UNIVERSAL DISPLAY CORP \PA\ [OLED] Filings

10-Q 1 oled-20220630.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 June 30, 2022


☐	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.)

250 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 August 2, 2022, the registrant had outstanding 47,229,055 shares of common stock.

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets – June 30, 2022 and December 31, 2021		1
Consolidated Statements of Income – Three and six months ended June 30, 2022 and 2021		2
Consolidated Statements of Comprehensive Income – Three and six months ended June 30, 2022 and 2021		3
Consolidated Statements of Shareholders’ Equity – Three and six months ended June 30, 2022 and 2021		4
Consolidated Statements of Cash Flows – Six months ended June 30, 2022 and 2021		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)


	June 30, 2022			December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	213,896		$	311,993
Short-term investments		439,449			351,194
Accounts receivable		74,933			107,639
Inventory		165,635			134,160
Other current assets		38,244			20,948
Total current assets		932,157			925,934
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $103,881 and $92,461		138,028			128,832
ACQUIRED TECHNOLOGY, net of accumulated amortization of $183,928 and $173,635		39,375			49,668
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $8,273 and $7,565		9,015			9,711
GOODWILL		15,535			15,535
INVESTMENTS		200,142			168,076
DEFERRED INCOME TAXES		36,998			33,453
OTHER ASSETS		128,188			135,710
TOTAL ASSETS	$	1,499,438		$	1,466,919
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	14,048		$	14,955
Accrued expenses		38,757			45,474
Deferred revenue		99,106			120,864
Other current liabilities		3,302			6,645
Total current liabilities		155,213			187,938
DEFERRED REVENUE		30,021			36,217
RETIREMENT PLAN BENEFIT LIABILITY		68,188			66,773
OTHER LIABILITIES		80,707			76,077
Total liabilities		334,129			367,005
COMMITMENTS AND CONTINGENCIES (Note 18)
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, 49,115,444 and 49,065,924 shares issued, and 47,749,796 and 47,700,276 shares outstanding, at June 30, 2022 and December 31, 2021, respectively		491			491
Additional paid-in capital		666,087			658,728
Retained earnings		563,191			500,212
Accumulated other comprehensive loss		(23,178	)		(18,235	)
Treasury stock, at cost (1,365,648 shares at June 30, 2022 and December 31, 2021)		(41,284	)		(41,284	)
Total shareholders’ equity		1,165,309			1,099,914
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,499,438		$	1,466,919

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 June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
REVENUE:
Material sales	$	71,869		$	77,438		$	158,560		$	157,246
Royalty and license fees		60,278			48,212			120,080			99,098
Contract research services		4,414			4,010			8,391			7,316
Total revenue		136,561			129,660			287,031			263,660
COST OF SALES		27,239			27,969			60,402			51,267
Gross margin		109,322			101,691			226,629			212,393
OPERATING EXPENSES:
Research and development		28,197			24,101			54,742			47,406
Selling, general and administrative		19,869			20,239			40,931			36,643
Amortization of acquired technology and other intangible assets		5,502			5,497			11,000			10,985
Patent costs		2,259			1,809			4,057			3,644
Royalty and license expense		181			149			335			261
Total operating expenses		56,008			51,795			111,065			98,939
OPERATING INCOME		53,314			49,896			115,564			113,454
Interest income, net		1,583			75			1,874			208
Other income, net		89			221			55			280
Interest and other income, net		1,672			296			1,929			488
INCOME BEFORE INCOME TAXES		54,986			50,192			117,493			113,942
INCOME TAX EXPENSE		(13,484	)		(9,651	)		(26,021	)		(21,714	)
NET INCOME	$	41,502		$	40,541		$	91,472		$	92,228
NET INCOME PER COMMON SHARE:
BASIC	$	0.87		$	0.85		$	1.92		$	1.94
DILUTED	$	0.87		$	0.85		$	1.92		$	1.94
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC		47,393,830			47,299,627			47,381,864			47,284,773
DILUTED		47,457,892			47,356,864			47,451,354			47,347,596
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.30		$	0.20		$	0.60		$	0.40

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 June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
NET INCOME	$	41,502		$	40,541	$	91,472		$	92,228
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:
Unrealized (loss) gain on available-for-sale securities, net of tax of $450, $7, $1,547 and $9, respectively		(1,616	)		26		(5,551	)		(32	)
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, net of tax of $142, $334, $285 and $669, respectively		509			1,174		1,018			2,348
Change in cumulative foreign currency translation adjustment		(176	)		37		(410	)		(69	)
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME		(1,283	)		1,237		(4,943	)		2,247
COMPREHENSIVE INCOME	$	40,219		$	41,778	$	86,529		$	94,475

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 June 30, 2022
	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, MARCH 31, 2022		200,000	$	2		49,099,830		$	491	$	658,050		$	535,936		$	(21,895	)		1,365,648	$	(41,284	)	$	1,131,300
Net income		—		—		—			—		—			41,502			—			—		—			41,502
Other comprehensive loss		—		—		—			—		—			—			(1,283	)		—		—			(1,283	)
Cash dividend		—		—		—			—		—			(14,247	)		—			—		—			(14,247	)
Issuance of common stock to employees		—		—		14,386			—		7,959			—			—			—		—			7,959
Shares withheld for employee taxes		—		—		(6,135	)		—		(948	)		—			—			—		—			(948	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		2,196			—		344			—			—			—		—			344
Issuance of common stock to employees under an ESPP		—		—		5,167			—		682			—			—			—		—			682
BALANCE, JUNE 30, 2022		200,000	$	2		49,115,444		$	491	$	666,087		$	563,191		$	(23,178	)		1,365,648	$	(41,284	)	$	1,165,309

	Six Months Ended June 30, 2022
	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, 2021		200,000	$	2		49,065,924		$	491	$	658,728		$	500,212		$	(18,235	)		1,365,648	$	(41,284	)	$	1,099,914
Net income		—		—		—			—		—

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10-Q	[2021-11-04]
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10-Q	[2021-05-06]
10-K	[2021-02-18]
10-Q	[2020-10-29]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
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]