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 March 31, 2022

OR

☐ 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 May 3, 2022, the registrant had outstanding 47,214,329 shares of common stock.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets – March 31, 2022 and December 31, 2021	1
Consolidated Statements of Income – Three months ended March 31, 2022 and 2021	2
Consolidated Statements of Comprehensive Income – Three months ended March 31, 2022 and 2021	3
Consolidated Statements of Shareholders’ Equity – Three months ended March 31, 2022 and 2021	4
Consolidated Statements of Cash Flows – Three months ended March 31, 2022 and 2021	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures About Market Risk	32
Item 4. Controls and Procedures	32
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	32
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Defaults Upon Senior Securities	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information	33
Item 6. Exhibits	34

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)

	March 31, 2022			December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	357,424		$	311,993
Short-term investments		325,055			351,194
Accounts receivable		104,947			107,639
Inventory		143,240			134,160
Other current assets		29,120			20,948
Total current assets		959,786			925,934
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $97,979 and $92,461		131,879			128,832
ACQUIRED TECHNOLOGY, net of accumulated amortization of $178,782 and $173,635		44,521			49,668
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $7,918 and $7,565		9,370			9,711
GOODWILL		15,535			15,535
INVESTMENTS		164,130			168,076
DEFERRED INCOME TAXES		35,788			33,453
OTHER ASSETS		126,222			135,710
TOTAL ASSETS	$	1,487,231		$	1,466,919
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	27,064		$	14,955
Accrued expenses		26,960			45,474
Deferred revenue		111,778			120,864
Other current liabilities		12,452			6,645
Total current liabilities		178,254			187,938
DEFERRED REVENUE		31,735			36,217
RETIREMENT PLAN BENEFIT LIABILITY		67,481			66,773
OTHER LIABILITIES		78,461			76,077
Total liabilities		355,931			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, 49,099,830    and 49,065,924 shares issued, and 47,734,182 and 47,700,276 shares outstanding, at    March 31, 2022 and December 31, 2021, respectively		491			491
Additional paid-in capital		658,050			658,728
Retained earnings		535,936			500,212
Accumulated other comprehensive loss		(21,895	)		(18,235	)
Treasury stock, at cost (1,365,648 shares at March 31, 2022 and December 31, 2021)		(41,284	)		(41,284	)
Total shareholders’ equity		1,131,300			1,099,914
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,487,231		$	1,466,919

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

1

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)

	Three Months Ended March 31,
	2022			2021
REVENUE:
Material sales	$	86,691		$	79,808
Royalty and license fees		59,802			50,886
Contract research services		3,977			3,306
Total revenue		150,470			134,000
COST OF SALES		33,163			23,298
Gross margin		117,307			110,702
OPERATING EXPENSES:
Research and development		26,545			23,305
Selling, general and administrative		21,062			16,404
Amortization of acquired technology and other intangible assets		5,498			5,488
Patent costs		1,798			1,835
Royalty and license expense		154			112
Total operating expenses		55,057			47,144
OPERATING INCOME		62,250			63,558
Interest income, net		291			133
Other (loss) income, net		(34	)		59
Interest and other income, net		257			192
INCOME BEFORE INCOME TAXES		62,507			63,750
INCOME TAX EXPENSE		(12,537	)		(12,063	)
NET INCOME	$	49,970		$	51,687
NET INCOME PER COMMON SHARE:
BASIC	$	1.05		$	1.09
DILUTED	$	1.05		$	1.08
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET    INCOME PER COMMON SHARE:
BASIC		47,369,764			47,267,921
DILUTED		47,440,281			47,329,704
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.30		$	0.20

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

2

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2022			2021
NET INCOME	$	49,970		$	51,687
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:
Unrealized loss on available-for-sale securities,    net of tax of $1,097 and $17, respectively		(3,935	)		(58	)
Amortization of prior service cost and actuarial loss for    retirement plan included in net periodic pension costs,    net of tax of $143 and $335, respectively		509			1,174
Change in cumulative foreign currency translation    adjustment		(234	)		(106	)
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME		(3,660	)		1,010
COMPREHENSIVE INCOME	$	46,310		$	52,697

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

3

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except for share data)

	Three Months Ended March 31, 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		—		—		—			—		—			49,970			—			—		—			49,970
Other comprehensive loss		—		—		—			—		—			—			(3,660	)		—		—			(3,660	)
Cash dividend		—		—		—			—		—			(14,246	)		—			—		—			(14,246	)
Issuance of common stock to employees		—		—		47,748			—		5,979			—			—			—		—			5,979
Shares withheld for employee taxes		—		—		(22,347	)		—		(7,896	)		—			—			—		—			(7,896	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		5,630			—		730			—			—			—		—			730
Issuance of common stock to employees under an ESPP		—		—		2,875			—		509			—			—			—		—			509
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
	Three Months Ended March 31, 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		—		—		—			—		—			51,687			—			—		—			51,687
Other comprehensive income		—		—		—			—		—			—			1,010			—		—			1,010
Cash dividend		—		—		—			—		—			(9,487	)		—			—		—			(9,487	)
Issuance of common stock to employees		—		—		53,123			1		5,115			—			—			—		—			5,116
Shares withheld for employee taxes		—		—		(22,048	)		—		(9,634	)		—			—			—		—			(9,634	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		4,443			—		630			—			—			—		—			630
Issuance of common stock to employees under an ESPP		—		—		1,782			—		432			—			—			—		—			432
BALANCE, MARCH 31, 2021		200,000	$	2		49,050,776		$	491	$	632,138		$	396,130		$	(35,009	)		1,365,648	$	(41,284	)	$	952,468

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

4

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	49,970		$	51,687
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue and recognition of unbilled receivables, net		(64,106	)		(57,648	)
Depreciation		5,627			4,263
Amortization of intangibles		5,498			5,488
Change in excess inventory reserve		84			667
Amortization of premium and discount on investments, net		(271	)		(70	)
Stock-based compensation to employees		6,085			5,200
Stock-based compensation to Board of Directors and Scientific Advisory Board		430			330
Deferred income tax (benefit) expense		(1,380	)		515
Retirement plan expense		1,359			2,228
Decrease (increase) in assets:
Accounts receivable		2,692			(9,066	)
Inventory		(9,164	)		(10,498	)
Other current assets		(3,525	)		5,400
Other assets		9,488			(7,133	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(4,261	)		(21,136	)
Other current liabilities		5,807			(666	)
Deferred revenue		45,891			53,000
Other liabilities		2,384			6,935
Net cash provided by operating activities		52,608			29,496
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(10,751	)		(9,938	)
Purchases of intangibles		(12	)		(298	)
Purchases of investments		(24,915	)		(4,220	)
Proceeds from sale and maturity of investments		50,240			100,000
Net cash provided by investing activities		14,562			85,544
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		403			348
Payment of withholding taxes related to stock-based compensation to employees		(7,896	)		(9,634	)
Cash dividends paid		(14,246	)		(9,487	)
Net cash used in financing activities		(21,739	)		(18,773	)
INCREASE IN CASH AND CASH EQUIVALENTS		45,431			96,267
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		311,993			630,012
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	357,424		$	726,279
The following non-cash activities occurred:
Unrealized loss on available-for-sale securities	$	(5,031	)	$	(66	)
Common stock issued to Board of Directors and Scientific Advisory Board that was    earned and accrued for in a previous period		300			300
Net change in accounts payable and accrued expenses related to purchases of property    and equipment		2,077			(27	)

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

5

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BUSINESS:

Universal Display Corporation and its subsidiaries (the Company) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. OLEDs are thin, lightweight and power-efficient solid-state devices that emit light that can be manufactured on both flexible and rigid substrates, making them highly suitable for use in full-color displays and as lighting products. OLED displays are capturing a growing share of the display market, especially in the mobile phone, television, wearable, tablet, notebook and personal computer, augmented reality (AR), virtual reality (VR) and automotive markets. The Company believes this is because OLEDs offer potential advantages over competing display technologies with respect to power efficiency, contrast ratio, viewing angle, video response time, form factor and manufacturing cost. The Company also believes that OLED lighting products have the potential to replace many existing light sources in the future because of their high-power efficiency, excellent color rendering index, low operating temperature and novel form factor. The Company’s technology leadership, intellectual property position, and the Company’s more than 20 years of experience working closely with leading OLED display manufacturers are some of the competitive advantages that should enable the Company to continue to share in the revenues from OLED displays and lighting products as they gain wider acceptance.

The Company’s primary business strategy is to (1) develop new OLED materials and sell existing and new materials to product manufacturers of products for display applications, such as mobile phones, televisions, wearables, tablets, portable media devices, notebook computers, personal computers and automotive applications, and specialty and general lighting products; and (2) further develop and either license or otherwise commercialize the Company’s proprietary OLED material, device design and manufacturing technologies to those manufacturers. The Company has established a significant portfolio of proprietary OLED technologies and materials, primarily through internal research and development efforts and acquisitions of patents and patent applications, as well as maintaining long-standing, and establishing new relationships with world-class universities, research institutions and strategic manufacturing partnerships. The Company currently owns, exclusively licenses or has the sole right to sublicense more than 5,500 patents issued and pending worldwide.

The Company manufactures and sells its proprietary OLED materials to customers for evaluation and use in commercial OLED products. The Company also enters into agreements with manufacturers of OLED display and lighting products under which it grants them licenses to practice under the Company’s patents and to use the Company's proprietary know-how. At the same time, the Company works with these and other companies that are evaluating the Company's OLED material, device design and manufacturing technologies for possible use in commercial OLED display and lighting products.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information

In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of March 31, 2022 and results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. While management believes that the disclosures presented are adequate to make the information not misleading, these unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the Company’s latest year-end Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The results of the Company’s operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for the full year.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Universal Display Corporation and its wholly owned subsidiaries, UDC, Inc., UDC Ireland Limited (UDC Ireland), Universal Display Corporation Hong Kong, Limited, Universal Display Corporation Korea, Y.H. (UDC Korea), Universal Display Corporation Japan GK, Universal Display Corporation China, Ltd., Adesis, Inc. (Adesis), UDC Ventures LLC, OVJP Corporation (OVJP Corp) and OLED Material Manufacturing Limited (OMM). All intercompany transactions and accounts have been eliminated.

6

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates made are principally in the areas of revenue recognition including estimates of material unit sales and royalties, the useful life of acquired intangibles, lease liabilities, right-of-use assets, the use and recoverability of inventories, intangibles, investments and income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Inventories

Inventories consist of raw materials, work-in-process and finished goods, and are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventory valuation and firm committed purchase order assessments are performed on a quarterly basis and those items that are identified to be obsolete or in excess of forecasted usage are written down to their estimated realizable value. Estimates of realizable value are based upon management’s analyses and assumptions, including, but not limited to, forecasted sales levels by product, expected product lifecycle, product development plans and future demand requirements. A 12-month rolling forecast based on factors, including, but not limited to, production cycles, anticipated product orders, marketing forecasts, backlog, and shipment activities is used in the inventory analysis. If market conditions are less favorable than forecasts or actual demand from customers is lower than estimates, additional inventory write-downs may be required. If demand is higher than expected, inventories that had previously been written down may be sold.

Fair Value of Financial Instruments

The carrying values of accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value in the accompanying Consolidated Financial Statements due to the short-term nature of those instruments. The Company’s other financial instruments, which include cash equivalents, investments, retirement plan benefit liability and other liabilities are carried at fair value.

Minority Equity Investments

The Company accounts for minority equity investments in companies that are not accounted for under the equity method as equity securities without readily determinable fair values. The fair value of these securities is based on original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Under this method, the share of income or loss of such companies is not included in the Consolidated Statements of Income. The carrying value of these investments is included in investments on the Consolidated Balance Sheets.

The Company’s policy is to recognize an impairment in the value of its minority equity investments when clear evidence of an impairment exists. Factors considered in the assessment include a significant adverse change in the regulatory, economic, or technological environment, the completion of new equity financing that may indicate a decrease in value, the failure to complete new equity financing arrangements after seeking to raise additional funds, or the commencement of proceedings under which the assets of the business may be placed in receivership or liquidated to satisfy the claims of debt and equity stakeholders.

Leases

The Company is a lessee in operating leases primarily incurred to facilitate the expansion of manufacturing, research and development, and selling, general and administrative activities. At contract inception, the Company determines if an arrangement is or contains a lease, and if so recognizes a right-of-use asset and lease liability at the lease commencement date. For operating leases, the lease liability is measured at the present value of the unpaid lease payments at the lease commencement date, whereas for finance leases, the lease liability is initially measured at the present value of the unpaid lease payments and subsequently measured at amortized cost using the interest method. Operating lease right-of-use assets are included in other assets on the Consolidated Balance Sheets. The short-term portion of operating lease liabilities is included in other current liabilities on the Consolidated Balance Sheets and the long-term portion is included in other liabilities on the Consolidated Balance Sheets. As of March 31, 2022, the Company had no leases that qualified as financing arrangements.

Key estimates and judgments include how the Company determines the discount rate used to discount the unpaid lease payments to present value and the lease term. The Company monitors for events or changes in circumstances that could potentially require recognizing an impairment loss.

7

Revenue Recognition and Deferred Revenue

Material sales relate to the Company’s sale of its OLED materials for incorporation into its customers’ commercial OLED products or for their OLED development and evaluation activities. Revenue associated with material sales is generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties. Revenue may be recognized after control of the material passes in the event the transaction price includes variable consideration. For example, a customer may be provided an extended opportunity to stock materials prior to use in mass production and given a general right of return not conditioned on breaches of warranties associated with the specific product. In such circumstances, revenue will be recognized at the earlier of the expiration of the customer’s general right of return or once it becomes unlikely that the customer will exercise its right of return.

The rights and benefits to the Company’s OLED technologies are conveyed to the customer through technology license agreements and material supply agreements. The Company believes that the licenses and materials sold under these combined agreements are not distinct from each other for financial reporting purposes and as such, are accounted for as a single performance obligation. Accordingly, total contract consideration is estimated and recognized over the contract term based on material units sold at the estimated per unit fee over the life of the contract. Total contract consideration is allocated to material sales and royalty and licensing fees on the Consolidated Statements of Income based on contract pricing.

Various estimates are relied upon to recognize revenue. The Company estimates total material units to be purchased by its customers over the contract term based on historical trends, industry estimates and its forecast process. Management uses the expected value method to estimate the material per unit fee. Additionally, management estimates the total sales-based royalties based on the estimated net sales revenue of its customers over the contract term.

Contract research services revenue is revenue earned by Adesis by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis. These services range from intermediates for structure-activity relationship studies, reference agents and building blocks for combinatorial synthesis, re-synthesis of key intermediates, specialty organic chemistry needs, and selective toll manufacturing. These services are provided to third-party pharmaceutical and life sciences firms and other technology firms at fixed costs or on an annual contract basis. Revenue is recognized as services are performed with billing schedules and payment terms negotiated on a contract-by-contract basis. Payments received in excess of revenue recognized are recorded as deferred revenue. In other cases, services may be provided and revenue is recognized before the customer is invoiced. In these cases, revenue recognized will exceed amounts billed and the difference, representing amounts which are currently unbillable to the customer pursuant to contractual terms, is recorded as an unbilled receivable.

Technology development and support revenue is revenue earned from development and technology evaluation agreements and commercialization assistance fees, along with, to a minimal extent, government contracts. Relating to the Company’s government contracts, the Company may receive reimbursements by government entities for all or a portion of the research and development costs the Company incurs. Revenues are recognized as services are performed, proportionally as research and development costs are incurred, or as defined milestones are achieved. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

In 2018, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC). This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2018 and lasts through the end of 2022 with an additional two-year extension option. Under this agreement, the Company is being paid a license fee, payable in quarterly installments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets.

At the same time the Company entered into the current commercial license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC. Under the supplemental material purchase agreement, SDC agrees to purchase from the Company a minimum amount of phosphorescent emitter materials for use in the manufacture of licensed products. This minimum commitment is subject to SDC’s requirements for phosphorescent emitter materials and the Company’s ability to meet these requirements over the term of the supplemental agreement.

In 2015, the Company entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display) which were effective as of January 1, 2015 and superseded the existing 2007 commercial supply agreement between the parties. The terms of the agreements were set to expire by the end of 2022. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under the Company's patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The agreements include customary provisions relating to warranties, indemnities, confidentiality, assignability and business terms. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty

8

revenue to be generated under the patent license agreement. The Company generates revenue under these agreements that are predominantly tied to LG Display’s sales of OLED licensed products. The OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials.

In 2021, the Company entered into amendments of the 2015 OLED patent license agreement and the 2015 OLED commercial supply agreement with LG Display, which amendments were effective as of January 1, 2021. The amended agreements included a term extension and are set to expire by the end of 2025.

In 2016, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, the Company has granted Tianma non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, the parties extended the terms of both the patent license and material purchase agreements for an additional multi-year-term.

In 2017, the Company entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, the Company has granted BOE non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company supplies phosphorescent OLED materials to BOE for use in its licensed products.

In 2018, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, the Company granted certain of Visionox’s affiliates a non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Visionox for use in its licensed products. On April 22, 2021, the Company announced that it had extended the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd.

In 2019, the Company entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, the Company entered into long-term, multi-year agreements with CSOT. Under these agreements, the Company has granted CSOT non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company also supplies phosphorescent OLED materials to CSOT for use in its licensed products.

All material sales transactions that are not variable consideration transactions are billed and due within 90 days and substantially all are transacted in U.S. dollars.

Cost of Sales

Cost of sales consists of labor and material costs associated with the production of materials processed at the Company's manufacturing partners and at the Company's internal manufacturing processing facility. The Company’s portion of cost of sales also includes depreciation of manufacturing equipment, as well as manufacturing overhead costs and inventory adjustments for excess and obsolete inventory.

Research and Development

Expenditures for research and development are charged to expense as incurred.

Patent Costs

Costs associated with patent applications, patent prosecution, patent defense and the maintenance of patents are charged to expense as incurred. Costs to successfully defend a challenge to a patent are capitalized to the extent of an evident increase in the value of the patent. Costs that relate to an unsuccessful outcome are charged to expense.

Amortization of Acquired Technology

Amortization costs primarily relate to technology acquired from BASF and Fujifilm. These acquisitions were completed in the years ended December 31, 2016 and 2012, respectively. Acquisition costs are being amortized over a period of 10 years for both the BASF and Fujifilm patents.

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Amortization of Other Intangible Assets

Other intangible assets primarily relate to the Adesis acquisition and are being amortized over a period of 10 to 15 years. See Note 7 for further discussion.

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

The Company’s reporting currency is the U.S. dollar. The functional currency for the UDC Ireland and UDC Korea subsidiaries are also the U.S. dollar and the functional currency for the OMM subsidiary and each of the Company's other Asia-Pacific foreign subsidiaries is its local currency. The Company translates the amounts included in the Consolidated Statements of Income from OMM and its Asia-Pacific foreign subsidiaries into U.S. dollars at weighted-average exchange rates, which the Company believes are representative of the actual exchange rates on the dates of the transactions. The Company's foreign subsidiaries' assets and liabilities are translated into U.S. dollars from the local currency at the actual exchange rates as of the end of each reporting date, and the Company records the resulting foreign exchange translation adjustments in the Consolidated Balance Sheets as a component of accumulated other comprehensive loss. The overall effect of the translation of foreign currency and foreign currency transactions to date has been insignificant.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties, if any, related to unrecognized tax benefits as a component of tax expense.

Share-Based Payment Awards

The Company recognizes in the Consolidated Statements of Income the grant-date fair value of equity-based awards such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units and performance unit awards issued to employees and directors.

The grant-date fair value of stock awards is based on the closing price of the stock on the date of grant. The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of forfeitures. The Company issues new shares upon the respective grant, exercise or vesting of the share-based payment awards, as applicable.

Performance unit awards are subject to either a performance-based or market-based vesting requirement. For performance-based vesting, the grant-date fair value of the award, based on fair value of the Company's common stock, is recognized over the service period based on an assessment of the likelihood that the applicable performance goals will be achieved and compensation expense is periodically adjusted based on actual and expected performance. Compensation expense for performance unit awards with market-based vesting is calculated based on the estimated fair value as of the grant date utilizing a Monte Carlo simulation model and is recognized over the service period on a straight-line basis.

Recent Accounting Pronouncements

Accounting Standards Issued But Not Yet Adopted

The Company considers the applicability and impact of all ASUs. ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

3. CASH, CASH EQUIVALENTS AND INVESTMENTS:

The Company’s portfolio of fixed income securities consists of term bank certificates of deposit, U.S. Government bonds and corporate bonds. The Company considers all highly liquid debt instruments purchased with an original maturity (maturity at the purchase date) of three months or less to be cash equivalents. The Company classifies its remaining debt security investments as

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available-for-sale. These debt securities are carried at fair market value, with unrealized gains and losses reported in shareholders’ equity. Gains or losses on securities sold are based on the specific identification method.

Cash and Cash Equivalents

The following table provides details regarding the Company’s portfolio of cash and cash equivalents (in thousands):

	Amortized		Unrealized				Aggregate Fair
Cash and Cash Equivalents Classification	Cost		Gains		(Losses)		Market Value
March 31, 2022
Cash accounts in banking institutions	$	277,104	$	—	$	—	$	277,104
Money market accounts		17,335		—		—		17,335
U.S. Government bonds		62,985		—		—		62,985
	$	357,424	$	—	$	—	$	357,424
December 31, 2021
Cash accounts in banking institutions	$	256,878	$	—	$	—	$	256,878
Money market accounts		55,115		—		—		55,115
	$	311,993	$	—	$	—	$	311,993

Short-term Investments

The following table provides details regarding the Company’s portfolio of short-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Short-term Investments Classification	Cost		Gains		(Losses)			Market Value
March 31, 2022
Corporate bonds	$	201,492	$	—	$	(469	)	$	201,023
U.S. Government bonds		124,713		—		(681	)		124,032
	$	326,205	$	—	$	(1,150	)	$	325,055
December 31, 2021
Certificates of deposit	$	240	$	—	$	—		$	240
Corporate bonds		226,448		3		(97	)		226,354
U.S. Government bonds		124,611		—		(11	)		124,600
	$	351,299	$	3	$	(108	)	$	351,194

Long-term U.S. Government Bonds Investments

The following table provides details regarding the Company’s portfolio of long-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Long-term Investments Classification	Cost		Gains		(Losses)			Market Value
March 31, 2022
U.S. Government bonds	$	159,732	$	—	$	(4,110	)	$	155,622
	$	159,732	$	—	$	(4,110	)	$	155,622
December 31, 2021
U.S. Government bonds	$	159,692	$	10	$	(134	)	$	159,568
	$	159,692	$	10	$	(134	)	$	159,568

Long-term Minority Investments

The Company’s portfolio of minority investments consists of investments in privately held early-stage companies primarily motivated to gain early access to new technology and are passive in nature in that the Company does not obtain representation on the boards of directors of the companies in which it invests. Minority investments are included in investments on the Consolidated Balance Sheets. As of March 31, 2022, the Company had two minority investments with a total carrying value of $8.5 million accounted for as equity securities without readily determinable fair values.

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4. FAIR VALUE MEASUREMENTS:

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2022 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of March 31,  2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	80,320	$	80,320	$	—	$	—
Short-term investments		325,055		325,055		—		—
Long-term U.S. Government bonds investments		155,622		155,622		—		—

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2021 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of December 31,  2021		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	55,115	$	55,115	$	—	$	—
Short-term investments		351,194		351,194		—		—
Long-term U.S. Government bonds investments		159,568		159,568		—		—

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification is determined based on the lowest level input that is significant to the fair value measurement.

Changes in fair value of the debt investments are recorded as unrealized gains and losses in accumulated other comprehensive loss on the Consolidated Balance Sheets and any credit losses on debt investments are recorded as an allowance for credit losses with an offset recognized in other income, net on the Consolidated Statements of Income. There were no credit losses on debt investments as of March 31, 2022 or December 31, 2021.

5. INVENTORY:

Inventory consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Raw materials	$	79,834	$	75,227
Work-in-process		14,974		16,065
Finished goods		48,432		42,868
Inventory	$	143,240	$	134,160

The Company recorded an increase in inventory reserve of $84,000 and $667,000 for the three months ended March 31, 2022 and 2021, respectively, due to excess inventory levels in certain products.

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6. PROPERTY AND EQUIPMENT:

Property and equipment, net consist of the following (in thousands):

	March 31, 2022			December 31, 2021
Land	$	2,642		$	2,642
Building and improvements		76,213			76,600
Office and lab equipment		109,967			107,168
Furniture, fixtures and computer related assets		16,452			16,221
Construction-in-progress		24,584			18,662
		229,858			221,293
Less: Accumulated depreciation		(97,979	)		(92,461	)
Property and equipment, net	$	131,879		$	128,832

Depreciation expense was $5.6 million and $4.3 million for the three months ended March 31, 2022 and 2021, respectively.

7. GOODWILL AND INTANGIBLE ASSETS:

The Company monitors the recoverability of goodwill annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Purchased intangible assets subject to amortization consist of acquired technology and other intangible assets that include trade names, customer relationships and developed intellectual property (IP) processes.

Acquired Technology

Acquired technology consists of acquired license rights for patents and know-how obtained from PD-LD, Inc., Motorola, BASF SE (BASF) and Fujifilm. These intangible assets consist of the following (in thousands):

	March 31, 2022			December 31, 2021
PD-LD, Inc.	$	1,481		$	1,481
Motorola		15,909			15,909
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		462			462
		223,303			223,303
Less: Accumulated amortization		(178,782	)		(173,635	)
Acquired technology, net	$	44,521		$	49,668

Amortization expense related to acquired technology was $5.1 million for both three-month periods ended March 31, 2022 and 2021. Amortization expense is included in amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $10.6 million for the nine months ending December 31, 2022, $9.7 million in the year ending December 31, 2023, $9.6 million in each of the years ending December 31, 2024 and 2025, $4.8 million in the year ending December 31, 2026 and $200,000 in total thereafter.

Fujifilm Patent Acquisition

On July 23, 2012, the Company entered into a Patent Sale Agreement with Fujifilm. Under the agreement, Fujifilm sold more than 1,200 OLED-related patents and patent applications in exchange for a cash payment of $105.0 million, plus costs incurred in connection with the purchase. The agreement contains customary representations and warranties and covenants, including respective covenants not to sue by both parties thereto. The agreement permitted the Company to assign all of its rights and obligations under the agreement to its affiliates, and the Company assigned, prior to the consummation of the transactions contemplated by the agreement, its rights and obligations to UDC Ireland, a wholly-owned subsidiary of the Company formed under the laws of the Republic of Ireland. The transactions contemplated by the agreement were consummated on July 26, 2012. The Company recorded the $105.0 million plus $4.5 million of purchase costs as acquired technology, which is being amortized over a period of 10 years.

BASF Patent Acquisition

On June 28, 2016, UDC Ireland entered into and consummated an IP Transfer Agreement with BASF. Under the IP Transfer Agreement, BASF sold to UDC Ireland all of its rights, title and interest to certain of its owned and co-owned intellectual property rights relating to the composition of, development, manufacture and use of OLED materials, including OLED lighting and display stack

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technology, as well as certain tangible assets. The intellectual property includes knowhow and more than 500 issued and pending patents in the area of phosphorescent materials and technologies. These assets were acquired in exchange for a cash payment of €86.8 million ($95.8 million). In addition, UDC Ireland also took on certain rights and obligations under three joint research and development agreements to which BASF was a party. The IP Transfer Agreement also contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of €86.8 million ($95.8 million) and acquisition costs incurred of $217,000 as acquired technology, which is being amortized over a period of 10 years.

Other Intangible Assets

As a result of the Adesis acquisition in June 2016, the Company recorded $16.8 million of other intangible assets, including $10.5 million assigned to customer relationships with a weighted average life of 11.5 years, $4.8 million of internally developed IP, processes and recipes with a weighted average life of 15 years, and $1.5 million assigned to trade name and trademarks with a weighted average life of 10 years.

At March 31, 2022, these other intangible assets consist of the following (in thousands):

	March 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(5,199	)	$	5,321
Developed IP, processes and recipes		4,820		(1,828	)		2,992
Trade name/Trademarks		1,500		(855	)		645
Other		448		(36	)		412
Total identifiable other intangible assets	$	17,288	$	(7,918	)	$	9,370

Amortization expense related to other intangible assets was $352,000 and $341,000 for the three months ended March 31, 2022 and 2021, respectively. Amortization expense is included in amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $1.1 million for the nine months ending December 31, 2022, $1.4 million for each of the next four fiscal years (2023 - 2026) and $2.7 million in total thereafter.

8. OTHER ASSETS:

Other assets consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Long-term taxes receivable	$	93,293	$	103,260
Right-of-use assets		29,645		30,614
Other long-term assets		3,284		1,836
Other Assets	$	126,222	$	135,710

See Notes 9 and 20 for further explanation on right-of-use assets and non-current taxes receivable, respectively.

9. LEASES:

The Company has entered into operating leases to facilitate the expansion of its manufacturing, research and development, and selling, general and administrative activities. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when those events are reasonably certain to occur. The interest rate implicit in lease contracts is typically not readily determinable and as such the Company uses the appropriate incremental borrowing rate based on information available at the lease commencement date in determining the present value of the lease payments. Current lease agreements do not contain any residual value guarantees or material restrictive covenants. As of March 31, 2022, the Company did not have any finance leases and no additional operating leases that have not yet commenced.

The following table presents the Company’s operating lease cost and supplemental cash flow information related to the Company’s operating leases (in thousands):

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	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	1,098	$	615
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	—	$	4,720

The following table presents the Company’s operating right-of-use assets and liabilities (in thousands):

	March 31, 2022		December 31, 2021
Right-of-use assets	$	29,645	$	30,614
Short-term lease liabilities		3,333		3,351
Long-term lease liabilities		26,312		27,263

The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities:

	March 31, 2022
Weighted average remaining lease term (in years)		8.3
Weighted average discount rate		2.8	%

As of March 31, 2022, current operating leases had remaining terms between five months and ten years with options to extend the lease terms.

Undiscounted future minimum lease payments as of March 31, 2022, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows (in thousands):

	Maturities of Operating Lease Liabilities
2022 (1)	$	3,054
2023		4,009
2024		3,957
2025		3,999
2026		4,012
Thereafter		14,115
Total lease payments		33,146
Less: Imputed interest		(3,501	)
Present value of lease payments	$	29,645

(1)Scheduled maturities of lease liabilities represent the period from April 1, 2022 to December 31, 2022.

10. ACCRUED EXPENSES:

Accrued expenses consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Compensation	$	12,997	$	27,686
PPG agreements		6,705		8,853
Research and development agreements		1,746		1,469
Professional fees		1,432		1,000
Consulting		645		1,314
Royalties		154		691
Other		3,281		4,461
Accrued expenses	$	26,960	$	45,474

11. RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS:

The Company has long-standing relationships with Princeton University (Princeton) and the University of Southern California (USC) for the conduct of research relating to the Company’s OLED and other organic thin-film technologies and materials. This research

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had been performed at Princeton under the direction of Professor Stephen R. Forrest and at USC under the direction of Professor Mark E. Thompson.

Under an Amended License Agreement entered into in 1997 by the Company, Princeton and USC (as amended, the 1997 Amended License Agreement), the universities granted the Company worldwide, exclusive license rights, with rights to sublicense, to make, have made, use, lease and/or sell products and to practice processes based on patent applications and issued patents arising out of research performed by the universities for the Company. Under the 1997 Amended License Agreement, the Company pays Princeton royalties of 3% of the net sales price for licensed products it sells or 3% of the revenues the Company receives from its sublicensees for their sale of licensed products. The Company recorded royalty expense in connection with this agreement of $154,000 and $112,000 for the three months ended March 31, 2022 and 2021, respectively.

In 2006, Professor Forrest transferred to the University of Michigan (Michigan) and the Company amended the 1997 Amended License Agreement to include Michigan as a party to that agreement. Also in connection with the transfer, the Company entered into a sponsored research agreement with USC under which the Company continues to fund organic electronics research being conducted by Professors Forrest and Thompson (the 2006 Research Agreement). Work by Professor Forrest is being funded through a subcontract between USC and Michigan. The 2006 Research Agreement extends through April 2023 with an option to further extend for an additional two years.

The Company makes payments under the 2006 Research Agreement to USC on a quarterly basis as actual expenses are incurred. As of March 31, 2022, the Company was obligated to pay USC up to $4.1 million for work to be performed during the remaining extended term. The Company recorded research and development expense in connection with work performed under the 2006 Research Agreement of $195,000 and $285,000 for the three months ended March 31, 2022 and 2021, respectively.

12. OTHER LIABILITIES:

Other liabilities consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Long-term taxes payable	$	51,060	$	47,791
Long-term lease liabilities		26,312		27,263
Other long-term liabilities		1,089		1,023
Other Liabilities	$	78,461	$	76,077

See Notes 9 and 20 for further explanation on long-term lease liabilities and long-term taxes payable, respectively.

13. EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS:

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG Industries, Inc. (PPG) (the New OLED Materials Agreement), which replaced the original OLED Materials Agreement with PPG, effective as of October 1, 2011. The term of the New OLED Materials Agreement, by amendment in February 2021, runs through December 31, 2024, and thereafter is automatically renewed for additional one-year terms, unless terminated by the Company by providing prior notice of one year or terminated by PPG by providing prior notice of two years. The New OLED Materials Agreement contains provisions that are substantially similar to those of the original OLED Materials Agreement. Under the New OLED Materials Agreement, PPG continues to assist the Company in developing its proprietary OLED materials and supplying the Company with those materials for evaluation purposes and for resale to its customers.

Under the New OLED Materials Agreement, the Company compensates PPG on a cost-plus basis for the services provided during each calendar quarter. The Company is required to pay for some of these services in all cash. Up to 50% of the remaining services are payable, at the Company’s sole discretion, in cash or shares of the Company’s common stock, with the balance payable in cash. The actual number of shares of common stock issuable to PPG is determined based on the average closing price for the Company’s common stock during a specified number of days prior to the end of each calendar half-year period ending on March 31 and September 30. If, however, this average closing price is less than $20.00, the Company is required to compensate PPG in cash. No shares were issued for services to PPG for the three months ended March 31, 2022 and 2021.

The Company is also required to reimburse PPG for raw materials used for research and development. The Company records the purchases of these raw materials as a current asset until such materials are used for research and development efforts.

In February 2021, the Company entered into an amendment to the New OLED Materials Agreement extending the term of the agreement and specifying operation and maintenance services that will be provided by PPG affiliate, PPG SCM Ireland Limited, to

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UDC Ireland, at the Company’s new manufacturing site in Shannon, Ireland, currently being leased by UDC Ireland’s wholly-owned subsidiary, OMM, for the production of OLED materials. Facility improvements and regulatory approvals are expected to be completed and operations are scheduled to commence by mid-year 2022. As with the initial New OLED Materials Agreement, the Company will compensate PPG on a cost-plus basis for the services provided at the Shannon manufacturing facility.

The Company recorded research and development expense of $1.5 million for both three-month periods ended March 31, 2022 and 2021, in relation to the cash portion of the reimbursement of expenses and work performed by PPG, excluding amounts paid for commercial chemicals.

14. SHAREHOLDERS’ EQUITY:

Preferred Stock

The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to 5,000,000 shares of $0.01 par value preferred stock with designations, rights and preferences determined from time-to-time by the Company’s Board of Directors. Accordingly, the Company’s Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of shareholders of the Company’s common stock.

In 1995, the Company issued 200,000 shares of Series A Nonconvertible Preferred Stock (Series A) to American Biomimetics Corporation (ABC) pursuant to a certain Technology Transfer Agreement between the Company and ABC. The Series A shares have a liquidation value of $7.50 per share. Series A shareholders, as a single class, have the right to elect two members of the Company’s Board of Directors. This right has never been exercised. Holders of the Series A shares are entitled to one vote per share on matters which shareholders are generally entitled to vote. The Series A shareholders are not entitled to any dividends.

As of March 31, 2022, the Company had issued 200,000 shares of preferred stock, all of which were outstanding.

Common Stock

The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to 200,000,000 shares of $0.01 par value common stock. Each share of the Company’s common stock entitles the holder to one vote on all matters to be voted upon by the shareholders.

As of March 31, 2022, the Company had issued 49,099,830 shares of common stock, of which 47,734,182 were outstanding. During the three months ended March 31, 2022 and 2021, the Company repurchased no shares of common stock.

Scientific Advisory Board Awards

During the three months ended March 31, 2022 and 2021, the Company granted a total of 2,024 and 1,400 shares, respectively, of fully vested common stock to non-employee members of the Scientific Advisory Board for services performed in 2021 and 2020, respectively. The fair value of shares issued to members of the Scientific Advisory Board was $300,000 for both three-month periods.

Dividends

During the three months ended March 31, 2022, the Company declared and paid cash dividends of $0.30 per common share, or $14.2 million, on the Company’s outstanding common stock.

On May 3, 2022, the Company’s Board of Directors declared a second quarter dividend of $0.30 per share to be paid on June 30, 2022 to all shareholders of record of the Company’s common stock as of the close of business on June 16, 2022. All future dividends will be subject to the approval of the Company’s Board of Directors.

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15. ACCUMULATED OTHER COMPREHENSIVE LOSS:

Amounts related to the changes in accumulated other comprehensive loss were as follows (in thousands):

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2021, net of tax	$	(142	)	$	(18,019	)	$	(74	)	$	(18,235	)
Other comprehensive loss    before reclassification		(3,935	)		—			(234	)		(4,169	)
Reclassification to net income (1)		—			509			—			509		Selling, general and administrative, research and development and cost of sales
Change during period		(3,935	)		509			(234	)		(3,660	)
Balance March 31, 2022, net of tax	$	(4,077	)	$	(17,510	)	$	(308	)	$	(21,895	)

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2020, net of tax	$	91		$	(36,075	)	$	(35	)	$	(36,019	)
Other comprehensive loss    before reclassification		(58	)		—			(106	)		(164	)
Reclassification to net income (1)		—			1,174			—			1,174		Selling, general and administrative, research and development and cost of sales
Change during period		(58	)		1,174			(106	)		1,010
Balance March 31, 2021, net of tax	$	33		$	(34,901	)	$	(141	)	$	(35,009	)

(1)The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $509,000 and $1.2 million for the three months ended March 31, 2022 and 2021, respectively.

(2)Refer to Note 17: Supplemental Executive Retirement Plan.

16. STOCK-BASED COMPENSATION:

Equity Compensation Plan

The Equity Compensation Plan provides for the granting of incentive and nonqualified stock options, shares of common stock, stock appreciation rights and performance units to employees, directors and consultants of the Company. Stock options are exercisable over periods determined by the Company’s Human Capital Committee, but for no longer than 10 years from the grant date. Through March 31, 2022, the Company’s shareholders have approved increases in the number of shares reserved for issuance under the Equity Compensation Plan to 10,500,000, and have extended the term of the plan through 2024. As of March 31, 2022, there were 1,579,746 shares that remained available to be granted under the Equity Compensation Plan.

Restricted Stock Awards and Units

The Company has issued restricted stock awards and units to employees and non-employees with vesting terms of one to five years. The fair value is equal to the market price of the Company’s common stock on the date of grant for awards granted to employees and equal to the market price at the end of the reporting period for unvested non-employee awards or upon the date of vesting for vested non-employee awards. Expense for restricted stock awards and units is amortized ratably over the vesting period for the awards issued to employees and using a graded vesting method for the awards issued to non-employees.

During the three months ended March 31, 2022, the Company granted 100,134 shares of restricted stock awards and restricted stock units to employees and non-employees, which had a total fair value of $15.1 million on the respective dates of grant, and will vest over three to five years from the date of grant, provided that the grantee is still an employee of the Company or is still providing services to the Company on the applicable vesting date.

For the three months ended March 31, 2022 and 2021, the Company recorded, as compensation charges related to all restricted stock awards and units granted to employees and non-employees, selling, general and administrative expense of $4.0 million and $3.6 million, respectively, research and development expense of $1.5 million and $1.2 million, respectively, and cost of sales of $518,000 and $557,000, respectively.

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In connection with the vesting of restricted stock awards and units during the three months ended March 31, 2022 and 2021, 49,794 and 48,824 shares, respectively, with aggregate fair values of $7.8 million and $9.4 million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

For the three months ended March 31, 2022 and 2021, the Company recorded as compensation charges related to all restricted stock units granted to non-employee members of the Scientific Advisory Board, whose unvested shares are marked to market each reporting period, research and development expense of $120,000 and $36,000, respectively.

The Company has granted restricted stock units to non-employee members of the Board of Directors with quarterly vesting over a period of approximately one year. The fair value is equal to the market price of the Company's common stock on the date of grant. The restricted stock units are issued and expense is recognized ratably over the vesting period. For the three months ended March 31, 2022 and 2021, the Company recorded compensation charges for services performed, related to all restricted stock units granted to non-employee members of the Board of Directors, selling, general and administrative expense of $309,000 and $294,000, respectively. In connection with the vesting of the restricted stock, the Company issued to non-employee members of the Board of Directors 2,196 and 1,353 shares, respectively, during the three months ended March 31, 2022 and 2021.

Performance Unit Awards

Each performance unit award is subject to both a performance-vesting requirement (either performance-based or market-based) and a service-vesting requirement. The performance-based vesting requirement is tied to EBITDA and cash flow achievement, as measured over a specific performance period. The market-based vesting requirement is tied to the Company's total shareholder return (TSR) relative to the TSR of companies comprising the Nasdaq Electronics Components Index, as measured over a three-year performance period. The maximum number of performance units that may vest based on performance is three times the shares granted. Further, if the Company's total shareholder return is negative, the performance units will not vest at all.

During the three months ended March 31, 2022, the Company granted 100,621 performance units, of which 50,309 units are subject to performance-based vesting requirements based on EBITDA, 25,156 units are subject to performance-based vesting requirements based on the Company's achievement of cash from operations, and 25,156 units are subject to market-based, TSR vesting requirements. The grant date fair value of the performance unit awards granted was $15.2 million for the three months ended March 31, 2022, as determined by the Company’s common stock on date of grant for the units with performance-based vesting and a Monte Carlo simulation model used for the units with market-based vesting.

For the three months ended March 31, 2022 and 2021, the Company recorded selling, general and administrative expense of $68,000 and credit of $211,000, respectively, research and development credit of $28,000 and $56,000, respectively, and cost of sales credit of $19,000 and $35,000, respectively, related to the performance units.

In connection with the vesting of performance units during the three months ended March 31, 2022 and 2021, 563 and 1,224 shares, respectively, with an aggregate fair value of $88,000 and $231,000, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

Employee Stock Purchase Plan

On April 7, 2009, the Board of Directors of the Company adopted an Employee Stock Purchase Plan (ESPP). The ESPP was approved by the Company’s shareholders and became effective on June 25, 2009. The Company has reserved 1,000,000 shares of common stock for issuance under the ESPP. Unless terminated by the Board of Directors, the ESPP will expire when all reserved shares have been issued.

Eligible employees may elect to contribute to the ESPP through payroll deductions during consecutive three-month purchase periods, the first of which began on July 1, 2009. Each employee who elects to participate will be deemed to have been granted an option to purchase shares of the Company’s common stock on the first day of the purchase period. Unless the employee opts out during the purchase period, the option will automatically be exercised on the last day of the period, which is the purchase date, based on the employee’s accumulated contributions to the ESPP. The purchase price will equal 85% of the lesser of the closing price per share of common stock on the first day of the period or the last business day of the period.

Employees may allocate up to 10% of their base compensation to purchase shares of common stock under the ESPP; however, each employee may purchase no more than 12,500 shares on a given purchase date, and no employee may purchase more than $25,000 of common stock under the ESPP during a given calendar year.

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During the three months ended March 31, 2022 and 2021, the Company issued 2,875 and 1,782 shares, respectively, of its common stock under the ESPP, resulting in proceeds of $403,000 and $348,000, respectively.

For the three months ended March 31, 2022 and 2021, the Company recorded charges of $25,000 and $23,000, respectively, to selling, general and administrative expense, $51,000 and $36,000, respectively, to research and development expense, and $29,000 and $25,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature.

17. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN:

On March 18, 2010, the Human Capital Committee and the Board of Directors of the Company approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP). The SERP is currently unfunded and includes salary and bonus as part of the plan. The purpose of the SERP is to provide certain of the Company’s key employees with supplemental pension benefits following a cessation of their employment and to encourage their continued employment with the Company. As of March 31, 2022, there were eight participants in the SERP.

The Company records amounts relating to the SERP based on calculations that incorporate various actuarial and other assumptions, including discount rates, rate of compensation increases, retirement dates and life expectancies. The net periodic costs are recognized as employees render the services necessary to earn the SERP benefits.

The components of net periodic pension cost were as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Service cost	$	361	$	428
Interest cost		346		291
Amortization of prior service cost		280		275
Amortization of loss		372		1,234
Total net periodic benefit cost	$	1,359	$	2,228

18. COMMITMENTS AND CONTINGENCIES:

Commitments

Under the 2006 Research Agreement with USC, the Company is obligated to make certain payments to USC based on work performed by USC under that agreement, and by Michigan under its subcontractor agreement with USC. See Note 11 for further explanation.

Under the terms of the 1997 Amended License Agreement, the Company is required to make minimum royalty payments to Princeton. See Note 11 for further explanation.

The Company has agreements with six executive officers and 12 senior level employees which provide for certain cash and other benefits upon termination of employment of the officer or employee in connection with a change in control of the Company. If a covered person’s employment is terminated in connection with the change in control, the person is entitled to a lump-sum cash payment equal to two times (in the case of the executive officers) or either one or two times (in the case of the senior level employees) the sum of the average annual base salary and bonus of the person and immediate vesting of all stock options and other equity awards that may be outstanding at the date of the change in control, among other items.

In order to manage manufacturing lead times and help ensure adequate material supply, the Company entered into the New OLED Materials Agreement (see Note 13) that allows PPG to procure and produce inventory based upon criteria as defined by the Company. These purchase commitments consist of firm, noncancelable and unconditional commitments. In certain instances, this agreement allows the Company the option to reschedule and adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of March 31, 2022 and December 31, 2021, the Company had purchase commitments for inventory of $42.3 million and $25.7 million, respectively.

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Patent Related Challenges and Oppositions

Each major jurisdiction in the world that issues patents provides both third parties and applicants an opportunity to seek a further review of an issued patent. The process for requesting and considering such reviews is specific to the jurisdiction that issued the patent in question, and generally does not provide for claims of monetary damages or a review of specific claims of infringement. The conclusions made by the reviewing administrative bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

The Company believes that opposition proceedings are frequently commenced in the ordinary course of business by third parties who may believe that one or more claims in a patent do not comply with the technical or legal requirements of the specific jurisdiction in which the patent was issued. The Company views these proceedings as reflective of its goal of obtaining the broadest legally permissible patent coverage permitted in each jurisdiction. Once a proceeding is initiated, as a general matter, the issued patent continues to be presumed valid until the jurisdiction’s applicable administrative body issues a final non-appealable decision. Depending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. The Company believes that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings.

Below is a summary of an active proceeding that has been commenced against an issued patent that is exclusively licensed to the Company. The Company does not believe that the confirmation, loss or modification of the Company’s rights in any individual claim or set of claims that are the subject of the following legal proceeding would have a material impact on the Company’s material sales or licensing business or on the Company’s Consolidated Financial Statements, including its Consolidated Statements of Income, as a whole. In certain circumstances, when permitted, the Company may also utilize a proceeding to request modification of the claims to better distinguish the patented invention from any newly identified prior art and/or improve the claim scope of the patent relative to commercially important categories of the invention.

Opposition to European Patent No. 1390962

On November 16, 2011, Osram AG and BASF SE each filed a Notice of Opposition to European Patent No. 1390962 (the EP '962 patent), which relates to the Company’s white phosphorescent OLED technology. The EP '962 patent, which was issued on February 16, 2011, is a European counterpart patent to U.S. patents 7,009,338 and 7,285,907. They are exclusively licensed to the Company by Princeton, and the Company is required to pay all legal costs and fees associated with this proceeding.

The European Patent Office (EPO) combined the oppositions into a single opposition proceeding, and a hearing on this matter was held in December 2015, wherein the EPO Opposition Division revoked the patent claims for alleged insufficiencies under European Patent Convention Article 83. The Company believes the EPO's decision is erroneous and appealed the decision. Subsequent to the filing of the appeal, BASF withdrew its opposition to the patent. On appeal, the Appeals Division withdrew the lower Opposition Division’s rejections with respect to a portion of the original subject matter and remanded the matter to the lower Opposition Division for further consideration. The patent, as originally granted, is deemed valid during the pendency of the opposition process.

At this time, based on its current knowledge, the Company believes that the patent being challenged should be declared valid and that a significant portion of the Company's claims should be upheld. However, the Company cannot make any assurances of this result.

In addition to the above proceeding and now concluded proceedings which have been referenced in prior filings, from time to time, the Company may have other proceedings that are pending which relate to patents the Company acquired as part of the Fujifilm or BASF OLED patent acquisitions or which relate to technologies that are not currently widely used in the marketplace.

19. CONCENTRATION OF RISK:

Revenues and accounts receivable from the Company's largest customers were as follows (in thousands):

	% of Total Revenue for the  Three Months Ended March 31,		Accounts Receivable as of
Customer	2022	2021	March 31, 2022
A	40%	36%	$	8,216
B	27%	23%	$	42,813
C	15%	20%	$	20,622
D	7%	12%	$	6,870

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Revenues from outside of North America represented approximately 97% for both three-month periods ended March 31, 2022 and 2021. Revenues by geographic area are as follows (in thousands):

	Three Months Ended March 31,
Country	2022		2021
South Korea	$	89,687	$	67,975
China		55,400		60,504
Japan		1,053		1,315
Other non-U.S. locations		300		825
Total non-U.S. locations		146,440		130,619
United States		4,030		3,381
Total revenue	$	150,470	$	134,000

The Company attributes revenue to different geographic areas on the basis of the location of the customer.

Long-lived assets (net), by geographic area are as follows (in thousands):

	March 31, 2022		December 31, 2021
United States	$	115,760	$	115,004
Other		16,119		13,828
Total long-lived assets	$	131,879	$	128,832

Substantially all chemical materials were purchased from one supplier. See Note 13 for further explanation.

20. INCOME TAXES:

The Company is subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was an expense of 20.1% and 18.9% for the three months ended March 31, 2022 and 2021, respectively. The discrepancy between the statutory tax rate and the effective tax rate is primarily due to the benefit of income taxed in foreign jurisdictions partially offset by nondeductible employee compensation and U.S. international tax (GILTI and Subpart F). The Company recorded an income tax expense of $12.5 million and $12.1 million for the three months ended March 31, 2022 and 2021, respectively.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the Company's ability to generate future taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. As part of its assessment, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. At this time there is no evidence to release the valuation allowance that has historically been recorded for the New Jersey research and development credit.

On December 27, 2018 the Korean Supreme Court, citing prior cases, held that only royalties paid with respect to Korean registered patents are Korean source income and subject to Korean withholding tax under the applicable law and interpretation of the Korea-U.S. Tax Treaty. The Company has incurred Korean withholding tax of $14.9 million each year since the year ended December 31, 2018. Based on the Korean Supreme Court decision, in October 2021, a tax refund request on behalf of the Company was filed with the Korean National Tax Service (KNTS) for over-withheld taxes from 2018 to the second quarter of 2021. The Company has been advised by a leading Korean law firm that there is a more-likely-than-not chance of success. As a result, as of March 31, 2022 and December 31, 2021, the Company has recorded a long-term asset of $56.6 million and $53.2 million, respectively, representing the allocation of withholding to non-Korean patents. Also, as of March 31, 2022 and December 31, 2021, the Company has recorded a long-term liability of $34.8 million and $31.6 million, respectively, for estimated amounts due to the U.S. Federal government based on the amendment of U.S. tax returns for lower withholding amounts.

With respect to the Korean withholding for the years 2011 through 2017, the Company has decided to continue the U.S.-Korean Mutual Agreement Procedure (MAP) which was accepted by the KNTS on September 15, 2017. The Company believes that it is more-likely-than-not that a favorable settlement will be reached resulting in a reduction of the Korean withholding taxes previously withheld since 2011. The Internal Revenue Service and KNTS are currently exchanging information with respect to the MAP. No further notable progress has been made since the last quarter. A long-term asset of $36.9 million for estimated refunds due from the Korean government, a long-term payable of $16.2 million for estimated amounts due to the U.S. Federal government based on amendment of prior year U.S.

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tax returns for the lower withholding amounts, and a reduction of deferred tax assets for foreign tax credits and research and development credits of $20.7 million has been recorded on the March 31, 2022 and December 31, 2021 Consolidated Balance Sheets for this matter.

On October 30, 2018, the KNTS concluded a tax audit with LG Display that included the licensing and royalty payments made to UDC Ireland during the years 2015 through 2017. The KNTS questioned whether UDC Ireland was the beneficial owner of these payments and assessed UDC Ireland a charge of $13.2 million for withholding and interest for the three-year period. UDC Ireland has engaged a leading Korean law firm which believes it is more-likely-than-not that UDC Ireland has beneficial ownership of the underlying intellectual property. Based on this authority, UDC Ireland has paid the assessment which is recorded as a long-term asset as of December 31, 2021. In September 2020, the Korean District Court ruled entirely in the favor of UDC Ireland on the beneficial ownership issue and the ruling was affirmed by the Korean High Court in August 2021. The KNTS appealed the ruling to the Korean Supreme Court. On January 13, 2022, the Korean Supreme Court dismissed the appeal from the KNTS. UDC Ireland recovered the charge of $13.2 million for withholding plus interest for the three-year period during February 2022.

The Company’s federal income tax returns for the years 2018 to 2021 are open and subject to examination. The Company's state and foreign tax returns are open for a period of generally three to four years.

The above estimates may change in the future and upon settlement.

21. REVENUE RECOGNITION:

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (Topic 606). The standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows from a contract with a customer.

For both three month periods ended March 31, 2022 and 2021, the Company recorded 97% of its revenue from OLED related sales and 3% from the providing of services through Adesis, respectively.

Contract Balances

The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):

	As of March 31, 2022
Accounts receivable	$	104,947
Short-term unbilled receivables		12,774
Long-term unbilled receivables		—
Short-term deferred revenue		111,778
Long-term deferred revenue		31,735

Short-term and long-term unbilled receivables are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. The deferred revenue balance at March 31, 2022 will be recognized as materials are shipped to customers over the remaining contract periods. As of March 31, 2022, the Company had $23.8 million of backlog associated with committed purchase orders from its customers for phosphorescent emitter material. These orders are anticipated to be fulfilled within the next 90 days.

Significant changes in the unbilled receivables and deferred liabilities balances for the three months ended March 31, 2022 and 2021, are as follows (in thousands):

	Three Months Ended March 31, 2022
	Unbilled Receivables		Deferred Revenue
Balance at December 31, 2021	$	8,127	$	(157,081	)
Revenue recognized that was previously included in deferred revenue, net		—		57,594
Increases due to cash received		—		(45,891	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		1,865
Unbilled receivables recorded, net		4,647		—
Net change		4,647		13,568
Balance at March 31, 2022	$	12,774	$	(143,513	)

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	Three Months Ended March 31, 2021
	Unbilled Receivables			Deferred Revenue
Balance at December 31, 2020	$	10,429		$	(162,301	)
Revenue recognized that was previously included in deferred revenue, net		—			33,439
Increases due to cash received		—			(53,000	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			3,738
Unbilled receivables recorded, net		20,471			—
Transferred to receivables from unbilled receivables		(6,000	)		—
Net change		14,471			(15,823	)
Balance at March 31, 2021	$	24,900		$	(178,124	)

The cumulative catch-up adjustment arising from changes in estimates of transaction price, net for the three months ended March 31, 2022 decreased by $1.9 million as compared to the three months ended March 31, 2021.

22. NET INCOME PER COMMON SHARE:

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share, which requires earnings per share (EPS) for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and the Company's participating security holders. Under the two-class method, income for the reporting period is allocated between common shareholders and other security holders based on their respective participation rights in undistributed income. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method.

Basic net income per common share is computed by dividing net income allocated to common shareholders by the weighted-average number of shares of common stock outstanding for the period excluding unvested restricted stock units and performance units. Net income allocated to the holders of the Company's unvested restricted stock awards is calculated based on the shareholders proportionate share of weighted average shares of common stock outstanding on an if-converted basis.

For purposes of determining diluted net income per common share, basic net income per share is further adjusted to include the effect of potential dilutive common shares outstanding, including stock options, restricted stock units and performance units, and the impact of shares to be issued under the Employee Stock Purchase Plan.

The following table is a reconciliation of net income and the shares used in calculating basic and diluted net income per common share for the three months ended March 31, 2022 and 2021 (in thousands, except share and per share data):

	March 31,
	2022			2021
Numerator:
Net income	$	49,970		$	51,687
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(325	)		(358	)
Adjusted net income	$	49,645		$	51,329
Denominator:
Weighted average common shares outstanding – Basic		47,369,764			47,267,921
Effect of dilutive shares:
Common stock equivalents arising from stock options and ESPP		191			165
Restricted stock awards and units and performance units		70,326			61,618
Weighted average common shares outstanding – Diluted		47,440,281			47,329,704
Net income per common share:
Basic	$	1.05		$	1.09
Diluted	$	1.05		$	1.08

For the three months ended March 31, 2022 and 2021, the combined effects of unvested restricted stock awards, restricted stock units, performance unit awards and stock options of 14,298 and none, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and related notes above.

CAUTIONARY STATEMENT

CONCERNING FORWARD-LOOKING STATEMENTS

This discussion and analysis contains some “forward-looking statements.” 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,” “may” or similar expressions. These statements 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 that we believe are appropriate in these circumstances.

As you read and consider this discussion and analysis, you should not place undue reliance on any forward-looking statements. You should understand that these statements involve substantial risk and uncertainty and are not guarantees of future performance or results. They depend on many factors that are discussed further in the sections entitled (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by disclosures in Item 1A of Part II below. Changes or developments in any of these areas could affect our financial results or results of operations and could cause actual results to differ materially from those contemplated in the forward-looking statements.

All forward-looking statements speak only as of the date of this report or the documents incorporated by reference, as the case may be. We do not undertake any duty to update any of these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

OVERVIEW

We are a leader in the research, development and commercialization of organic light emitting diode (OLED), technologies and materials for use in display applications, such as mobile phones, televisions, wearables, tablets, portable media devices, notebook computers, personal computers and automotive applications, as well as specialty and general lighting products. Since 1994, we have been engaged and expect to continue to be primarily engaged, in funding and performing research and development activities relating to OLED technologies and materials, and commercializing these technologies and materials. We derive our revenue primarily from the following:

•sales of OLED materials for evaluation, development and commercial manufacturing;

•intellectual property and technology licensing;

•technology development and support, including third-party collaboration efforts and providing support to third parties for commercialization of their OLED products; and

•contract research services in the areas of chemical materials synthesis research, development and commercialization for non-OLED applications.

Material sales relate to our sale of OLED materials for incorporation into our customers’ commercial OLED products or for their OLED development and evaluation activities. Material sales are generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties.

We receive license and royalty payments under certain commercial, development and technology evaluation agreements, some of which are non-refundable advances. These payments may include royalty and license fees made pursuant to license agreements and also license fees included as part of certain commercial supply agreements. These payments are included in the estimate of total contract consideration by customer and recognized as revenue over the contract term based on material units sold at the estimated per unit fee over the life of the contract.

In 2018, we entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC). This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2018 and lasts through the end of 2022 with an additional two-year extension option. Under this agreement, we are being paid a license fee, payable in quarterly installments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.

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At the same time that we entered into the current commercial license agreement with SDC, we also entered into a material purchase agreement with SDC. Under the material purchase agreement, SDC agrees to purchase from us a minimum amount of phosphorescent emitter materials for use in the manufacture of licensed products. This minimum commitment is subject to SDC’s requirements for phosphorescent emitter materials and our ability to meet these requirements over the term of the supplemental agreement.

In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display), which were effective as of January 1, 2015. The terms of the agreements were set to expire by the end of 2022. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The agreements include customary provisions relating to warranties, indemnities, confidentiality, assignability and business terms. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty revenue to be generated under the patent license agreement. We generate revenue under these agreements that are predominantly tied to LG Display’s sales of OLED licensed products. The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials.

In 2021, we entered into amendments of the 2015 OLED patent license agreement and the 2015 OLED commercial supply agreement with LG Display, which amendments were effective as of January 1, 2021. The amended agreements included a term extension and are set to expire by the end of 2025.

In 2016, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, we have granted Tianma non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on Tianma’s sales of licensed products. Additionally, we supply phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, we mutually agreed to extend the terms of both the patent license and material purchase agreements for an additional multi-year term.

In 2017, we entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, we have granted BOE non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to BOE for use in its licensed products.

In 2018, we entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, we have granted certain of Visionox’s affiliates a non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products. On April 22, 2021, we announced an extension of the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd.

In 2019, we entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, we entered into long-term, multi-year agreements with CSOT. Under these agreements, we have granted CSOT non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to CSOT for use in its licensed products.

In 2016, we acquired Adesis, Inc. (Adesis) with operations in New Castle, Delaware. Adesis is a contract research organization (CRO) that provides support services to the OLED, pharma, biotech, catalysis and other industries. As of March 31, 2022, Adesis employed a team of 127 research scientists, chemists, engineers and laboratory technicians. Prior to our acquisition of Adesis in 2016, we utilized more than 50% of Adesis’ technology service and production output. We continue to utilize a significant portion of its technology research capacity for the benefit of our OLED technology development, and Adesis uses the remaining capacity to operate as a CRO in the above-mentioned industries by providing contract research services for non-OLED applications to those third-party customers. Contract research services revenue is earned by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis for those third-party customers.

In June 2020, a wholly-owned subsidiary, OVJP Corporation (OVJP Corp), was formed as a Delaware corporation. Based in California, OVJP Corp was founded to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology. As of March 31, 2022, OVJP employed a team of 23 research, mechanical, electrical and software engineers and laboratory technicians. As a direct printing technique, OVJP technology has the potential to offer high deposition rates for large-area OLEDs. In addition, OVJP technology reduces OLED material waste associated with use of a shadow mask (i.e., the waste of material that deposits on the shadow mask itself when fabricating an OLED). By comparison to inkjet printing, an OVJP process does not use liquid solvents and therefore the OLED materials utilized are not limited by their viscosity or solvent solubility. OVJP also avoids generation of solvent wastes and eliminates the additional step of removing residual solvent from the OLED device. We believe the successful implementation of the

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OVJP technology has the potential to increase the addressable market for large-size OLED panels while also serving another potential growth market for our proprietary PHOLED materials and technologies.

In February 2021, we announced the establishment of a new manufacturing site in Shannon, Ireland and an agreement between UDC Ireland Limited and PPG for the production of our OLED materials. The new facility is expected to double our production capacity and allow for the diversification of our manufacturing base for phosphorescent emitters. We anticipate the facility to be operational by mid-year 2022.

We also generate technology development and support revenue earned from development and technology evaluation agreements and commercialization assistance fees, along with, to a minimal extent, government contracts. Relating to our government contracts, we may receive reimbursements by government entities for all or a portion of the research and development costs we incur. Revenues are recognized as services are performed, proportionally as research and development costs are incurred, or as defined milestones are achieved.

We anticipate fluctuations in our annual and quarterly results of operations due to uncertainty regarding, among other factors:

•the timing, cost and volume of sales of our OLED materials;

•the timing of our receipt of license fees and royalties, as well as fees for future technology development and evaluation;

•the timing and magnitude of expenditures we may incur in connection with our ongoing research and development and patent-related activities; and

•the timing and financial consequences of our formation of new business relationships and alliances.

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Further, we continue to monitor the impact of COVID-19 on our business. Our global operations, and the global nature of our customer base and their respective customers, expose us to risks associated with public health crises, such as pandemics and epidemics. The ongoing COVID-19 pandemic had a substantial impact on our operations and financial results during the year ended December 31, 2020 and continued to have an impact during the year ended December 31, 2021 and the three months ended March 31, 2022. We expect that as the pandemic continues to evolve, it may potentially have a further adverse impact on the results of our operations due to uncertainties involving the continued disruption of the global economy, uncertainties associated with consumer demand for finished OLED goods, and the potential resulting impact on our customers and their demand for our phosphorescent emitters.

At this time, the crisis has not had a significant impact on our ability to fulfill shipments of commercial materials as required by our customers. However, the sustainability of maintaining our testing and manufacturing operations at levels needed to meet fluctuating customer demand is uncertain and is dependent upon the rapidly evolving situations being encountered by our logistics and supply chain partners. In an effort to protect the health and safety of our employees, we have taken proactive measures to adopt social distancing policies at all of our locations, employing nurses to check everyone entering our buildings, working from home, reducing the number of people in our sites at any one time, and suspending employee travel.

While the ultimate health and economic impact of the COVID-19 pandemic is highly uncertain, we expect that our business operations and results of operations, including our revenues, net income and cash flows, will continue to be adversely impacted for at least the first half of 2022, including as a result of:

•temporary closure of electronics and other retail stores through which our customers sell the products for which they use our technology and materials;

•consumer confidence and consumer spending habits, including spending for the products that our customers sell and negative trends in consumer purchasing patterns due to consumers’ disposable income, credit availability and debt levels;

•possible disruption to the supply chain caused by distribution and other logistical issues, which may impact suppliers of our raw materials as well as our ability to ship our materials to customers on a timely basis;

•decreased productivity due to travel ban, work-from-home policies or shelter-in-place orders;

•a slowdown in the U.S. economy, and uncertain global economic outlook or a credit crisis; and

•uncertain trade restrictions amongst jurisdictions seeking to manage their respective exposure to risks, including the COVID-19 pandemic.

We are focused on navigating these recent challenges presented by COVID-19 through preserving our liquidity and managing our cash flow. We continue to actively monitor the COVID-19 situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers, employees, and on our financial results for the remainder of the 2022 fiscal year.

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RESULTS OF OPERATIONS

Comparison of the Three Months Ended March 31, 2022 and 2021

	Three Months Ended March 31,
	2022			2021			Increase (Decrease)
REVENUE:
Material sales	$	86,691		$	79,808		$	6,883
Royalty and license fees		59,802			50,886			8,916
Contract research services		3,977			3,306			671
Total revenue		150,470			134,000			16,470
COST OF SALES		33,163			23,298			9,865
Gross margin		117,307			110,702			6,605
OPERATING EXPENSES:
Research and development		26,545			23,305			3,240
Selling, general and administrative		21,062			16,404			4,658
Amortization of acquired technology and other intangible assets		5,498			5,488			10
Patent costs		1,798			1,835			(37	)
Royalty and license expense		154			112			42
Total operating expenses		55,057			47,144			7,913
OPERATING INCOME		62,250			63,558			(1,308	)
Interest income, net		291			133			158
Other (loss) income, net		(34	)		59			(93	)
Interest and other income, net		257			192			65
INCOME BEFORE INCOME TAXES		62,507			63,750			(1,243	)
INCOME TAX EXPENSE		(12,537	)		(12,063	)		(474	)
NET INCOME	$	49,970		$	51,687		$	(1,717	)

Revenue

Our total material sales were $86.7 million for the three months ended March 31, 2022, as compared to $79.8 million for the three months ended March 31, 2021, an increase of 9% with a commensurate increase in unit material volume of 16%. The increase in material sales was due to strengthened demand for OLED products utilizing our emitter material.

•Green emitter sales for the three months ended March 31, 2022, which include our yellow-green emitters, were $66.4 million as compared to $60.5 million for the three months ended March 31, 2021, with unit material volumes increasing by 18%.

•Red emitter sales for the three months ended March 31, 2022 were $20.2 million as compared to $19.1 million for the three months ended March 31, 2021, with unit material volumes increasing by 8%.

Revenue from royalty and license fees was $59.8 million for the three months ended March 31, 2022 as compared to $50.9 million for the three months ended March 31, 2021, an increase of 18%. This increase was primarily due to an overall strengthening of our customers’ sales of royalty-bearing OLED licensed products.

Contract research services revenue was $4.0 million for the three months ended March 31, 2022 as compared to $3.3 million for the three months ended March 31, 2021, an increase of 20%. Revenue from contract research services consists of revenue earned by our subsidiary, Adesis, which provides support services to the pharma, biotech, catalysis and other industries on a contractual basis for those third-party customers.

Cost of sales

Cost of sales for the three months ended March 31, 2022 increased by $9.9 million as compared to the three months ended March 31, 2021, primarily due to increases in the level of material sales and manufacturing costs and higher per unit material costs. Included in the cost of sales for the three months ended March 31, 2022 and 2021 was an increase in inventory reserve of $84,000 and $667,000, respectively, due to excess inventory levels in certain products. As a result of the increase in revenue from material sales and royalty and license fees, gross margin for the three months ended March 31, 2022 increased by $6.6 million as compared to the three months ended March 31, 2021, with gross margin as a percentage of revenue decreasing to 78% from 83%.

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Research and development

Research and development expenses increased to $26.5 million for the three months ended March 31, 2022, as compared to $23.3 million for the three months ended March 31, 2021. The increase in research and development expenses was primarily due to higher employee-related compensation expenses and operating costs, including those associated with OVJP technology development, increased contract research, and PPG development activity.

Selling, general and administrative

Selling, general and administrative expenses increased to $21.1 million for the three months ended March 31, 2022, as compared to $16.4 million for the three months ended March 31, 2021. The increase in selling, general and administrative expenses was primarily due to higher employee-related compensation expenses, increased pre-production costs associated with the new manufacturing facility in Shannon, Ireland, as well as an increase in depreciation expenses resulting from corporate expansion.

Amortization of acquired technology and other intangible assets

Amortization of acquired technology and other intangible assets was $5.5 million for both three-month periods ended March 31, 2022 and 2021.

Patent costs

Patent costs were $1.8 million for both three-month periods ended March 31, 2022 and 2021.

Royalty and license expense

Royalty and license expense increased to $154,000 for the three months ended March 31, 2022, as compared to $112,000 for the three months ended March 31, 2021. The increase was due to increased royalties incurred under the 1997 Amended License Agreement, resulting from an increase in qualifying material sales. See Note 11 in Notes to the Consolidated Financial Statements for further discussion.

Interest and other income, net

Interest income, net was $291,000 for the three months ended March 31, 2022, as compared to $133,000 for the three months ended March 31, 2021. The increase in interest income, net was primarily due to higher available-for-sale investment balances as well as an increase in bond yields on available-for-sale investments held during the three months ended March 31, 2022 compared to bond yields on available-for-sale investments held during the three months ended March 31, 2021. Other income, net primarily consisted of net exchange gains and losses on foreign currency transactions and rental income. We recorded other loss, net of $34,000 for the three months ended March 31, 2022 as compared to other income, net of $59,000 for the three months ended March 31, 2021.

Income tax expense

We are subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was an expense of 20.1% and 18.9% for the three months ended March 31, 2022 and 2021, respectively, and we recorded income tax expense of $12.5 million and $12.1 million, respectively, for those periods.

Liquidity and Capital Resources

Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of March 31, 2022, we had cash and cash equivalents of $357.4 million, short-term investments of $325.1 million, and long-term U.S. Government bond investments of $155.6 million for a total of $838.1 million. This compares to cash and cash equivalents of $312.0 million, short-term investments of $351.2 million, and long-term U.S. Government bond investments of $159.6 million for a total of $822.8 million as of December 31, 2021.

Cash provided by operating activities for the three months ended March 31, 2022 was $52.6 million resulting from $50.0 million of net income and $49.3 million due to changes in our operating assets and liabilities, partially offset by a $46.7 million reduction due to non-cash items including amortization of deferred revenue, stock-based compensation and amortization of intangibles. Changes in our operating assets and liabilities related to an increase in deferred revenue of $45.9 million, an increase in other liabilities of $8.2 million, a decrease in other assets of $6.0 million and a decrease in accounts receivable of $2.7 million, partially offset by an increase in inventory of $9.2 million and a decrease in accounts payable and accrued expenses of $4.3 million.

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Cash provided by operating activities for the three months ended March 31, 2021 was $29.5 million resulting from $51.7 million of net income and $16.8 million due to changes in our operating assets and liabilities, partially offset by a $39.0 million reduction due to non-cash items including amortization of deferred revenue, amortization of intangibles and stock-based compensation. Changes in our operating assets and liabilities related to an increase in deferred revenue of $53.0 million and an increase in other liabilities of $6.3 million, partially offset by a decrease in accounts payable and accrued expenses of $21.1 million, an increase in inventory of $10.5 million, an increase in accounts receivable of $9.1 million and an increase in other assets of $1.8 million.

Cash provided by investing activities was $14.6 million for the three months ended March 31, 2022, as compared to $85.5 million for the three months ended March 31, 2021. The decrease was due to the timing of maturities and purchases of investments resulting in net maturities of $25.3 million for the three months ended March 31, 2022, as compared to $95.8 million for the three months ended March 31, 2021, and an increase in purchases of intangibles and property, plant and equipment of $527,000 for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. The increase in property, plant and equipment purchases during 2022 was primarily due to improvements to our facilities in Ewing, New Jersey.

Cash used in financing activities was $21.7 million for the three months ended March 31, 2022, as compared to $18.8 million for the three months ended March 31, 2021. The increase was due to an increase in the cash payment of dividends in the current year of $4.8, partially offset by a decrease in the payment of withholding taxes related to stock-based compensation to employees of $1.7 million and an increase in the proceeds from issuance of common stock of $55,000.

Working capital was $781.5 million as of March 31, 2022, as compared to $738.0 million as of December 31, 2021. The increase was primarily due to an increase in cash and cash equivalents and a decrease in accrued expenses, partially offset by a decrease in short term investments.

We anticipate, based on our internal forecasts and assumptions relating to our operations (including, among others, assumptions regarding our working capital requirements, the progress of our research and development efforts, the availability of sources of funding for our research and development work, and the timing and costs associated with the preparation, filing, prosecution, maintenance, defense and enforcement of our patents and patent applications), that we have sufficient cash, cash equivalents and short-term investments to meet our obligations for at least the next 12 months. However, the extent to which the COVID-19 pandemic and our precautionary measures in response thereto may impact our business and thus our liquidity will depend on future developments, which are highly uncertain and cannot be precisely estimated at this time.

We believe that potential additional financing sources for us include long-term and short-term borrowings and public and private sales of our equity and debt securities. It should be noted, however, that additional funding may be required in the future for research, development and commercialization of our OLED technologies and materials, to obtain, maintain and enforce patents respecting these technologies and materials, and for working capital and other purposes, the timing and amount of which are difficult to ascertain. There can be no assurance that additional funds will be available to us when needed, on commercially reasonable terms or at all, particularly in the current economic environment.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these Consolidated Financial Statements requires us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses, and other financial information. Actual results may differ significantly from our estimates under other assumptions and conditions.

We believe that our accounting policies related to revenue recognition and deferred revenue, inventories, and income taxes are our “critical accounting policies” as contemplated by the SEC.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2021, for additional discussion of our critical accounting policies.

Contractual Obligations

Refer to our Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of our contractual obligations.

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Off-Balance Sheet Arrangements

As of March 31, 2022, we had no off-balance sheet arrangements in the nature of guarantee contracts, retained or contingent interests in assets transferred to unconsolidated entities (or similar arrangements serving as credit, liquidity or market risk support to unconsolidated entities for any such assets), or obligations (including contingent obligations) arising out of variable interests in unconsolidated entities providing financing, liquidity, market risk or credit risk support to us, or that engage in leasing, hedging or research and development services with us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not utilize financial instruments for trading purposes and hold no derivative financial instruments, other financial instruments or derivative commodity instruments that could expose us to significant market risk other than our investments disclosed in “Fair Value Measurements” in Note 4 to the Consolidated Financial Statements included herein. We generally invest in investment grade financial instruments to reduce our exposure related to investments. Our primary market risk exposure with regard to such financial instruments is to changes in interest rates, which would impact interest income earned on investments. However, based upon the conservative nature of our investment portfolio and current experience, we do not believe a decrease in investment yields would have a material negative effect on our interest income.

Substantially all our revenue is derived from outside of North America. All revenue is primarily denominated in U.S. dollars and therefore we bear no significant foreign exchange risk.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this report, are effective to provide reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. However, a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls 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 control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Patent Related Challenges and Oppositions

Each major jurisdiction in the world that issues patents provides both third parties and applicants an opportunity to seek a further review of an issued patent. The process for requesting and considering such reviews is specific to the jurisdiction that issued the patent in question, and generally does not provide for claims of monetary damages or a review of specific claims of infringement. The conclusions made by the reviewing administrative bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

We believe that opposition proceedings are frequently commenced in the ordinary course of business by third parties who may believe that one or more claims in a patent do not comply with the technical or legal requirements of the specific jurisdiction in which the patent was issued. We view these proceedings as reflective of its goal of obtaining the broadest legally permissible patent coverage permitted in each jurisdiction. Once a proceeding is initiated, as a general matter, the issued patent continues to be presumed valid until the jurisdiction’s applicable administrative body issues a final non-appealable decision. Depending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. We believe that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings.

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Below is a summary of an active proceeding that has been commenced against an issued patent that is exclusively licensed to us. We do not believe that the confirmation, loss or modification of our rights in any individual claim or set of claims that are the subject of the following legal proceeding would have a material impact on our material sales or licensing business or on our Consolidated Financial Statements, including our Consolidated Statements of Income, as a whole. In certain circumstances, when permitted, we may also utilize a proceeding to request modification of the claims to better distinguish the patented invention from any newly identified prior art and/or improve the claim scope of the patent relative to commercially important categories of the invention.

Opposition to European Patent No. 1390962

On November 16, 2011, Osram AG and BASF SE each filed a Notice of Opposition to European Patent No. 1390962 (the EP '962 patent), which relates to our white phosphorescent OLED technology. The EP '962 patent, which was issued on February 16, 2011, is a European counterpart patent to U.S. patents 7,009,338 and 7,285,907. They are exclusively licensed to us by Princeton, and we are required to pay all legal costs and fees associated with this proceeding.

The European Patent Office (EPO) combined the oppositions into a single opposition proceeding, and a hearing on this matter was held in December 2015, wherein the EPO Opposition Division revoked the patent claims for alleged insufficiencies under European Patent Convention Article 83. We believe the EPO's decision is erroneous and appealed the decision. Subsequent to the filing of the appeal, BASF withdrew its opposition to the patent. On appeal, the Appeals Division withdrew the lower Opposition Division’s rejections with respect to a portion of the original subject matter and remanded the matter to the lower Opposition Division for further consideration. The patent, as originally granted, is deemed valid during the pendency of the opposition process.

At this time, based on its current knowledge, we believe that the patent being challenged should be declared valid and that a significant portion of our claims should be upheld. However, the we cannot make any assurances of this result.

In addition to the above proceeding and now concluded proceedings which have been referenced in prior filings, from time to time, we may have other proceedings that are pending which relate to patents we acquired as part of the Fujifilm or BASF OLED patent acquisitions or which relate to technologies that are not currently widely used in the marketplace.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

The following is a list of the exhibits filed as part of this report. Where so indicated by footnote, exhibits that were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated parenthetically, together with a reference to the filing indicated by footnote.

Exhibit Number	Description
31.1*	Certifications of Steven V. Abramson, Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
31.2*	Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
32.1**	Certifications of Steven V. Abramson, Chief Executive Officer, as required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C. Section 1350. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.2**	Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C. Section 1350. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
101.INS*	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	The cover page of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 formatted in Inline XBRL (included in Item 101.INS)

Explanation of footnotes to listing of exhibits:

*	Filed herewith.
**	Furnished herewith.

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SIGNATURES

Pursuant to the requirements 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:

	UNIVERSAL DISPLAY CORPORATION
Date: May 5, 2022	By: /s/ Sidney D. Rosenblatt
	Sidney D. Rosenblatt
	Executive Vice President, Chief Financial Officer,
	Treasurer and Secretary

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EX-31.1

Exhibit 31.1

CERTIFICATIONS REQUIRED BY

RULE 13a-14(a)/15d-14(a)

I, Steven V. Abramson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Display Corporation (the “registrant”) for the quarter ended March 31, 2022;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 5, 2022	By:	/s/ Steven V. Abramson
			Steven V. Abramson
			President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS REQUIRED BY

RULE 13a-14(a)/15d-14(a)

I, Sidney D. Rosenblatt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Display Corporation (the “registrant”) for the quarter ended March 31, 2022;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 5, 2022	By:	/s/ Sidney D. Rosenblatt
			Sidney D. Rosenblatt
			Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS REQUIRED BY

RULE 13a-14(b)/15d-14(b) AND 18 U.S.C. SECTION 1350

In connection with the quarterly report of Universal Display Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven V. Abramson, President and Chief Executive Officer of the Company, hereby certify, based on my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 5, 2022	By:	/s/ Steven V. Abramson
			Steven V. Abramson
			President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATIONS REQUIRED BY

RULE 13a-14(b)/15d-14(b) AND 18 U.S.C. SECTION 1350

In connection with the quarterly report of Universal Display Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of the Company, hereby certify, based on my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 5, 2022	By:	/s/ Sidney D. Rosenblatt
			Sidney D. Rosenblatt
			Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 03, 2022
Cover [Abstract]
Entity Registrant Name	UNIVERSAL DISPLAY CORPORATION
Entity Central Index Key	0001005284
Trading Symbol	OLED
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		47,214,329
Entity Current Reporting Status	Yes
Entity File Number	1-12031
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	23-2372688
Entity Address, Address Line One	Phillips Boulevard
Entity Address, City or Town	Ewing
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08618
City Area Code	609
Local Phone Number	671-0980
Title of 12(b) Security	Common Stock, $0.01 par value
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
CURRENT ASSETS:
Cash and cash equivalents	$ 357,424	$ 311,993
Short-term investments	325,055	351,194
Accounts receivable	104,947	107,639
Inventory	143,240	134,160
Other current assets	29,120	20,948
Total current assets	959,786	925,934
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $97,979 and $92,461	131,879	128,832
ACQUIRED TECHNOLOGY, net of accumulated amortization of $178,782 and $173,635	44,521	49,668
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $7,918 and $7,565	9,370	9,711
GOODWILL	15,535	15,535
INVESTMENTS	164,130	168,076
DEFERRED INCOME TAXES	35,788	33,453
OTHER ASSETS	126,222	135,710
TOTAL ASSETS	1,487,231	1,466,919
CURRENT LIABILITIES:
Accounts payable	27,064	14,955
Accrued expenses	26,960	45,474
Deferred revenue	111,778	120,864
Other current liabilities	12,452	6,645
Total current liabilities	178,254	187,938
DEFERRED REVENUE	31,735	36,217
RETIREMENT PLAN BENEFIT LIABILITY	67,481	66,773
OTHER LIABILITIES	78,461	76,077
Total liabilities	355,931	367,005
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, 49,099,830 and 49,065,924 shares issued, and 47,734,182 and 47,700,276 shares outstanding, at March 31, 2022 and December 31, 2021, respectively	491	491
Additional paid-in capital	658,050	658,728
Retained earnings	535,936	500,212
Accumulated other comprehensive loss	(21,895)	(18,235)
Treasury stock, at cost (1,365,648 shares at September 30, 2021 and December 31, 2020)	(41,284)	(41,284)
Total shareholders’ equity	1,131,300	1,099,914
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,487,231	$ 1,466,919

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 97,979,000	$ 92,461,000
Finite-Lived Intangible Assets, Accumulated Amortization	178,782,000	173,635,000
Other Finite-Lived Intangible Assets, Accumulated Amortization	$ 7,918,000	$ 7,565,000
SHAREHOLDERS' EQUITY:
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized ( in shares)	5,000,000	5,000,000
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized (in shares)	200,000,000	200,000,000
Common Stock, shares issued (in shares)	49,099,830	49,065,924
Common Stock, shares outstanding (in shares)	47,734,182	47,700,276
Treasury Stock
Treasury stock, shares	1,365,648	1,365,648
Shareholders' Equity A Nonconvertible Preferred Stock
Preferred Stock, liquidation value per share (in dollars per share)	$ 7.50
Series A Nonconvertible Preferred Stock [Member]
Shareholders' Equity A Nonconvertible Preferred Stock
Preferred Stock, shares issued (in shares)	200,000	200,000
Preferred Stock, shares outstanding (in shares)	200,000	200,000
Preferred Stock, liquidation value per share (in dollars per share)	$ 7.50	$ 7.50
Preferred Stock, liquidation value	$ 1,500	$ 1,500

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
REVENUE:
Total revenue	$ 150,470	$ 134,000
COST OF SALES	33,163	23,298
Gross margin	117,307	110,702
OPERATING EXPENSES:
Research and development	26,545	23,305
Selling, general and administrative	21,062	16,404
Amortization of acquired technology and other intangible assets	5,498	5,488
Patent costs	1,798	1,835
Royalty and license expense	154	112
Total operating expenses	55,057	47,144
OPERATING INCOME	62,250	63,558
Interest income, net	291	133
Other (loss) income, net	(34)	59
Interest and other income, net	257	192
INCOME BEFORE INCOME TAXES	62,507	63,750
INCOME TAX EXPENSE	(12,537)	(12,063)
NET INCOME	$ 49,970	$ 51,687
NET INCOME PER COMMON SHARE:
BASIC	$ 1.05	$ 1.09
DILUTED	$ 1.05	$ 1.08
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC	47,369,764	47,267,921
DILUTED	47,440,281	47,329,704
CASH DIVIDENDS DECLARED PER COMMON SHARE	$ 0.30	$ 0.20
Material Sales
REVENUE:
Total revenue	$ 86,691	$ 79,808
Royalty And License Fees
REVENUE:
Total revenue	59,802	50,886
Contract Research Services
REVENUE:
Total revenue	$ 3,977	$ 3,306

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
NET INCOME	$ 49,970	$ 51,687
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:
Unrealized loss on available-for-sale securities, net of tax of $1,097 and $17, respectively	(3,935)	(58)
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, net of tax of $143, and $335, respectively	509	1,174
Change in cumulative foreign currency translation adjustment	(234)	(106)
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME	(3,660)	1,010
COMPREHENSIVE INCOME	$ 46,310	$ 52,697

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Unrealized gain (loss) on available-for-sale securities, tax	$ 1,097	$ 17
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, tax	$ 143	$ 335

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]	Series A Nonconvertible Preferred Stock [Member] Preferred Stock [Member]
BALANCE at Dec. 31, 2020	$ 912,714	$ 490	$ 635,595	$ 353,930	$ (36,019)	$ (41,284)	$ 2
BALANCE (in shares) at Dec. 31, 2020		49,013,476				1,365,648	200,000
Net income	51,687			51,687
Other comprehensive income (loss)	1,010				1,010
Cash dividend	(9,487)			9,487
Issuance of common stock to employees	5,116	$ 1	5,115
Issuance of common stock to employees (in shares)		53,123
Shares withheld for employee taxes	(9,634)		9,634
Shares withheld for employee taxes (in shares)		22,048
Issuance of common stock to Board of Directors and Scientific Advisory Board	630		630
Issuance of common stock to Board of Directors and Scientific Advisory Board (in shares)		4,443
Issuance of common stock to employees under an ESPP	432		432
Issuance of common stock to employees under an ESPP (in shares)		1,782
BALANCE at Mar. 31, 2021	952,468	$ 491	632,138	396,130	(35,009)	$ (41,284)	$ 2
BALANCE (in shares) at Mar. 31, 2021		49,050,776				1,365,648	200,000
BALANCE at Dec. 31, 2021	1,099,914	$ 491	658,728	500,212	(18,235)	$ (41,284)	$ 2
BALANCE (in shares) at Dec. 31, 2021		49,065,924				1,365,648	200,000
Net income	49,970			49,970
Other comprehensive income (loss)	(3,660)				(3,660)
Cash dividend	(14,246)			14,246
Issuance of common stock to employees	5,979		5,979
Issuance of common stock to employees (in shares)		47,748
Shares withheld for employee taxes	(7,896)		7,896
Shares withheld for employee taxes (in shares)		22,347
Issuance of common stock to Board of Directors and Scientific Advisory Board	730		730
Issuance of common stock to Board of Directors and Scientific Advisory Board (in shares)		5,630
Issuance of common stock to employees under an ESPP	509		509
Issuance of common stock to employees under an ESPP (in shares)		2,875
BALANCE at Mar. 31, 2022	$ 1,131,300	$ 491	$ 658,050	$ 535,936	$ (21,895)	$ (41,284)	$ 2
BALANCE (in shares) at Mar. 31, 2022		49,099,830				1,365,648	200,000

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 49,970,000	$ 51,687,000
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue and recognition of unbilled receivables	(64,106,000)	(57,648,000)
Depreciation	5,627,000	4,263,000
Amortization of intangibles	5,498,000	5,488,000
Change in excess inventory reserve	84,000	667,000
Amortization of premium and discount on investments, net	(271,000)	(70,000)
Stock-based compensation to employees	6,085,000	5,200,000
Stock-based compensation to Board of Directors and Scientific Advisory Board	430,000	330,000
Deferred income tax expense (benefit)	(1,380,000)	515,000
Retirement plan expense	1,359,000	2,228,000
Decrease (increase) in assets:
Accounts receivable	2,692,000	(9,066,000)
Inventory	(9,164,000)	(10,498,000)
Other current assets	(3,525,000)	5,400,000
Other assets	9,488,000	(7,133,000)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(4,261,000)	(21,136,000)
Other current liabilities	5,807,000	(666,000)
Deferred revenue	45,891,000	53,000,000
Other liabilities	(2,384,000)	6,935,000
Net cash provided by operating activities	52,608,000	29,496,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(10,751,000)	(9,938,000)
Purchases of intangibles	(12,000)	(298,000)
Purchases of investments	(24,915,000)	(4,220,000)
Proceeds from sale and maturity of investments	50,240,000	100,000,000
Net cash used in investing activities	14,562,000	85,544,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	403,000	348,000
Payment of withholding taxes related to stock-based compensation to employees	(7,896,000)	(9,634,000)
Cash dividends paid	(14,246,000)	(9,487,000)
Net cash used in financing activities	(21,739,000)	(18,773,000)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	45,431,000	96,267,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	311,993,000	630,012,000
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 357,424,000	$ 726,279,000

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Non-Cash Activities - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Other Significant Noncash Transactions [Line Items]
Unrealized (loss) gain on available-for-sale securities	$ (5,031)	$ (66)
Net change in accounts payable and accrued expenses related to purchases of property and equipment	2,077	(27)
Common Stock Issued to Board of Directors and Scientific Advisory Board that was Earned and Accrued for in Previous Period [Member]
Other Significant Noncash Transactions [Line Items]
Other significant noncash transaction, value of consideration received	$ 300	$ 300

XML

BUSINESS

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS

1. BUSINESS:

Universal Display Corporation and its subsidiaries (the Company) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. OLEDs are thin, lightweight and power-efficient solid-state devices that emit light that can be manufactured on both flexible and rigid substrates, making them highly suitable for use in full-color displays and as lighting products. OLED displays are capturing a growing share of the display market, especially in the mobile phone, television, wearable, tablet, notebook and personal computer, augmented reality (AR), virtual reality (VR) and automotive markets. The Company believes this is because OLEDs offer potential advantages over competing display technologies with respect to power efficiency, contrast ratio, viewing angle, video response time, form factor and manufacturing cost. The Company also believes that OLED lighting products have the potential to replace many existing light sources in the future because of their high-power efficiency, excellent color rendering index, low operating temperature and novel form factor. The Company’s technology leadership, intellectual property position, and the Company’s more than 20 years of experience working closely with leading OLED display manufacturers are some of the competitive advantages that should enable the Company to continue to share in the revenues from OLED displays and lighting products as they gain wider acceptance.

The Company’s primary business strategy is to (1) develop new OLED materials and sell existing and new materials to product manufacturers of products for display applications, such as mobile phones, televisions, wearables, tablets, portable media devices, notebook computers, personal computers and automotive applications, and specialty and general lighting products; and (2) further develop and either license or otherwise commercialize the Company’s proprietary OLED material, device design and manufacturing technologies to those manufacturers. The Company has established a significant portfolio of proprietary OLED technologies and materials, primarily through internal research and development efforts and acquisitions of patents and patent applications, as well as maintaining long-standing, and establishing new relationships with world-class universities, research institutions and strategic manufacturing partnerships. The Company currently owns, exclusively licenses or has the sole right to sublicense more than 5,500 patents issued and pending worldwide.

The Company manufactures and sells its proprietary OLED materials to customers for evaluation and use in commercial OLED products. The Company also enters into agreements with manufacturers of OLED display and lighting products under which it grants them licenses to practice under the Company’s patents and to use the Company's proprietary know-how. At the same time, the Company works with these and other companies that are evaluating the Company's OLED material, device design and manufacturing technologies for possible use in commercial OLED display and lighting products.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information

In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of March 31, 2022 and results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. While management believes that the disclosures presented are adequate to make the information not misleading, these unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the Company’s latest year-end Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The results of the Company’s operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for the full year.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Universal Display Corporation and its wholly owned subsidiaries, UDC, Inc., UDC Ireland Limited (UDC Ireland), Universal Display Corporation Hong Kong, Limited, Universal Display Corporation Korea, Y.H. (UDC Korea), Universal Display Corporation Japan GK, Universal Display Corporation China, Ltd., Adesis, Inc. (Adesis), UDC Ventures LLC, OVJP Corporation (OVJP Corp) and OLED Material Manufacturing Limited (OMM). All intercompany transactions and accounts have been eliminated.

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates made are principally in the areas of revenue recognition including estimates of material unit sales and royalties, the useful life of acquired intangibles, lease liabilities, right-of-use assets, the use and recoverability of inventories, intangibles, investments and income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Inventories

Inventories consist of raw materials, work-in-process and finished goods, and are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventory valuation and firm committed purchase order assessments are performed on a quarterly basis and those items that are identified to be obsolete or in excess of forecasted usage are written down to their estimated realizable value. Estimates of realizable value are based upon management’s analyses and assumptions, including, but not limited to, forecasted sales levels by product, expected product lifecycle, product development plans and future demand requirements. A 12-month rolling forecast based on factors, including, but not limited to, production cycles, anticipated product orders, marketing forecasts, backlog, and shipment activities is used in the inventory analysis. If market conditions are less favorable than forecasts or actual demand from customers is lower than estimates, additional inventory write-downs may be required. If demand is higher than expected, inventories that had previously been written down may be sold.

Fair Value of Financial Instruments

The carrying values of accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value in the accompanying Consolidated Financial Statements due to the short-term nature of those instruments. The Company’s other financial instruments, which include cash equivalents, investments, retirement plan benefit liability and other liabilities are carried at fair value.

Minority Equity Investments

The Company accounts for minority equity investments in companies that are not accounted for under the equity method as equity securities without readily determinable fair values. The fair value of these securities is based on original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Under this method, the share of income or loss of such companies is not included in the Consolidated Statements of Income. The carrying value of these investments is included in investments on the Consolidated Balance Sheets.

The Company’s policy is to recognize an impairment in the value of its minority equity investments when clear evidence of an impairment exists. Factors considered in the assessment include a significant adverse change in the regulatory, economic, or technological environment, the completion of new equity financing that may indicate a decrease in value, the failure to complete new equity financing arrangements after seeking to raise additional funds, or the commencement of proceedings under which the assets of the business may be placed in receivership or liquidated to satisfy the claims of debt and equity stakeholders.

Leases

The Company is a lessee in operating leases primarily incurred to facilitate the expansion of manufacturing, research and development, and selling, general and administrative activities. At contract inception, the Company determines if an arrangement is or contains a lease, and if so recognizes a right-of-use asset and lease liability at the lease commencement date. For operating leases, the lease liability is measured at the present value of the unpaid lease payments at the lease commencement date, whereas for finance leases, the lease liability is initially measured at the present value of the unpaid lease payments and subsequently measured at amortized cost using the interest method. Operating lease right-of-use assets are included in other assets on the Consolidated Balance Sheets. The short-term portion of operating lease liabilities is included in other current liabilities on the Consolidated Balance Sheets and the long-term portion is included in other liabilities on the Consolidated Balance Sheets. As of March 31, 2022, the Company had no leases that qualified as financing arrangements.

Key estimates and judgments include how the Company determines the discount rate used to discount the unpaid lease payments to present value and the lease term. The Company monitors for events or changes in circumstances that could potentially require recognizing an impairment loss.

Revenue Recognition and Deferred Revenue

Material sales relate to the Company’s sale of its OLED materials for incorporation into its customers’ commercial OLED products or for their OLED development and evaluation activities. Revenue associated with material sales is generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties. Revenue may be recognized after control of the material passes in the event the transaction price includes variable consideration. For example, a customer may be provided an extended opportunity to stock materials prior to use in mass production and given a general right of return not conditioned on breaches of warranties associated with the specific product. In such circumstances, revenue will be recognized at the earlier of the expiration of the customer’s general right of return or once it becomes unlikely that the customer will exercise its right of return.

The rights and benefits to the Company’s OLED technologies are conveyed to the customer through technology license agreements and material supply agreements. The Company believes that the licenses and materials sold under these combined agreements are not distinct from each other for financial reporting purposes and as such, are accounted for as a single performance obligation. Accordingly, total contract consideration is estimated and recognized over the contract term based on material units sold at the estimated per unit fee over the life of the contract. Total contract consideration is allocated to material sales and royalty and licensing fees on the Consolidated Statements of Income based on contract pricing.

Various estimates are relied upon to recognize revenue. The Company estimates total material units to be purchased by its customers over the contract term based on historical trends, industry estimates and its forecast process. Management uses the expected value method to estimate the material per unit fee. Additionally, management estimates the total sales-based royalties based on the estimated net sales revenue of its customers over the contract term.

Contract research services revenue is revenue earned by Adesis by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis. These services range from intermediates for structure-activity relationship studies, reference agents and building blocks for combinatorial synthesis, re-synthesis of key intermediates, specialty organic chemistry needs, and selective toll manufacturing. These services are provided to third-party pharmaceutical and life sciences firms and other technology firms at fixed costs or on an annual contract basis. Revenue is recognized as services are performed with billing schedules and payment terms negotiated on a contract-by-contract basis. Payments received in excess of revenue recognized are recorded as deferred revenue. In other cases, services may be provided and revenue is recognized before the customer is invoiced. In these cases, revenue recognized will exceed amounts billed and the difference, representing amounts which are currently unbillable to the customer pursuant to contractual terms, is recorded as an unbilled receivable.

Technology development and support revenue is revenue earned from development and technology evaluation agreements and commercialization assistance fees, along with, to a minimal extent, government contracts. Relating to the Company’s government contracts, the Company may receive reimbursements by government entities for all or a portion of the research and development costs the Company incurs. Revenues are recognized as services are performed, proportionally as research and development costs are incurred, or as defined milestones are achieved. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

In 2018, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC). This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2018 and lasts through the end of 2022 with an additional two-year extension option. Under this agreement, the Company is being paid a license fee, payable in quarterly installments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets.

At the same time the Company entered into the current commercial license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC. Under the supplemental material purchase agreement, SDC agrees to purchase from the Company a minimum amount of phosphorescent emitter materials for use in the manufacture of licensed products. This minimum commitment is subject to SDC’s requirements for phosphorescent emitter materials and the Company’s ability to meet these requirements over the term of the supplemental agreement.

In 2015, the Company entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display) which were effective as of January 1, 2015 and superseded the existing 2007 commercial supply agreement between the parties. The terms of the agreements were set to expire by the end of 2022. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under the Company's patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The agreements include customary provisions relating to warranties, indemnities, confidentiality, assignability and business terms. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty

revenue to be generated under the patent license agreement. The Company generates revenue under these agreements that are predominantly tied to LG Display’s sales of OLED licensed products. The OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials.

In 2021, the Company entered into amendments of the 2015 OLED patent license agreement and the 2015 OLED commercial supply agreement with LG Display, which amendments were effective as of January 1, 2021. The amended agreements included a term extension and are set to expire by the end of 2025.

In 2016, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, the Company has granted Tianma non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, the parties extended the terms of both the patent license and material purchase agreements for an additional multi-year-term.

In 2017, the Company entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, the Company has granted BOE non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company supplies phosphorescent OLED materials to BOE for use in its licensed products.

In 2018, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, the Company granted certain of Visionox’s affiliates a non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Visionox for use in its licensed products. On April 22, 2021, the Company announced that it had extended the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd.

In 2019, the Company entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, the Company entered into long-term, multi-year agreements with CSOT. Under these agreements, the Company has granted CSOT non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company also supplies phosphorescent OLED materials to CSOT for use in its licensed products.

All material sales transactions that are not variable consideration transactions are billed and due within 90 days and substantially all are transacted in U.S. dollars.

Cost of Sales

Cost of sales consists of labor and material costs associated with the production of materials processed at the Company's manufacturing partners and at the Company's internal manufacturing processing facility. The Company’s portion of cost of sales also includes depreciation of manufacturing equipment, as well as manufacturing overhead costs and inventory adjustments for excess and obsolete inventory.

Research and Development

Expenditures for research and development are charged to expense as incurred.

Patent Costs

Costs associated with patent applications, patent prosecution, patent defense and the maintenance of patents are charged to expense as incurred. Costs to successfully defend a challenge to a patent are capitalized to the extent of an evident increase in the value of the patent. Costs that relate to an unsuccessful outcome are charged to expense.

Amortization of Acquired Technology

Amortization costs primarily relate to technology acquired from BASF and Fujifilm. These acquisitions were completed in the years ended December 31, 2016 and 2012, respectively. Acquisition costs are being amortized over a period of 10 years for both the BASF and Fujifilm patents.

Amortization of Other Intangible Assets

Other intangible assets primarily relate to the Adesis acquisition and are being amortized over a period of 10 to 15 years. See Note 7 for further discussion.

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

The Company’s reporting currency is the U.S. dollar. The functional currency for the UDC Ireland and UDC Korea subsidiaries are also the U.S. dollar and the functional currency for the OMM subsidiary and each of the Company's other Asia-Pacific foreign subsidiaries is its local currency. The Company translates the amounts included in the Consolidated Statements of Income from OMM and its Asia-Pacific foreign subsidiaries into U.S. dollars at weighted-average exchange rates, which the Company believes are representative of the actual exchange rates on the dates of the transactions. The Company's foreign subsidiaries' assets and liabilities are translated into U.S. dollars from the local currency at the actual exchange rates as of the end of each reporting date, and the Company records the resulting foreign exchange translation adjustments in the Consolidated Balance Sheets as a component of accumulated other comprehensive loss. The overall effect of the translation of foreign currency and foreign currency transactions to date has been insignificant.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties, if any, related to unrecognized tax benefits as a component of tax expense.

Share-Based Payment Awards

The Company recognizes in the Consolidated Statements of Income the grant-date fair value of equity-based awards such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units and performance unit awards issued to employees and directors.

The grant-date fair value of stock awards is based on the closing price of the stock on the date of grant. The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of forfeitures. The Company issues new shares upon the respective grant, exercise or vesting of the share-based payment awards, as applicable.

Performance unit awards are subject to either a performance-based or market-based vesting requirement. For performance-based vesting, the grant-date fair value of the award, based on fair value of the Company's common stock, is recognized over the service period based on an assessment of the likelihood that the applicable performance goals will be achieved and compensation expense is periodically adjusted based on actual and expected performance. Compensation expense for performance unit awards with market-based vesting is calculated based on the estimated fair value as of the grant date utilizing a Monte Carlo simulation model and is recognized over the service period on a straight-line basis.

Recent Accounting Pronouncements

Accounting Standards Issued But Not Yet Adopted

The Company considers the applicability and impact of all ASUs. ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

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CASH, CASH EQUIVALENTS AND INVESTMENTS

3 Months Ended

Mar. 31, 2022

Cash and Cash Equivalents [Abstract]

CASH, CASH EQUIVALENTS AND INVESTMENTS

3. CASH, CASH EQUIVALENTS AND INVESTMENTS:

The Company’s portfolio of fixed income securities consists of term bank certificates of deposit, U.S. Government bonds and corporate bonds. The Company considers all highly liquid debt instruments purchased with an original maturity (maturity at the purchase date) of three months or less to be cash equivalents. The Company classifies its remaining debt security investments as

available-for-sale. These debt securities are carried at fair market value, with unrealized gains and losses reported in shareholders’ equity. Gains or losses on securities sold are based on the specific identification method.

Cash and Cash Equivalents

The following table provides details regarding the Company’s portfolio of cash and cash equivalents (in thousands):

	Amortized		Unrealized				Aggregate Fair
Cash and Cash Equivalents Classification	Cost		Gains		(Losses)		Market Value
March 31, 2022
Cash accounts in banking institutions	$	277,104	$	—	$	—	$	277,104
Money market accounts		17,335		—		—		17,335
U.S. Government bonds		62,985		—		—		62,985
	$	357,424	$	—	$	—	$	357,424
December 31, 2021
Cash accounts in banking institutions	$	256,878	$	—	$	—	$	256,878
Money market accounts		55,115		—		—		55,115
	$	311,993	$	—	$	—	$	311,993

Short-term Investments

The following table provides details regarding the Company’s portfolio of short-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Short-term Investments Classification	Cost		Gains		(Losses)			Market Value
March 31, 2022
Corporate bonds	$	201,492	$	—	$	(469	)	$	201,023
U.S. Government bonds		124,713		—		(681	)		124,032
	$	326,205	$	—	$	(1,150	)	$	325,055
December 31, 2021
Certificates of deposit	$	240	$	—	$	—		$	240
Corporate bonds		226,448		3		(97	)		226,354
U.S. Government bonds		124,611		—		(11	)		124,600
	$	351,299	$	3	$	(108	)	$	351,194

Long-term U.S. Government Bonds Investments

The following table provides details regarding the Company’s portfolio of long-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Long-term Investments Classification	Cost		Gains		(Losses)			Market Value
March 31, 2022
U.S. Government bonds	$	159,732	$	—	$	(4,110	)	$	155,622
	$	159,732	$	—	$	(4,110	)	$	155,622
December 31, 2021
U.S. Government bonds	$	159,692	$	10	$	(134	)	$	159,568
	$	159,692	$	10	$	(134	)	$	159,568

Long-term Minority Investments

The Company’s portfolio of minority investments consists of investments in privately held early-stage companies primarily motivated to gain early access to new technology and are passive in nature in that the Company does not obtain representation on the boards of directors of the companies in which it invests. Minority investments are included in investments on the Consolidated Balance Sheets. As of March 31, 2022, the Company had two minority investments with a total carrying value of $8.5 million accounted for as equity securities without readily determinable fair values.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

4. FAIR VALUE MEASUREMENTS:

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2022 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of March 31,  2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	80,320	$	80,320	$	—	$	—
Short-term investments		325,055		325,055		—		—
Long-term U.S. Government bonds investments		155,622		155,622		—		—

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2021 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of December 31,  2021		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	55,115	$	55,115	$	—	$	—
Short-term investments		351,194		351,194		—		—
Long-term U.S. Government bonds investments		159,568		159,568		—		—

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification is determined based on the lowest level input that is significant to the fair value measurement.

Changes in fair value of the debt investments are recorded as unrealized gains and losses in accumulated other comprehensive loss on the Consolidated Balance Sheets and any credit losses on debt investments are recorded as an allowance for credit losses with an offset recognized in other income, net on the Consolidated Statements of Income. There were no credit losses on debt investments as of March 31, 2022 or December 31, 2021.

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INVENTORY

3 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

INVENTORY

5. INVENTORY:

Inventory consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Raw materials	$	79,834	$	75,227
Work-in-process		14,974		16,065
Finished goods		48,432		42,868
Inventory	$	143,240	$	134,160

The Company recorded an increase in inventory reserve of $84,000 and $667,000 for the three months ended March 31, 2022 and 2021, respectively, due to excess inventory levels in certain products.

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PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

6. PROPERTY AND EQUIPMENT:

Property and equipment, net consist of the following (in thousands):

	March 31, 2022			December 31, 2021
Land	$	2,642		$	2,642
Building and improvements		76,213			76,600
Office and lab equipment		109,967			107,168
Furniture, fixtures and computer related assets		16,452			16,221
Construction-in-progress		24,584			18,662
		229,858			221,293
Less: Accumulated depreciation		(97,979	)		(92,461	)
Property and equipment, net	$	131,879		$	128,832

Depreciation expense was $5.6 million and $4.3 million for the three months ended March 31, 2022 and 2021, respectively.

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GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2022

Finite-Lived Intangible Assets, Net [Abstract]

GOODWILL AND INTANGIBLE ASSETS

7. GOODWILL AND INTANGIBLE ASSETS:

The Company monitors the recoverability of goodwill annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Purchased intangible assets subject to amortization consist of acquired technology and other intangible assets that include trade names, customer relationships and developed intellectual property (IP) processes.

Acquired Technology

Acquired technology consists of acquired license rights for patents and know-how obtained from PD-LD, Inc., Motorola, BASF SE (BASF) and Fujifilm. These intangible assets consist of the following (in thousands):

	March 31, 2022			December 31, 2021
PD-LD, Inc.	$	1,481		$	1,481
Motorola		15,909			15,909
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		462			462
		223,303			223,303
Less: Accumulated amortization		(178,782	)		(173,635	)
Acquired technology, net	$	44,521		$	49,668

Amortization expense related to acquired technology was $5.1 million for both three-month periods ended March 31, 2022 and 2021. Amortization expense is included in amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $10.6 million for the nine months ending December 31, 2022, $9.7 million in the year ending December 31, 2023, $9.6 million in each of the years ending December 31, 2024 and 2025, $4.8 million in the year ending December 31, 2026 and $200,000 in total thereafter.

Fujifilm Patent Acquisition

On July 23, 2012, the Company entered into a Patent Sale Agreement with Fujifilm. Under the agreement, Fujifilm sold more than 1,200 OLED-related patents and patent applications in exchange for a cash payment of $105.0 million, plus costs incurred in connection with the purchase. The agreement contains customary representations and warranties and covenants, including respective covenants not to sue by both parties thereto. The agreement permitted the Company to assign all of its rights and obligations under the agreement to its affiliates, and the Company assigned, prior to the consummation of the transactions contemplated by the agreement, its rights and obligations to UDC Ireland, a wholly-owned subsidiary of the Company formed under the laws of the Republic of Ireland. The transactions contemplated by the agreement were consummated on July 26, 2012. The Company recorded the $105.0 million plus $4.5 million of purchase costs as acquired technology, which is being amortized over a period of 10 years.

BASF Patent Acquisition

On June 28, 2016, UDC Ireland entered into and consummated an IP Transfer Agreement with BASF. Under the IP Transfer Agreement, BASF sold to UDC Ireland all of its rights, title and interest to certain of its owned and co-owned intellectual property rights relating to the composition of, development, manufacture and use of OLED materials, including OLED lighting and display stack

technology, as well as certain tangible assets. The intellectual property includes knowhow and more than 500 issued and pending patents in the area of phosphorescent materials and technologies. These assets were acquired in exchange for a cash payment of €86.8 million ($95.8 million). In addition, UDC Ireland also took on certain rights and obligations under three joint research and development agreements to which BASF was a party. The IP Transfer Agreement also contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of €86.8 million ($95.8 million) and acquisition costs incurred of $217,000 as acquired technology, which is being amortized over a period of 10 years.

Other Intangible Assets

As a result of the Adesis acquisition in June 2016, the Company recorded $16.8 million of other intangible assets, including $10.5 million assigned to customer relationships with a weighted average life of 11.5 years, $4.8 million of internally developed IP, processes and recipes with a weighted average life of 15 years, and $1.5 million assigned to trade name and trademarks with a weighted average life of 10 years.

At March 31, 2022, these other intangible assets consist of the following (in thousands):

	March 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(5,199	)	$	5,321
Developed IP, processes and recipes		4,820		(1,828	)		2,992
Trade name/Trademarks		1,500		(855	)		645
Other		448		(36	)		412
Total identifiable other intangible assets	$	17,288	$	(7,918	)	$	9,370

Amortization expense related to other intangible assets was $352,000 and $341,000 for the three months ended March 31, 2022 and 2021, respectively. Amortization expense is included in amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $1.1 million for the nine months ending December 31, 2022, $1.4 million for each of the next four fiscal years (2023 - 2026) and $2.7 million in total thereafter.

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OTHER ASSETS

3 Months Ended

Mar. 31, 2022

Prepaid Expense and Other Assets [Abstract]

Schedule Of Other assets

8. OTHER ASSETS:

Other assets consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Long-term taxes receivable	$	93,293	$	103,260
Right-of-use assets		29,645		30,614
Other long-term assets		3,284		1,836
Other Assets	$	126,222	$	135,710

See Notes 9 and 20 for further explanation on right-of-use assets and non-current taxes receivable, respectively.

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LEASES

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

LEASES

9. LEASES:

The Company has entered into operating leases to facilitate the expansion of its manufacturing, research and development, and selling, general and administrative activities. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when those events are reasonably certain to occur. The interest rate implicit in lease contracts is typically not readily determinable and as such the Company uses the appropriate incremental borrowing rate based on information available at the lease commencement date in determining the present value of the lease payments. Current lease agreements do not contain any residual value guarantees or material restrictive covenants. As of March 31, 2022, the Company did not have any finance leases and no additional operating leases that have not yet commenced.

The following table presents the Company’s operating lease cost and supplemental cash flow information related to the Company’s operating leases (in thousands):

	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	1,098	$	615
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	—	$	4,720

The following table presents the Company’s operating right-of-use assets and liabilities (in thousands):

	March 31, 2022		December 31, 2021
Right-of-use assets	$	29,645	$	30,614
Short-term lease liabilities		3,333		3,351
Long-term lease liabilities		26,312		27,263

The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities:

	March 31, 2022
Weighted average remaining lease term (in years)		8.3
Weighted average discount rate		2.8	%

As of March 31, 2022, current operating leases had remaining terms between five months and ten years with options to extend the lease terms.

Undiscounted future minimum lease payments as of March 31, 2022, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows (in thousands):

	Maturities of Operating Lease Liabilities
2022 (1)	$	3,054
2023		4,009
2024		3,957
2025		3,999
2026		4,012
Thereafter		14,115
Total lease payments		33,146
Less: Imputed interest		(3,501	)
Present value of lease payments	$	29,645

(1)Scheduled maturities of lease liabilities represent the period from April 1, 2022 to December 31, 2022.

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ACCRUED EXPENSES

3 Months Ended

Mar. 31, 2022

Payables and Accruals [Abstract]

Schedule Of Accrued expenses

10. ACCRUED EXPENSES:

Accrued expenses consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Compensation	$	12,997	$	27,686
PPG agreements		6,705		8,853
Research and development agreements		1,746		1,469
Professional fees		1,432		1,000
Consulting		645		1,314
Royalties		154		691
Other		3,281		4,461
Accrued expenses	$	26,960	$	45,474

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RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS

3 Months Ended

Mar. 31, 2022

Research and Development [Abstract]

RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS

. RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS:

The Company has long-standing relationships with Princeton University (Princeton) and the University of Southern California (USC) for the conduct of research relating to the Company’s OLED and other organic thin-film technologies and materials. This research

had been performed at Princeton under the direction of Professor Stephen R. Forrest and at USC under the direction of Professor Mark E. Thompson.

Under an Amended License Agreement entered into in 1997 by the Company, Princeton and USC (as amended, the 1997 Amended License Agreement), the universities granted the Company worldwide, exclusive license rights, with rights to sublicense, to make, have made, use, lease and/or sell products and to practice processes based on patent applications and issued patents arising out of research performed by the universities for the Company. Under the 1997 Amended License Agreement, the Company pays Princeton royalties of 3% of the net sales price for licensed products it sells or 3% of the revenues the Company receives from its sublicensees for their sale of licensed products. The Company recorded royalty expense in connection with this agreement of $154,000 and $112,000 for the three months ended March 31, 2022 and 2021, respectively.

In 2006, Professor Forrest transferred to the University of Michigan (Michigan) and the Company amended the 1997 Amended License Agreement to include Michigan as a party to that agreement. Also in connection with the transfer, the Company entered into a sponsored research agreement with USC under which the Company continues to fund organic electronics research being conducted by Professors Forrest and Thompson (the 2006 Research Agreement). Work by Professor Forrest is being funded through a subcontract between USC and Michigan. The 2006 Research Agreement extends through April 2023 with an option to further extend for an additional two years.

The Company makes payments under the 2006 Research Agreement to USC on a quarterly basis as actual expenses are incurred. As of March 31, 2022, the Company was obligated to pay USC up to $4.1 million for work to be performed during the remaining extended term. The Company recorded research and development expense in connection with work performed under the 2006 Research Agreement of $195,000 and $285,000 for the three months ended March 31, 2022 and 2021, respectively.

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OTHER LIABILITIES

3 Months Ended

Mar. 31, 2022

Other Liabilities Disclosure [Abstract]

OTHER LIABILITIES

12. OTHER LIABILITIES:

Other liabilities consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Long-term taxes payable	$	51,060	$	47,791
Long-term lease liabilities		26,312		27,263
Other long-term liabilities		1,089		1,023
Other Liabilities	$	78,461	$	76,077

See Notes 9 and 20 for further explanation on long-term lease liabilities and long-term taxes payable, respectively.

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EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS

3 Months Ended

Mar. 31, 2022

Long-term Commitment (Excluding Unconditional Purchase Obligation) [Abstract]

EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS

13. EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS:

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG Industries, Inc. (PPG) (the New OLED Materials Agreement), which replaced the original OLED Materials Agreement with PPG, effective as of October 1, 2011. The term of the New OLED Materials Agreement, by amendment in February 2021, runs through December 31, 2024, and thereafter is automatically renewed for additional one-year terms, unless terminated by the Company by providing prior notice of one year or terminated by PPG by providing prior notice of two years. The New OLED Materials Agreement contains provisions that are substantially similar to those of the original OLED Materials Agreement. Under the New OLED Materials Agreement, PPG continues to assist the Company in developing its proprietary OLED materials and supplying the Company with those materials for evaluation purposes and for resale to its customers.

Under the New OLED Materials Agreement, the Company compensates PPG on a cost-plus basis for the services provided during each calendar quarter. The Company is required to pay for some of these services in all cash. Up to 50% of the remaining services are payable, at the Company’s sole discretion, in cash or shares of the Company’s common stock, with the balance payable in cash. The actual number of shares of common stock issuable to PPG is determined based on the average closing price for the Company’s common stock during a specified number of days prior to the end of each calendar half-year period ending on March 31 and September 30. If, however, this average closing price is less than $20.00, the Company is required to compensate PPG in cash. No shares were issued for services to PPG for the three months ended March 31, 2022 and 2021.

The Company is also required to reimburse PPG for raw materials used for research and development. The Company records the purchases of these raw materials as a current asset until such materials are used for research and development efforts.

In February 2021, the Company entered into an amendment to the New OLED Materials Agreement extending the term of the agreement and specifying operation and maintenance services that will be provided by PPG affiliate, PPG SCM Ireland Limited, to

UDC Ireland, at the Company’s new manufacturing site in Shannon, Ireland, currently being leased by UDC Ireland’s wholly-owned subsidiary, OMM, for the production of OLED materials. Facility improvements and regulatory approvals are expected to be completed and operations are scheduled to commence by mid-year 2022. As with the initial New OLED Materials Agreement, the Company will compensate PPG on a cost-plus basis for the services provided at the Shannon manufacturing facility.

The Company recorded research and development expense of $1.5 million for both three-month periods ended March 31, 2022 and 2021, in relation to the cash portion of the reimbursement of expenses and work performed by PPG, excluding amounts paid for commercial chemicals.

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SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

SHAREHOLDERS' EQUITY

14. SHAREHOLDERS’ EQUITY:

Preferred Stock

The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to 5,000,000 shares of $0.01 par value preferred stock with designations, rights and preferences determined from time-to-time by the Company’s Board of Directors. Accordingly, the Company’s Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of shareholders of the Company’s common stock.

In 1995, the Company issued 200,000 shares of Series A Nonconvertible Preferred Stock (Series A) to American Biomimetics Corporation (ABC) pursuant to a certain Technology Transfer Agreement between the Company and ABC. The Series A shares have a liquidation value of $7.50 per share. Series A shareholders, as a single class, have the right to elect two members of the Company’s Board of Directors. This right has never been exercised. Holders of the Series A shares are entitled to one vote per share on matters which shareholders are generally entitled to vote. The Series A shareholders are not entitled to any dividends.

As of March 31, 2022, the Company had issued 200,000 shares of preferred stock, all of which were outstanding.

Common Stock

The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to 200,000,000 shares of $0.01 par value common stock. Each share of the Company’s common stock entitles the holder to one vote on all matters to be voted upon by the shareholders.

As of March 31, 2022, the Company had issued 49,099,830 shares of common stock, of which 47,734,182 were outstanding. During the three months ended March 31, 2022 and 2021, the Company repurchased no shares of common stock.

Scientific Advisory Board Awards

During the three months ended March 31, 2022 and 2021, the Company granted a total of 2,024 and 1,400 shares, respectively, of fully vested common stock to non-employee members of the Scientific Advisory Board for services performed in 2021 and 2020, respectively. The fair value of shares issued to members of the Scientific Advisory Board was $300,000 for both three-month periods.

Dividends

During the three months ended March 31, 2022, the Company declared and paid cash dividends of $0.30 per common share, or $14.2 million, on the Company’s outstanding common stock.

On May 3, 2022, the Company’s Board of Directors declared a second quarter dividend of $0.30 per share to be paid on June 30, 2022 to all shareholders of record of the Company’s common stock as of the close of business on June 16, 2022. All future dividends will be subject to the approval of the Company’s Board of Directors.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Mar. 31, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

15. ACCUMULATED OTHER COMPREHENSIVE LOSS:

Amounts related to the changes in accumulated other comprehensive loss were as follows (in thousands):

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2021, net of tax	$	(142	)	$	(18,019	)	$	(74	)	$	(18,235	)
Other comprehensive loss    before reclassification		(3,935	)		—			(234	)		(4,169	)
Reclassification to net income (1)		—			509			—			509		Selling, general and administrative, research and development and cost of sales
Change during period		(3,935	)		509			(234	)		(3,660	)
Balance March 31, 2022, net of tax	$	(4,077	)	$	(17,510	)	$	(308	)	$	(21,895	)

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2020, net of tax	$	91		$	(36,075	)	$	(35	)	$	(36,019	)
Other comprehensive loss    before reclassification		(58	)		—			(106	)		(164	)
Reclassification to net income (1)		—			1,174			—			1,174		Selling, general and administrative, research and development and cost of sales
Change during period		(58	)		1,174			(106	)		1,010
Balance March 31, 2021, net of tax	$	33		$	(34,901	)	$	(141	)	$	(35,009	)

(1)The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $509,000 and $1.2 million for the three months ended March 31, 2022 and 2021, respectively.

(2)Refer to Note 17: Supplemental Executive Retirement Plan.

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STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

16. STOCK-BASED COMPENSATION:

Equity Compensation Plan

The Equity Compensation Plan provides for the granting of incentive and nonqualified stock options, shares of common stock, stock appreciation rights and performance units to employees, directors and consultants of the Company. Stock options are exercisable over periods determined by the Company’s Human Capital Committee, but for no longer than 10 years from the grant date. Through March 31, 2022, the Company’s shareholders have approved increases in the number of shares reserved for issuance under the Equity Compensation Plan to 10,500,000, and have extended the term of the plan through 2024. As of March 31, 2022, there were 1,579,746 shares that remained available to be granted under the Equity Compensation Plan.

Restricted Stock Awards and Units

The Company has issued restricted stock awards and units to employees and non-employees with vesting terms of one to five years. The fair value is equal to the market price of the Company’s common stock on the date of grant for awards granted to employees and equal to the market price at the end of the reporting period for unvested non-employee awards or upon the date of vesting for vested non-employee awards. Expense for restricted stock awards and units is amortized ratably over the vesting period for the awards issued to employees and using a graded vesting method for the awards issued to non-employees.

During the three months ended March 31, 2022, the Company granted 100,134 shares of restricted stock awards and restricted stock units to employees and non-employees, which had a total fair value of $15.1 million on the respective dates of grant, and will vest over three to five years from the date of grant, provided that the grantee is still an employee of the Company or is still providing services to the Company on the applicable vesting date.

For the three months ended March 31, 2022 and 2021, the Company recorded, as compensation charges related to all restricted stock awards and units granted to employees and non-employees, selling, general and administrative expense of $4.0 million and $3.6 million, respectively, research and development expense of $1.5 million and $1.2 million, respectively, and cost of sales of $518,000 and $557,000, respectively.

In connection with the vesting of restricted stock awards and units during the three months ended March 31, 2022 and 2021, 49,794 and 48,824 shares, respectively, with aggregate fair values of $7.8 million and $9.4 million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

For the three months ended March 31, 2022 and 2021, the Company recorded as compensation charges related to all restricted stock units granted to non-employee members of the Scientific Advisory Board, whose unvested shares are marked to market each reporting period, research and development expense of $120,000 and $36,000, respectively.

The Company has granted restricted stock units to non-employee members of the Board of Directors with quarterly vesting over a period of approximately one year. The fair value is equal to the market price of the Company's common stock on the date of grant. The restricted stock units are issued and expense is recognized ratably over the vesting period. For the three months ended March 31, 2022 and 2021, the Company recorded compensation charges for services performed, related to all restricted stock units granted to non-employee members of the Board of Directors, selling, general and administrative expense of $309,000 and $294,000, respectively. In connection with the vesting of the restricted stock, the Company issued to non-employee members of the Board of Directors 2,196 and 1,353 shares, respectively, during the three months ended March 31, 2022 and 2021.

Performance Unit Awards

Each performance unit award is subject to both a performance-vesting requirement (either performance-based or market-based) and a service-vesting requirement. The performance-based vesting requirement is tied to EBITDA and cash flow achievement, as measured over a specific performance period. The market-based vesting requirement is tied to the Company's total shareholder return (TSR) relative to the TSR of companies comprising the Nasdaq Electronics Components Index, as measured over a three-year performance period. The maximum number of performance units that may vest based on performance is three times the shares granted. Further, if the Company's total shareholder return is negative, the performance units will not vest at all.

During the three months ended March 31, 2022, the Company granted 100,621 performance units, of which 50,309 units are subject to performance-based vesting requirements based on EBITDA, 25,156 units are subject to performance-based vesting requirements based on the Company's achievement of cash from operations, and 25,156 units are subject to market-based, TSR vesting requirements. The grant date fair value of the performance unit awards granted was $15.2 million for the three months ended March 31, 2022, as determined by the Company’s common stock on date of grant for the units with performance-based vesting and a Monte Carlo simulation model used for the units with market-based vesting.

For the three months ended March 31, 2022 and 2021, the Company recorded selling, general and administrative expense of $68,000 and credit of $211,000, respectively, research and development credit of $28,000 and $56,000, respectively, and cost of sales credit of $19,000 and $35,000, respectively, related to the performance units.

In connection with the vesting of performance units during the three months ended March 31, 2022 and 2021, 563 and 1,224 shares, respectively, with an aggregate fair value of $88,000 and $231,000, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

Employee Stock Purchase Plan

On April 7, 2009, the Board of Directors of the Company adopted an Employee Stock Purchase Plan (ESPP). The ESPP was approved by the Company’s shareholders and became effective on June 25, 2009. The Company has reserved 1,000,000 shares of common stock for issuance under the ESPP. Unless terminated by the Board of Directors, the ESPP will expire when all reserved shares have been issued.

Eligible employees may elect to contribute to the ESPP through payroll deductions during consecutive three-month purchase periods, the first of which began on July 1, 2009. Each employee who elects to participate will be deemed to have been granted an option to purchase shares of the Company’s common stock on the first day of the purchase period. Unless the employee opts out during the purchase period, the option will automatically be exercised on the last day of the period, which is the purchase date, based on the employee’s accumulated contributions to the ESPP. The purchase price will equal 85% of the lesser of the closing price per share of common stock on the first day of the period or the last business day of the period.

Employees may allocate up to 10% of their base compensation to purchase shares of common stock under the ESPP; however, each employee may purchase no more than 12,500 shares on a given purchase date, and no employee may purchase more than $25,000 of common stock under the ESPP during a given calendar year.

During the three months ended March 31, 2022 and 2021, the Company issued 2,875 and 1,782 shares, respectively, of its common stock under the ESPP, resulting in proceeds of $403,000 and $348,000, respectively.

For the three months ended March 31, 2022 and 2021, the Company recorded charges of $25,000 and $23,000, respectively, to selling, general and administrative expense, $51,000 and $36,000, respectively, to research and development expense, and $29,000 and $25,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature.

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

17. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN:

On March 18, 2010, the Human Capital Committee and the Board of Directors of the Company approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP). The SERP is currently unfunded and includes salary and bonus as part of the plan. The purpose of the SERP is to provide certain of the Company’s key employees with supplemental pension benefits following a cessation of their employment and to encourage their continued employment with the Company. As of March 31, 2022, there were eight participants in the SERP.

The Company records amounts relating to the SERP based on calculations that incorporate various actuarial and other assumptions, including discount rates, rate of compensation increases, retirement dates and life expectancies. The net periodic costs are recognized as employees render the services necessary to earn the SERP benefits.

The components of net periodic pension cost were as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Service cost	$	361	$	428
Interest cost		346		291
Amortization of prior service cost		280		275
Amortization of loss		372		1,234
Total net periodic benefit cost	$	1,359	$	2,228

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

18. COMMITMENTS AND CONTINGENCIES:

Commitments

Under the 2006 Research Agreement with USC, the Company is obligated to make certain payments to USC based on work performed by USC under that agreement, and by Michigan under its subcontractor agreement with USC. See Note 11 for further explanation.

Under the terms of the 1997 Amended License Agreement, the Company is required to make minimum royalty payments to Princeton. See Note 11 for further explanation.

The Company has agreements with six executive officers and 12 senior level employees which provide for certain cash and other benefits upon termination of employment of the officer or employee in connection with a change in control of the Company. If a covered person’s employment is terminated in connection with the change in control, the person is entitled to a lump-sum cash payment equal to two times (in the case of the executive officers) or either one or two times (in the case of the senior level employees) the sum of the average annual base salary and bonus of the person and immediate vesting of all stock options and other equity awards that may be outstanding at the date of the change in control, among other items.

In order to manage manufacturing lead times and help ensure adequate material supply, the Company entered into the New OLED Materials Agreement (see Note 13) that allows PPG to procure and produce inventory based upon criteria as defined by the Company. These purchase commitments consist of firm, noncancelable and unconditional commitments. In certain instances, this agreement allows the Company the option to reschedule and adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of March 31, 2022 and December 31, 2021, the Company had purchase commitments for inventory of $42.3 million and $25.7 million, respectively.

Patent Related Challenges and Oppositions

Each major jurisdiction in the world that issues patents provides both third parties and applicants an opportunity to seek a further review of an issued patent. The process for requesting and considering such reviews is specific to the jurisdiction that issued the patent in question, and generally does not provide for claims of monetary damages or a review of specific claims of infringement. The conclusions made by the reviewing administrative bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

The Company believes that opposition proceedings are frequently commenced in the ordinary course of business by third parties who may believe that one or more claims in a patent do not comply with the technical or legal requirements of the specific jurisdiction in which the patent was issued. The Company views these proceedings as reflective of its goal of obtaining the broadest legally permissible patent coverage permitted in each jurisdiction. Once a proceeding is initiated, as a general matter, the issued patent continues to be presumed valid until the jurisdiction’s applicable administrative body issues a final non-appealable decision. Depending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. The Company believes that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings.

Below is a summary of an active proceeding that has been commenced against an issued patent that is exclusively licensed to the Company. The Company does not believe that the confirmation, loss or modification of the Company’s rights in any individual claim or set of claims that are the subject of the following legal proceeding would have a material impact on the Company’s material sales or licensing business or on the Company’s Consolidated Financial Statements, including its Consolidated Statements of Income, as a whole. In certain circumstances, when permitted, the Company may also utilize a proceeding to request modification of the claims to better distinguish the patented invention from any newly identified prior art and/or improve the claim scope of the patent relative to commercially important categories of the invention.

Opposition to European Patent No. 1390962

On November 16, 2011, Osram AG and BASF SE each filed a Notice of Opposition to European Patent No. 1390962 (the EP '962 patent), which relates to the Company’s white phosphorescent OLED technology. The EP '962 patent, which was issued on February 16, 2011, is a European counterpart patent to U.S. patents 7,009,338 and 7,285,907. They are exclusively licensed to the Company by Princeton, and the Company is required to pay all legal costs and fees associated with this proceeding.

The European Patent Office (EPO) combined the oppositions into a single opposition proceeding, and a hearing on this matter was held in December 2015, wherein the EPO Opposition Division revoked the patent claims for alleged insufficiencies under European Patent Convention Article 83. The Company believes the EPO's decision is erroneous and appealed the decision. Subsequent to the filing of the appeal, BASF withdrew its opposition to the patent. On appeal, the Appeals Division withdrew the lower Opposition Division’s rejections with respect to a portion of the original subject matter and remanded the matter to the lower Opposition Division for further consideration. The patent, as originally granted, is deemed valid during the pendency of the opposition process.

At this time, based on its current knowledge, the Company believes that the patent being challenged should be declared valid and that a significant portion of the Company's claims should be upheld. However, the Company cannot make any assurances of this result.

In addition to the above proceeding and now concluded proceedings which have been referenced in prior filings, from time to time, the Company may have other proceedings that are pending which relate to patents the Company acquired as part of the Fujifilm or BASF OLED patent acquisitions or which relate to technologies that are not currently widely used in the marketplace.

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CONCENTRATION OF RISK

3 Months Ended

Mar. 31, 2022

Risks and Uncertainties [Abstract]

CONCENTRATION OF RISK

19. CONCENTRATION OF RISK:

Revenues and accounts receivable from the Company's largest customers were as follows (in thousands):

	% of Total Revenue for the  Three Months Ended March 31,		Accounts Receivable as of
Customer	2022	2021	March 31, 2022
A	40%	36%	$	8,216
B	27%	23%	$	42,813
C	15%	20%	$	20,622
D	7%	12%	$	6,870

Revenues from outside of North America represented approximately 97% for both three-month periods ended March 31, 2022 and 2021. Revenues by geographic area are as follows (in thousands):

	Three Months Ended March 31,
Country	2022		2021
South Korea	$	89,687	$	67,975
China		55,400		60,504
Japan		1,053		1,315
Other non-U.S. locations		300		825
Total non-U.S. locations		146,440		130,619
United States		4,030		3,381
Total revenue	$	150,470	$	134,000

The Company attributes revenue to different geographic areas on the basis of the location of the customer.

Long-lived assets (net), by geographic area are as follows (in thousands):

	March 31, 2022		December 31, 2021
United States	$	115,760	$	115,004
Other		16,119		13,828
Total long-lived assets	$	131,879	$	128,832

Substantially all chemical materials were purchased from one supplier. See Note 13 for further explanation.

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INCOME TAXES

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

20. INCOME TAXES:

The Company is subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was an expense of 20.1% and 18.9% for the three months ended March 31, 2022 and 2021, respectively. The discrepancy between the statutory tax rate and the effective tax rate is primarily due to the benefit of income taxed in foreign jurisdictions partially offset by nondeductible employee compensation and U.S. international tax (GILTI and Subpart F). The Company recorded an income tax expense of $12.5 million and $12.1 million for the three months ended March 31, 2022 and 2021, respectively.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the Company's ability to generate future taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. As part of its assessment, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. At this time there is no evidence to release the valuation allowance that has historically been recorded for the New Jersey research and development credit.

On December 27, 2018 the Korean Supreme Court, citing prior cases, held that only royalties paid with respect to Korean registered patents are Korean source income and subject to Korean withholding tax under the applicable law and interpretation of the Korea-U.S. Tax Treaty. The Company has incurred Korean withholding tax of $14.9 million each year since the year ended December 31, 2018. Based on the Korean Supreme Court decision, in October 2021, a tax refund request on behalf of the Company was filed with the Korean National Tax Service (KNTS) for over-withheld taxes from 2018 to the second quarter of 2021. The Company has been advised by a leading Korean law firm that there is a more-likely-than-not chance of success. As a result, as of March 31, 2022 and December 31, 2021, the Company has recorded a long-term asset of $56.6 million and $53.2 million, respectively, representing the allocation of withholding to non-Korean patents. Also, as of March 31, 2022 and December 31, 2021, the Company has recorded a long-term liability of $34.8 million and $31.6 million, respectively, for estimated amounts due to the U.S. Federal government based on the amendment of U.S. tax returns for lower withholding amounts.

With respect to the Korean withholding for the years 2011 through 2017, the Company has decided to continue the U.S.-Korean Mutual Agreement Procedure (MAP) which was accepted by the KNTS on September 15, 2017. The Company believes that it is more-likely-than-not that a favorable settlement will be reached resulting in a reduction of the Korean withholding taxes previously withheld since 2011. The Internal Revenue Service and KNTS are currently exchanging information with respect to the MAP. No further notable progress has been made since the last quarter. A long-term asset of $36.9 million for estimated refunds due from the Korean government, a long-term payable of $16.2 million for estimated amounts due to the U.S. Federal government based on amendment of prior year U.S.

tax returns for the lower withholding amounts, and a reduction of deferred tax assets for foreign tax credits and research and development credits of $20.7 million has been recorded on the March 31, 2022 and December 31, 2021 Consolidated Balance Sheets for this matter.

On October 30, 2018, the KNTS concluded a tax audit with LG Display that included the licensing and royalty payments made to UDC Ireland during the years 2015 through 2017. The KNTS questioned whether UDC Ireland was the beneficial owner of these payments and assessed UDC Ireland a charge of $13.2 million for withholding and interest for the three-year period. UDC Ireland has engaged a leading Korean law firm which believes it is more-likely-than-not that UDC Ireland has beneficial ownership of the underlying intellectual property. Based on this authority, UDC Ireland has paid the assessment which is recorded as a long-term asset as of December 31, 2021. In September 2020, the Korean District Court ruled entirely in the favor of UDC Ireland on the beneficial ownership issue and the ruling was affirmed by the Korean High Court in August 2021. The KNTS appealed the ruling to the Korean Supreme Court. On January 13, 2022, the Korean Supreme Court dismissed the appeal from the KNTS. UDC Ireland recovered the charge of $13.2 million for withholding plus interest for the three-year period during February 2022.

The Company’s federal income tax returns for the years 2018 to 2021 are open and subject to examination. The Company's state and foreign tax returns are open for a period of generally three to four years.

The above estimates may change in the future and upon settlement.

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REVENUE RECOGNITION

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

21. REVENUE RECOGNITION:

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (Topic 606). The standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows from a contract with a customer.

For both three month periods ended March 31, 2022 and 2021, the Company recorded 97% of its revenue from OLED related sales and 3% from the providing of services through Adesis, respectively.

Contract Balances

The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):

	As of March 31, 2022
Accounts receivable	$	104,947
Short-term unbilled receivables		12,774
Long-term unbilled receivables		—
Short-term deferred revenue		111,778
Long-term deferred revenue		31,735

Short-term and long-term unbilled receivables are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. The deferred revenue balance at March 31, 2022 will be recognized as materials are shipped to customers over the remaining contract periods. As of March 31, 2022, the Company had $23.8 million of backlog associated with committed purchase orders from its customers for phosphorescent emitter material. These orders are anticipated to be fulfilled within the next 90 days.

Significant changes in the unbilled receivables and deferred liabilities balances for the three months ended March 31, 2022 and 2021, are as follows (in thousands):

	Three Months Ended March 31, 2022
	Unbilled Receivables		Deferred Revenue
Balance at December 31, 2021	$	8,127	$	(157,081	)
Revenue recognized that was previously included in deferred revenue, net		—		57,594
Increases due to cash received		—		(45,891	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		1,865
Unbilled receivables recorded, net		4,647		—
Net change		4,647		13,568
Balance at March 31, 2022	$	12,774	$	(143,513	)

	Three Months Ended March 31, 2021
	Unbilled Receivables			Deferred Revenue
Balance at December 31, 2020	$	10,429		$	(162,301	)
Revenue recognized that was previously included in deferred revenue, net		—			33,439
Increases due to cash received		—			(53,000	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			3,738
Unbilled receivables recorded, net		20,471			—
Transferred to receivables from unbilled receivables		(6,000	)		—
Net change		14,471			(15,823	)
Balance at March 31, 2021	$	24,900		$	(178,124	)

The cumulative catch-up adjustment arising from changes in estimates of transaction price, net for the three months ended March 31, 2022 decreased by $1.9 million as compared to the three months ended March 31, 2021.

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NET INCOME PER COMMON SHARE

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

NET INCOME PER COMMON SHARE

22. NET INCOME PER COMMON SHARE:

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share, which requires earnings per share (EPS) for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and the Company's participating security holders. Under the two-class method, income for the reporting period is allocated between common shareholders and other security holders based on their respective participation rights in undistributed income. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method.

Basic net income per common share is computed by dividing net income allocated to common shareholders by the weighted-average number of shares of common stock outstanding for the period excluding unvested restricted stock units and performance units. Net income allocated to the holders of the Company's unvested restricted stock awards is calculated based on the shareholders proportionate share of weighted average shares of common stock outstanding on an if-converted basis.

For purposes of determining diluted net income per common share, basic net income per share is further adjusted to include the effect of potential dilutive common shares outstanding, including stock options, restricted stock units and performance units, and the impact of shares to be issued under the Employee Stock Purchase Plan.

The following table is a reconciliation of net income and the shares used in calculating basic and diluted net income per common share for the three months ended March 31, 2022 and 2021 (in thousands, except share and per share data):

	March 31,
	2022			2021
Numerator:
Net income	$	49,970		$	51,687
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(325	)		(358	)
Adjusted net income	$	49,645		$	51,329
Denominator:
Weighted average common shares outstanding – Basic		47,369,764			47,267,921
Effect of dilutive shares:
Common stock equivalents arising from stock options and ESPP		191			165
Restricted stock awards and units and performance units		70,326			61,618
Weighted average common shares outstanding – Diluted		47,440,281			47,329,704
Net income per common share:
Basic	$	1.05		$	1.09
Diluted	$	1.05		$	1.08

For the three months ended March 31, 2022 and 2021, the combined effects of unvested restricted stock awards, restricted stock units, performance unit awards and stock options of 14,298 and none, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Basis of Accounting

Interim Financial Information

In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of March 31, 2022 and results of operations for the three months ended March 31, 2022 and 2021, and cash flows for the three months ended March 31, 2022 and 2021. While management believes that the disclosures presented are adequate to make the information not misleading, these unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the Company’s latest year-end Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The results of the Company’s operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for the full year.

Principles of Consolidation

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Universal Display Corporation and its wholly owned subsidiaries, UDC, Inc., UDC Ireland Limited (UDC Ireland), Universal Display Corporation Hong Kong, Limited, Universal Display Corporation Korea, Y.H. (UDC Korea), Universal Display Corporation Japan GK, Universal Display Corporation China, Ltd., Adesis, Inc. (Adesis), UDC Ventures LLC, OVJP Corporation (OVJP Corp) and OLED Material Manufacturing Limited (OMM). All intercompany transactions and accounts have been eliminated.

Management's Use of Estimates

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates made are principally in the areas of revenue recognition including estimates of material unit sales and royalties, the useful life of acquired intangibles, lease liabilities, right-of-use assets, the use and recoverability of inventories, intangibles, investments and income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Inventories

Inventories

Inventories consist of raw materials, work-in-process and finished goods, and are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventory valuation and firm committed purchase order assessments are performed on a quarterly basis and those items that are identified to be obsolete or in excess of forecasted usage are written down to their estimated realizable value. Estimates of realizable value are based upon management’s analyses and assumptions, including, but not limited to, forecasted sales levels by product, expected product lifecycle, product development plans and future demand requirements. A 12-month rolling forecast based on factors, including, but not limited to, production cycles, anticipated product orders, marketing forecasts, backlog, and shipment activities is used in the inventory analysis. If market conditions are less favorable than forecasts or actual demand from customers is lower than estimates, additional inventory write-downs may be required. If demand is higher than expected, inventories that had previously been written down may be sold.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying values of accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value in the accompanying Consolidated Financial Statements due to the short-term nature of those instruments. The Company’s other financial instruments, which include cash equivalents, investments, retirement plan benefit liability and other liabilities are carried at fair value.

Minority Equity Investments

Minority Equity Investments

The Company accounts for minority equity investments in companies that are not accounted for under the equity method as equity securities without readily determinable fair values. The fair value of these securities is based on original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Under this method, the share of income or loss of such companies is not included in the Consolidated Statements of Income. The carrying value of these investments is included in investments on the Consolidated Balance Sheets.

The Company’s policy is to recognize an impairment in the value of its minority equity investments when clear evidence of an impairment exists. Factors considered in the assessment include a significant adverse change in the regulatory, economic, or technological environment, the completion of new equity financing that may indicate a decrease in value, the failure to complete new equity financing arrangements after seeking to raise additional funds, or the commencement of proceedings under which the assets of the business may be placed in receivership or liquidated to satisfy the claims of debt and equity stakeholders.

Leases

Leases

The Company is a lessee in operating leases primarily incurred to facilitate the expansion of manufacturing, research and development, and selling, general and administrative activities. At contract inception, the Company determines if an arrangement is or contains a lease, and if so recognizes a right-of-use asset and lease liability at the lease commencement date. For operating leases, the lease liability is measured at the present value of the unpaid lease payments at the lease commencement date, whereas for finance leases, the lease liability is initially measured at the present value of the unpaid lease payments and subsequently measured at amortized cost using the interest method. Operating lease right-of-use assets are included in other assets on the Consolidated Balance Sheets. The short-term portion of operating lease liabilities is included in other current liabilities on the Consolidated Balance Sheets and the long-term portion is included in other liabilities on the Consolidated Balance Sheets. As of March 31, 2022, the Company had no leases that qualified as financing arrangements.

Key estimates and judgments include how the Company determines the discount rate used to discount the unpaid lease payments to present value and the lease term. The Company monitors for events or changes in circumstances that could potentially require recognizing an impairment loss.

Revenue Recognition and Deferred Revenue

Revenue Recognition and Deferred Revenue

Material sales relate to the Company’s sale of its OLED materials for incorporation into its customers’ commercial OLED products or for their OLED development and evaluation activities. Revenue associated with material sales is generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties. Revenue may be recognized after control of the material passes in the event the transaction price includes variable consideration. For example, a customer may be provided an extended opportunity to stock materials prior to use in mass production and given a general right of return not conditioned on breaches of warranties associated with the specific product. In such circumstances, revenue will be recognized at the earlier of the expiration of the customer’s general right of return or once it becomes unlikely that the customer will exercise its right of return.

The rights and benefits to the Company’s OLED technologies are conveyed to the customer through technology license agreements and material supply agreements. The Company believes that the licenses and materials sold under these combined agreements are not distinct from each other for financial reporting purposes and as such, are accounted for as a single performance obligation. Accordingly, total contract consideration is estimated and recognized over the contract term based on material units sold at the estimated per unit fee over the life of the contract. Total contract consideration is allocated to material sales and royalty and licensing fees on the Consolidated Statements of Income based on contract pricing.

Various estimates are relied upon to recognize revenue. The Company estimates total material units to be purchased by its customers over the contract term based on historical trends, industry estimates and its forecast process. Management uses the expected value method to estimate the material per unit fee. Additionally, management estimates the total sales-based royalties based on the estimated net sales revenue of its customers over the contract term.

Contract research services revenue is revenue earned by Adesis by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis. These services range from intermediates for structure-activity relationship studies, reference agents and building blocks for combinatorial synthesis, re-synthesis of key intermediates, specialty organic chemistry needs, and selective toll manufacturing. These services are provided to third-party pharmaceutical and life sciences firms and other technology firms at fixed costs or on an annual contract basis. Revenue is recognized as services are performed with billing schedules and payment terms negotiated on a contract-by-contract basis. Payments received in excess of revenue recognized are recorded as deferred revenue. In other cases, services may be provided and revenue is recognized before the customer is invoiced. In these cases, revenue recognized will exceed amounts billed and the difference, representing amounts which are currently unbillable to the customer pursuant to contractual terms, is recorded as an unbilled receivable.

Technology development and support revenue is revenue earned from development and technology evaluation agreements and commercialization assistance fees, along with, to a minimal extent, government contracts. Relating to the Company’s government contracts, the Company may receive reimbursements by government entities for all or a portion of the research and development costs the Company incurs. Revenues are recognized as services are performed, proportionally as research and development costs are incurred, or as defined milestones are achieved. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

In 2018, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC). This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2018 and lasts through the end of 2022 with an additional two-year extension option. Under this agreement, the Company is being paid a license fee, payable in quarterly installments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets.

At the same time the Company entered into the current commercial license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC. Under the supplemental material purchase agreement, SDC agrees to purchase from the Company a minimum amount of phosphorescent emitter materials for use in the manufacture of licensed products. This minimum commitment is subject to SDC’s requirements for phosphorescent emitter materials and the Company’s ability to meet these requirements over the term of the supplemental agreement.

In 2015, the Company entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display) which were effective as of January 1, 2015 and superseded the existing 2007 commercial supply agreement between the parties. The terms of the agreements were set to expire by the end of 2022. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under the Company's patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The agreements include customary provisions relating to warranties, indemnities, confidentiality, assignability and business terms. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty

revenue to be generated under the patent license agreement. The Company generates revenue under these agreements that are predominantly tied to LG Display’s sales of OLED licensed products. The OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials.

In 2021, the Company entered into amendments of the 2015 OLED patent license agreement and the 2015 OLED commercial supply agreement with LG Display, which amendments were effective as of January 1, 2021. The amended agreements included a term extension and are set to expire by the end of 2025.

In 2016, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, the Company has granted Tianma non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, the parties extended the terms of both the patent license and material purchase agreements for an additional multi-year-term.

In 2017, the Company entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, the Company has granted BOE non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company supplies phosphorescent OLED materials to BOE for use in its licensed products.

In 2018, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, the Company granted certain of Visionox’s affiliates a non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Visionox for use in its licensed products. On April 22, 2021, the Company announced that it had extended the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd.

In 2019, the Company entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, the Company entered into long-term, multi-year agreements with CSOT. Under these agreements, the Company has granted CSOT non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company also supplies phosphorescent OLED materials to CSOT for use in its licensed products.

All material sales transactions that are not variable consideration transactions are billed and due within 90 days and substantially all are transacted in U.S. dollars.

Cost of Sales

Cost of Sales

Cost of sales consists of labor and material costs associated with the production of materials processed at the Company's manufacturing partners and at the Company's internal manufacturing processing facility. The Company’s portion of cost of sales also includes depreciation of manufacturing equipment, as well as manufacturing overhead costs and inventory adjustments for excess and obsolete inventory.

Research and Development

Research and Development

Expenditures for research and development are charged to expense as incurred.

Patent Costs

Patent Costs

Costs associated with patent applications, patent prosecution, patent defense and the maintenance of patents are charged to expense as incurred. Costs to successfully defend a challenge to a patent are capitalized to the extent of an evident increase in the value of the patent. Costs that relate to an unsuccessful outcome are charged to expense.

Amortization of Acquired Technology

Amortization of Acquired Technology

Amortization costs primarily relate to technology acquired from BASF and Fujifilm. These acquisitions were completed in the years ended December 31, 2016 and 2012, respectively. Acquisition costs are being amortized over a period of 10 years for both the BASF and Fujifilm patents.

Amortization of Other Intangible Assets

Amortization of Other Intangible Assets

Other intangible assets primarily relate to the Adesis acquisition and are being amortized over a period of 10 to 15 years. See Note 7 for further discussion.

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

The Company’s reporting currency is the U.S. dollar. The functional currency for the UDC Ireland and UDC Korea subsidiaries are also the U.S. dollar and the functional currency for the OMM subsidiary and each of the Company's other Asia-Pacific foreign subsidiaries is its local currency. The Company translates the amounts included in the Consolidated Statements of Income from OMM and its Asia-Pacific foreign subsidiaries into U.S. dollars at weighted-average exchange rates, which the Company believes are representative of the actual exchange rates on the dates of the transactions. The Company's foreign subsidiaries' assets and liabilities are translated into U.S. dollars from the local currency at the actual exchange rates as of the end of each reporting date, and the Company records the resulting foreign exchange translation adjustments in the Consolidated Balance Sheets as a component of accumulated other comprehensive loss. The overall effect of the translation of foreign currency and foreign currency transactions to date has been insignificant.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties, if any, related to unrecognized tax benefits as a component of tax expense.

Share-Based Payment Awards

Share-Based Payment Awards

The Company recognizes in the Consolidated Statements of Income the grant-date fair value of equity-based awards such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units and performance unit awards issued to employees and directors.

The grant-date fair value of stock awards is based on the closing price of the stock on the date of grant. The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of forfeitures. The Company issues new shares upon the respective grant, exercise or vesting of the share-based payment awards, as applicable.

Performance unit awards are subject to either a performance-based or market-based vesting requirement. For performance-based vesting, the grant-date fair value of the award, based on fair value of the Company's common stock, is recognized over the service period based on an assessment of the likelihood that the applicable performance goals will be achieved and compensation expense is periodically adjusted based on actual and expected performance. Compensation expense for performance unit awards with market-based vesting is calculated based on the estimated fair value as of the grant date utilizing a Monte Carlo simulation model and is recognized over the service period on a straight-line basis.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Standards Issued But Not Yet Adopted

The Company considers the applicability and impact of all ASUs. ASUs were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial statements.

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Cash and Cash Equivalents [Abstract]

Schedule of Cash, Cash Equivalents

The following table provides details regarding the Company’s portfolio of cash and cash equivalents (in thousands):

	Amortized		Unrealized				Aggregate Fair
Cash and Cash Equivalents Classification	Cost		Gains		(Losses)		Market Value
March 31, 2022
Cash accounts in banking institutions	$	277,104	$	—	$	—	$	277,104
Money market accounts		17,335		—		—		17,335
U.S. Government bonds		62,985		—		—		62,985
	$	357,424	$	—	$	—	$	357,424
December 31, 2021
Cash accounts in banking institutions	$	256,878	$	—	$	—	$	256,878
Money market accounts		55,115		—		—		55,115
	$	311,993	$	—	$	—	$	311,993

Schedule of Investments

The following table provides details regarding the Company’s portfolio of short-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Short-term Investments Classification	Cost		Gains		(Losses)			Market Value
March 31, 2022
Corporate bonds	$	201,492	$	—	$	(469	)	$	201,023
U.S. Government bonds		124,713		—		(681	)		124,032
	$	326,205	$	—	$	(1,150	)	$	325,055
December 31, 2021
Certificates of deposit	$	240	$	—	$	—		$	240
Corporate bonds		226,448		3		(97	)		226,354
U.S. Government bonds		124,611		—		(11	)		124,600
	$	351,299	$	3	$	(108	)	$	351,194

Long-term U.S. Government Bonds Investments

The following table provides details regarding the Company’s portfolio of long-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Long-term Investments Classification	Cost		Gains		(Losses)			Market Value
March 31, 2022
U.S. Government bonds	$	159,732	$	—	$	(4,110	)	$	155,622
	$	159,732	$	—	$	(4,110	)	$	155,622
December 31, 2021
U.S. Government bonds	$	159,692	$	10	$	(134	)	$	159,568
	$	159,692	$	10	$	(134	)	$	159,568

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2022 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of March 31,  2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	80,320	$	80,320	$	—	$	—
Short-term investments		325,055		325,055		—		—
Long-term U.S. Government bonds investments		155,622		155,622		—		—

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2021 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of December 31,  2021		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	55,115	$	55,115	$	—	$	—
Short-term investments		351,194		351,194		—		—
Long-term U.S. Government bonds investments		159,568		159,568		—		—

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INVENTORY (Tables)

3 Months Ended

Mar. 31, 2022

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Raw materials	$	79,834	$	75,227
Work-in-process		14,974		16,065
Finished goods		48,432		42,868
Inventory	$	143,240	$	134,160

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment, net consist of the following (in thousands):

	March 31, 2022			December 31, 2021
Land	$	2,642		$	2,642
Building and improvements		76,213			76,600
Office and lab equipment		109,967			107,168
Furniture, fixtures and computer related assets		16,452			16,221
Construction-in-progress		24,584			18,662
		229,858			221,293
Less: Accumulated depreciation		(97,979	)		(92,461	)
Property and equipment, net	$	131,879		$	128,832

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GOODWILL AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2022

Finite-Lived Intangible Assets, Net [Abstract]

Schedule of Acquired Technology

Acquired technology consists of acquired license rights for patents and know-how obtained from PD-LD, Inc., Motorola, BASF SE (BASF) and Fujifilm. These intangible assets consist of the following (in thousands):

	March 31, 2022			December 31, 2021
PD-LD, Inc.	$	1,481		$	1,481
Motorola		15,909			15,909
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		462			462
		223,303			223,303
Less: Accumulated amortization		(178,782	)		(173,635	)
Acquired technology, net	$	44,521		$	49,668

Schedule of Other Intangible Assets

At March 31, 2022, these other intangible assets consist of the following (in thousands):

	March 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(5,199	)	$	5,321
Developed IP, processes and recipes		4,820		(1,828	)		2,992
Trade name/Trademarks		1,500		(855	)		645
Other		448		(36	)		412
Total identifiable other intangible assets	$	17,288	$	(7,918	)	$	9,370

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OTHER ASSETS (Tables)

3 Months Ended

Mar. 31, 2022

Disclosure Text Block [Abstract]

Other Asset

Other assets consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Long-term taxes receivable	$	93,293	$	103,260
Right-of-use assets		29,645		30,614
Other long-term assets		3,284		1,836
Other Assets	$	126,222	$	135,710

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LEASES (Tables)

3 Months Ended

Mar. 31, 2022

Leases [Abstract]

Summary of Operating Lease Cost and Supplemental Cash Flow Information Related to Operating Leases

The following table presents the Company’s operating lease cost and supplemental cash flow information related to the Company’s operating leases (in thousands):

	Three Months Ended March 31,
	2022		2021
Operating lease cost	$	1,098	$	615
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	—	$	4,720

Schedule Of Operating Lease Right of Use Assets and Liabilities

The following table presents the Company’s operating right-of-use assets and liabilities (in thousands):

	March 31, 2022		December 31, 2021
Right-of-use assets	$	29,645	$	30,614
Short-term lease liabilities		3,333		3,351
Long-term lease liabilities		26,312		27,263

Schedule of Weighted Average Assumptions Used to Compute Right-of-use Assets and Lease Liabilities

The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities:

	March 31, 2022
Weighted average remaining lease term (in years)		8.3
Weighted average discount rate		2.8	%

Schedule of Undiscounted Future Minimum Lease Payments Having Non-cancelable Lease Terms

Undiscounted future minimum lease payments as of March 31, 2022, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows (in thousands):

	Maturities of Operating Lease Liabilities
2022 (1)	$	3,054
2023		4,009
2024		3,957
2025		3,999
2026		4,012
Thereafter		14,115
Total lease payments		33,146
Less: Imputed interest		(3,501	)
Present value of lease payments	$	29,645

(1)Scheduled maturities of lease liabilities represent the period from April 1, 2022 to December 31, 2022.

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ACCRUED EXPENSES (Tables)

3 Months Ended

Mar. 31, 2022

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Compensation	$	12,997	$	27,686
PPG agreements		6,705		8,853
Research and development agreements		1,746		1,469
Professional fees		1,432		1,000
Consulting		645		1,314
Royalties		154		691
Other		3,281		4,461
Accrued expenses	$	26,960	$	45,474

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OTHER LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2022

Other Liabilities Disclosure [Abstract]

Schedule of Other liabilities

Other liabilities consist of the following (in thousands):

	March 31, 2022		December 31, 2021
Long-term taxes payable	$	51,060	$	47,791
Long-term lease liabilities		26,312		27,263
Other long-term liabilities		1,089		1,023
Other Liabilities	$	78,461	$	76,077

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

3 Months Ended

Mar. 31, 2022

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Loss

Amounts related to the changes in accumulated other comprehensive loss were as follows (in thousands):

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2021, net of tax	$	(142	)	$	(18,019	)	$	(74	)	$	(18,235	)
Other comprehensive loss    before reclassification		(3,935	)		—			(234	)		(4,169	)
Reclassification to net income (1)		—			509			—			509		Selling, general and administrative, research and development and cost of sales
Change during period		(3,935	)		509			(234	)		(3,660	)
Balance March 31, 2022, net of tax	$	(4,077	)	$	(17,510	)	$	(308	)	$	(21,895	)

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2020, net of tax	$	91		$	(36,075	)	$	(35	)	$	(36,019	)
Other comprehensive loss    before reclassification		(58	)		—			(106	)		(164	)
Reclassification to net income (1)		—			1,174			—			1,174		Selling, general and administrative, research and development and cost of sales
Change during period		(58	)		1,174			(106	)		1,010
Balance March 31, 2021, net of tax	$	33		$	(34,901	)	$	(141	)	$	(35,009	)

(1)The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $509,000 and $1.2 million for the three months ended March 31, 2022 and 2021, respectively.

(2)Refer to Note 17: Supplemental Executive Retirement Plan.

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Tables)

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

Components of Net Periodic Pension Cost

The components of net periodic pension cost were as follows (in thousands):

	Three Months Ended March 31,
	2022		2021
Service cost	$	361	$	428
Interest cost		346		291
Amortization of prior service cost		280		275
Amortization of loss		372		1,234
Total net periodic benefit cost	$	1,359	$	2,228

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CONCENTRATION OF RISK (Tables)

3 Months Ended

Mar. 31, 2022

Risks and Uncertainties [Abstract]

Revenues and Accounts Receivable From Our Largest Customers

Revenues and accounts receivable from the Company's largest customers were as follows (in thousands):

	% of Total Revenue for the  Three Months Ended March 31,		Accounts Receivable as of
Customer	2022	2021	March 31, 2022
A	40%	36%	$	8,216
B	27%	23%	$	42,813
C	15%	20%	$	20,622
D	7%	12%	$	6,870

Revenues by Geographic Area

Revenues by geographic area are as follows (in thousands):

	Three Months Ended March 31,
Country	2022		2021
South Korea	$	89,687	$	67,975
China		55,400		60,504
Japan		1,053		1,315
Other non-U.S. locations		300		825
Total non-U.S. locations		146,440		130,619
United States		4,030		3,381
Total revenue	$	150,470	$	134,000

Long-Lived Assets (Net) by Geographic Area

Long-lived assets (net), by geographic area are as follows (in thousands):

	March 31, 2022		December 31, 2021
United States	$	115,760	$	115,004
Other		16,119		13,828
Total long-lived assets	$	131,879	$	128,832

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REVENUE RECOGNITION (Tables)

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Schedule of Assets and Liabilities Associated with Contracts from Customers

The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):

	As of March 31, 2022
Accounts receivable	$	104,947
Short-term unbilled receivables		12,774
Long-term unbilled receivables		—
Short-term deferred revenue		111,778
Long-term deferred revenue		31,735

Summary of Significant Changes in Unbilled Receivables and Deferred Liabilities Balances

Significant changes in the unbilled receivables and deferred liabilities balances for the three months ended March 31, 2022 and 2021, are as follows (in thousands):

	Three Months Ended March 31, 2022
	Unbilled Receivables		Deferred Revenue
Balance at December 31, 2021	$	8,127	$	(157,081	)
Revenue recognized that was previously included in deferred revenue, net		—		57,594
Increases due to cash received		—		(45,891	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		1,865
Unbilled receivables recorded, net		4,647		—
Net change		4,647		13,568
Balance at March 31, 2022	$	12,774	$	(143,513	)

	Three Months Ended March 31, 2021
	Unbilled Receivables			Deferred Revenue
Balance at December 31, 2020	$	10,429		$	(162,301	)
Revenue recognized that was previously included in deferred revenue, net		—			33,439
Increases due to cash received		—			(53,000	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			3,738
Unbilled receivables recorded, net		20,471			—
Transferred to receivables from unbilled receivables		(6,000	)		—
Net change		14,471			(15,823	)
Balance at March 31, 2021	$	24,900		$	(178,124	)

XML

NET INCOME PER COMMON SHARE (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The following table is a reconciliation of net income and the shares used in calculating basic and diluted net income per common share for the three months ended March 31, 2022 and 2021 (in thousands, except share and per share data):

	March 31,
	2022			2021
Numerator:
Net income	$	49,970		$	51,687
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(325	)		(358	)
Adjusted net income	$	49,645		$	51,329
Denominator:
Weighted average common shares outstanding – Basic		47,369,764			47,267,921
Effect of dilutive shares:
Common stock equivalents arising from stock options and ESPP		191			165
Restricted stock awards and units and performance units		70,326			61,618
Weighted average common shares outstanding – Diluted		47,440,281			47,329,704
Net income per common share:
Basic	$	1.05		$	1.09
Diluted	$	1.05		$	1.08

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BUSINESS - Additional Information (Details)	Mar. 31, 2022 Patent
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of patents issued and pending application	5,500

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details)				3 Months Ended
	Apr. 22, 2021	Jun. 28, 2016	Jul. 23, 2012	Mar. 31, 2022
Summary Of Significant Accounting Policies [Line Items]
Recognized income tax positions measured at likelihood of realization description				Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%.
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Recognized income tax positions measured at percentage of likelihood of realization				50.00%
Patents [Member] | FUJIFILM [Member]
Summary Of Significant Accounting Policies [Line Items]
OLED patents useful life			10 years	10 years
Patents [Member] | BASF [Member]
Summary Of Significant Accounting Policies [Line Items]
OLED patents useful life		10 years		10 years
Other Intangible Assets [Member] | Adesis, Inc. [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization period of acquired intangible assets (in years)				10 years
Other Intangible Assets [Member] | Adesis, Inc. [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization period of acquired intangible assets (in years)				15 years
Visionox Hefei Technology Co. Ltd [Member]
Summary Of Significant Accounting Policies [Line Items]
Additional agreement duration	5 years

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Schedule of Cash, Cash Equivalents (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	$ 357,424	$ 311,993
Cash Equivalents, Gross Unrealized Gains	0
Cash Equivalents, Gross Unrealized Losses	0
Cash and Cash Equivalents, Fair Value Disclosure	357,424	311,993
Cash Accounts in Banking Institutions [Member]
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	277,104	256,878
Cash Equivalents, Gross Unrealized Gains	0
Cash Equivalents, Gross Unrealized Losses	0
Cash and Cash Equivalents, Fair Value Disclosure	277,104	256,878
Money Market Accounts [Member]
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	17,335	55,115
Cash Equivalents, Gross Unrealized Gains	0
Cash Equivalents, Gross Unrealized Losses	0
Cash and Cash Equivalents, Fair Value Disclosure	17,335	$ 55,115
U.S. Government Bonds [Member]
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	62,985
Cash Equivalents, Gross Unrealized Gains	0
Cash Equivalents, Gross Unrealized Losses	0
Cash and Cash Equivalents, Fair Value Disclosure	$ 62,985

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Schedule of Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Short-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	$ 326,205	$ 351,299
Available-for-sale Securities, Gross Unrealized Gains	0	3
Available-for-sale Securities, Gross Unrealized Losses	(1,150)	(108)
Available-for-sale Securities, Fair Value Disclosure	325,055	351,194
Long-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	159,732	159,692
Available-for-sale Securities, Gross Unrealized Gains	0	10
Available-for-sale Securities, Gross Unrealized Losses	(4,110)	(134)
Available-for-sale Securities, Fair Value Disclosure	155,622	159,568
Certificates of Deposit [Member] | Short-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis		240
Available-for-sale Securities, Gross Unrealized Gains		0
Available-for-sale Securities, Gross Unrealized Losses		0
Available-for-sale Securities, Fair Value Disclosure		240
Corporate Bonds [Member] | Short-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	201,492	226,448
Available-for-sale Securities, Gross Unrealized Gains	0	3
Available-for-sale Securities, Gross Unrealized Losses	(469)	(97)
Available-for-sale Securities, Fair Value Disclosure	201,023	226,354
U.S. Government Bonds [Member] | Short-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	124,713	124,611
Available-for-sale Securities, Gross Unrealized Gains	0	0
Available-for-sale Securities, Gross Unrealized Losses	(681)	(11)
Available-for-sale Securities, Fair Value Disclosure	124,032	124,600
U.S. Government Bonds [Member] | Long-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	159,732	159,692
Available-for-sale Securities, Gross Unrealized Gains	0	10
Available-for-sale Securities, Gross Unrealized Losses	(4,110)	(134)
Available-for-sale Securities, Fair Value Disclosure	$ 155,622	$ 159,568

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Additional Information (Details) $ in Millions	Mar. 31, 2022 USD ($) Investment
Cash And Cash Equivalents [Line Items]
Number of minority investments | Investment	2
Minority investment, carrying value | $	$ 8.5

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FAIR VALUE MEASUREMENTS - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 357,424	$ 311,993
Short-term investments	325,055	351,194
Fair Value, Measurements, Recurring [Member] | Reported Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	80,320	55,115
Short-term investments	325,055	351,194
Convertible notes	155,622
Fair Value, Measurements, Recurring [Member] | Reported Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible notes		159,568
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible notes	155,622
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	80,320	55,115
Short-term investments	$ 325,055	351,194
Convertible notes		$ 159,568

XML

FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Fair Value Disclosures [Abstract]
Credit losses on debt investments	$ 0	$ 0

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INVENTORY - Schedule of Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 79,834	$ 75,227
Work-in-process	14,974	16,065
Finished goods	48,432	42,868
Inventory	$ 143,240	$ 134,160

XML

INVENTORY - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Inventory Disclosure [Abstract]
Change in inventory reserve	$ 84,000	$ 667,000

XML

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 229,858	$ 221,293
Less: Accumulated depreciation	(97,979)	(92,461)
Property and equipment, net	131,879	128,832
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,642	2,642
Building and improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	76,213	76,600
Office and lab equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	109,967	107,168
Furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	16,452	16,221
Construction-in-progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 24,584	$ 18,662

XML

PROPERTY AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 5,627	$ 4,263

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GOODWILL AND INTANGIBLE ASSETS - Schedule of Acquired Technology (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	$ 223,303	$ 223,303
Less: Accumulated amortization	(178,782)	(173,635)
Acquired technology, net	44,521	49,668
PD LD, Inc [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	1,481	1,481
Motorola [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	15,909	15,909
BASF [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	95,989	95,989
FUJIFILM [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	109,462	109,462
Other [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	$ 462	$ 462

XML

GOODWILL AND INTANGIBLE ASSETS - Acquired Technology - Additional Information (Details)			3 Months Ended
	Jun. 28, 2016 USD ($) Patent	Jul. 23, 2012 USD ($) Patent	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets			$ 5,498,000	$ 5,488,000
Future amortization expense, 2022			10,600,000
Future amortization expense, 2023			9,700,000
Future amortization expense, 2024			9,600,000
Future amortization expense, 2025			9,600,000
Future amortization expense, 2026			4,800,000
Future amortization expense, thereafter			200,000
Patent Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization of Intangible Assets			$ 5,100,000	$ 5,100,000
Patents [Member] | FUJIFILM [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents acquired (more than) | Patent		1,200
Assigned value of acquired intangible assets		$ 105,000,000.0
Cash paid for OLED patents		$ 4,500,000
OLED patents useful life		10 years	10 years
Patents [Member] | BASF [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents acquired (more than) | Patent	500
Assigned value of acquired intangible assets	$ 95,800,000
Cash paid for OLED patents	$ 217,000,000
OLED patents useful life	10 years		10 years

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GOODWILL AND INTANGIBLE ASSETS - Other Intangible Assets - Additional Information (Details) - Adesis, Inc. [Member] - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Other intangible assets acquired	$ 16,800,000
Other intangible assets	17,288,000
Amortization expense related to other intangible assets	352,000	$ 341,000
Future amortization expense of other intangible assets, remainder of fiscal year 2021	1,100,000
Future amortization expense of other intangible assets, fiscal year 2024	1,400,000
Future amortization expense of other intangible assets, thereafter	2,700,000
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 10,520,000
Weighted average useful life , intangible assets	11 years 6 months
Internally-developed IP, Processes and Recipes [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 4,820,000
Weighted average useful life , intangible assets	15 years
Trade Name/Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 1,500,000
Weighted average useful life , intangible assets	10 years

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GOODWILL AND INTANGIBLE ASSETS - Schedule of Other Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Accumulated Amortization	$ (7,918)	$ (7,565)
Net Carrying Amount	9,370	$ 9,711
Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	17,288
Accumulated Amortization	(7,918)
Net Carrying Amount	9,370
Customer Relationships [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	10,520
Accumulated Amortization	5,199
Net Carrying Amount	5,321
Developed IP, Processes and Recipes [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,820
Accumulated Amortization	1,828
Net Carrying Amount	2,992
Trade Name/Trademarks [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,500
Accumulated Amortization	855
Net Carrying Amount	645
Other [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	448
Accumulated Amortization	36
Net Carrying Amount	$ 412

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OTHER ASSETS - Schedule Of Other assets (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Other Assets [Abstract]
Long-term taxes receivable	$ 93,293	$ 103,260
Right-of-use assets	$ 29,645	$ 30,614
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets, Noncurrent	Other Assets, Noncurrent
Other long-term assets	$ 3,284	$ 1,836
Other Assets	$ 126,222	$ 135,710

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LEASES- Additional Information (Details)	3 Months Ended	9 Months Ended
	Mar. 31, 2022	Sep. 30, 2021
Lessee Lease Description [Line Items]
Operating lease description	Current lease agreements do not contain any residual value guarantees or material restrictive covenants. As of March 31, 2022, the Company did not have any finance leases and no additional operating leases that have not yet commenced.
Minimum [Member]
Lessee Lease Description [Line Items]
Operating leases remaining term	5 months
Operating lease, option to extend		true
Maximum [Member]
Lessee Lease Description [Line Items]
Operating leases remaining term	10 years

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LEASES - Summary of Operating Lease Cost and Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Leases [Abstract]
Operating lease cost	$ 1,098	$ 615
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$ 0	$ 4,720

XML

LEASES - Schedule Of Operating Lease Right of Use Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Lessee Lease Description [Line Items]
Right-of-use assets	$ 29,645	$ 30,614
Current Liabilities [Member]
Lessee Lease Description [Line Items]
Short-term lease liabilities	3,333	3,351
Non-current Liabilities [Member]
Lessee Lease Description [Line Items]
Long-term lease liabilities	$ 26,312	$ 27,263

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LEASES - Schedule of Weighted Average Assumptions Used to Compute Right-of-use Assets and Lease Liabilities (Details)	Mar. 31, 2022
Leases [Abstract]
Weighted average remaining lease term (in years)	8 years 3 months 18 days
Weighted average discount rate	2.80%

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LEASES - Schedule of Undiscounted Future Minimum Lease Payments Having Non-cancelable Lease Terms (Details) $ in Thousands	Mar. 31, 2022 USD ($)
Lessee Lease Description [Line Items]
2021	$ 3,054
2022	4,009
2023	3,957
2024	3,999
2025	4,012
Thereafter	14,115
Total lease payments	33,146
Less: Imputed interest	(3,501)
Present value of lease payments	$ 29,645

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ACCRUED EXPENSES - Schedule Of Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Compensation	$ 12,997	$ 27,686
PPG agreements	6,705	8,853
Research and development agreements	1,746	1,469
Professional fees	1,432	1,000
Consulting	645	1,314
Royalties	154	691
Other	3,281	4,461
Accrued expenses	$ 26,960	$ 45,474

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OTHER LIABILITIES - Summary of Other liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Long-term taxes payable	$ 51,060	$ 47,791
Long-term lease liabilities	26,312	27,263
Other long-term liabilities	1,089	1,023
Other Liabilities	$ 78,461	$ 76,077

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RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty expense	$ 154,000	$ 112,000
1997 Amended License Agreement [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty expense	$ 154,000	1,120,000
Royalty rate for licensed products sold by the Company (in hundredths)	3.00%
Royalty rate for licensed products sold by the Company's sublicenses (in hundredths)	3.00%
2006 Research Agreement [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Research agreement, extension term (in years)	2 years
Research agreement, new amendment expiration date	Apr. 30, 2023
Maximum obligation	$ 4,100,000
Research and development expense incurred	$ 195,000	$ 285,000

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EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2021
Long-term Purchase Commitment [Line Items]
Percent of services payable in cash or shares	50.00%
Issuance of common stock in connection with materials and license agreements (in shares)	0	0
Charges to expense for cash portion of reimbursement of expenses	$ 1.5	$ 1.5
New OLED Materials Agreement and OLED Materials Agreement [Member] | Weighted Average
Long-term Purchase Commitment [Line Items]
Minimum average closing price of common stock (in dollars per share)	$ 20.00	$ 20.00	$ 20.00

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SHAREHOLDERS' EQUITY - Additional Information (Details) $ / shares in Units, $ in Millions		3 Months Ended
	May 03, 2022 $ / shares	Mar. 31, 2022 USD ($) Board_member $ / shares shares	Mar. 31, 2021 $ / shares shares	Dec. 31, 2021 $ / shares shares	Sep. 30, 2021 shares
Class Of Stock [Line Items]
Preferred Stock, shares authorized ( in shares)		5,000,000		5,000,000
Preferred Stock, par value (in dollars per share) | $ / shares		$ 0.01		$ 0.01
Common Stock, shares authorized (in shares)		200,000,000		200,000,000
Common Stock, par value (in dollars per share) | $ / shares		$ 0.01		$ 0.01
Common Stock, shares issued (in shares)		49,099,830		49,065,924	49,099,830
Common Stock, shares outstanding (in shares)		47,734,182		47,700,276	47,734,182
Treasury stock repurchased shares		0	0
Common stock dividends declared per share | $ / shares		$ 0.30	$ 0.20
Common stock dividends paid per share | $ / shares		$ 0.30
Common stock dividends paid | $		$ 14.2
Preferred Stock, liquidation value per share (in dollars per share) | $ / shares		$ 7.50
Number of board members elected by class A shareholders | Board_member		2
Subsequent Event [Member]
Class Of Stock [Line Items]
Common stock dividends declared per share | $ / shares	$ 0.30
Dividend payable date	Jun. 30, 2022
Dividend record date	Jun. 16, 2022
Series A Nonconvertible Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred Stock, shares issued (in shares)		200,000		200,000
Preferred Stock, shares outstanding (in shares)		200,000		200,000
Preferred Stock, liquidation value per share (in dollars per share) | $ / shares		$ 7.50		$ 7.50
Preferred stock voting rights		Holders of the Series A shares are entitled to one vote per share on matters which shareholders are generally entitled to vote
1995 | Series A Nonconvertible Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred Stock, shares issued (in shares)		200,000

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SHAREHOLDERS' EQUITY - Deferred Compensation Arrangement - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Non-Employee Members of Scientific Advisory Board [Member]
Deferred Compensation Arrangement with Employees and Non-Employees, Share-Based Payments [Line Items]
Shares issued (in shares)	2,024	1,400
Members of Scientific Advisory Board [Member]
Deferred Compensation Arrangement with Employees and Non-Employees, Share-Based Payments [Line Items]
Fair value of shares issued	$ 300,000	$ 300,000

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($)		3 Months Ended
		Mar. 31, 2022		Mar. 31, 2021
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE		$ 1,099,914,000		$ 912,714,000
Other comprehensive gain (loss) before reclassification		(4,169,000)		(164,000)
Reclassification to net income	[1]	509,000		1,174,000
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME		(3,660,000)		1,010,000
BALANCE		1,131,300,000		952,468,000
Unrealized gain (loss) on available-for-sale securities [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE		(142,000)		91,000
Other comprehensive gain (loss) before reclassification		(3,935,000)		(58,000)
Reclassification to net income		0	[1]	0
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME		(3,935,000)		(58,000)
BALANCE		(4,077,000)		33,000
Net unrealized gain (loss) on retirement plan [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE	[2]	(18,019,000)		(36,075,000)
Other comprehensive gain (loss) before reclassification		0		0
Reclassification to net income	[1]	509,000		(1,174,000)	[2]
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME	[2]	509,000		1,174,000
BALANCE	[2]	(17,510,000)		(34,901,000)
Change in cumulative foreign currency translation adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE		(74,000)		(35,000)
Other comprehensive gain (loss) before reclassification		(234,000)		(106,000)
Reclassification to net income		0	[1]	0
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME		(234,000)		(106,000)
BALANCE		(308,000)		(141,000)
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE		(18,235,000)		(36,019,000)
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME		(3,660,000)		1,010,000
BALANCE		$ (21,895,000)		$ (35,009,000)

[1] The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $509,000 and $1.2 million for the three months ended March 31, 2022 and 2021, respectively.

[2] Refer to Note 17: Supplemental Executive Retirement Plan.

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Details) - USD ($)		3 Months Ended
		Mar. 31, 2022	Mar. 31, 2021
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Reclassification to net income	[1]	$ 509,000	$ 1,174,000

[1] The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $509,000 and $1.2 million for the three months ended March 31, 2022 and 2021, respectively.

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STOCK-BASED COMPENSATION - Equity Compensation Plan - Additional Information (Details) - Equity Compensation Plan [Member]	3 Months Ended
	Mar. 31, 2022 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	10,500,000
Number of shares available for grant (in shares)	1,579,746
Compensation plan extended term description	extended the term of the plan through 2024
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration term (in years)	10 years

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STOCK-BASED COMPENSATION - Equity Instruments Other Than Options - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of shares withheld for tax withholding obligations	$ 7,896,000	$ 9,634,000
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards and units vesting terms	1 year
Fair value of shares issued	$ 309,000	$ 294,000
Shares issued (in shares)	2,196	1,353
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)	100,134
Total fair value of performance unit awards granted	$ 15,100,000
Shares withheld for employee taxes (shares)	49,794	48,824
Shares withheld for employee taxes	$ 7,800,000	$ 9,400,000
Restricted Stock [Member] | Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	4,000,000.0	3,600,000
Restricted Stock [Member] | Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	1,500,000	1,200,000
Restricted Stock [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 518,000	557,000
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards and units vesting terms	3 years
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards and units vesting terms	5 years
Restricted Stock Units (RSUs) [Member] | Research and Development Expense [Member] | Non Employee Members of Scientific Advisory Board [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 120,000	$ 36,000
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)	2,516
Total fair value of performance unit awards granted	$ 15,200,000
Shares withheld for tax withholding obligations (in shares)	563	1,224
Fair value of shares withheld for tax withholding obligations	$ 88,000	$ 231,000
Performance Shares [Member] | Performance-Based Vesting Requirement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)	100,621	50,309
Performance Shares [Member] | Market-Based Vesting Requirement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)	25,156
Performance Shares [Member] | Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 68,000	$ 211,000
Performance Shares [Member] | Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	28,000	56,000
Performance Shares [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 19,000	$ 35,000

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STOCK-BASED COMPENSATION - Employee Stock Purchase Plan - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Jun. 25, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from common stock issued	$ 509,000	$ 432,000
Employee Stock Purchase Plan (ESPP) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for issuance (in shares)			1,000,000
Percentage of market value (in hundredths)	85.00%
Maximum allocation of base compensation (in hundredths)	10.00%
Maximum shares per purchase date (in shares)	12,500
Maximum value per calendar year, per employee	$ 25,000
Common stock issued (in shares)	2,875	1,782
Proceeds from common stock issued	$ 403,000	$ 348,000
Employee Stock Purchase Plan ESPP Purchase Period1	3 months
Employee Stock Purchase Plan (ESPP) [Member] | Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charges to expense	$ 25,000	23,000
Employee Stock Purchase Plan (ESPP) [Member] | Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charges to expense	51,000	36,000
Employee Stock Purchase Plan (ESPP) [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charges to expense	$ 29,000	$ 25,000

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN - Additional Information (Details)	Mar. 31, 2022 Participant
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of participants	8

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN - Components of Net Periodic Pension Cost (Details) - Supplemental Executive Retirement Plan [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Components of net periodic pension cost [Abstract]
Service cost	$ 361	$ 428
Interest cost	346	291
Amortization of prior service cost	280	275
Amortization of loss	372	1,234
Total net periodic benefit cost	$ 1,359	$ 2,228

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COMMITMENTS AND CONTINGENCIES - Additional Information (Details) $ in Millions	Mar. 31, 2022 USD ($) Multiple ExecutiveOfficer Employee	Dec. 31, 2021 USD ($)
Loss Contingencies [Line Items]
Purchase commitments for inventory | $	$ 42.3	$ 25.7
Commitment With Executive Officers [Member]
Loss Contingencies [Line Items]
Number of executive officers under agreement | ExecutiveOfficer	6
Number of employees under agreement | Employee	12
Multiple of sum of average annual base salary and bonus agreement terms	2
Commitment With Senior Level Employees [Member] | Minimum [Member]
Loss Contingencies [Line Items]
Multiple of sum of average annual base salary and bonus agreement terms	1
Commitment With Senior Level Employees [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Multiple of sum of average annual base salary and bonus agreement terms	2

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CONCENTRATION OF RISK - Revenues and Accounts Receivable From Our Largest Customers (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Concentration Risk [Line Items]
Accounts Receivable	$ 104,947		$ 107,639
Major Customer A [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	40.00%	36.00%
Major Customer A [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 8,216
Major Customer B [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	27.00%	23.00%
Major Customer B [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 42,813
Major Customer C [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	15.00%	20.00%
Major Customer C [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 20,622
Major Customer D [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	7.00%	12.00%
Major Customer D [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 6,870

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CONCENTRATION OF RISK - Additional Information (Details) - Supplier	3 Months Ended	9 Months Ended
	Mar. 31, 2022	Sep. 30, 2021
Concentration Risk [Line Items]
Number of suppliers from which chemical materials were purchased	1
Excluding North America [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (less than 1% for contracts with U.S. government agencies)		97.00%

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CONCENTRATION OF RISK - Revenues by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Concentration Risk [Line Items]
Revenues	$ 150,470	$ 134,000
South Korea [Member]
Concentration Risk [Line Items]
Revenues	89,687	67,975
China [Member]
Concentration Risk [Line Items]
Revenues	55,400	60,504
Japan [Member]
Concentration Risk [Line Items]
Revenues	1,053	1,315
Other Non-U.S. Locations [Member]
Concentration Risk [Line Items]
Revenues	300	825
Total Non-U.S. Locations [Member]
Concentration Risk [Line Items]
Revenues	146,440	130,619
United States [Member]
Concentration Risk [Line Items]
Revenues	$ 4,030	$ 3,381

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CONCENTRATION OF RISK - Long-Lived Assets (Net) by Geographic Area (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Segment Reporting Information [Line Items]
Total long-lived assets	$ 131,879	$ 128,832
United States [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	115,760	115,004
Other [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	$ 16,119	$ 13,828

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INCOME TAXES - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	Oct. 30, 2018	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Jan. 13, 2022
Income Taxes [Line Items]
Effective income tax rate (benefit) expense, percent		20.10%	18.90%
INCOME TAX EXPENSE		$ (12,537)	$ (12,063)
Long-term asset		$ 126,222		$ 135,710
Estimated settlement amounts due (refunds) from withholding taxes					$ 13,200
Withholding and interest for licencing and royalty payments	$ 13,200
Withholding and interest for licencing and royalty payments period	3 years
State and foreign income tax returns subject to examination period minimum (in years)		3 years
State and foreign income tax returns subject to examination period maximum (in years)		4 years
Reduction of Korean Withholding Taxes [Member]
Income Taxes [Line Items]
Reduction of deferred tax asset for foreign tax credits and R&D		$ 20,700		20,700
U.S.Federal Government [Member]
Income Taxes [Line Items]
Estimated settlement amounts due (refunds) from withholding taxes		16,200
Korean Government [Member]
Income Taxes [Line Items]
Estimated settlement amounts due (refunds) from withholding taxes		36,900
Current income tax expense		14,900
Allocation of Withholding to Non-Korean Patents [Member]
Income Taxes [Line Items]
Long-term asset		56,600		53,200
Allocation of Withholding to Non-Korean Patents [Member] | U.S.Federal Government [Member]
Income Taxes [Line Items]
Estimated settlement amounts due (refunds) from withholding taxes		$ 34,800		$ 31,600

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REVENUE RECOGNITION - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation Of Revenue [Line Items]
Backlog associated with committed purchase orders from customers	$ 23.8
Cumulative catch-up adjustment arising from decrease in estimates of transaction price	$ (1.9)
Revenue from Contracts with Customers - ASU No. 2014-09 [Member]
Disaggregation Of Revenue [Line Items]
Percentage of revenue recorded from sales of materials	97.00%	97.00%
Revenue from Contracts with Customers - ASU No. 2014-09 [Member] | Adesis, Inc. [Member]
Disaggregation Of Revenue [Line Items]
Percentage of revenue recorded from provision of services	3.00%	3.00%

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REVENUE RECOGNITION - Schedule of Assets and Liabilities Associated with Contracts from Customers (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Disaggregation Of Revenue [Line Items]
Accounts receivable	$ 104,947	$ 107,639
Short-term unbilled receivables	12,774
Short-term deferred revenue	111,778	120,864
Long-term deferred revenue	31,735	$ 36,217
Other Assets [Member]
Disaggregation Of Revenue [Line Items]
Long-term unbilled receivables	$ 0

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REVENUE RECOGNITION - Summary of Significant Changes in Unbilled Receivables and Deferred Liabilities Balances (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Deferred Revenue (Increase) Decrease
Balance	$ (157,081)	$ (162,301)
Revenue recognized that was previously included in deferred revenue	57,594	33,439
Increases due to cash received	45,891	53,000
Cumulative catch-up adjustment arising from changes in estimates of transaction price, net	1,865	3,738
Net change	13,568	(15,823)
Balance	(143,513)	(178,124)
Unbilled Receivables Increase (Decrease)
Balance	8,127	10,429
Unbilled receivables recognized	4,647	20,471
Transferred to receivables from unbilled receivables		6,000
Net change	4,647	14,471
Balance	$ 12,774	$ 24,900

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NET INCOME PER COMMON SHARE - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Sep. 30, 2020
Numerator:
Net income	$ 49,970	$ 51,687
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders	(325)	(358)
Adjusted net income	$ 49,645	$ 51,329
Denominator:
Weighted average common shares outstanding – Basic	47,369,764	47,267,921	47,267,921
Effect of dilutive shares:
Common stock equivalents arising from stock options and ESPP	191	165
Restricted stock awards and units and performance units	70,326	61,618
Weighted average common shares outstanding – Diluted	47,440,281	47,329,704	47,329,704
Basic	$ 1.05	$ 1.09
Diluted	$ 1.05	$ 1.08

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NET INCOME PER COMMON SHARE - Additional Information (Details) - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Earnings Per Share [Abstract]
Antidilutive securities excluded from calculation of diluted EPS	14,298	0