Universal Display Corporation Announces Third Quarter 2012 Financial Results

  Universal Display Corporation Announces Third Quarter 2012 Financial Results

Business Wire

EWING, N.J. -- November 07, 2012

Universal Display Corporation (NASDAQ: PANL), enabling energy-efficient
displays and lighting with its UniversalPHOLED^® technology and materials,
today announced its results for the third quarter of 2012.

For the third quarter of 2012, the Company reported a net loss of $5.5
million, or $0.12 per diluted share, on revenues of $12.5 million. For the
third quarter of 2011, the Company reported net income of $6.0 million, or
$0.12 per diluted share, on revenues of $21.8 million.

“The long-term outlook for OLED technology remains strong, despite this
quarter’s results,” said Sidney D. Rosenblatt, Executive Vice President and
Chief Financial Officer of Universal Display. “Material sales in the quarter
were consistent with the first quarter of the year, reflecting what we believe
to be a temporary slowdown in industry growth. We believe that a more
indicative measure of our continued strong growth and the outlook for OLED
technology is the 29 percent growth in year-over-year revenues over the first
three quarters of the year despite having only received half of the year’s
Samsung licensing revenue.”

Results for the third quarter of 2012 do not include the recognition of any
revenue under a licensing agreement with Samsung Display Co. Ltd. (SDC), under
which SDC is obligated to make payments to the Company of $15 million in each
of the second and fourth quarters of this year. Had the Company recognized
these payments on a pro rata quarterly basis over the year, it would have
resulted in an additional $7.5 million of royalty and license fees revenue in
the third quarter. The SDC licensing revenue is subject to a royalty fee of 3%
payable to the Company’s university partners, and 16.5% in South Korean taxes.

Third Quarter Results

Revenues for the third quarter of 2012 were $12.5 million compared to revenues
of $21.8 million in the same quarter of 2011. Material sales were $11.0
million in the third quarter of 2012 compared to $15.4 million in the third
quarter of 2011 due to lower volumes of green emitter and host materials. The
anticipated ramp up of phosphorescent green materials did not occur this
quarter. Royalty and license fees were $396,000 in the third quarter of 2012
compared to $4.6 million in the same quarter of 2011. Third quarter 2011
revenues included a partial license payment from SDC as the SDC Agreement was
signed last August, whereas there were no similar revenues in the third
quarter of this year.

Research and development expense was $8.2 million for the three months ended
September 30, 2012, compared to $6.1 million for the three months ended
September 30, 2011. The increase is primarily attributable to a $1.0 million
increase in costs incurred under our agreement with PPG Industries for
development and scale up of new materials, and a $500,000 increase in
outsourced sponsored research and development contract costs as we continue to
invest in the future. Patent costs and amortization of acquired technology
increased to $3.7 million for the third quarter of 2012 from $1.9 million for
the third quarter of 2011 due to $2.1 million in amortization expense as a
result of the acquisition of the Fujifilm OLED intellectual property portfolio
in July 2012.

The Company’s balance sheet remained strong, with cash and cash equivalents
and short-term investments of $238.8 million as of September 30, 2012.

First Nine Months Results

Revenues for the first nine months of 2012 were $55.1 million, a 29 percent
increase from the $42.6 million generated in the first nine months of 2011.
Material sales in the first nine months of the year were $34.4 million, also a
29 percent increase compared to material sales of $26.6 million in the first
nine months of 2011. Operating income in the first nine months of 2012 was
$5.3 million, more than doubling the $2.1 million of operating income in the
first nine months of 2011. For the first nine months of 2012, we reported net
income of $4.3 million, or $0.09 per diluted share, compared to a net loss of
$2.6 million, or $0.06 per diluted share, in the same period in 2011. The net
loss in the first nine months of 2011 included a $4.2 million loss on stock
warrant liability. In the first nine months of the year, we generated $7.2
million in operating cash flow.

Mr. Rosenblatt concluded, “Over the past year, through a variety of
transactions, we have opened exciting new technological opportunities,
strengthened our industry relationships and significantly enhanced our
intellectual property position. This enables us to not only capitalize on
current market demand for OLED materials and technology, but to continually
expand the opportunity for our technology in the display, lighting and other
markets over the longer term. We are confident that we are in a strong
position to lead that growth and build value for our shareholders.”

GUIDANCE

With the caveat that the OLED industry is in the early stage of development
and commercial adoption, where the delay or acceleration in the introduction
of a commercial line or products by a small number of customers could have a
material impact on the Company’s revenue opportunities, the Company believes
that based on the information currently available, its revenues will be in the
range of $80 million to $82 million for fiscal 2012, compared to previous
expectations of $90 million to $110 million.

In conjunction with this release, Universal Display will host a conference
call, followed by a question and answer session, on Wednesday, November 7,
2012 at 5:00 p.m. Eastern Time. Interested parties may participate by calling
888-637-7725 at 4:55 p.m. Eastern Time and referencing conference ID 3855410.

The conference call will be simultaneously broadcast live over the Internet
through a webcast on the Universal Display website. To access the call, please
visit the Events portion of the website. An online archive of the webcast will
be available within two hours of the conclusion of the call.

About Universal Display Corporation

Universal Display Corporation (Nasdaq: PANL) is a leader in developing and
delivering state-of-the-art, organic light emitting diode (OLED) technologies,
materials and services to the display and lighting industries. Founded in
1994, the company currently owns or has exclusive, co-exclusive or sole
license rights with respect to more than 2,700 issued and pending patents
worldwide, including those acquired from Fujifilm. Universal Display licenses
its proprietary technologies, including its breakthrough high-efficiency
UniversalPHOLED^® phosphorescent OLED technology, that can enable the
development of low power and eco-friendly displays and white lighting. The
company also develops and offers high-quality, state-of-the-art
UniversalPHOLED materials that are recognized as key ingredients in the
fabrication of OLEDs with peak performance. In addition, Universal Display
delivers innovative and customized solutions to its clients and partners
through technology transfer, collaborative technology development and on-site
training.

Based in Ewing, New Jersey, Universal Display works and partners with a
network of world-class organizations, including Princeton University, the
University of Southern California, the University of Michigan, and PPG
Industries, Inc. The company has also established relationships with companies
such as AU Optronics Corporation, Chimei Innolux Corporation, DuPont Displays,
Inc., Konica Minolta Technology Center, Inc., LG Display Co., Ltd., Lumiotec,
Inc., Moser Baer Technologies Inc., Panasonic Idemitsu OLED Lighting Co.,
Pioneer Corporation, Samsung Display Corporation, Seiko Epson Corporation,
Sony Corporation, Showa Denko K.K., and Tohoku Pioneer Corporation. To learn
more about Universal Display, please visit www.universaldisplay.com.

Universal Display Corporation and the Universal Display logo are trademarks or
registered trademarks of Universal Display Corporation. All other company,
brand or product names may be trademarks or registered trademarks.

All statements in this document that are not historical, such as those
relating to Universal Display Corporation’s technologies and potential
applications of those technologies, are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. You are
cautioned not to place undue reliance on any forward-looking statements in
this document, as they reflect Universal Display Corporation’s current views
with respect to future events and are subject to risks and uncertainties that
could cause actual results to differ materially from those contemplated. These
risks and uncertainties are discussed in greater detail in Universal Display
Corporation’s periodic reports on Form 10-K and Form 10-Q filed with the
Securities and Exchange Commission, including, in particular, the section
entitled “Risk Factors” in Universal Display Corporation’s annual report on
Form 10-K for the year ended December 31, 2011. Universal Display Corporation
disclaims any obligation to update any forward-looking statement contained in
this document.

TABLES FOLLOW


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
                                                             
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except for share and per share data)


                                                September 30,     December 31,
                                                2012              2011
                                                                             
ASSETS
                                                                             
CURRENT ASSETS:
Cash and cash equivalents                       $  74,193         $ 111,795
Short-term investments                             164,585          234,294
Accounts receivable                                7,871            10,727
Inventory                                          9,451            3,843
Other current assets                              4,390          1,645    
Total current assets                               260,490          362,304
PROPERTY AND EQUIPMENT, net                        11,713           10,884
ACQUIRED TECHNOLOGY, net                           107,367          391
INVESTMENTS                                        1,169            -
OTHER ASSETS                                       262              299
                                                                        
TOTAL ASSETS                                    $  381,001       $ 373,878  
                                                                             
                                                                             
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                             
CURRENT LIABILITIES:
Accounts payable                                $  5,451          $ 4,776
Accrued expenses                                   9,179            9,020
Deferred revenue                                   5,001            5,534
Other current liabilities                         478            187      
Total current liabilities                          20,109           19,517
DEFERRED REVENUE                                   3,349            3,874
RETIREMENT PLAN BENEFIT LIABILITY                  8,685            8,260
                                                                        
Total liabilities                                 32,143         31,651   
                                                                             
SHAREHOLDERS' EQUITY:
Preferred Stock, par value $0.01 per share,
5,000,000 shares authorized, 200,000 shares
of Series A Nonconvertible Preferred Stock         2                2
issued and outstanding (liquidation value
of $7.50 per share or $1,500)
Common Stock, par value $0.01 per share,
100,000,000 shares authorized, 46,537,754
and 46,113,296 shares issued and                   465              461
outstanding at September 30, 2012 and
December 31, 2011, respectively
Additional paid-in capital                         563,383          561,492
Accumulated deficit                                (209,596 )       (213,871 )
Accumulated other comprehensive loss               (5,396   )       (5,857   )
                                                                        
Total shareholders' equity                         348,858          342,227
                                                                        
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $  381,001       $ 373,878  
                                                                             


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
                                                           
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except for share and per share data)


                                             Three Months Ended September 30,
                                             2012               2011
                                                                             
REVENUE:
Material sales                               $ 10,984           $ 15,386
Royalty and license fees                       396                4,564
Technology development and support            1,124            1,827      
revenue
Total revenue                                 12,504           21,777     
                                                                             
OPERATING EXPENSES:
Cost of material sales                         1,094              2,406
Research and development                       8,177              6,080
Selling, general and administrative            5,275              4,957
Patent costs and amortization of               3,736              1,938
acquired technology
Royalty and license expense                   283              462        
Total operating expenses                      18,565           15,843     
                                                                             
Operating (loss) income                        (6,061     )       5,934
INTEREST INCOME                                272                364
INTEREST EXPENSE                               (5         )       (13        )
GAIN ON STOCK WARRANT LIABILITY                -                  240
                                                                        
(LOSS) INCOME BEFORE INCOME TAX BENEFIT        (5,794     )       6,525
(EXPENSE)
                                                                             
INCOME TAX BENEFIT (EXPENSE)                   326                (536       )
                                                                        
NET (LOSS) INCOME                            $ (5,468     )     $ 5,989      
                                                                             
NET (LOSS) INCOME PER COMMON SHARE:
BASIC                                        $ (0.12      )     $ 0.13       
DILUTED                                      $ (0.12      )     $ 0.12       
                                                                             
WEIGHTED AVERAGE SHARES USED IN
COMPUTING NET (LOSS) INCOME PER COMMON
SHARE:
BASIC                                         46,006,290       45,314,893 
DILUTED                                       46,006,290       46,799,557 
                                                                             


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except for share and per share data)


                                           Nine Months Ended September 30,
                                             2012             2011
                                                                             
REVENUE:
Material sales                               $ 34,361           $ 26,604
Royalty and license fees                       16,253             9,898
Technology development and support            4,497            6,128      
revenue
Total revenue                                 55,111           42,630     
                                                                             
OPERATING EXPENSES:
Cost of material sales                         3,793              2,651
Research and development                       22,074             18,186
Selling, general and administrative            14,761             13,325
Patent costs and amortization of               7,859              5,466
acquired technology
Royalty and license expense                   1,319            882        
Total operating expenses                      49,806           40,510     
                                                                             
Operating income                               5,305              2,120
INTEREST INCOME                                986                644
INTEREST EXPENSE                               (43        )       (31        )
LOSS ON STOCK WARRANT LIABILITY                -                  (4,190     )
                                                                        
INCOME (LOSS) BEFORE INCOME TAX EXPENSE        6,248              (1,457     )
                                                                             
INCOME TAX EXPENSE                             (1,973     )       (1,122     )
                                                                        
NET INCOME (LOSS)                            $ 4,275           $ (2,579     )
                                                                             
NET INCOME (LOSS) PER COMMON SHARE:
BASIC                                        $ 0.09            $ (0.06      )
DILUTED                                      $ 0.09            $ (0.06      )
                                                                             
WEIGHTED AVERAGE SHARES USED IN
COMPUTING NET INCOME (LOSS) PER COMMON
SHARE:
BASIC                                         45,916,536       43,101,933 
DILUTED                                       46,912,557       43,101,933 
                                                                             


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
                                                             
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
                                                                             
                                                                             
                                               Nine Months Ended September 30,
                                               2012               2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                              $  4,275           $ (2,579   )
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Amortization of deferred revenue                  (2,685    )       (2,234   )
Depreciation                                      1,449             1,092
Amortization of intangibles                       2,126             34
Amortization of premium and discount on           (612      )       (483     )
investments, net
Stock-based employee compensation                 3,111             3,270
Stock-based non-employee compensation             -                 3
Non-cash expense under a materials                -                 9
agreement
Stock-based compensation to Board of              648               1,252
Directors and Scientific Advisory Board
Loss on stock warrant liability                   -                 4,190
Retirement plan benefit expense                   1,165             1,145
Decrease (increase) in assets:
Accounts receivable                               2,856             (4,513   )
Inventory                                         (5,608    )       (2,228   )
Other current assets                              (2,745    )       271
Other assets                                      37                (96      )
Increase in liabilities:
Accounts payable and accrued expenses             1,538             5,307
Other current liabilities                         (3        )       25
Deferred revenue                                  1,627             3,330
                                                                        
Net cash provided by operating activities        7,179           7,795    
                                                                             
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                (2,278    )       (2,208   )
Purchase of intangibles                           (109,102  )       (440     )
Purchase of investments                           (209,244  )       (290,269 )
Proceeds from sale of investments                 278,412           72,726
                                                                        
Net cash used in investing activities            (42,212   )      (220,191 )
                                                                             
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock        244               249,867
Proceeds from the exercise of common stock        1,323             13,283
options and warrants
Payment of withholding taxes related to           (4,136    )       (3,999   )
stock-based employee compensation
                                                                        
Net cash (used in) provided by financing         (2,569    )      259,151  
activities
                                                                             
(DECREASE) INCREASE IN CASH AND CASH              (37,602   )       46,755
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF           111,795           20,369
PERIOD
                                                                        
CASH AND CASH EQUIVALENTS, END OF PERIOD       $  74,193         $ 67,124   
                                                                             

Contact:

Universal Display Corporation
Investor Relations:
Gregory FCA
Joe Hassett, 610-228-2110
joeh@gregoryfca.com
or
Media Contact:
Gregory FCA
Matt McLoughlin, 610-228-2123
matt@gregoryfca.com
 
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