Universal Display Corporation Announces Fourth Quarter and Full Year 2012 Financial Results

  Universal Display Corporation Announces Fourth Quarter and Full Year 2012
  Financial Results

Business Wire

EWING, N.J. -- February 27, 2013

Universal Display Corporation (NASDAQ: PANL), enabling energy-efficient
displays and lighting with its UniversalPHOLED^® technology and materials,
today announced its results for the fourth quarter and year ended December 31,
2012.

For the full year of 2012, the company reported revenues of $83.2 million, up
36% compared to revenues of $61.3 million for 2011. Operating income rose to
$13.7 million for the year, up 141% from $5.7 million in 2011. The company
reported net income of $9.7 million, or $0.21 per diluted share, for the full
year of 2012, compared to net income of $3.2 million, or $0.07 per diluted
share, for 2011.

“Universal Display Corporation reported a second consecutive profitable year
on the strength of a solid finish to 2012,” said Sidney D. Rosenblatt,
Executive Vice President and Chief Financial Officer of Universal Display. “As
we continue to grow, we are building a business that we believe can deliver
strong gross margins, produce high operating leverage and generate strong cash
flow. Our goal is to solidify and extend our market leadership to capitalize
on the growth of the OLED market. With our strong financial position,
industry-leading technology, and extensive relationships throughout the
industry, we are very excited about the competitive advantages we believe we
have established and our expectation that we will be able to use these
resources to bring OLED technology into the lives of the global community.”

Material sales for 2012 were $44.5 million, up 19% compared to $37.4 million
for 2011. Royalty and license fees for 2012 were $31.7 million, up 107%
compared to $15.3 million for 2011 as a result of the licensing agreement with
Samsung Display Corporation (SDC, and formerly Samsung Mobile Display) being
in place for the full year. Technology development and support revenue was
$7.1 million for 2012, down 17% compared to $8.5 million for 2011.

Cash provided by operating activities was $17.8 million in 2012, compared to
$16.4 million in 2011, primarily due to an improvement in net income. The
company’s balance sheet remained strong at December31, 2012, with cash, cash
equivalents and short-term investments of $243.9 million, which reflects the
$109.1 million used this year to purchase Fujifilm’s worldwide patent
portfolio of more than 1,200 OLED patents and patent applications. During the
fourth quarter of 2012, the company used $5.2 million of its $50 million
authorization to repurchase approximately 206,000 of our shares.

FOURTH QUARTER RESULTS

For the fourth quarter of 2012, the company reported revenues of $28.1 million
and operating income of $8.4 million, increases of 51% and 135%, respectively,
over fourth quarter 2011 revenues of $18.7 million and operating income of
$3.6 million. Net income for the fourth quarter of 2012 was $5.4 million, or
$0.12 per diluted share, compared to net income of $5.7 million, or $0.12 per
diluted share, for the fourth quarter of 2011. Fourth quarter 2011 net income
and earnings per share reflect a net tax benefit of approximately $2.7 million
as a result of the sale of state-related net operating losses and tax credits,
whereas there were no similar benefits in the fourth quarter of 2012.

Royalty and license fees in the fourth quarter of 2012 were $15.4 million, up
184% compared to $5.4 million in the fourth quarter of 2011 primarily due to
increased revenue under the licensing agreement with SDC. Material sales were
$10.1 million for the 2012 quarter, down 7% compared to $10.8 million for the
fourth quarter of 2011. Total operating expenses for the fourth quarter
increased $4.7 million compared to the fourth quarter of 2011, with $3.6
million of the increase attributable to higher patent costs and amortization
of acquired technology as a result of the Fujifilm patent portfolio
acquisition.

Mr. Rosenblatt concluded, “For nearly 20 years, Universal Display has
championed OLED technology as a better performing, more efficient alternative
to existing display and lighting technology. Consequently, we are extremely
pleased with the excitement created by the OLED displays currently in the
market, and the increase in new OLED product development that has been
encouraged by these initial successes. Beyond today’s focus on materials and
technology for both large and small format displays, we are working on new
generations of products that we believe have the potential to significantly
increase our total addressable market, such as encapsulation and
solution-based technology. Over the past year, through the acquisition of OLED
patent portfolios, new partnerships with companies both domestically and in
South Korea, and the expansion of our facilities, we have been making the
investments that we anticipate will enable us to remain at the forefront of an
industry that we believe is only now entering the early stages of a period of
significant growth.”

GUIDANCE

The company’s arrangement with SDC provides a substantial amount of visibility
into its potential future financial performance. Although the OLED industry is
still at a stage where many variables can have a material effect on growth, in
an effort to increase our transparency, Universal Display is providing the
following financial guidance. Again with the caveat that the OLED industry is
still in an early stage, the company believes that its revenues will be in the
range of $110 million to $125 million for fiscal 2013.

In conjunction with this release, Universal Display will host a conference
call, followed by a question and answer session, on Wednesday, February 27,
2013 at 5:00 p.m. Eastern Time. Interested parties may participate by calling
888-271-8594 at 5:00 p.m. Eastern Time and referencing conference ID 4380580.

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 at www.universaldisplay.com. 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 3,000 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, DuPont Displays, Inc., Innolux Corporation,
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.
Forward-looking statements concern possible or assumed future results of
operations, including descriptions of our business strategies and customer
relationships. These statements often include words such as “believe,”
“expect,” “anticipate,” “intend,” “plan,” “estimate,” “seek,” “will,” “goal,”
“may” or similar expressions. 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
based on assumptions that we have made in light of our experience in the
industry, as well as our perceptions of historical trends, current conditions,
expected future developments and other factors we believe are appropriate in
these circumstances, and are thus 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, 2012. 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)
                                                       
                                                       December 31,
                                                       2012         2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                              $ 85,923      $ 111,795
Short-term investments                                 158,018       234,294
Accounts receivable                                    8,657         10,727
Inventory                                              11,018        3,843
Other current assets                                   3,929        1,645
Total current assets                                   267,545       362,304
PROPERTY AND EQUIPMENT, net                            11,808        10,884
ACQUIRED TECHNOLOGY, net                               104,624       391
INVESTMENTS                                            1,270         —
OTHER ASSETS                                           277          299
TOTAL ASSETS                                           $ 385,524    $ 373,878

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable                                       $ 7,596       $ 4,776
Accrued expenses                                       10,394        9,020
Deferred revenue                                       4,273         5,534
Other current liabilities                              36           187
Total current liabilities                              22,299        19,517
DEFERRED REVENUE                                       3,153         3,874
RETIREMENT PLAN BENEFIT LIABILITY                      9,837        8,260
Total liabilities                                      35,289       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 issued and     2             2
outstanding (liquidation value of $7.50 per share or
$1,500)
Common Stock, par value $0.01 per share, 100,000,000
shares authorized, 46,561,437 and 46,113,296 shares    465           461
issued at December 31, 2012 and 2011, respectively
Additional paid-in capital                             564,883       561,492
Accumulated deficit                                    (204,211  )   (213,871)
Accumulated other comprehensive loss                   (5,702    )   (5,857)
Treasury stock, at cost (205,902 shares at December    (5,202    )   —
31, 2012)
Total shareholders’ equity                             350,235      342,227
                                                                     
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY             $ 385,524    $ 373,878
                                                                       

                                             
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

(in thousands except for share and per share data)
                                               
                                               Three Months Ended December 31,
                                               2012              2011
REVENUE:
Material sales                                 $    10,111        $  10,840
Royalty and license fees                       15,445             5,447
Technology development and support revenue     2,577             2,372      
Total revenue                                  28,133            18,659     
                                                                  
OPERATING EXPENSES:
Cost of material sales                         735                1,080
Research and development                       7,958              5,943
Selling, general and administrative            4,789              5,615
Patent costs and amortization of acquired      5,526              1,976
technology
Royalty and license expense                    754               478        
Total operating expenses                       19,762            15,092     
Operating income                               8,371              3,567
INTEREST INCOME                                254                350
INTEREST EXPENSE                               (5           )     (19        )
INCOME BEFORE INCOME TAXES                     8,620              3,898
INCOME TAX (EXPENSE) BENEFIT                   (3,235       )     1,836      
NET INCOME                                     $    5,385        $  5,734   
                                                                  
NET INCOME PER COMMON SHARE:
BASIC                                          $    0.12         $  0.13    
DILUTED                                        $    0.12         $  0.12    
                                                                  
WEIGHTED AVERAGE SHARES USED IN COMPUTING
NET INCOME PER COMMON SHARE:
BASIC                                          46,051,637        45,625,323 
DILUTED                                        46,794,260        46,896,277 
                                                                             


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

(in thousands except for share and per share data)
                                                 
                                                   Year Ended December 31,
                                                   2012          2011
REVENUE:
Material sales                                     $  44,472      $  37,444
Royalty and license fees                           31,698         15,345
Technology development and support revenue         7,074         8,500      
Total revenue                                      83,244        61,289     
                                                                  
OPERATING EXPENSES:
Cost of material sales                             4,528          3,731
Research and development                           30,032         24,129
Selling, general and administrative                19,550         18,940
Patent costs and amortization of acquired          13,385         7,442
technology
Royalty and license expense                        2,073         1,360      
Total operating expenses                           69,568        55,602     
Operating income                                   13,676         5,687
INTEREST INCOME                                    1,240          994
INTEREST EXPENSE                                   (48        )   (50        )
LOSS ON STOCK WARRANT LIABILITY                    —             (4,190     )
INCOME BEFORE INCOME TAXES                         14,868         2,441
INCOME TAX (EXPENSE) BENEFIT                       (5,208     )   714        
NET INCOME                                         $  9,660      $  3,155   
                                                                  
NET INCOME PER COMMON SHARE:
BASIC                                              $  0.21       $  0.07    
DILUTED                                            $  0.21       $  0.07    
                                                                  
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET
INCOME PER COMMON SHARE:
BASIC                                              45,951,276    43,737,968 
DILUTED                                            46,883,602    45,140,394 
                                                                             


UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

(in thousands)
                                                    
                                                      Year Ended December 31,
                                                      2012        2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                            $ 9,660      $ 3,155
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred revenue                      (5,284   )   (3,275    )
Depreciation                                          1,978        1,451
Amortization of intangibles                           4,869        49
Amortization of premium and discount on               (778     )   (775      )
investments, net
Stock-based employee compensation                     4,263        4,373
Stock-based non-employee compensation                 —            6
Non-cash expense under materials and license          —            9
agreements
Stock-based compensation to Board of Directors and    781          1,377
Scientific Advisory Board
Loss on stock warrant liability                       —            4,190
Retirement plan benefit expense                       1,600        1,527
Decrease (increase) in assets:
Accounts receivable                                   2,070        (3,479    )
Inventory                                             (7,175   )   (3,841    )
Other current assets                                  (2,284   )   341
Other assets                                          22           (82       )
Increase in liabilities:
Accounts payable and accrued expenses                 4,718        6,775
Other current liabilities                             11           23
Deferred revenue                                      3,303       4,585     
Net cash provided by operating activities             17,754      16,409    
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                   (2,737   )   (2,624    )
Purchases of intangibles                              (109,102 )   (440      )
Purchases of short-term investments                   (304,500 )   (337,442  )
Proceeds from sale of short-term investments          380,253     156,717   
Net cash used in investing activities                 (36,086  )   (183,789  )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock                321          249,936
Repurchase of common stock                            (5,202   )   —
Proceeds from the exercise of common stock options    1,483        13,343
and warrants
Payment of withholding taxes related to stock-based   (4,142   )   (4,473    )
employee compensation
Net cash (used in) provided by financing activities   (7,540   )   258,806   
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS      (25,872  )   91,426
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR          111,795     20,369    
CASH AND CASH EQUIVALENTS, END OF YEAR                $ 85,923    $ 111,795 
                                                                             

Contact:

Universal Display Corporation
Media Contact:
Gregory FCA
Matt McLoughlin, 610-228-2123
matt@gregoryfca.com
or
Investor Relations:
Gregory FCA
Joe Hassett, 610-228-2110
joeh@gregoryfca.com
 
Press spacebar to pause and continue. Press esc to stop.