,188		$	(33,772	)		1,365,648	$	(41,284	)	$	991,616
Net income		—		—		—			—		—			46,109			—			—		—			46,109
Other comprehensive income		—		—		—			—		—			—			1,016			—		—			1,016
Cash dividend		—		—		—			—		—			(9,477	)		—			—		—			(9,477	)
Issuance of common stock to employees		—		—		5,111			—		8,131			—			—			—		—			8,131
Shares withheld for employee taxes		—		—		(2,025	)		—		(1,862	)		—			—			—		—			(1,862	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		1,361			—		348			—			—			—		—			348
Issuance of common stock to employees under an ESPP		—		—		2,403			—		441			—			—			—		—			441
BALANCE, SEPTEMBER 30, 2021		200,000	$	2		49,060,909		$	491	$	646,049		$	463,820		$	(32,756	)		1,365,648	$	(41,284	)	$	1,036,322

	Nine Months Ended September 30, 2021
	Series A Nonconvertible									Additional						Accumulated Other								Total
	Preferred Stock				Common Stock					Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount		Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, DECEMBER 31, 2020		200,000	$	2		49,013,476		$	490	$	635,595		$	353,930		$	(36,019	)		1,365,648	$	(41,284	)	$	912,714
Net income		—		—		—			—		—			138,337			—			—		—			138,337
Other comprehensive income		—		—		—			—		—			—			3,263			—		—			3,263
Cash dividend		—		—		—			—		—			(28,447	)		—			—		—			(28,447	)
Issuance of common stock to employees		—		—		62,501			1		22,542			—			—			—		—			22,543
Shares withheld for employee taxes		—		—		(28,733	)		—		(14,880	)

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10-Q	[2020-08-06]
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10-K	[2020-02-20]
10-Q	[2019-10-30]
10-Q	[2019-08-01]
10-Q	[2019-05-02]
10-K	[2019-02-21]
10-Q	[2018-11-01]
10-Q	[2018-08-09]
10-Q	[2018-05-03]
10-K	[2018-02-22]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-23]
10-Q	[2016-11-03]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-25]
10-Q	[2015-11-05]
10-Q	[2015-08-06]
10-Q	[2015-05-07]
10-K	[2015-02-26]
10-Q	[2014-11-06]
10-Q	[2014-08-07]
10-Q	[2014-05-08]
10-K	[2014-02-28]
10-Q	[2013-11-07]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-02-27]
10-Q	[2012-11-07]
10-Q	[2012-08-08]
10-Q	[2012-05-09]
10-K	[2012-02-28]