10-Q

`

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2023

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 November 1, 2023, the registrant had outstanding 47,358,076 shares of common stock.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets – September 30, 2023 and December 31, 2022	1
Consolidated Statements of Income – Three and nine months ended September 30, 2023 and 2022	2
Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2023 and 2022	3
Consolidated Statements of Shareholders’ Equity – Three and nine months ended September 30, 2023 and 2022	4
Consolidated Statements of Cash Flows – Nine months ended September 30, 2023 and 2022	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	35
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3. Defaults Upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	36
Item 6. Exhibits	36

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

	September 30, 2023			December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	79,323		$	93,430
Short-term investments		412,350			484,345
Accounts receivable		122,192			92,664
Inventory		181,406			183,220
Other current assets		83,444			45,791
Total current assets		878,715			899,450
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $137,020 and $117,118		174,638			143,445
ACQUIRED TECHNOLOGY, net of accumulated amortization of $182,657 and $189,671		94,518			38,382
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $10,055 and $8,989		7,233			8,247
GOODWILL		15,535			15,535
INVESTMENTS		301,193			259,861
DEFERRED INCOME TAXES		49,637			58,161
OTHER ASSETS		101,447			109,739
TOTAL ASSETS	$	1,622,916		$	1,532,820
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	20,624		$	9,519
Accrued expenses		38,500			51,002
Deferred revenue		66,828			45,599
Other current liabilities		5,391			29,577
Total current liabilities		131,343			135,697
DEFERRED REVENUE		8,859			18,279
RETIREMENT PLAN BENEFIT LIABILITY		61,165			59,790
OTHER LIABILITIES		39,183			43,685
Total liabilities		240,550			257,451
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, 48,720,530    and 49,136,030 shares issued, and 47,354,882 and 47,770,382 shares outstanding, at    September 30, 2023 and December 31, 2022, respectively		487			491
Additional paid-in capital		693,899			681,335
Retained earnings		744,227			653,277
Accumulated other comprehensive loss		(14,965	)		(18,452	)
Treasury stock, at cost (1,365,648 shares at September 30, 2023 and December 31, 2022)		(41,284	)		(41,284	)
Total shareholders’ equity		1,382,366			1,275,369
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,622,916		$	1,532,820

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 September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
REVENUE:
Material sales	$	92,492		$	84,182		$	239,789		$	242,742
Royalty and license fees		45,915			71,450			165,524			191,530
Contract research services		2,670			4,924			12,796			13,315
Total revenue		141,077			160,556			418,109			447,587
COST OF SALES		34,248			37,396			99,357			97,798
Gross margin		106,829			123,160			318,752			349,789
OPERATING EXPENSES:
Research and development		33,099			30,414			96,840			85,156
Selling, general and administrative		18,084			18,442			50,557			59,373
Amortization of acquired technology and other intangible assets		4,557			3,562			11,442			14,562
Patent costs		2,572			2,018			7,056			6,075
Royalty and license expense		81			261			414			596
Total operating expenses		58,393			54,697			166,309			165,762
OPERATING INCOME		48,436			68,463			152,443			184,027
Interest income, net		7,136			2,432			20,301			4,306
Other loss, net		(1,693	)		(804	)		(3,180	)		(749	)
Interest and other income, net		5,443			1,628			17,121			3,557
INCOME BEFORE INCOME TAXES		53,879			70,091			169,564			187,584
INCOME TAX EXPENSE		(2,363	)		(16,636	)		(28,531	)		(42,657	)
NET INCOME	$	51,516		$	53,455		$	141,033		$	144,927
NET INCOME PER COMMON SHARE:
BASIC	$	1.08		$	1.12		$	2.95		$	3.04
DILUTED	$	1.08		$	1.12		$	2.95		$	3.04
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET    INCOME PER COMMON SHARE:
BASIC		47,570,099			47,396,495			47,555,734			47,386,426
DILUTED		47,632,431			47,466,934			47,609,692			47,455,893
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.35		$	0.30		$	1.05		$	0.90

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 September 30,						Nine Months Ended September 30,
	2023			2022			2023		2022
NET INCOME	$	51,516		$	53,455		$	141,033	$	144,927
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gain (loss) on available-for-sale securities,    net of tax of ($318), $572, ($756) and $2,120, respectively		1,138			(1,680	)		2,706		(7,231	)
Amortization of prior service cost and actuarial loss for    retirement plan included in net periodic pension costs,    net of tax of ($71), ($159), ($212) and ($444), respectively		253			493			759		1,511
Change in cumulative foreign currency translation    adjustment		(44	)		(191	)		22		(601	)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		1,347			(1,378	)		3,487		(6,321	)
COMPREHENSIVE INCOME	$	52,863		$	52,077		$	144,520	$	138,606

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 September 30, 2023
	Series A Nonconvertible										Additional						Accumulated Other								Total
	Preferred Stock				Common Stock						Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount			Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, JUNE 30, 2023		200,000	$	2		48,706,932		$	487		$	686,501		$	709,372		$	(16,312	)		1,365,648	$	(41,284	)	$	1,338,766
Net income		—		—		—			—			—			51,516			—			—		—			51,516
Other comprehensive income		—		—		—			—			—			—			1,347			—		—			1,347
Cash dividend		—		—		—			—			—			(16,661	)		—			—		—			(16,661	)
Issuance of common stock to employees		—		—		8,908			—			6,738			—			—			—		—			6,738
Shares withheld for employee taxes		—		—		(3,190	)		—			(466	)		—			—			—		—			(466	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		3,304			—			423			—			—			—		—			423
Issuance of common stock to employees under an ESPP		—		—		4,576			—			703			—			—			—		—			703
BALANCE, SEPTEMBER 30, 2023		200,000	$	2		48,720,530		$	487		$	693,899		$	744,227		$	(14,965	)		1,365,648	$	(41,284	)	$	1,382,366
	Nine Months Ended September 30, 2023
	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, 2022		200,000	$	2		49,136,030		$	491		$	681,335		$	653,277		$	(18,452	)		1,365,648	$	(41,284	)	$	1,275,369
Net income		—		—		—			—			—			141,033			—			—		—			141,033
Other comprehensive income		—		—		—			—			—			—			3,487			—		—			3,487
Cash dividend		—		—		—			—			—			(50,083	)		—			—		—			(50,083	)
Issuance of common stock to employees		—		—		139,826			1			16,946			—			—			—		—			16,947
Shares withheld for employee taxes		—		—		(56,504	)		—			(7,895	)		—			—			—		—			(7,895	)
Cancellation of restricted stock awards		—		—		(526,241	)		(5	)		5			—			—			—		—			—
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		13,504			—			1,564			—			—			—		—			1,564
Issuance of common stock to employees under an ESPP		—		—		13,915			—			1,944			—			—			—		—			1,944
BALANCE, SEPTEMBER 30, 2023		200,000	$	2		48,720,530		$	487		$	693,899		$	744,227		$	(14,965	)		1,365,648	$	(41,284	)	$	1,382,366

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

4

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except for share data)

	Three Months Ended September 30, 2022
	Series A Nonconvertible									Additional						Accumulated Other								Total
	Preferred Stock				Common Stock					Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount		Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, JUNE 30, 2022		200,000	$	2		49,115,444		$	491	$	666,087		$	563,191		$	(23,178	)		1,365,648	$	(41,284	)	$	1,165,309
Net income		—		—		—			—		—			53,455			—			—		—			53,455
Other comprehensive loss		—		—		—			—		—			—			(1,378	)		—		—			(1,378	)
Cash dividend		—		—		—			—		—			(14,247	)		—			—		—			(14,247	)
Issuance of common stock to employees		—		—		8,753			—		8,209			—			—			—		—			8,209
Shares withheld for employee taxes		—		—		(2,852	)		—		(306	)		—			—			—		—			(306	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		2,196			—		347			—			—			—		—			347
Issuance of common stock to employees under an ESPP		—		—		4,984			—		436			—			—			—		—			436
BALANCE, SEPTEMBER 30, 2022		200,000	$	2		49,128,525		$	491	$	674,773		$	602,399		$	(24,556	)		1,365,648	$	(41,284	)	$	1,211,825
	Nine Months Ended September 30, 2022
	Series A Nonconvertible									Additional						Accumulated Other								Total
	Preferred Stock				Common Stock					Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount		Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, DECEMBER 31, 2021		200,000	$	2		49,065,924		$	491	$	658,728		$	500,212		$	(18,235	)		1,365,648	$	(41,284	)	$	1,099,914
Net income		—		—		—			—		—			144,927			—			—		—			144,927
Other comprehensive loss		—		—		—			—		—			—			(6,321	)		—		—			(6,321	)
Cash dividend		—		—		—			—		—			(42,740	)		—			—		—			(42,740	)
Issuance of common stock to employees		—		—		70,887			—		22,147			—			—			—		—			22,147
Shares withheld for employee taxes		—		—		(31,334	)		—		(9,150	)		—			—			—		—			(9,150	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		10,022			—		1,421			—			—			—		—			1,421
Issuance of common stock to employees under an ESPP		—		—		13,026			—		1,627			—			—			—		—			1,627
BALANCE, SEPTEMBER 30, 2022		200,000	$	2		49,128,525		$	491	$	674,773		$	602,399		$	(24,556	)		1,365,648	$	(41,284	)	$	1,211,825

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

5

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Nine Months Ended September 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	141,033		$	144,927
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		20,128			17,982
Amortization of intangibles		11,442			14,562
Amortization of premium and discount on investments, net		(9,436	)		(3,469	)
Stock-based compensation to employees		17,359			22,528
Stock-based compensation to Board of Directors and Scientific Advisory Board		1,264			1,121
Deferred income tax expense (benefit)		7,556			(7,876	)
Retirement plan expense, net of benefit payments		2,347			3,998
Decrease (increase) in assets:
Accounts receivable		(29,528	)		29,446
Inventory		1,814			(46,034	)
Other current assets		(37,653	)		(9,057	)
Other assets		8,292			2,282
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(32	)		7,217
Other current liabilities		(24,186	)		(543	)
Deferred revenue		11,809			(63,066	)
Other liabilities		(4,502	)		10,156
Net cash provided by operating activities		117,707			124,174
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(52,208	)		(31,119	)
Purchases of intangibles		(66,563	)		(4,761	)
Purchases of investments		(303,004	)		(464,766	)
Proceeds from sale and maturity of investments		346,407			302,872
Net cash used in investing activities		(75,368	)		(197,774	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		1,532			1,247
Payment of withholding taxes related to stock-based compensation to employees		(7,895	)		(9,150	)
Cash dividends paid		(50,083	)		(42,740	)
Net cash used in financing activities		(56,446	)		(50,643	)
DECREASE IN CASH AND CASH EQUIVALENTS		(14,107	)		(124,243	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		93,430			311,993
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	79,323		$	187,750
Supplemental disclosures:
Unrealized gain (loss) on available-for-sale securities	$	3,304		$	(9,711	)
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		887			4,256
Cash paid for income tax		81,132			42,227

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

6

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 and 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, monitor, 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 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, monitors, 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 6,000 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 have been prepared in accordance with the requirements of the Securities and Exchange Commission for interim financial reporting and contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of September 30, 2023 and results of operations for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. 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, 2022. 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.

7

Reclassification of Prior Year Presentation

Certain prior year adjustments to reconcile net income to net cash provided by operating activities have been reclassified on the Consolidated Statements of Cash Flows to conform to the current year presentation. These adjustments have been consolidated into their respective operating assets and liabilities accounts, specifically, inventory, other current assets, other assets and deferred revenue.

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 in 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. The impairment in the value of minority equity investments is included in the other (loss) income, net line item on the Consolidated Statements of Income.

Leases

The Company is a lessee in operating leases primarily incurred to facilitate 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

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in other liabilities on the Consolidated Balance Sheets. As of September 30, 2023, 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, they 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 sales-based portion of royalty revenue 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 predetermined rates on a 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. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

On December 2, 2022, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC), replacing a previous license agreement that had been in place since 2018. This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2023 and lasts through the end of 2027 with an additional two-year extension option for SDC. Under this agreement, the Company is being paid a license fee, which includes quarterly and annual payments 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 patent license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC, which lasts for the same term as the license agreement and is subject to the same extension option. This new material purchase agreement replaced a previous purchase agreement that had been in place since 2018. Under the supplemental material purchase agreement, SDC agrees to purchase red and green phosphorescent emitter materials from the Company for use in the manufacture of licensed products. This amount purchased 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.

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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. The terms of these agreements were extended by a January 1, 2021 amendment through the end of 2025. 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 OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the lives of the agreements as well as minimum royalty revenue.

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 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. In 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 facilities of the Company's manufacturing partner, PPG Industries, Inc. (PPG) and at the Company's internal facilities. 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 Merck KGaA, Darmstadt, Germany (Merck KGaA), BASF SE (BASF) and Fujifilm Corporation (Fujifilm). The Merck KGaA acquisition was completed on April 28, 2023. The BASF and Fujifilm acquisitions were completed in the years ended December 31, 2016 and 2012, respectively. Acquisition costs are being amortized over

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a period of 10 years for the Merck KGaA and BASF patents. The Fujifilm acquired technology was fully amortized over a period of 10 years that ended in July 2022.

Amortization of Other Intangible Assets

Other intangible assets from the Adesis acquisition 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 respective 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 OMM subsidiary and each of the Company's other Asia-Pacific 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

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. Under this standard, a contractual restriction on the sale of an equity security is not considered in measuring the security's fair value. The standard also requires certain disclosures for equity securities that are subject to contractual restrictions. ASU 2022-03 becomes effective January 1, 2024, and the Company is evaluating the potential impact of this standard on its investments.

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3. CASH, CASH EQUIVALENTS AND INVESTMENTS:

The Company’s portfolio of marketable fixed income securities consists of 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
September 30, 2023
Cash accounts in banking institutions	$	77,550	$	—	$	—	$	77,550
Money market accounts		1,773		—		—		1,773
	$	79,323	$	—	$	—	$	79,323
December 31, 2022
Cash accounts in banking institutions	$	86,268	$	—	$	—	$	86,268
Money market accounts		7,162		—		—		7,162
	$	93,430	$	—	$	—	$	93,430

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
September 30, 2023
Corporate bonds	$	2,386	$	3	$	(16	)	$	2,373
U.S. Government bonds		412,539		—		(2,562	)		409,977
	$	414,925	$	3	$	(2,578	)	$	412,350
December 31, 2022
Corporate bonds		150,698		—		(910	)		149,788
U.S. Government bonds		339,472		32		(4,947	)		334,557
	$	490,170	$	32	$	(5,857	)	$	484,345

Long-term Corporate Bonds and 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
September 30, 2023
Corporate bonds	$	128	$	—	$	(118	)	$	10
U.S. Government bonds		289,024		—		(1,887	)		287,137
	$	289,152	$	—	$	(2,005	)	$	287,147
December 31, 2022
Corporate bonds	$	2,479	$	—	$	(28	)	$	2,451
U.S. Government bonds		247,464		52		(2,152	)		245,364
	$	249,943	$	52	$	(2,180	)	$	247,815

Long-term Minority Investments

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The Company’s portfolio of minority investments consists of investments in privately held early-stage companies primarily motivated for the Company to gain early access to new technology and are passive in nature in that the Company typically does not seek to 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 September 30, 2023, the Company had minority investments in five entities with a total carrying value of $14.0 million accounted for as equity securities without readily determinable fair values, as compared to four minority investments with a total carrying value of $12.0 million as of December 31, 2022.

4. FAIR VALUE MEASUREMENTS:

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2023 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of September 30, 2023		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	1,773	$	1,773	$	—	$	—
Short-term Corporate bonds investments		2,373		2,373		—		—
Short-term U.S. Government bonds investments		409,977		409,977		—		—
Long-term Corporate bonds investments		10		10		—		—
Long-term U.S. Government bonds investments		287,137		287,137		—		—

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

			Fair Value Measurements, Using
	Total Carrying Value as of December 31, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	7,162	$	7,162	$	—	$	—
Short-term Corporate bonds investments		149,788		149,788		—		—
Short-term U.S. Government bonds investments		334,557		334,557		—		—
Long-term Corporate bonds investments		2,451		2,451		—		—
Long-term U.S. Government bonds investments		245,364		245,364		—		—

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 (loss) income, net on the Consolidated Statements of Income. There were no credit losses on debt investments as of September 30, 2023 or December 31, 2022.

5. INVENTORY:

Inventory consisted of the following (in thousands):

	September 30, 2023		December 31, 2022
Raw materials	$	120,096	$	115,448
Work-in-process		7,494		7,626
Finished goods		53,816		60,146
Inventory	$	181,406	$	183,220

The Company recorded an increase in inventory reserve of $2.5 million and $1.7 million for the three months ended September 30, 2023 and 2022, respectively, and $6.6 million and $2.4 million for the nine months ended September 30, 2023 and 2022, 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):

	September 30, 2023			December 31, 2022
Land	$	9,393		$	2,642
Building and improvements		118,365			99,586
Office and lab equipment		144,188			129,697
Furniture, fixtures and computer related assets		18,814			18,071
Construction-in-progress		20,898			10,567
		311,658			260,563
Less: Accumulated depreciation		(137,020	)		(117,118	)
Property and equipment, net	$	174,638		$	143,445

Depreciation expense was $6.9 million and $6.5 million for the three months ended September 30, 2023 and 2022, respectively, and $20.1 million and $18.0 million for the nine months ended September 30, 2023 and 2022, respectively. The increase in property and equipment, net for the nine months ended September 30, 2023 is primarily due to the purchases of two previously leased facilities for an aggregate cost of $23.4 million.

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 primarily consists of acquired license rights for patents and know-how obtained from Merck KGaA, BASF and Fujifilm. These intangible assets consist of the following (in thousands):

	September 30, 2023 (1)			December 31, 2022
PD-LD, Inc.	$	—		$	1,481
Motorola		—			15,909
Merck KGaA		66,012			—
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		5,712			5,212
		277,175			228,053
Less: Accumulated amortization		(182,657	)		(189,671	)
Acquired technology, net	$	94,518		$	38,382

(1)During the nine months ended September 30, 2023, the gross value and accumulated amortization associated with the PD-LD, Inc. and Motorola patent portfolios have been removed from the table as the underlying patents have reached the end of their useful lives.

Amortization expense related to acquired technology was $4.2 million and $3.2 million for the three months ended September 30, 2023 and 2022, respectively, and $10.4 million and $13.5 million for the nine months ended September 30, 2023 and 2022, respectively. Amortization expense is included in the amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $4.2 million for the three months ending December 31, 2023, $16.8 million in each of the years ending December 31, 2024 and 2025, $12.0 million in the year ending December 31, 2026, $7.2 million in the year ending December 31, 2027 and $37.5 million in total thereafter.

Merck KGaA Patent Acquisition

On April 28, 2023, UDC Ireland entered into a Patent Sale and License Agreement with Merck KGaA. Under this agreement, Merck KGaA sold to UDC Ireland all of its rights, title and interest to over 550 of its owned and licensed OLED-related patents and patent applications in exchange for a cash payment of $66.0 million. The Patent Sale and License Agreement contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of $66.0 million as acquired technology, which is being amortized over a period of 10 years.

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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, 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 to internally developed IP, processes and recipes with a weighted average life of 15 years, and $1.5 million to trade name and trademarks with a weighted average life of 10 years.

At September 30, 2023, these other intangible assets consist of the following (in thousands):

	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(6,571	)	$	3,949
Developed IP, processes and recipes		4,820		(2,308	)		2,512
Trade name/Trademarks		1,500		(1,080	)		420
Other		448		(96	)		352
Total identifiable other intangible assets	$	17,288	$	(10,055	)	$	7,233

Amortization expense related to other intangible assets was $359,000 and $358,000 for the three months ended September 30, 2023 and 2022, respectively, and $1.1 million for both the nine months ended September 30, 2023 and 2022. Amortization expense is included in the amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $359,000 for the three months ending December 31, 2023, $1.4 million for each of the next three fiscal years (2024 - 2026), $1.3 million for the year ending December 31, 2027 and $1.3 million in total thereafter.

8. OTHER ASSETS:

Other assets consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Long-term taxes receivable	$	57,581	$	63,915
Right-of-use assets		25,321		31,486
Long-term contract assets		16,317		11,651
Other long-term assets		2,228		2,687
Other assets	$	101,447	$	109,739

See Notes 9 and 20 for further explanation on right-of-use assets and long-term 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

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contain any residual value guarantees or material restrictive covenants. As of September 30, 2023, the Company did not have any finance leases and had one additional operating lease that has 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	1,094	$	1,067	$	3,538	$	3,238
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	—	$	867	$	—	$	867

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

	September 30, 2023		December 31, 2022
Right-of-use assets	$	25,321	$	31,486
Short-term lease liabilities		3,376		3,737
Long-term lease liabilities		23,380		29,039

The decrease in right-of-use assets and long-term lease liabilities during the nine months ended September 30, 2023 was primarily due to the purchases of two facilities, which were previously accounted for as operating lease obligations.

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

	September 30, 2023
Weighted average remaining lease term (in years)		7.1
Weighted average discount rate		3.7	%

As of September 30, 2023, current operating leases had remaining terms between two months and eight years with options to extend the lease terms.

Undiscounted future minimum lease payments as of September 30, 2023, 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
2023 (1)	$	1,040
2024		4,119
2025		4,155
2026		4,235
2027		4,317
Thereafter		12,077
Total lease payments		29,943
Less: Imputed interest		(3,187	)
Present value of lease payments	$	26,756

(1)Scheduled maturities of lease liabilities represent the period from October 1, 2023 to December 31, 2023.

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10. ACCRUED EXPENSES:

Accrued expenses consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Compensation	$	22,685	$	31,751
PPG Industries, Inc. agreement		6,090		9,864
Consulting		1,832		910
Professional fees		1,049		906
Research and development agreements		513		662
Royalties		414		877
Other		5,917		6,032
Accrued expenses	$	38,500	$	51,002

11. RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS:

The Company has long-standing relationships with a number of academic institutions that undertake funded research projects, including Princeton University (Princeton) and the University of Southern California (USC).

Under the current license agreement among the Company, Princeton and USC, the universities have 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. The Company recorded royalty expense in connection with this agreement of $60,000 and $261,000 for the three months ended September 30, 2023 and 2022, respectively, and $358,000 and $596,000 for the nine months ended September 30, 2023 and 2022, respectively.

The Company also makes payments under the current research agreement with USC on a quarterly basis as actual expenses are incurred. As of September 30, 2023, the Company was obligated to pay USC up to $2.4 million for work to be performed during the remaining term of the research agreement. The Company recorded research and development expense in connection with work performed under the agreement of $251,000 and $245,000 for the three months ended September 30, 2023 and 2022, respectively, and $666,000 and $695,000 for the nine months ended September 30, 2023 and 2022, respectively.

12. OTHER LIABILITIES:

Other liabilities consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Long-term lease liabilities	$	23,380	$	29,039
Long-term taxes payable		15,749		14,592
Other long-term liabilities		54		54
Other liabilities	$	39,183	$	43,685

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 AGREEMENT:

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG (the New OLED Materials Agreement), which, effective as of October 1, 2011, replaced the original OLED Materials Agreement with PPG. 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

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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 have been issued for services rendered by PPG since the inception of the contract.

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 manufacturing site in Shannon, Ireland, currently being leased by UDC Ireland’s wholly-owned subsidiary, OMM, for the production of OLED materials. Facility improvements have been completed and operations commenced in June 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 and $2.6 million for the three months ended September 30, 2023 and 2022, respectively, and $6.1 million and $4.9 million for the nine months ended September 30, 2023 and 2022, respectively, 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 September 30, 2023, 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 September 30, 2023, the Company had issued 48,720,530 shares of common stock, of which 47,354,882 were outstanding. During the three and nine months ended September 30, 2023 and 2022, the Company repurchased no shares of common stock.

Dividends

During the three months ended September 30, 2023, the Company declared and paid cash dividends of $0.35 per common share, or $16.7 million, and during the nine months ended September 30, 2023, the Company declared and paid cash dividends of $1.05 per common share, or $50.1 million, on the Company’s outstanding common stock.

On October 31, 2023, the Company’s Board of Directors declared a fourth quarter dividend of $0.35 per share to be paid on December 29, 2023 to all shareholders of record of the Company’s common stock as of the close of business on December 15, 2023. 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, 2022, net of tax	$	(7,887	)	$	(10,011	)	$	(554	)	$	(18,452	)
Other comprehensive gain    before reclassification		2,706			—			22			2,728
Reclassification to net income (1)		—			759			—			759		Selling, general and administrative, research and development and cost of sales
Change during period		2,706			759			22			3,487
Balance September 30, 2023, net of tax	$	(5,181	)	$	(9,252	)	$	(532	)	$	(14,965	)

	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		(7,231	)		—			(601	)		(7,832	)
Reclassification to net income (1)		—			1,511			—			1,511		Selling, general and administrative, research and development and cost of sales
Change during period		(7,231	)		1,511			(601	)		(6,321	)
Balance September 30, 2022, net of tax	$	(7,373	)	$	(16,508	)	$	(675	)	$	(24,556	)

(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 $759,000 and $1.5 million for the nine months ended September 30, 2023 and 2022, respectively.

(2)Refer to Note 17: Retirement Plan Benefit Liability.

16. STOCK-BASED COMPENSATION:

Equity Compensation Plan

On June 15, 2023, the shareholders of the Company voted to approve the Universal Display Corporation 2023 Equity Compensation Plan (the “Equity Compensation Plan”), which replaced the Universal Display Corporation 2014 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. The total number of shares that may be subject to awards under the Equity Compensation Plan is equal to the shares that were available for issuance and not subject to an award under the 2014 Equity Compensation Plan at the time it was replaced by the Equity Compensation Plan, subject to adjustment with respect to shares underlying any outstanding award granted under the Equity Compensation Plan or the 2014 Equity Compensation Plan that may expire, or be terminated, surrendered or forfeited for any reason, without issuance of such shares. As of September 30, 2023, there were 1,520,274 shares that remained available to be granted under the Equity Compensation Plan. The Equity Compensation Plan will terminate on June 15, 2033.

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.

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During the nine months ended September 30, 2023, the Company granted 110,279 shares of restricted stock awards and restricted stock units to employees and non-employees, which had a total fair value of $16.4 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 September 30, 2023 and 2022, 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 $2.4 million and $3.4 million, respectively, research and development expense of $1.4 million and $1.5 million, respectively, and cost of sales of $454,000 and $573,000, respectively. For the nine months ended September 30, 2023 and 2022, 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 $7.8 million and $10.8 million, respectively, research and development expense of $4.4 million and $4.6 million, respectively, and cost of sales of $1.4 million and $1.7 million, respectively.

In connection with the vesting of restricted stock awards and units during the three months ended September 30, 2023 and 2022, 3,190 and 2,852 shares, respectively, with aggregate fair values of $465,000 and $305,000, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows. In connection with the vesting of restricted stock awards and units during the nine months ended September 30, 2023 and 2022, 51,154 and 54,252 shares, respectively, with aggregate fair values of $7.1 million and $8.3 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 September 30, 2023 and 2022, 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 $60,000 and $32,000, respectively. Such compensation charges to research and development expense were $188,000 and $183,000, respectively, for the nine months ended September 30, 2023 and 2022.

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 September 30, 2023 and 2022, 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 $363,000 and $315,000, respectively. Such compensation charges to selling, general and administrative expense were $1.1 million and $937,000, respectively, for the nine months ended September 30, 2023 and 2022. In connection with the vesting of the restricted stock, the Company issued to non-employee members of the Board of Directors 9,712 and 6,588 shares, respectively, during the nine months ended September 30, 2023 and 2022.

Performance Unit Awards

Each performance unit award is subject to either a performance-based or market-based vesting requirement. The performance-based vesting requirement is tied to the Company's achievement of specified financial metrics such as earnings before interest, taxes, depreciation and amortization (EBITDA), cash flow, and/or gross margin, 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 performance falls below certain thresholds, the performance units will not vest at all.

During the nine months ended September 30, 2023, the Company granted 84,448 performance units, of which 42,222 units are subject to performance-based vesting requirements based on three-year cumulative adjusted EBITDA, 21,113 units are subject to performance-based vesting requirements based on three-year cumulative gross margin and 21,113 units are subject to market-based, TSR vesting requirements. The grant date fair value of the performance unit awards granted was $12.6 million for the nine months ended September 30, 2023, 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 September 30, 2023 and 2022, the Company recorded selling, general and administrative expense of $1.5 million and $1.9 million, respectively, research and development expense of $607,000 and $488,000, respectively, and cost of sales expense of $376,000 and $303,000, respectively, related to the performance units. For the nine months ended September 30, 2023 and 2022, the Company recorded selling, general and administrative expense of $1.7 million and $3.7 million, respectively, research and development expense of $982,000 and $873,000, respectively, and cost of sales expense of $609,000 and $539,000, respectively, related to the performance units.

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In connection with the vesting of performance units during the nine months ended September 30, 2023 and 2022, 5,350 and 5,082 shares, respectively, with an aggregate fair value of $775,000 and $826,000, 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 nine months ended September 30, 2023 and 2022, the Company issued 13,915 and 13,026 shares, respectively, of its common stock under the ESPP, resulting in proceeds of $1.5 million and $1.2 million, respectively.

For the three months ended September 30, 2023 and 2022, the Company recorded charges of $36,000 and $3,000, respectively, to selling, general and administrative expense, $61,000 and $19,000, respectively, to research and development expense, and $46,000 and $14,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature. For the nine months ended September 30, 2023 and 2022 the Company recorded charges of $105,000 and $86,000, respectively, to selling, general and administrative expense, $186,000 and $183,000, respectively, to research and development expense, and $121,000 and $110,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature.

Scientific Advisory Board Awards

During the nine months ended September 30, 2023 and 2022, the Company granted a total of 2,366 and 2,024 shares, respectively, of fully vested common stock to non-employee members of the Scientific Advisory Board for services performed in 2022 and 2021, respectively. The fair value of shares issued to members of the Scientific Advisory Board was $300,000 for both nine-month periods.

17. RETIREMENT PLAN BENEFIT LIABILITY:

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 September 30, 2023, there were eight participants in the SERP. In December 2022, one of the participants retired and monthly SERP benefit payments commenced in January 2023. The total SERP benefit payments for the nine months ended September 30, 2023 were $1.5 million.

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.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Service cost	$	238	$	282	$	713	$	1,005
Interest cost		725		346		2,174		1,038
Amortization of prior service cost		203		280		611		839
Amortization of loss		120		372		360		1,116
Total net periodic benefit cost	$	1,286	$	1,280	$	3,858	$	3,998

18. COMMITMENTS AND CONTINGENCIES:

Commitments

Under the current research agreement with USC, the Company is obligated to make certain payments to USC based on work performed by it under that agreement, and by the University of Michigan (Michigan) under a subcontractor agreement that Michigan has with USC.

Under the terms of the current license agreement among the Company, Princeton and USC, the Company makes royalty payments to Princeton. See Note 11 for further explanation.

The Company has agreements with five 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 September 30, 2023 and December 31, 2022, the Company had purchase commitments for inventory of $26.2 million and $31.9 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.

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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 September 30,		% of Total Revenue for the  Nine Months Ended September 30,		Accounts Receivable as of
Customer	2023	2022	2023	2022	September 30, 2023
A	45%	46%	37%	42%	$	12,525
B	20%	23%	23%	26%	$	32,879
C	12%	12%	15%	14%	$	43,314
D	8%	4%	10%	4%	$	20,442

Revenues from outside of North America represented approximately 98% and 97% for the three months ended September 30, 2023 and 2022, respectively, and 98% and 97% for the nine-month periods ended September 30, 2023 and 2022, respectively. Revenues by geographic area are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Country	2023		2022		2023		2022
South Korea	$	87,231	$	100,555	$	235,320	$	269,338
China		48,687		52,906		163,634		159,486
Japan		2,019		2,011		5,175		4,456
Other non-U.S. locations		541		976		3,856		1,991
Total non-U.S. locations		138,478		156,448		407,985		435,271
United States		2,599		4,108		10,124		12,316
Total revenue	$	141,077	$	160,556	$	418,109	$	447,587

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

Property and equipment, net by geographic area are as follows (in thousands):

	September 30, 2023		December 31, 2022
United States	$	119,458	$	117,255
Ireland		40,860		20,270
Other		14,320		5,920
Property and equipment, net	$	174,638	$	143,445

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 4.4% and 23.7% for the three months ended September 30, 2023 and 2022, respectively and 16.8% and 22.7% for the nine months ended September 30, 2023 and 2022, respectively. The discrepancy between the statutory tax rate and the effective tax rate is primarily due to nondeductible employee compensation and U.S. international tax (GILTI and Subpart F). The reduction in the income tax rate for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022, was primarily due to the change in IRS regulations, issued in July 2023, that permit withholding taxes to be credited against U.S. taxable income for the tax years 2022 and 2023, recorded as a discrete tax adjustment in the three months ended September 30, 2023. The Company recorded an income tax expense of $2.4 million and $16.6 million for the three months ended September 30, 2023 and 2022, respectively, and $28.5 million and $42.7 million for the nine months ended September 30, 2023 and 2022, 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. Included in other current assets as of September 30, 2023 is $18.0 million of income tax receivable, which was previously classified as a deferred tax asset. This was the result of a change in guidance issued under IRS Notice 2023-63 which clarified that certain research and development costs do not need to be capitalized and amortized over future periods. 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 not sufficient evidence to release the valuation allowance that has been recorded for the New Jersey research and development credit and unrealized loss on investments, and no indicators against the realizability of the remaining net deferred tax asset.

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The U.S.-Korean Mutual Agreement Procedure (MAP) for the years ended December 31, 2010 to December 31, 2017 was closed in September 2022, resulting in a refund of the Korean withholding taxes previously withheld. In July 2023, the Company amended its U.S. federal tax returns to reflect the refund and to redetermine the foreign tax credit amount. In November 2022, the Company prepaid $18.8 million to the IRS under Rev. Proc. 2005-18 to offset the tax payable amount.

On December 27, 2018, regarding the withholding taxes for the years 2018 to 2022, the Korean Supreme Court, citing prior cases, held that only royalties paid with respect to Korean registered patents are considered 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 for the years ended December 31, 2018 to December 31, 2022. Based on the Korean Supreme Court decision, a tax refund request on behalf of the Company was filed with the Korean National Tax Service (KNTS) for the entire period from January 1, 2018 to December 31, 2022. The Company received a formal rejection from the KNTS and has filed a petition to the Korean Tax Tribunal to reverse the decision of the tax office. The Company has been advised by a prominent Korean law firm that there is a more-likely-than-not chance of success. As a result, the Company has recorded a long-term asset of $57.6 million and $60.9 million as of September 30, 2023 and December 31, 2022, respectively. The Company also recorded foreign exchange loss of $1.5 million during the three months ended September 30, 2023 and $3.3 million during the nine months ended September 30, 2023 due to the fluctuation of the Korean Won to the U.S. Dollar and resulting remeasurement of this Won-denominated receivable.

The Company will also amend U.S. federal tax returns for the 2018 to 2020 years when the anticipated refund from KNTS is received to offset the additional tax liability and to redetermine the research and development credit utilization. In November 2022, the Company prepaid $16.0 million to the IRS under Rev. Proc. 2005-18 that relates to the anticipated tax payable. The Company has recorded a long-term liability of $15.7 million and $14.6 million as of September 30, 2023 and December 31, 2022, respectively, for the estimated amounts due to the U.S. federal government based on the amendment of the Company's U.S. tax returns indicating that lower withholding amounts were required.

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 the three months ended September 30, 2023 and 2022, the Company recorded 98% and 97%, respectively, of its revenue from OLED related sales and 2% and 3%, respectively, from the providing of services through Adesis. For both nine-month periods ended September 30, 2023 and 2022, the Company recorded 97% of its revenue from OLED related sales and 3% from the providing of services through Adesis.

Contract Balances

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

	As of September 30, 2023
Accounts receivable	$	122,192
Short-term unbilled receivables		21,896
Short-term contract assets		2,585
Long-term unbilled receivables		6,379
Long-term contract assets		9,938
Short-term deferred revenue		66,828
Long-term deferred revenue		8,859

Short-term and long-term unbilled receivables and contract assets are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. The deferred revenue balance as of September 30, 2023 will be recognized as materials are shipped to customers over the remaining contract periods. As of September 30, 2023, the Company had $30.5 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.

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Significant changes in the assets and liabilities balances associated with the Company's contracts from customers for the nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Nine Months Ended September 30, 2023
	Assets			Liabilities
Balance at December 31, 2022	$	38,457		$	(63,878	)
Revenue recognized that was previously included in deferred revenue, net		—			143,064
Increases due to cash received		—			(159,989	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			5,116
Unbilled receivables recorded, net		29,094			—
Contract assets recorded, net		(1,860	)		—
Transferred to receivables from unbilled receivables		(24,893	)		—
Net change		2,341			(11,809	)
Balance at September 30, 2023	$	40,798		$	(75,687	)

	Nine Months Ended September 30, 2022
	Assets		Liabilities
Balance at December 31, 2021	$	8,127	$	(157,081	)
Revenue recognized that was previously included in deferred revenue, net		—		178,737
Increases due to cash received		—		(132,961	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		17,290
Unbilled receivables recorded, net		5,502		—
Net change		5,502		63,066
Balance at September 30, 2022	$	13,629	$	(94,015	)

The cumulative catch-up adjustment arising from changes in estimates of transaction price, net was $5.1 million for the nine months ended September 30, 2023 as compared to $17.3 million for the nine months ended September 30, 2022. These adjustments resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of the Company's customers over the remaining lives of their contracts, resulting from changes in global macroeconomic factors.

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 restricted stock units, performance units and the impact of shares to be issued under the Company's Employee Stock Purchase Plan.

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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 and nine months ended September 30, 2023 and 2022 (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator:
Net income	$	51,516		$	53,455		$	141,033		$	144,927
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(243	)		(289	)		(709	)		(849	)
Adjusted net income	$	51,273		$	53,166		$	140,324		$	144,078
Denominator:
Weighted average common shares outstanding – Basic		47,570,099			47,396,495			47,555,734			47,386,426
Effect of dilutive shares:
Common stock equivalents arising from ESPP		499			729			1,764			1,814
Restricted stock awards and units and performance units		61,833			69,710			52,194			67,653
Weighted average common shares outstanding – Diluted		47,632,431			47,466,934			47,609,692			47,455,893
Net income per common share:
Basic	$	1.08		$	1.12		$	2.95		$	3.04
Diluted	$	1.08		$	1.12		$	2.95		$	3.04

For the three months ended September 30, 2023 and 2022, the combined effects of unvested restricted stock awards, restricted stock units and performance unit awards of 39,426 and 173,707, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive. For the nine months ended September 30, 2023 and 2022, the combined effects of unvested restricted stock awards, restricted stock units and performance unit awards of 34,291 and 121,962, 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, 2022, 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, monitors, 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.

On December 2, 2022, we entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC), replacing a previous license agreement that had been in place since 2018. This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2023 and lasts through the end of 2027 with an additional two-year extension option for SDC. Under this agreement, we are being paid a license fee, which includes quarterly and annual payments over the agreement

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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.

At the same time that we entered into the current commercial patent license agreement with SDC, we also entered into a material purchase agreement with SDC, which lasts for the same term as the license agreement and is subject to the same extension option. This new material purchase agreement replaced a previous purchase agreement that had been in place since 2018. Under the material purchase agreement, SDC agrees to purchase from us a minimum amount of red and green 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 these agreements were extended by a January 1, 2021 amendment through the end of 2025. 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 OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials. 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.

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 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. In 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), which has operations in New Castle and Wilmington, Delaware. Adesis is a contract research organization (CRO) that provides support services to the OLED, pharma, biotech, catalysis and other industries. As of September 30, 2023, Adesis employed a team of 138 research scientists, chemists, engineers and laboratory technicians. Prior to our acquisition of Adesis, 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 September 30, 2023, OVJP Corp employed a team of 28 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

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of the 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 manufacturing site in Shannon, Ireland and an agreement between UDC Ireland Limited and PPG for the production of our OLED materials. We purchased the site during September 2023. When fully operational, the new facility is expected to double our production capacity and allow for the diversification of our manufacturing base for phosphorescent emitters. The first phase of facility improvements has been completed and operations commenced in June 2022.

We also generate technology development and support revenue earned from development and technology evaluation agreements and commercialization assistance fees.

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.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2023 and 2022

	Three Months Ended September 30,
	2023			2022			Increase (Decrease)
REVENUE:
Material sales	$	92,492		$	84,182		$	8,310
Royalty and license fees		45,915			71,450			(25,535	)
Contract research services		2,670			4,924			(2,254	)
Total revenue		141,077			160,556			(19,479	)
COST OF SALES		34,248			37,396			(3,148	)
Gross margin		106,829			123,160			(16,331	)
OPERATING EXPENSES:
Research and development		33,099			30,414			2,685
Selling, general and administrative		18,084			18,442			(358	)
Amortization of acquired technology and other intangible assets		4,557			3,562			995
Patent costs		2,572			2,018			554
Royalty and license expense		81			261			(180	)
Total operating expenses		58,393			54,697			3,696
OPERATING INCOME		48,436			68,463			(20,027	)
Interest income, net		7,136			2,432			4,704
Other loss, net		(1,693	)		(804	)		(889	)
Interest and other income, net		5,443			1,628			3,815
INCOME BEFORE INCOME TAXES		53,879			70,091			(16,212	)
INCOME TAX EXPENSE		(2,363	)		(16,636	)		14,273
NET INCOME	$	51,516		$	53,455		$	(1,939	)

Revenue

Our total material sales were $92.5 million for the three months ended September 30, 2023, as compared to $84.2 million for the three months ended September 30, 2022, an increase of 10% with a commensurate increase in unit material volume of 3%. The increase in material sales was due to strengthened demand for OLED products utilizing our emitter material, as well as improved product mix weighted towards increased demand for our new generation of emitter products.

•Green emitter sales for the three months ended September 30, 2023, which include our yellow-green emitters, were $68.9 million as compared to $64.0 million for the three months ended September 30, 2022, with unit material volumes increasing by 1%.

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•Red emitter sales for the three months ended September 30, 2023 were $22.1 million as compared to $20.0 million for the three months ended September 30, 2022, with unit material volumes increasing by 8%.

Revenue from royalty and license fees was $45.9 million for the three months ended September 30, 2023 as compared to $71.5 million for the three months ended September 30, 2022, a decrease of 36%. The decrease in royalty and license fees was primarily the result of changes in customer mix, the decrease in the cumulative catch-up noted below, as well as higher estimated future demand for several of our customers over the remaining lives of their contracts.

The cumulative catch-up adjustment arising from changes in estimates of transaction price, net was a decrease of $1.5 million for the three months ended September 30, 2023. This adjustment resulted from a decrease in the average selling price per gram that was primarily due to the increase in anticipated OLED materials demand by several of our customers over the remaining lives of their contracts, resulting from changes in global macroeconomic factors. The cumulative catch-up adjustment during the three months ended September 30, 2022 was a net increase of $6.6 million, resulting in a net reduction in revenue between periods of $8.1 million related to cumulative catch-ups.

Contract research services revenue was $2.6 million for the three months ended September 30, 2023 as compared to $4.9 million for the three months ended September 30, 2022, a decrease of 46%. The decrease in contract research services revenue was primarily due to the timing of the completion of several CRO projects by our subsidiary, Adesis. Revenue from contract research services consists of revenue earned by 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 September 30, 2023 decreased by $3.1 million as compared to the three months ended September 30, 2022, primarily due to a reduction in contract manufacturing support costs, a reduction in the underutilization charges of the manufacturing facility in Shannon, Ireland and changes in product mix, offset by an increase in the level of material sales and inventory reserve. For the three months ended September 30, 2023 and 2022, the increase in inventory reserve was $2.5 million and $1.7 million, respectively, due to excess inventory levels in certain products. As a result of the decrease in revenue from royalty and license fees offset by the increase in material sales, gross margin for the three months ended September 30, 2023 decreased by $16.3 million as compared to the three months ended September 30, 2022, with gross margin as a percentage of revenue decreasing to 76% from 77%.

Research and development

Research and development expenses increased to $33.1 million for the three months ended September 30, 2023, as compared to $30.4 million for the three months ended September 30, 2022. The increase in research and development expenses was primarily due to higher operating costs, including employee-related compensation expenses and contract research costs, offset by lower costs associated with PPG development activity.

Selling, general and administrative

Selling, general and administrative expenses decreased to $18.1 million for the three months ended September 30, 2023, as compared to $18.4 million for the three months ended September 30, 2022. The decrease in selling, general and administrative expenses was primarily due to lower employee-related compensation expenses.

Amortization of acquired technology and other intangible assets

Amortization of acquired technology and other intangible assets was $4.6 million for the three months ended September 30, 2023, as compared to $3.6 million for the three months ended September 30, 2022. The increase was due to the Fujifilm patents becoming fully amortized during July 2022, partially offset by the commencement of amortization expense associated with the Merck KGaA, Darmstadt, Germany (Merck KGaA) patent acquisition that was completed on April 28, 2023.

Patent costs

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Patent costs increased to $2.6 million for the three months ended September 30, 2023, as compared to $2.0 million for the three months ended September 30, 2022. The results in the current quarter reflected higher internal prosecution related costs.

Royalty and license expense

Royalty and license expense decreased to $81,000 for the three months ended September 30, 2023, as compared to $261,000 for the three months ended September 30, 2022.

Interest and other loss, net

Interest income, net was $7.1 million for the three months ended September 30, 2023, as compared to $2.4 million for the three months ended September 30, 2022. The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the three months ended September 30, 2023 compared to the three months ended September 30, 2022 as well as higher available-for-sale investment balances. Other loss, net primarily consisted of net exchange gains and losses on foreign currency transactions and rental income. We recorded other loss, net of $1.7 million for the three months ended September 30, 2023 as compared to $804,000 for the three months ended September 30, 2022.

Income tax expense

We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was an expense of 4.4% and 23.7% for the three months ended September 30, 2023 and 2022, respectively, and we recorded income tax expense of $2.4 million and $16.6 million, respectively, for those periods. The reduction in the effective income tax rate was primarily due to the change in IRS regulations, issued in July 2023, that permit withholding taxes to be credited against U.S. taxable income for the tax years 2022 and 2023, by applying federal regulations in place prior to changes in 2022.

Comparison of the Nine Months Ended September 30, 2023 and 2022

	Nine Months Ended September 30,
	2023			2022			Increase (Decrease)
REVENUE:
Material sales	$	239,789		$	242,742		$	(2,953	)
Royalty and license fees		165,524			191,530			(26,006	)
Contract research services		12,796			13,315			(519	)
Total revenue		418,109			447,587			(29,478	)
COST OF SALES		99,357			97,798			1,559
Gross margin		318,752			349,789			(31,037	)
OPERATING EXPENSES:
Research and development		96,840			85,156			11,684
Selling, general and administrative		50,557			59,373			(8,816	)
Amortization of acquired technology and other intangible assets		11,442			14,562			(3,120	)
Patent costs		7,056			6,075			981
Royalty and license expense		414			596			(182	)
Total operating expenses		166,309			165,762			547
OPERATING INCOME		152,443			184,027			(31,584	)
Interest income, net		20,301			4,306			15,995
Other loss, net		(3,180	)		(749	)		(2,431	)
Interest and other income, net		17,121			3,557			13,564
INCOME BEFORE INCOME TAXES		169,564			187,584			(18,020	)
INCOME TAX EXPENSE		(28,531	)		(42,657	)		14,126
NET INCOME	$	141,033		$	144,927		$	(3,894	)

Revenue

Our total material sales were $239.8 million for the nine months ended September 30, 2023, as compared to $242.7 million for the nine months ended September 30, 2022, a decrease of 1% with a decrease in unit material volume of 3%. The decline in material sales was primarily due to reduced demand for our emitter material during the first quarter of 2023, partially offset by the introduction of blue emitter and host sales. This weakness resulted from the continuation of unfavorable macroeconomic conditions that have negatively impacted the OLED display market segment.

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•Green emitter sales for the nine months ended September 30, 2023, which include our yellow-green emitters, were $180.5 million as compared to $185.0 million for the nine months ended September 30, 2022, with unit material volumes decreasing by 5%.

•Red emitter sales for the nine months ended September 30, 2023 were $54.9 million as compared to $57.4 million for the nine months ended September 30, 2022, with unit material volumes remaining consistent.

Revenue from royalty and license fees was $165.5 million for the nine months ended September 30, 2023 as compared to $191.5 million for the nine months ended September 30, 2022. The decrease in royalty and license fees was primarily the result of higher estimated future demand for several of our customers over the remaining lives of their contracts, as well as the impact of the cumulative catch-up adjustments noted below.

The cumulative catch-up adjustment arising from changes in estimates of transaction price, net was an increase of $5.1 million for the nine months ended September 30, 2023 as compared to an increase of $17.3 million for the nine months ended September 30, 2022, resulting in a net reduction in revenue between periods of $12.2 million, the majority of which was recorded to royalty and license fees. These adjustments resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated OLED materials demand by several of our customers over the remaining lives of their contracts.

Contract research services revenue was $12.8 million for the nine months ended September 30, 2023 as compared to $13.3 million for the nine months ended September 30, 2022, a decrease of 4%. The decrease in contract research services revenue was primarily due to the timing of the completion of several CRO projects by our subsidiary, Adesis, in the three months ended September 30, 2023. Revenue from contract research services consists of revenue earned by 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 nine months ended September 30, 2023 increased by $1.6 million as compared to the nine months ended September 30, 2022, primarily due to underutilization of the manufacturing facility in Shannon, Ireland and changes in product mix offset by a decrease in manufacturing costs and a decrease in the level of material sales. The underutilization charges related to the Shannon facility were $10.6 million for the nine months ended September 30, 2023 as compared to $4.5 million for the nine months ended September 30, 2022. Shannon facility costs began to be recorded as cost of sales in June 2022 when the facility was first used for production activities. Shannon facility costs prior to June 2022 were recorded in selling, general and administrative expenses. Included in the cost of sales for the nine months ended September 30, 2023 and 2022 was an increase in inventory reserve of $6.6 million and $2.4 million, respectively, due to excess inventory levels in certain products. As a result of the decrease in revenue from royalty and licenses fees and material sales, gross margin for the nine months ended September 30, 2023 decreased by $31.0 million as compared to the nine months ended September 30, 2022, with gross margin as a percentage of revenue decreasing to 76% from 78%.

Research and development

Research and development expenses increased to $96.8 million for the nine months ended September 30, 2023, as compared to $85.2 million for the nine months ended September 30, 2022. The increase in research and development expenses was primarily due to higher operating costs, including increased contract research costs, employee-related compensation expenses and those costs associated with PPG development activity.

Selling, general and administrative

Selling, general and administrative expenses decreased to $50.6 million for the nine months ended September 30, 2023, as compared to $59.4 million for the nine months ended September 30, 2022. The decrease in selling, general and administrative expenses was primarily due to lower stock-based compensation expenses and a decrease in pre-production costs associated with the Shannon facility. The Shannon facility became operational during June 2022 and the costs associated with this facility have since been included in cost of sales.

Amortization of acquired technology and other intangible assets

Amortization of acquired technology and other intangible assets was $11.4 million for the nine months ended September 30, 2023 as compared to $14.6 million for the nine months ended September 30, 2022. The decrease was due to the Fujifilm patents becoming

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fully amortized during July 2022 offset by the commencement of amortization expense associated with the Merck KGaA patent acquisition that was completed on April 28, 2023.

Patent costs

Patent costs increased to $7.1 million for the nine months ended September 30, 2023, as compared to $6.1 million for the nine months ended September 30, 2022. The results in the current year reflected higher internal prosecution related costs.

Royalty and license expense

Royalty and license expense decreased to $414,000 for the nine months ended September 30, 2023, as compared to $596,000 for the nine months ended September 30, 2022.

Interest and other loss, net

Interest income, net was $20.3 million for the nine months ended September 30, 2023, as compared to $4.3 million for the nine months ended September 30, 2022. The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 as well as higher available-for-sale investment balances. Other loss, net primarily consisted of net exchange gains and losses on foreign currency transactions and rental income. We recorded other loss, net of $3.2 million for the nine months ended September 30, 2023 as compared to $749,000 for the nine months ended September 30, 2022.

Income tax expense

We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was an expense of 16.8% and 22.7% for the nine months ended September 30, 2023, respectively, and we recorded income tax expense of $28.5 million and $42.7 million, respectively, for those periods. The reduction in the effective income tax rate was primarily due to the change in IRS regulations, issued in July 2023, that permit withholding taxes to be credited against U.S. taxable income for the tax years 2022 and 2023, by applying federal regulations in place prior to changes in 2022.

Liquidity and Capital Resources

Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of September 30, 2023, we had cash and cash equivalents of $79.3 million, short-term investments of $412.4 million, and long-term corporate bonds and U.S. Government bonds investments of $287.1 million for a total of $778.8 million. This compares to cash and cash equivalents of $93.4 million, short-term investments of $484.3 million, and long-term U.S. Government bonds investments of $247.9 million for a total of $825.6 million as of December 31, 2022.

Cash provided by operating activities for the nine months ended September 30, 2023 was $117.7 million resulting from $141.0 million of net income and $50.7 million from non-cash items including depreciation, stock-based compensation and amortization of intangibles, partially offset by $74.0 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to an increase in accounts receivable of $29.5 million, an increase in other assets of $29.4 million, a decrease in other liabilities of $28.7 million and a decrease in accounts payable and accrued expense of $32,000, partially offset by an increase in deferred revenue of $11.8 million and a decrease in inventory of $1.8 million.

Cash provided by operating activities for the nine months ended September 30, 2022 was $124.2 million resulting from $144.9 million of net income and $129.6 million due to changes in our operating assets and liabilities, partially offset by a $150.3 million reduction due to non-cash items including amortization of deferred revenue, stock-based compensation, depreciation and amortization of intangibles. Changes in our operating assets and liabilities related to an increase in deferred revenue of $133.0 million, a decrease in accounts receivable of $29.5 million, an increase in other liabilities of $9.6 million and an increase in accounts payable and accrued expenses of $7.2 million, partially offset by an increase in inventory of $48.4 million and an increase in other assets of $1.3 million.

Cash used in investing activities was $75.4 million for the nine months ended September 30, 2023, as compared to $197.8 million for the nine months ended September 30, 2022. The decrease was due to the timing of maturities and purchases of investments resulting in net sales and maturities of $43.4 million for the nine months ended September 30, 2023, as compared to net purchases of $161.9 million for the nine months ended September 30, 2022, partially offset by an increase in purchases of property, plant and equipment and intangibles of $82.9 million. The increase in property, plant and equipment and intangibles during the nine months ended September 30, 2023 was primarily due to the Merck KGaA patent acquisition and the purchases of the Shannon facility and the Korean application center.

33

Cash used in financing activities was $56.4 million for the nine months ended September 30, 2023, as compared to $50.6 million for the nine months ended September 30, 2022. The increase was due to an increase in the cash payment of dividends in the current year of $7.3 million, partially offset by a decrease in the payment of withholding taxes related to stock-based compensation to employees of $1.3 million and an increase in the proceeds from issuance of common stock of $285,000.

Working capital was $747.4 million as of September 30, 2023, as compared to $763.8 million as of December 31, 2022. The decrease was primarily due to a decrease in short-term investments and an increase in deferred revenue, partially offset by an increase in other current assets, an increase in accounts receivable and a decrease in other current liabilities.

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 twelve months.

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, 2022, 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, 2022, for a discussion of our contractual obligations.

Off-Balance Sheet Arrangements

As of September 30, 2023, 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. 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.

34

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 September 30, 2023. 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 September 30, 2023 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 our 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 our patent portfolio increases in size, so will the number of these proceedings.

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, 2022.

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.

35

ITEM 5. OTHER INFORMATION

None.

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 Brian Millard, 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 Brian Millard, 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 September 30, 2023 formatted in Inline XBRL (included in Item 101.INS)

Explanation of footnotes to listing of exhibits:

*	Filed herewith.
**	Furnished herewith.

36

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: November 2, 2023	By: /s/ Brian Millard
	Brian Millard
	Vice President, Chief Financial Officer and Treasurer

37

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 September 30, 2023;

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:	November 2, 2023	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, Brian Millard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Display Corporation (the “registrant”) for the quarter ended September 30, 2023;

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:	November 2, 2023	By:	/s/ Brian Millard
			Brian Millard
			Vice President, Chief Financial Officer and Treasurer

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 September 30, 2023 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:	November 2, 2023	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 September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian Millard, 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:	November 2, 2023	By:	/s/ Brian Millard
			Brian Millard
			Vice President, Chief Financial Officer and Treasurer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Nov. 01, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001005284
Entity Registrant Name	UNIVERSAL DISPLAY CORPORATION
Entity File Number	1-12031
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	23-2372688
Entity Address, Address Line One	250 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
Trading Symbol	OLED
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		47,358,076

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2023		Dec. 31, 2022
CURRENT ASSETS:
Cash and cash equivalents	$ 79,323		$ 93,430
Short-term investments	412,350		484,345
Accounts receivable	122,192		92,664
Inventory	181,406		183,220
Other current assets	83,444		45,791
Total current assets	878,715		899,450
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $137,020 and $117,118	174,638		143,445
ACQUIRED TECHNOLOGY, net of accumulated amortization of $182,657 and $189,671	94,518	[1]	38,382
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $10,055 and $8,989	7,233		8,247
GOODWILL	15,535		15,535
INVESTMENTS	301,193		259,861
DEFERRED INCOME TAXES	49,637		58,161
OTHER ASSETS	101,447		109,739
TOTAL ASSETS	1,622,916		1,532,820
CURRENT LIABILITIES:
Accounts payable	20,624		9,519
Accrued expenses	38,500		51,002
Deferred revenue	66,828		45,599
Other current liabilities	5,391		29,577
Total current liabilities	131,343		135,697
DEFERRED REVENUE	8,859		18,279
RETIREMENT PLAN BENEFIT LIABILITY	61,165		59,790
OTHER LIABILITIES	39,183		43,685
Total liabilities	240,550		257,451
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, 48,720,530 and 49,136,030 shares issued, and 47,354,882 and 47,770,382 shares outstanding, at September 30, 2023 and December 31, 2022, respectively	487		491
Additional paid-in capital	693,899		681,335
Retained earnings	744,227		653,277
Accumulated other comprehensive loss	(14,965)		(18,452)
Treasury stock, at cost (1,365,648 shares at September 30, 2023 and December 31, 2022)	(41,284)		(41,284)
Total shareholders’ equity	1,382,366		1,275,369
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,622,916		$ 1,532,820

[1] During the nine months ended September 30, 2023, the gross value and accumulated amortization associated with the PD-LD, Inc. and Motorola patent portfolios have been removed from the table as the underlying patents have reached the end of their useful lives.

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023		Dec. 31, 2022
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 137,020		$ 117,118
Finite-Lived Intangible Assets, Accumulated Amortization	182,657	[1]	189,671
Other Finite-Lived Intangible Assets, Accumulated Amortization	$ 10,055		$ 8,989
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)	48,720,530		49,136,030
Common Stock, shares outstanding (in shares)	47,354,882		47,770,382
Stockholders' Equity, Number of Shares, Par Value and Other Disclosure [Abstract]
Treasury Stock, Common, Shares	1,365,648		1,365,648
Treasury Stock, Preferred, Shares	1,365,648		1,365,648
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)	$ 7.5		$ 7.5
Preferred Stock, liquidation value	$ 1,500		$ 1,500

[1] During the nine months ended September 30, 2023, the gross value and accumulated amortization associated with the PD-LD, Inc. and Motorola patent portfolios have been removed from the table as the underlying patents have reached the end of their useful lives.

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
REVENUE:
Total revenue	$ 141,077	$ 160,556	$ 418,109	$ 447,587
COST OF SALES	34,248	37,396	99,357	97,798
Gross margin	106,829	123,160	318,752	349,789
OPERATING EXPENSES:
Research and development	33,099	30,414	96,840	85,156
Selling, general and administrative	18,084	18,442	50,557	59,373
Amortization of acquired technology and other intangible assets	4,557	3,562	11,442	14,562
Patent costs	2,572	2,018	7,056	6,075
Royalty and license expense	81	261	414	596
Total operating expenses	58,393	54,697	166,309	165,762
OPERATING INCOME	48,436	68,463	152,443	184,027
Interest income, net	7,136	2,432	20,301	4,306
Other loss, net	(1,693)	(804)	(3,180)	(749)
Interest and other income, net	5,443	1,628	17,121	3,557
INCOME BEFORE INCOME TAXES	53,879	70,091	169,564	187,584
Income tax expense (benefit)	(2,363)	(16,636)	(28,531)	(42,657)
NET INCOME	$ 51,516	$ 53,455	$ 141,033	$ 144,927
NET INCOME PER COMMON SHARE:
BASIC	$ 1.08	$ 1.12	$ 2.95	$ 3.04
DILUTED	$ 1.08	$ 1.12	$ 2.95	$ 3.04
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER OMMON SHARE:
BASIC	47,570,099	47,396,495	47,555,734	47,386,426
DILUTED	47,632,431	47,466,934	47,609,692	47,455,893
CASH DIVIDENDS DECLARED PER COMMON SHARE	$ 0.35	$ 0.3	$ 1.05	$ 0.9
Material Sales
REVENUE:
Total revenue	$ 92,492	$ 84,182	$ 239,789	$ 242,742
Royalty And License Fees
REVENUE:
Total revenue	45,915	71,450	165,524	191,530
Contract Research Services
REVENUE:
Total revenue	$ 2,670	$ 4,924	$ 12,796	$ 13,315

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
NET INCOME	$ 51,516	$ 53,455	$ 141,033	$ 144,927
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX:
Unrealized gain (loss) on available-for-sale securities, net of tax of ($318), $572, ($756) and $2,120, respectively	1,138	(1,680)	2,706	(7,231)
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, net of tax of ($71), ($159), ($212) and ($444), respectively	253	493	759	1,511
Change in cumulative foreign currency translation adjustment	(44)	(191)	22	(601)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	1,347	(1,378)	3,487	(6,321)
COMPREHENSIVE INCOME	$ 52,863	$ 52,077	$ 144,520	$ 138,606

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Unrealized (loss) gain on available-for-sale securities, tax	$ (318)	$ 572	$ (756)	$ 2,120
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, tax	$ (71)	$ (159)	$ (212)	$ (444)

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock, Common [Member]
BALANCE at Dec. 31, 2021	$ 1,099,914	$ 2	$ 491	$ 658,728	$ 500,212	$ (18,235)	$ (41,284)
BALANCE (in shares) at Dec. 31, 2021		200,000	49,065,924				1,365,648
Net income	144,927				144,927
Other comprehensive loss	(6,321)					(6,321)
Cash dividend	(42,740)				(42,740)
Issuance of common stock to employees	22,147			22,147
Issuance of common stock to employees (in shares)			70,887
Shares withheld for employee taxes	(9,150)			(9,150)
Shares withheld for employee taxes (in shares)			(31,334)
Issuance of common stock to Board of Directors and Scientific Advisory Board	1,421		$ 10,022	1,421
Issuance of common stock to employees under an ESPP	1,627		13,026	1,627
BALANCE at Sep. 30, 2022	1,211,825	$ 2	$ 491	674,773	602,399	(24,556)	$ (41,284)
BALANCE (in shares) at Sep. 30, 2022		200,000	49,128,525				1,365,648
BALANCE at Jun. 30, 2022	1,165,309	$ 2	$ 491	666,087	563,191	(23,178)	$ (41,284)
BALANCE (in shares) at Jun. 30, 2022		200,000	49,115,444				1,365,648
Net income	53,455				53,455
Other comprehensive loss	(1,378)					(1,378)
Cash dividend	(14,247)				(14,247)
Issuance of common stock to employees	8,209			8,209
Issuance of common stock to employees (in shares)			8,753
Shares withheld for employee taxes	(306)			(306)
Shares withheld for employee taxes (in shares)			(2,852)
Issuance of common stock to Board of Directors and Scientific Advisory Board	347		$ 2,196	347
Issuance of common stock to employees under an ESPP	436		4,984	436
BALANCE at Sep. 30, 2022	1,211,825	$ 2	$ 491	674,773	602,399	(24,556)	$ (41,284)
BALANCE (in shares) at Sep. 30, 2022		200,000	49,128,525				1,365,648
BALANCE at Dec. 31, 2022	1,275,369	$ 2	$ 491	681,335	653,277	(18,452)	$ (41,284)
BALANCE (in shares) at Dec. 31, 2022		200,000	49,136,030				1,365,648
Net income	141,033				141,033
Other comprehensive loss	3,487					3,487
Cash dividend	(50,083)				(50,083)
Issuance of common stock to employees	16,947		$ 1	16,946
Issuance of common stock to employees (in shares)			139,826
Shares withheld for employee taxes	(7,895)			(7,895)
Shares withheld for employee taxes (in shares)			(56,504)
Cancellation of restricted stock awards			$ (5)	5
Cancellation of restricted stock awards (in shares)			(526,241)
Issuance of common stock to Board of Directors and Scientific Advisory Board	1,564		$ 13,504	1,564
Issuance of common stock to employees under an ESPP	1,944		13,915	1,944
BALANCE at Sep. 30, 2023	1,382,366	$ 2	$ 487	693,899	744,227	(14,965)	$ (41,284)
BALANCE (in shares) at Sep. 30, 2023		200,000	48,720,530				1,365,648
BALANCE at Jun. 30, 2023	1,338,766	$ 2	$ 487	686,501	709,372	(16,312)	$ (41,284)
BALANCE (in shares) at Jun. 30, 2023		200,000	48,706,932				1,365,648
Net income	51,516				51,516
Other comprehensive loss	1,347					1,347
Cash dividend	(16,661)				(16,661)
Issuance of common stock to employees	6,738		$ 8,908	6,738
Shares withheld for employee taxes	(466)		(3,190)	(466)
Issuance of common stock to Board of Directors and Scientific Advisory Board	423		3,304	423
Issuance of common stock to employees under an ESPP	703		4,576	703
BALANCE at Sep. 30, 2023	$ 1,382,366	$ 2	$ 487	$ 693,899	$ 744,227	$ (14,965)	$ (41,284)
BALANCE (in shares) at Sep. 30, 2023		200,000	48,720,530				1,365,648

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 141,033	$ 144,927
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	20,128	17,982
Amortization of intangibles	11,442	14,562
Amortization of premium and discount on investments, net	(9,436)	(3,469)
Stock-based compensation to employees	17,359	22,528
Stock-based compensation to Board of Directors and Scientific Advisory Board	1,264	1,121
Deferred income tax expense (benefit)	7,556	(7,876)
Retirement plan expense, net of benefit payments	2,347	3,998
Decrease (increase) in assets:
Accounts receivable	(29,528)	29,446
Inventory	1,814	(46,034)
Other current assets	(37,653)	(9,057)
Other assets	8,292	2,282
Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(32)	7,217
Other current liabilities	(24,186)	(543)
Deferred revenue	11,809	(63,066)
Other liabilities	(4,502)	10,156
Net cash provided by operating activities	117,707	124,174
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(52,208)	(31,119)
Purchases of intangibles	(66,563)	(4,761)
Purchases of investments	(303,004)	(464,766)
Proceeds from sale and maturity of investments	346,407	302,872
Net cash used in investing activities	(75,368)	(197,774)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	1,532	1,247
Payment of withholding taxes related to stock-based compensation to employees	(7,895)	(9,150)
Cash dividends paid	(50,083)	(42,740)
Net cash used in financing activities	(56,446)	(50,643)
DECREASE IN CASH AND CASH EQUIVALENTS	(14,107)	(124,243)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	93,430	311,993
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 79,323	$ 187,750

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Non-Cash Activities - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Other Significant Noncash Transactions [Line Items]
Unrealized gain (loss) on available-for-sale securities	$ 3,304	$ (9,711)
Net change in accounts payable and accrued expenses related to purchases of property and equipment	887	4,256
Cash paid for income tax	81,132	42,227
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

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BUSINESS

9 Months Ended

Sep. 30, 2023

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 and 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, monitor, 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 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, monitors, 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 6,000 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2023

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 have been prepared in accordance with the requirements of the Securities and Exchange Commission for interim financial reporting and contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of September 30, 2023 and results of operations for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. 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, 2022. 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.

Reclassification of Prior Year Presentation

Certain prior year adjustments to reconcile net income to net cash provided by operating activities have been reclassified on the Consolidated Statements of Cash Flows to conform to the current year presentation. These adjustments have been consolidated into their respective operating assets and liabilities accounts, specifically, inventory, other current assets, other assets and deferred revenue.

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 in 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. The impairment in the value of minority equity investments is included in the other (loss) income, net line item on the Consolidated Statements of Income.

Leases

The Company is a lessee in operating leases primarily incurred to facilitate 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 September 30, 2023, 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, they 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 sales-based portion of royalty revenue 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 predetermined rates on a 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. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

On December 2, 2022, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC), replacing a previous license agreement that had been in place since 2018. This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2023 and lasts through the end of 2027 with an additional two-year extension option for SDC. Under this agreement, the Company is being paid a license fee, which includes quarterly and annual payments 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 patent license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC, which lasts for the same term as the license agreement and is subject to the same extension option. This new material purchase agreement replaced a previous purchase agreement that had been in place since 2018. Under the supplemental material purchase agreement, SDC agrees to purchase red and green phosphorescent emitter materials from the Company for use in the manufacture of licensed products. This amount purchased 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. The terms of these agreements were extended by a January 1, 2021 amendment through the end of 2025. 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 OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the lives of the agreements as well as minimum royalty revenue.

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 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. In 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 facilities of the Company's manufacturing partner, PPG Industries, Inc. (PPG) and at the Company's internal facilities. 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 Merck KGaA, Darmstadt, Germany (Merck KGaA), BASF SE (BASF) and Fujifilm Corporation (Fujifilm). The Merck KGaA acquisition was completed on April 28, 2023. The BASF and Fujifilm 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 the Merck KGaA and BASF patents. The Fujifilm acquired technology was fully amortized over a period of 10 years that ended in July 2022.

Amortization of Other Intangible Assets

Other intangible assets from the Adesis acquisition 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 respective 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 OMM subsidiary and each of the Company's other Asia-Pacific 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

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. Under this standard, a contractual restriction on the sale of an equity security is not considered in measuring the security's fair value. The standard also requires certain disclosures for equity securities that are subject to contractual restrictions. ASU 2022-03 becomes effective January 1, 2024, and the Company is evaluating the potential impact of this standard on its investments.

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CASH, CASH EQUIVALENTS AND INVESTMENTS

9 Months Ended

Sep. 30, 2023

Cash and Cash Equivalents [Abstract]

CASH, CASH EQUIVALENTS AND INVESTMENTS

3. CASH, CASH EQUIVALENTS AND INVESTMENTS:

The Company’s portfolio of marketable fixed income securities consists of 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
September 30, 2023
Cash accounts in banking institutions	$	77,550	$	—	$	—	$	77,550
Money market accounts		1,773		—		—		1,773
	$	79,323	$	—	$	—	$	79,323
December 31, 2022
Cash accounts in banking institutions	$	86,268	$	—	$	—	$	86,268
Money market accounts		7,162		—		—		7,162
	$	93,430	$	—	$	—	$	93,430

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
September 30, 2023
Corporate bonds	$	2,386	$	3	$	(16	)	$	2,373
U.S. Government bonds		412,539		—		(2,562	)		409,977
	$	414,925	$	3	$	(2,578	)	$	412,350
December 31, 2022
Corporate bonds		150,698		—		(910	)		149,788
U.S. Government bonds		339,472		32		(4,947	)		334,557
	$	490,170	$	32	$	(5,857	)	$	484,345

Long-term Corporate Bonds and 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
September 30, 2023
Corporate bonds	$	128	$	—	$	(118	)	$	10
U.S. Government bonds		289,024		—		(1,887	)		287,137
	$	289,152	$	—	$	(2,005	)	$	287,147
December 31, 2022
Corporate bonds	$	2,479	$	—	$	(28	)	$	2,451
U.S. Government bonds		247,464		52		(2,152	)		245,364
	$	249,943	$	52	$	(2,180	)	$	247,815

Long-term Minority Investments

The Company’s portfolio of minority investments consists of investments in privately held early-stage companies primarily motivated for the Company to gain early access to new technology and are passive in nature in that the Company typically does not seek to 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 September 30, 2023, the Company had minority investments in five entities with a total carrying value of $14.0 million accounted for as equity securities without readily determinable fair values, as compared to four minority investments with a total carrying value of $12.0 million as of December 31, 2022.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2023

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 September 30, 2023 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of September 30, 2023		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	1,773	$	1,773	$	—	$	—
Short-term Corporate bonds investments		2,373		2,373		—		—
Short-term U.S. Government bonds investments		409,977		409,977		—		—
Long-term Corporate bonds investments		10		10		—		—
Long-term U.S. Government bonds investments		287,137		287,137		—		—

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

			Fair Value Measurements, Using
	Total Carrying Value as of December 31, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	7,162	$	7,162	$	—	$	—
Short-term Corporate bonds investments		149,788		149,788		—		—
Short-term U.S. Government bonds investments		334,557		334,557		—		—
Long-term Corporate bonds investments		2,451		2,451		—		—
Long-term U.S. Government bonds investments		245,364		245,364		—		—

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 (loss) income, net on the Consolidated Statements of Income. There were no credit losses on debt investments as of September 30, 2023 or December 31, 2022.

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INVENTORY

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

INVENTORY

5. INVENTORY:

Inventory consisted of the following (in thousands):

	September 30, 2023		December 31, 2022
Raw materials	$	120,096	$	115,448
Work-in-process		7,494		7,626
Finished goods		53,816		60,146
Inventory	$	181,406	$	183,220

The Company recorded an increase in inventory reserve of $2.5 million and $1.7 million for the three months ended September 30, 2023 and 2022, respectively, and $6.6 million and $2.4 million for the nine months ended September 30, 2023 and 2022, respectively, due to excess inventory levels in certain products.

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PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

6. PROPERTY AND EQUIPMENT:

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

	September 30, 2023			December 31, 2022
Land	$	9,393		$	2,642
Building and improvements		118,365			99,586
Office and lab equipment		144,188			129,697
Furniture, fixtures and computer related assets		18,814			18,071
Construction-in-progress		20,898			10,567
		311,658			260,563
Less: Accumulated depreciation		(137,020	)		(117,118	)
Property and equipment, net	$	174,638		$	143,445

Depreciation expense was $6.9 million and $6.5 million for the three months ended September 30, 2023 and 2022, respectively, and $20.1 million and $18.0 million for the nine months ended September 30, 2023 and 2022, respectively. The increase in property and equipment, net for the nine months ended September 30, 2023 is primarily due to the purchases of two previously leased facilities for an aggregate cost of $23.4 million.

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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2023

Finite-Lived Intangible Assets, Net [Abstract]

GOODWILL AND INTANGIBLE ASSETS

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 primarily consists of acquired license rights for patents and know-how obtained from Merck KGaA, BASF and Fujifilm. These intangible assets consist of the following (in thousands):

	September 30, 2023 (1)			December 31, 2022
PD-LD, Inc.	$	—		$	1,481
Motorola		—			15,909
Merck KGaA		66,012			—
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		5,712			5,212
		277,175			228,053
Less: Accumulated amortization		(182,657	)		(189,671	)
Acquired technology, net	$	94,518		$	38,382

(1)During the nine months ended September 30, 2023, the gross value and accumulated amortization associated with the PD-LD, Inc. and Motorola patent portfolios have been removed from the table as the underlying patents have reached the end of their useful lives.

Amortization expense related to acquired technology was $4.2 million and $3.2 million for the three months ended September 30, 2023 and 2022, respectively, and $10.4 million and $13.5 million for the nine months ended September 30, 2023 and 2022, respectively. Amortization expense is included in the amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $4.2 million for the three months ending December 31, 2023, $16.8 million in each of the years ending December 31, 2024 and 2025, $12.0 million in the year ending December 31, 2026, $7.2 million in the year ending December 31, 2027 and $37.5 million in total thereafter.

Merck KGaA Patent Acquisition

On April 28, 2023, UDC Ireland entered into a Patent Sale and License Agreement with Merck KGaA. Under this agreement, Merck KGaA sold to UDC Ireland all of its rights, title and interest to over 550 of its owned and licensed OLED-related patents and patent applications in exchange for a cash payment of $66.0 million. The Patent Sale and License Agreement contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of $66.0 million 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, 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 to internally developed IP, processes and recipes with a weighted average life of 15 years, and $1.5 million to trade name and trademarks with a weighted average life of 10 years.

At September 30, 2023, these other intangible assets consist of the following (in thousands):

	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(6,571	)	$	3,949
Developed IP, processes and recipes		4,820		(2,308	)		2,512
Trade name/Trademarks		1,500		(1,080	)		420
Other		448		(96	)		352
Total identifiable other intangible assets	$	17,288	$	(10,055	)	$	7,233

Amortization expense related to other intangible assets was $359,000 and $358,000 for the three months ended September 30, 2023 and 2022, respectively, and $1.1 million for both the nine months ended September 30, 2023 and 2022. Amortization expense is included in the amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $359,000 for the three months ending December 31, 2023, $1.4 million for each of the next three fiscal years (2024 - 2026), $1.3 million for the year ending December 31, 2027 and $1.3 million in total thereafter.

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OTHER ASSETS

9 Months Ended

Sep. 30, 2023

Prepaid Expense and Other Assets [Abstract]

OTHER ASSETS

8. OTHER ASSETS:

Other assets consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Long-term taxes receivable	$	57,581	$	63,915
Right-of-use assets		25,321		31,486
Long-term contract assets		16,317		11,651
Other long-term assets		2,228		2,687
Other assets	$	101,447	$	109,739

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

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LEASES

9 Months Ended

Sep. 30, 2023

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 September 30, 2023, the Company did not have any finance leases and had one additional operating lease that has 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	1,094	$	1,067	$	3,538	$	3,238
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	—	$	867	$	—	$	867

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

	September 30, 2023		December 31, 2022
Right-of-use assets	$	25,321	$	31,486
Short-term lease liabilities		3,376		3,737
Long-term lease liabilities		23,380		29,039

The decrease in right-of-use assets and long-term lease liabilities during the nine months ended September 30, 2023 was primarily due to the purchases of two facilities, which were previously accounted for as operating lease obligations.

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

	September 30, 2023
Weighted average remaining lease term (in years)		7.1
Weighted average discount rate		3.7	%

As of September 30, 2023, current operating leases had remaining terms between two months and eight years with options to extend the lease terms.

Undiscounted future minimum lease payments as of September 30, 2023, 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
2023 (1)	$	1,040
2024		4,119
2025		4,155
2026		4,235
2027		4,317
Thereafter		12,077
Total lease payments		29,943
Less: Imputed interest		(3,187	)
Present value of lease payments	$	26,756

(1)Scheduled maturities of lease liabilities represent the period from October 1, 2023 to December 31, 2023.

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ACCRUED EXPENSES

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Schedule Of Accrued expenses

10. ACCRUED EXPENSES:

Accrued expenses consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Compensation	$	22,685	$	31,751
PPG Industries, Inc. agreement		6,090		9,864
Consulting		1,832		910
Professional fees		1,049		906
Research and development agreements		513		662
Royalties		414		877
Other		5,917		6,032
Accrued expenses	$	38,500	$	51,002

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RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS

9 Months Ended

Sep. 30, 2023

Research and Development [Abstract]

RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS

11. RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS:

The Company has long-standing relationships with a number of academic institutions that undertake funded research projects, including Princeton University (Princeton) and the University of Southern California (USC).

Under the current license agreement among the Company, Princeton and USC, the universities have 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. The Company recorded royalty expense in connection with this agreement of $60,000 and $261,000 for the three months ended September 30, 2023 and 2022, respectively, and $358,000 and $596,000 for the nine months ended September 30, 2023 and 2022, respectively.

The Company also makes payments under the current research agreement with USC on a quarterly basis as actual expenses are incurred. As of September 30, 2023, the Company was obligated to pay USC up to $2.4 million for work to be performed during the remaining term of the research agreement. The Company recorded research and development expense in connection with work performed under the agreement of $251,000 and $245,000 for the three months ended September 30, 2023 and 2022, respectively, and $666,000 and $695,000 for the nine months ended September 30, 2023 and 2022, respectively.

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OTHER LIABILITIES

9 Months Ended

Sep. 30, 2023

Other Liabilities [Abstract]

OTHER LIABILITIES

12. OTHER LIABILITIES:

Other liabilities consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Long-term lease liabilities	$	23,380	$	29,039
Long-term taxes payable		15,749		14,592
Other long-term liabilities		54		54
Other liabilities	$	39,183	$	43,685

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

9 Months Ended

Sep. 30, 2023

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

EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS

13. EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENT:

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG (the New OLED Materials Agreement), which, effective as of October 1, 2011, replaced the original OLED Materials Agreement with PPG. 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 have been issued for services rendered by PPG since the inception of the contract.

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 manufacturing site in Shannon, Ireland, currently being leased by UDC Ireland’s wholly-owned subsidiary, OMM, for the production of OLED materials. Facility improvements have been completed and operations commenced in June 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 and $2.6 million for the three months ended September 30, 2023 and 2022, respectively, and $6.1 million and $4.9 million for the nine months ended September 30, 2023 and 2022, respectively, 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, 2023

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 September 30, 2023, 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 September 30, 2023, the Company had issued 48,720,530 shares of common stock, of which 47,354,882 were outstanding. During the three and nine months ended September 30, 2023 and 2022, the Company repurchased no shares of common stock.

Dividends

During the three months ended September 30, 2023, the Company declared and paid cash dividends of $0.35 per common share, or $16.7 million, and during the nine months ended September 30, 2023, the Company declared and paid cash dividends of $1.05 per common share, or $50.1 million, on the Company’s outstanding common stock.

On October 31, 2023, the Company’s Board of Directors declared a fourth quarter dividend of $0.35 per share to be paid on December 29, 2023 to all shareholders of record of the Company’s common stock as of the close of business on December 15, 2023. All future dividends will be subject to the approval of the Company’s Board of Directors.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

9 Months Ended

Sep. 30, 2023

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, 2022, net of tax	$	(7,887	)	$	(10,011	)	$	(554	)	$	(18,452	)
Other comprehensive gain    before reclassification		2,706			—			22			2,728
Reclassification to net income (1)		—			759			—			759		Selling, general and administrative, research and development and cost of sales
Change during period		2,706			759			22			3,487
Balance September 30, 2023, net of tax	$	(5,181	)	$	(9,252	)	$	(532	)	$	(14,965	)

	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		(7,231	)		—			(601	)		(7,832	)
Reclassification to net income (1)		—			1,511			—			1,511		Selling, general and administrative, research and development and cost of sales
Change during period		(7,231	)		1,511			(601	)		(6,321	)
Balance September 30, 2022, net of tax	$	(7,373	)	$	(16,508	)	$	(675	)	$	(24,556	)

(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 $759,000 and $1.5 million for the nine months ended September 30, 2023 and 2022, respectively.

(2)Refer to Note 17: Retirement Plan Benefit Liability.

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

16. STOCK-BASED COMPENSATION:

Equity Compensation Plan

On June 15, 2023, the shareholders of the Company voted to approve the Universal Display Corporation 2023 Equity Compensation Plan (the “Equity Compensation Plan”), which replaced the Universal Display Corporation 2014 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. The total number of shares that may be subject to awards under the Equity Compensation Plan is equal to the shares that were available for issuance and not subject to an award under the 2014 Equity Compensation Plan at the time it was replaced by the Equity Compensation Plan, subject to adjustment with respect to shares underlying any outstanding award granted under the Equity Compensation Plan or the 2014 Equity Compensation Plan that may expire, or be terminated, surrendered or forfeited for any reason, without issuance of such shares. As of September 30, 2023, there were 1,520,274 shares that remained available to be granted under the Equity Compensation Plan. The Equity Compensation Plan will terminate on June 15, 2033.

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 nine months ended September 30, 2023, the Company granted 110,279 shares of restricted stock awards and restricted stock units to employees and non-employees, which had a total fair value of $16.4 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 September 30, 2023 and 2022, 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 $2.4 million and $3.4 million, respectively, research and development expense of $1.4 million and $1.5 million, respectively, and cost of sales of $454,000 and $573,000, respectively. For the nine months ended September 30, 2023 and 2022, 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 $7.8 million and $10.8 million, respectively, research and development expense of $4.4 million and $4.6 million, respectively, and cost of sales of $1.4 million and $1.7 million, respectively.

In connection with the vesting of restricted stock awards and units during the three months ended September 30, 2023 and 2022, 3,190 and 2,852 shares, respectively, with aggregate fair values of $465,000 and $305,000, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows. In connection with the vesting of restricted stock awards and units during the nine months ended September 30, 2023 and 2022, 51,154 and 54,252 shares, respectively, with aggregate fair values of $7.1 million and $8.3 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 September 30, 2023 and 2022, 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 $60,000 and $32,000, respectively. Such compensation charges to research and development expense were $188,000 and $183,000, respectively, for the nine months ended September 30, 2023 and 2022.

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 September 30, 2023 and 2022, 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 $363,000 and $315,000, respectively. Such compensation charges to selling, general and administrative expense were $1.1 million and $937,000, respectively, for the nine months ended September 30, 2023 and 2022. In connection with the vesting of the restricted stock, the Company issued to non-employee members of the Board of Directors 9,712 and 6,588 shares, respectively, during the nine months ended September 30, 2023 and 2022.

Performance Unit Awards

Each performance unit award is subject to either a performance-based or market-based vesting requirement. The performance-based vesting requirement is tied to the Company's achievement of specified financial metrics such as earnings before interest, taxes, depreciation and amortization (EBITDA), cash flow, and/or gross margin, 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 performance falls below certain thresholds, the performance units will not vest at all.

During the nine months ended September 30, 2023, the Company granted 84,448 performance units, of which 42,222 units are subject to performance-based vesting requirements based on three-year cumulative adjusted EBITDA, 21,113 units are subject to performance-based vesting requirements based on three-year cumulative gross margin and 21,113 units are subject to market-based, TSR vesting requirements. The grant date fair value of the performance unit awards granted was $12.6 million for the nine months ended September 30, 2023, 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 September 30, 2023 and 2022, the Company recorded selling, general and administrative expense of $1.5 million and $1.9 million, respectively, research and development expense of $607,000 and $488,000, respectively, and cost of sales expense of $376,000 and $303,000, respectively, related to the performance units. For the nine months ended September 30, 2023 and 2022, the Company recorded selling, general and administrative expense of $1.7 million and $3.7 million, respectively, research and development expense of $982,000 and $873,000, respectively, and cost of sales expense of $609,000 and $539,000, respectively, related to the performance units.

In connection with the vesting of performance units during the nine months ended September 30, 2023 and 2022, 5,350 and 5,082 shares, respectively, with an aggregate fair value of $775,000 and $826,000, 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 nine months ended September 30, 2023 and 2022, the Company issued 13,915 and 13,026 shares, respectively, of its common stock under the ESPP, resulting in proceeds of $1.5 million and $1.2 million, respectively.

For the three months ended September 30, 2023 and 2022, the Company recorded charges of $36,000 and $3,000, respectively, to selling, general and administrative expense, $61,000 and $19,000, respectively, to research and development expense, and $46,000 and $14,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature. For the nine months ended September 30, 2023 and 2022 the Company recorded charges of $105,000 and $86,000, respectively, to selling, general and administrative expense, $186,000 and $183,000, respectively, to research and development expense, and $121,000 and $110,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature.

Scientific Advisory Board Awards

During the nine months ended September 30, 2023 and 2022, the Company granted a total of 2,366 and 2,024 shares, respectively, of fully vested common stock to non-employee members of the Scientific Advisory Board for services performed in 2022 and 2021, respectively. The fair value of shares issued to members of the Scientific Advisory Board was $300,000 for both nine-month periods.

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RETIREMENT PLAN BENEFIT LIABILITY

9 Months Ended

Sep. 30, 2023

Retirement Benefits [Abstract]

RETIREMENT PLAN BENEFIT LIABILITY

RETIREMENT PLAN BENEFIT LIABILITY:

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 September 30, 2023, there were eight participants in the SERP. In December 2022, one of the participants retired and monthly SERP benefit payments commenced in January 2023. The total SERP benefit payments for the nine months ended September 30, 2023 were $1.5 million.

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Service cost	$	238	$	282	$	713	$	1,005
Interest cost		725		346		2,174		1,038
Amortization of prior service cost		203		280		611		839
Amortization of loss		120		372		360		1,116
Total net periodic benefit cost	$	1,286	$	1,280	$	3,858	$	3,998

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

18. COMMITMENTS AND CONTINGENCIES:

Commitments

Under the current research agreement with USC, the Company is obligated to make certain payments to USC based on work performed by it under that agreement, and by the University of Michigan (Michigan) under a subcontractor agreement that Michigan has with USC.

Under the terms of the current license agreement among the Company, Princeton and USC, the Company makes royalty payments to Princeton. See Note 11 for further explanation.

The Company has agreements with five 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 September 30, 2023 and December 31, 2022, the Company had purchase commitments for inventory of $26.2 million and $31.9 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.

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CONCENTRATION OF RISK

9 Months Ended

Sep. 30, 2023

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 September 30,		% of Total Revenue for the  Nine Months Ended September 30,		Accounts Receivable as of
Customer	2023	2022	2023	2022	September 30, 2023
A	45%	46%	37%	42%	$	12,525
B	20%	23%	23%	26%	$	32,879
C	12%	12%	15%	14%	$	43,314
D	8%	4%	10%	4%	$	20,442

Revenues from outside of North America represented approximately 98% and 97% for the three months ended September 30, 2023 and 2022, respectively, and 98% and 97% for the nine-month periods ended September 30, 2023 and 2022, respectively. Revenues by geographic area are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Country	2023		2022		2023		2022
South Korea	$	87,231	$	100,555	$	235,320	$	269,338
China		48,687		52,906		163,634		159,486
Japan		2,019		2,011		5,175		4,456
Other non-U.S. locations		541		976		3,856		1,991
Total non-U.S. locations		138,478		156,448		407,985		435,271
United States		2,599		4,108		10,124		12,316
Total revenue	$	141,077	$	160,556	$	418,109	$	447,587

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

Property and equipment, net by geographic area are as follows (in thousands):

	September 30, 2023		December 31, 2022
United States	$	119,458	$	117,255
Ireland		40,860		20,270
Other		14,320		5,920
Property and equipment, net	$	174,638	$	143,445

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

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INCOME TAXES

9 Months Ended

Sep. 30, 2023

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 4.4% and 23.7% for the three months ended September 30, 2023 and 2022, respectively and 16.8% and 22.7% for the nine months ended September 30, 2023 and 2022, respectively. The discrepancy between the statutory tax rate and the effective tax rate is primarily due to nondeductible employee compensation and U.S. international tax (GILTI and Subpart F). The reduction in the income tax rate for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022, was primarily due to the change in IRS regulations, issued in July 2023, that permit withholding taxes to be credited against U.S. taxable income for the tax years 2022 and 2023, recorded as a discrete tax adjustment in the three months ended September 30, 2023. The Company recorded an income tax expense of $2.4 million and $16.6 million for the three months ended September 30, 2023 and 2022, respectively, and $28.5 million and $42.7 million for the nine months ended September 30, 2023 and 2022, 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. Included in other current assets as of September 30, 2023 is $18.0 million of income tax receivable, which was previously classified as a deferred tax asset. This was the result of a change in guidance issued under IRS Notice 2023-63 which clarified that certain research and development costs do not need to be capitalized and amortized over future periods. 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 not sufficient evidence to release the valuation allowance that has been recorded for the New Jersey research and development credit and unrealized loss on investments, and no indicators against the realizability of the remaining net deferred tax asset.

The U.S.-Korean Mutual Agreement Procedure (MAP) for the years ended December 31, 2010 to December 31, 2017 was closed in September 2022, resulting in a refund of the Korean withholding taxes previously withheld. In July 2023, the Company amended its U.S. federal tax returns to reflect the refund and to redetermine the foreign tax credit amount. In November 2022, the Company prepaid $18.8 million to the IRS under Rev. Proc. 2005-18 to offset the tax payable amount.

On December 27, 2018, regarding the withholding taxes for the years 2018 to 2022, the Korean Supreme Court, citing prior cases, held that only royalties paid with respect to Korean registered patents are considered 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 for the years ended December 31, 2018 to December 31, 2022. Based on the Korean Supreme Court decision, a tax refund request on behalf of the Company was filed with the Korean National Tax Service (KNTS) for the entire period from January 1, 2018 to December 31, 2022. The Company received a formal rejection from the KNTS and has filed a petition to the Korean Tax Tribunal to reverse the decision of the tax office. The Company has been advised by a prominent Korean law firm that there is a more-likely-than-not chance of success. As a result, the Company has recorded a long-term asset of $57.6 million and $60.9 million as of September 30, 2023 and December 31, 2022, respectively. The Company also recorded foreign exchange loss of $1.5 million during the three months ended September 30, 2023 and $3.3 million during the nine months ended September 30, 2023 due to the fluctuation of the Korean Won to the U.S. Dollar and resulting remeasurement of this Won-denominated receivable.

The Company will also amend U.S. federal tax returns for the 2018 to 2020 years when the anticipated refund from KNTS is received to offset the additional tax liability and to redetermine the research and development credit utilization. In November 2022, the Company prepaid $16.0 million to the IRS under Rev. Proc. 2005-18 that relates to the anticipated tax payable. The Company has recorded a long-term liability of $15.7 million and $14.6 million as of September 30, 2023 and December 31, 2022, respectively, for the estimated amounts due to the U.S. federal government based on the amendment of the Company's U.S. tax returns indicating that lower withholding amounts were required.

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

9 Months Ended

Sep. 30, 2023

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 the three months ended September 30, 2023 and 2022, the Company recorded 98% and 97%, respectively, of its revenue from OLED related sales and 2% and 3%, respectively, from the providing of services through Adesis. For both nine-month periods ended September 30, 2023 and 2022, the Company recorded 97% of its revenue from OLED related sales and 3% from the providing of services through Adesis.

Contract Balances

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

	As of September 30, 2023
Accounts receivable	$	122,192
Short-term unbilled receivables		21,896
Short-term contract assets		2,585
Long-term unbilled receivables		6,379
Long-term contract assets		9,938
Short-term deferred revenue		66,828
Long-term deferred revenue		8,859

Short-term and long-term unbilled receivables and contract assets are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. The deferred revenue balance as of September 30, 2023 will be recognized as materials are shipped to customers over the remaining contract periods. As of September 30, 2023, the Company had $30.5 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 assets and liabilities balances associated with the Company's contracts from customers for the nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Nine Months Ended September 30, 2023
	Assets			Liabilities
Balance at December 31, 2022	$	38,457		$	(63,878	)
Revenue recognized that was previously included in deferred revenue, net		—			143,064
Increases due to cash received		—			(159,989	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			5,116
Unbilled receivables recorded, net		29,094			—
Contract assets recorded, net		(1,860	)		—
Transferred to receivables from unbilled receivables		(24,893	)		—
Net change		2,341			(11,809	)
Balance at September 30, 2023	$	40,798		$	(75,687	)

	Nine Months Ended September 30, 2022
	Assets		Liabilities
Balance at December 31, 2021	$	8,127	$	(157,081	)
Revenue recognized that was previously included in deferred revenue, net		—		178,737
Increases due to cash received		—		(132,961	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		17,290
Unbilled receivables recorded, net		5,502		—
Net change		5,502		63,066
Balance at September 30, 2022	$	13,629	$	(94,015	)

The cumulative catch-up adjustment arising from changes in estimates of transaction price, net was $5.1 million for the nine months ended September 30, 2023 as compared to $17.3 million for the nine months ended September 30, 2022. These adjustments resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of the Company's customers over the remaining lives of their contracts, resulting from changes in global macroeconomic factors.

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NET INCOME PER COMMON SHARE

9 Months Ended

Sep. 30, 2023

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 restricted stock units, performance units and the impact of shares to be issued under the Company's 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 and nine months ended September 30, 2023 and 2022 (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator:
Net income	$	51,516		$	53,455		$	141,033		$	144,927
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(243	)		(289	)		(709	)		(849	)
Adjusted net income	$	51,273		$	53,166		$	140,324		$	144,078
Denominator:
Weighted average common shares outstanding – Basic		47,570,099			47,396,495			47,555,734			47,386,426
Effect of dilutive shares:
Common stock equivalents arising from ESPP		499			729			1,764			1,814
Restricted stock awards and units and performance units		61,833			69,710			52,194			67,653
Weighted average common shares outstanding – Diluted		47,632,431			47,466,934			47,609,692			47,455,893
Net income per common share:
Basic	$	1.08		$	1.12		$	2.95		$	3.04
Diluted	$	1.08		$	1.12		$	2.95		$	3.04

For the three months ended September 30, 2023 and 2022, the combined effects of unvested restricted stock awards, restricted stock units and performance unit awards of 39,426 and 173,707, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive. For the nine months ended September 30, 2023 and 2022, the combined effects of unvested restricted stock awards, restricted stock units and performance unit awards of 34,291 and 121,962, 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)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Interim Financial Information

Interim Financial Information

In the opinion of management, the accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the requirements of the Securities and Exchange Commission for interim financial reporting and contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of September 30, 2023 and results of operations for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. 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, 2022. 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.

Reclassification of Prior Year Presentation

Reclassification of Prior Year Presentation

Certain prior year adjustments to reconcile net income to net cash provided by operating activities have been reclassified on the Consolidated Statements of Cash Flows to conform to the current year presentation. These adjustments have been consolidated into their respective operating assets and liabilities accounts, specifically, inventory, other current assets, other assets and deferred revenue.

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 in 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. The impairment in the value of minority equity investments is included in the other (loss) income, net line item on the Consolidated Statements of Income.

Leases

Leases

The Company is a lessee in operating leases primarily incurred to facilitate 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 September 30, 2023, 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, they 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 sales-based portion of royalty revenue 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 predetermined rates on a 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. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

On December 2, 2022, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC), replacing a previous license agreement that had been in place since 2018. This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2023 and lasts through the end of 2027 with an additional two-year extension option for SDC. Under this agreement, the Company is being paid a license fee, which includes quarterly and annual payments 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 patent license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC, which lasts for the same term as the license agreement and is subject to the same extension option. This new material purchase agreement replaced a previous purchase agreement that had been in place since 2018. Under the supplemental material purchase agreement, SDC agrees to purchase red and green phosphorescent emitter materials from the Company for use in the manufacture of licensed products. This amount purchased 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. The terms of these agreements were extended by a January 1, 2021 amendment through the end of 2025. 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 OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the lives of the agreements as well as minimum royalty revenue.

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 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. In 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 facilities of the Company's manufacturing partner, PPG Industries, Inc. (PPG) and at the Company's internal facilities. 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 Merck KGaA, Darmstadt, Germany (Merck KGaA), BASF SE (BASF) and Fujifilm Corporation (Fujifilm). The Merck KGaA acquisition was completed on April 28, 2023. The BASF and Fujifilm 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 the Merck KGaA and BASF patents. The Fujifilm acquired technology was fully amortized over a period of 10 years that ended in July 2022.

Amortization of Other Intangible Assets

Amortization of Other Intangible Assets

Other intangible assets from the Adesis acquisition 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 respective 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 OMM subsidiary and each of the Company's other Asia-Pacific 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

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. Under this standard, a contractual restriction on the sale of an equity security is not considered in measuring the security's fair value. The standard also requires certain disclosures for equity securities that are subject to contractual restrictions. ASU 2022-03 becomes effective January 1, 2024, and the Company is evaluating the potential impact of this standard on its investments.

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2023

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
September 30, 2023
Cash accounts in banking institutions	$	77,550	$	—	$	—	$	77,550
Money market accounts		1,773		—		—		1,773
	$	79,323	$	—	$	—	$	79,323
December 31, 2022
Cash accounts in banking institutions	$	86,268	$	—	$	—	$	86,268
Money market accounts		7,162		—		—		7,162
	$	93,430	$	—	$	—	$	93,430

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
September 30, 2023
Corporate bonds	$	2,386	$	3	$	(16	)	$	2,373
U.S. Government bonds		412,539		—		(2,562	)		409,977
	$	414,925	$	3	$	(2,578	)	$	412,350
December 31, 2022
Corporate bonds		150,698		—		(910	)		149,788
U.S. Government bonds		339,472		32		(4,947	)		334,557
	$	490,170	$	32	$	(5,857	)	$	484,345

Long-term Corporate Bonds and 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
September 30, 2023
Corporate bonds	$	128	$	—	$	(118	)	$	10
U.S. Government bonds		289,024		—		(1,887	)		287,137
	$	289,152	$	—	$	(2,005	)	$	287,147
December 31, 2022
Corporate bonds	$	2,479	$	—	$	(28	)	$	2,451
U.S. Government bonds		247,464		52		(2,152	)		245,364
	$	249,943	$	52	$	(2,180	)	$	247,815

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2023

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 September 30, 2023 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of September 30, 2023		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	1,773	$	1,773	$	—	$	—
Short-term Corporate bonds investments		2,373		2,373		—		—
Short-term U.S. Government bonds investments		409,977		409,977		—		—
Long-term Corporate bonds investments		10		10		—		—
Long-term U.S. Government bonds investments		287,137		287,137		—		—

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

			Fair Value Measurements, Using
	Total Carrying Value as of December 31, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	7,162	$	7,162	$	—	$	—
Short-term Corporate bonds investments		149,788		149,788		—		—
Short-term U.S. Government bonds investments		334,557		334,557		—		—
Long-term Corporate bonds investments		2,451		2,451		—		—
Long-term U.S. Government bonds investments		245,364		245,364		—		—

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.

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INVENTORY (Tables)

9 Months Ended

Sep. 30, 2023

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consisted of the following (in thousands):

	September 30, 2023		December 31, 2022
Raw materials	$	120,096	$	115,448
Work-in-process		7,494		7,626
Finished goods		53,816		60,146
Inventory	$	181,406	$	183,220

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PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment

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

	September 30, 2023			December 31, 2022
Land	$	9,393		$	2,642
Building and improvements		118,365			99,586
Office and lab equipment		144,188			129,697
Furniture, fixtures and computer related assets		18,814			18,071
Construction-in-progress		20,898			10,567
		311,658			260,563
Less: Accumulated depreciation		(137,020	)		(117,118	)
Property and equipment, net	$	174,638		$	143,445

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GOODWILL AND INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2023

Finite-Lived Intangible Assets, Net [Abstract]

Schedule of Acquired Technology

These intangible assets consist of the following (in thousands):

	September 30, 2023 (1)			December 31, 2022
PD-LD, Inc.	$	—		$	1,481
Motorola		—			15,909
Merck KGaA		66,012			—
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		5,712			5,212
		277,175			228,053
Less: Accumulated amortization		(182,657	)		(189,671	)
Acquired technology, net	$	94,518		$	38,382

(1)During the nine months ended September 30, 2023, the gross value and accumulated amortization associated with the PD-LD, Inc. and Motorola patent portfolios have been removed from the table as the underlying patents have reached the end of their useful lives.

Schedule of Other Intangible Assets

At September 30, 2023, these other intangible assets consist of the following (in thousands):

	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(6,571	)	$	3,949
Developed IP, processes and recipes		4,820		(2,308	)		2,512
Trade name/Trademarks		1,500		(1,080	)		420
Other		448		(96	)		352
Total identifiable other intangible assets	$	17,288	$	(10,055	)	$	7,233

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OTHER ASSETS (Tables)

9 Months Ended

Sep. 30, 2023

Disclosure Text Block [Abstract]

Other Asset

Other assets consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Long-term taxes receivable	$	57,581	$	63,915
Right-of-use assets		25,321		31,486
Long-term contract assets		16,317		11,651
Other long-term assets		2,228		2,687
Other assets	$	101,447	$	109,739

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LEASES (Tables)

9 Months Ended

Sep. 30, 2023

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	1,094	$	1,067	$	3,538	$	3,238
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	—	$	867	$	—	$	867

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):

	September 30, 2023		December 31, 2022
Right-of-use assets	$	25,321	$	31,486
Short-term lease liabilities		3,376		3,737
Long-term lease liabilities		23,380		29,039

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:

	September 30, 2023
Weighted average remaining lease term (in years)		7.1
Weighted average discount rate		3.7	%

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

Undiscounted future minimum lease payments as of September 30, 2023, 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
2023 (1)	$	1,040
2024		4,119
2025		4,155
2026		4,235
2027		4,317
Thereafter		12,077
Total lease payments		29,943
Less: Imputed interest		(3,187	)
Present value of lease payments	$	26,756

(1)Scheduled maturities of lease liabilities represent the period from October 1, 2023 to December 31, 2023.

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ACCRUED EXPENSES (Tables)

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Compensation	$	22,685	$	31,751
PPG Industries, Inc. agreement		6,090		9,864
Consulting		1,832		910
Professional fees		1,049		906
Research and development agreements		513		662
Royalties		414		877
Other		5,917		6,032
Accrued expenses	$	38,500	$	51,002

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OTHER LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2023

Other Liabilities [Abstract]

Schedule of other liabilities

Other liabilities consist of the following (in thousands):

	September 30, 2023		December 31, 2022
Long-term lease liabilities	$	23,380	$	29,039
Long-term taxes payable		15,749		14,592
Other long-term liabilities		54		54
Other liabilities	$	39,183	$	43,685

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

9 Months Ended

Sep. 30, 2023

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, 2022, net of tax	$	(7,887	)	$	(10,011	)	$	(554	)	$	(18,452	)
Other comprehensive gain    before reclassification		2,706			—			22			2,728
Reclassification to net income (1)		—			759			—			759		Selling, general and administrative, research and development and cost of sales
Change during period		2,706			759			22			3,487
Balance September 30, 2023, net of tax	$	(5,181	)	$	(9,252	)	$	(532	)	$	(14,965	)

	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		(7,231	)		—			(601	)		(7,832	)
Reclassification to net income (1)		—			1,511			—			1,511		Selling, general and administrative, research and development and cost of sales
Change during period		(7,231	)		1,511			(601	)		(6,321	)
Balance September 30, 2022, net of tax	$	(7,373	)	$	(16,508	)	$	(675	)	$	(24,556	)

(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 $759,000 and $1.5 million for the nine months ended September 30, 2023 and 2022, respectively.

(2)Refer to Note 17: Retirement Plan Benefit Liability.

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Tables)

9 Months Ended

Sep. 30, 2023

Retirement Benefits [Abstract]

Components of Net Periodic Pension Cost

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Service cost	$	238	$	282	$	713	$	1,005
Interest cost		725		346		2,174		1,038
Amortization of prior service cost		203		280		611		839
Amortization of loss		120		372		360		1,116
Total net periodic benefit cost	$	1,286	$	1,280	$	3,858	$	3,998

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CONCENTRATION OF RISK (Tables)

9 Months Ended

Sep. 30, 2023

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 September 30,		% of Total Revenue for the  Nine Months Ended September 30,		Accounts Receivable as of
Customer	2023	2022	2023	2022	September 30, 2023
A	45%	46%	37%	42%	$	12,525
B	20%	23%	23%	26%	$	32,879
C	12%	12%	15%	14%	$	43,314
D	8%	4%	10%	4%	$	20,442

Revenues by Geographic Area

Revenues from outside of North America represented approximately 98% and 97% for the three months ended September 30, 2023 and 2022, respectively, and 98% and 97% for the nine-month periods ended September 30, 2023 and 2022, respectively. Revenues by geographic area are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Country	2023		2022		2023		2022
South Korea	$	87,231	$	100,555	$	235,320	$	269,338
China		48,687		52,906		163,634		159,486
Japan		2,019		2,011		5,175		4,456
Other non-U.S. locations		541		976		3,856		1,991
Total non-U.S. locations		138,478		156,448		407,985		435,271
United States		2,599		4,108		10,124		12,316
Total revenue	$	141,077	$	160,556	$	418,109	$	447,587

Long-Lived Assets (Net) by Geographic Area

, net by geographic area are as follows (in thousands):

	September 30, 2023		December 31, 2022
United States	$	119,458	$	117,255
Ireland		40,860		20,270
Other		14,320		5,920
Property and equipment, net	$	174,638	$	143,445

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REVENUE RECOGNITION (Tables)

9 Months Ended

Sep. 30, 2023

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 September 30, 2023
Accounts receivable	$	122,192
Short-term unbilled receivables		21,896
Short-term contract assets		2,585
Long-term unbilled receivables		6,379
Long-term contract assets		9,938
Short-term deferred revenue		66,828
Long-term deferred revenue		8,859

Summary of Significant Changes in Unbilled Receivables and Deferred Liabilities Balances

Significant changes in the assets and liabilities balances associated with the Company's contracts from customers for the nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Nine Months Ended September 30, 2023
	Assets			Liabilities
Balance at December 31, 2022	$	38,457		$	(63,878	)
Revenue recognized that was previously included in deferred revenue, net		—			143,064
Increases due to cash received		—			(159,989	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			5,116
Unbilled receivables recorded, net		29,094			—
Contract assets recorded, net		(1,860	)		—
Transferred to receivables from unbilled receivables		(24,893	)		—
Net change		2,341			(11,809	)
Balance at September 30, 2023	$	40,798		$	(75,687	)

	Nine Months Ended September 30, 2022
	Assets		Liabilities
Balance at December 31, 2021	$	8,127	$	(157,081	)
Revenue recognized that was previously included in deferred revenue, net		—		178,737
Increases due to cash received		—		(132,961	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		17,290
Unbilled receivables recorded, net		5,502		—
Net change		5,502		63,066
Balance at September 30, 2022	$	13,629	$	(94,015	)

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NET INCOME PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2023

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 and nine months ended September 30, 2023 and 2022 (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Numerator:
Net income	$	51,516		$	53,455		$	141,033		$	144,927
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(243	)		(289	)		(709	)		(849	)
Adjusted net income	$	51,273		$	53,166		$	140,324		$	144,078
Denominator:
Weighted average common shares outstanding – Basic		47,570,099			47,396,495			47,555,734			47,386,426
Effect of dilutive shares:
Common stock equivalents arising from ESPP		499			729			1,764			1,814
Restricted stock awards and units and performance units		61,833			69,710			52,194			67,653
Weighted average common shares outstanding – Diluted		47,632,431			47,466,934			47,609,692			47,455,893
Net income per common share:
Basic	$	1.08		$	1.12		$	2.95		$	3.04
Diluted	$	1.08		$	1.12		$	2.95		$	3.04

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BUSINESS - Additional Information (Details)	Sep. 30, 2023 Patent
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of patents issued and pending application	6,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details)	9 Months Ended
	Sep. 30, 2023	Apr. 28, 2023	Jun. 28, 2016
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%
Visionox Hefei Technology Co. Ltd [Member]
Summary Of Significant Accounting Policies [Line Items]
Additional agreement duration	5 years
BASF [Member] | Patents [Member]
Summary Of Significant Accounting Policies [Line Items]
OLED patents useful life	10 years	10 years	10 years
FUJIFILM [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization period of acquired intangible assets (in years)	10 years
Adesis, Inc. [Member] | Other Intangible Assets [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization period of acquired intangible assets (in years)	10 years
Adesis, Inc. [Member] | Other Intangible Assets [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization period of acquired intangible assets (in years)	15 years

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Schedule of Cash, Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	$ 79,323	$ 93,430
Cash Equivalents, Gross Unrealized Gains	0	0
Cash Equivalents, Gross Unrealized Losses	0	0
Cash and Cash Equivalents, Fair Value Disclosure	79,323	93,430
Cash Accounts in Banking Institutions [Member]
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	77,550	86,268
Cash Equivalents, Gross Unrealized Gains	0	0
Cash Equivalents, Gross Unrealized Losses	0	0
Cash and Cash Equivalents, Fair Value Disclosure	77,550	86,268
Money Market Accounts [Member]
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	1,773	7,162
Cash Equivalents, Gross Unrealized Gains	0	0
Cash Equivalents, Gross Unrealized Losses	0	0
Cash and Cash Equivalents, Fair Value Disclosure	$ 1,773	$ 7,162

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Schedule of Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Short-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	$ 414,925	$ 490,170
Available-for-sale Securities, Gross Unrealized Gains	3	32
Available-for-sale Securities, Gross Unrealized Losses	(2,578)	(5,857)
Available-for-sale Securities, Fair Value Disclosure	412,350	484,345
Long-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	289,152	249,943
Available-for-sale Securities, Gross Unrealized Gains	0	52
Available-for-sale Securities, Gross Unrealized Losses	(2,005)	(2,180)
Available-for-sale Securities, Fair Value Disclosure	287,147	247,815
Corporate Bonds [Member] | Short-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	2,386	150,698
Available-for-sale Securities, Gross Unrealized Gains	3
Available-for-sale Securities, Gross Unrealized Losses	(16)	(910)
Available-for-sale Securities, Fair Value Disclosure	2,373	149,788
Corporate Bonds [Member] | Long-term Investments [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	128	2,479
Available-for-sale Securities, Gross Unrealized Losses	(118)	(28)
Available-for-sale Securities, Fair Value Disclosure	10	2,451
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	412,539	339,472
Available-for-sale Securities, Gross Unrealized Gains		32
Available-for-sale Securities, Gross Unrealized Losses	(2,562)	(4,947)
Available-for-sale Securities, Fair Value Disclosure	409,977	334,557
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	289,024	247,464
Available-for-sale Securities, Gross Unrealized Gains		52
Available-for-sale Securities, Gross Unrealized Losses	(1,887)	(2,152)
Available-for-sale Securities, Fair Value Disclosure	$ 287,137	$ 245,364

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Cash And Cash Equivalents [Line Items]
Minority investment, carrying value	$ 14.0	$ 12.0

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FAIR VALUE MEASUREMENTS - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 79,323	$ 93,430
Short-term investments	412,350	484,345
Short-term U.S. Government bonds investments	2,585
Long-term U.S. Government bonds investments	301,193	259,861
Fair Value, Measurements, Recurring [Member] | Reported Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	1,773	7,162
Short-term investments	2,373	149,788
Short-term U.S. Government bonds investments	409,977	334,557
Long-term Corporate bonds investments	10	2,451
Long-term U.S. Government bonds investments	287,137	245,364
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	1,773	7,162
Short-term investments	2,373	149,788
Short-term U.S. Government bonds investments	409,977	334,557
Long-term Corporate bonds investments	10	2,451
Long-term U.S. Government bonds investments	$ 287,137	$ 245,364

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FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Credit losses on debt investments	$ 0	$ 0

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INVENTORY - Schedule of Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 120,096	$ 115,448
Work-in-process	7,494	7,626
Finished goods	53,816	60,146
Inventory	$ 181,406	$ 183,220

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INVENTORY - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Inventory Disclosure [Abstract]
Change in inventory reserve	$ 2.5	$ 1.7	$ 6.6	$ 2.4

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PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 311,658	$ 260,563
Less: Accumulated depreciation	(137,020)	(117,118)
Property and equipment, net	174,638	143,445
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	9,393	2,642
Building and improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	118,365	99,586
Office and lab equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	144,188	129,697
Furniture, fixtures and computer related assets [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	18,814	18,071
Construction-in-progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 20,898	$ 10,567

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PROPERTY AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 6,900	$ 6,500	$ 20,128	$ 17,982
Increase in property and equipment			52,208	$ 31,119
Property Available for Operating Lease
Property, Plant and Equipment [Line Items]
Increase in property and equipment			$ 23,400
Descripion of Property Available for Operating Lease			The increase in property and equipment, net for the nine months ended September 30, 2023 is primarily due to the purchases of two previously leased facilities for an aggregate cost of $23.4 million.

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GOODWILL AND INTANGIBLE ASSETS - Schedule of Acquired Technology (Details) - USD ($) $ in Thousands	Sep. 30, 2023	[1]	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	$ 277,175		$ 228,053
Less: Accumulated amortization	(182,657)		(189,671)
Acquired technology, net	94,518		38,382
PD LD, Inc [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	0		1,481
Motorola [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	0		15,909
Merck KGaA [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	66,012		0
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	$ 5,712		$ 5,212

[1] During the nine months ended September 30, 2023, the gross value and accumulated amortization associated with the PD-LD, Inc. and Motorola patent portfolios have been removed from the table as the underlying patents have reached the end of their useful lives.

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GOODWILL AND INTANGIBLE ASSETS - Acquired Technology - Additional Information (Details) € in Millions				3 Months Ended		9 Months Ended
	Apr. 28, 2023 USD ($) Board_member	Jun. 28, 2016 USD ($) Patent	Jun. 28, 2016 EUR (€) Patent	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles						$ 11,442,000	$ 14,562,000
Future amortization expense, 2023				$ 4,200,000		4,200,000
Future amortization expense, 2024				16,800,000		16,800,000
Future amortization expense, 2025				16,800,000		16,800,000
Future amortization expense, 2026				12,000,000		12,000,000
Future amortization expense of other intangible assets, fiscal year 2027				7,200,000		7,200,000
Future amortization expense, thereafter				37,500,000		37,500,000
Patent Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization of intangibles				$ 4,200,000	$ 3,200,000	$ 10,400,000	$ 13,500,000
Patents [Member] | Merck KGaA [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents acquired (more than) | Board_member	550
Assigned value of acquired intangible assets	$ 66,000,000
Cash paid for OLED patents	$ 66,000,000
Patents [Member] | BASF [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents acquired (more than) | Patent		500	500
Assigned value of acquired intangible assets		$ 95,800,000	€ 86.8
Acquisition Costs, Period Cost		95,800,000	€ 86.8
Cash paid for OLED patents		$ 217,000
OLED patents useful life	10 years	10 years		10 years		10 years

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GOODWILL AND INTANGIBLE ASSETS - Other Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 16,800,000			$ 16,800,000
Future amortization expense of other intangible assets, remainder of fiscal year 2023	359,000			359,000
Future amortization expense of other intangible assets, fiscal year 2027	7,200,000			7,200,000
Finite-Lived Intangible Asset, Expected Amortization, after Year Five	37,500,000			37,500,000
Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	17,288,000			17,288,000
Amortization expense related to other intangible assets	359,000	$ 358,000		1,100,000	$ 1,100,000
Future amortization expense of other intangible assets, fiscal year 2026	1,400,000			1,400,000
Future amortization expense of other intangible assets, fiscal year(2024 - 2026)	1,400,000			1,400,000
Future amortization expense of other intangible assets, fiscal year 2025	1,400,000			1,400,000
Future amortization expense of other intangible assets, fiscal year 2027	1,300,000			1,300,000
Future amortization expense of other intangible assets, thereafter	1,300,000			1,300,000
Adesis, Inc. [Member] | Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	10,520,000			$ 10,520,000
Weighted average useful life , intangible assets				11 years 6 months
Adesis, Inc. [Member] | Internally-developed IP, Processes and Recipes [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	4,820,000			$ 4,820,000
Weighted average useful life , intangible assets				15 years
Adesis, Inc. [Member] | Trade Name/Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 1,500,000			$ 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	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 16,800
Accumulated Amortization	(10,055)	$ (8,989)
Net Carrying Amount	7,233	$ 8,247
Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	17,288
Accumulated Amortization	(10,055)
Net Carrying Amount	7,233
Customer Relationships [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	10,520
Accumulated Amortization	(6,571)
Net Carrying Amount	3,949
Developed IP, Processes and Recipes [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,820
Accumulated Amortization	(2,308)
Net Carrying Amount	2,512
Trade Name/Trademarks [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,500
Accumulated Amortization	(1,080)
Net Carrying Amount	420
Other [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	448
Accumulated Amortization	(96)
Net Carrying Amount	$ 352

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OTHER ASSETS - Schedule Of Other assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Other Assets [Abstract]
Long-term taxes receivable	$ 57,581	$ 63,915
Right-of-use assets	$ 25,321	$ 31,486
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Other Assets, Noncurrent	Other Assets, Noncurrent
Long-term contract assets	$ 16,317	$ 11,651
Other long-term assets	2,228	2,687
Other Assets	$ 101,447	$ 109,739

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LEASES- Additional Information (Details)	9 Months Ended
	Sep. 30, 2023 Facility
Lessee Lease Description [Line Items]
Operating lease description	As of September 30, 2023, the Company did not have any finance leases and had one additional operating lease that has not yet commenced.
Number of facilities	2
Minimum [Member]
Lessee Lease Description [Line Items]
Operating leases remaining term	2 months
Maximum [Member]
Lessee Lease Description [Line Items]
Operating leases remaining term	8 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		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Operating lease cost	$ 1,094	$ 1,067	$ 3,538	$ 3,238
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$ 0	$ 867	$ 0	$ 867

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LEASES - Schedule Of Operating Lease Right of Use Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Lessee Lease Description [Line Items]
Right-of-use assets	$ 25,321	$ 31,486
Short-term lease liabilities	3,376	3,737
Long-term lease liabilities	$ 23,380	$ 29,039

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LEASES - Schedule of Weighted Average Assumptions Used to Compute Right-of-use Assets and Lease Liabilities (Details)	Sep. 30, 2023
Leases [Abstract]
Weighted average remaining lease term (in years)	7 years 1 month 6 days
Weighted average discount rate	3.70%

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LEASES - Schedule of Undiscounted Future Minimum Lease Payments Having Non-cancelable Lease Terms (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Lessee Lease Description [Line Items]
2023	$ 1,040	[1]
2024	4,119
2025	4,155
2026	4,235
2027	4,317
Thereafter	12,077
Total lease payments	29,943
Less: Imputed interest	(3,187)
Present value of lease payments	$ 26,756

[1] Scheduled maturities of lease liabilities represent the period from October 1, 2023 to December 31, 2023.

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ACCRUED EXPENSES - Schedule Of Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Compensation	$ 22,685	$ 31,751
PPG Industries, Inc. agreement	6,090	9,864
Consulting	1,832	910
Professional fees	1,049	906
Research and development agreements	513	662
Royalties	414	877
Other	5,917	6,032
Accrued expenses	$ 38,500	$ 51,002

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RESEARCH AND LICENSE AGREEMENTS WITH ACADEMIC PARTNERS - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty expense	$ 81,000	$ 261,000	$ 414,000	$ 596,000
1997 Amended License Agreement [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty expense	60,000	261,000	358,000	596,000
2006 Research Agreement [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Maximum obligation	2,400,000		2,400,000
Research and development expense incurred	$ 251,000	$ 245,000	$ 666,000	$ 695,000

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OTHER LIABILITIES - Summary of Other liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Long-term lease liabilities	$ 23,380	$ 29,039
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other Liabilities, Noncurrent	Other Liabilities, Noncurrent
Long-term taxes payable	$ 15,749	$ 14,592
Other long-term liabilities	54	54
Other liabilities	$ 39,183	$ 43,685

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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
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Long-term Purchase Commitment [Line Items]
Percent of services payable in cash or shares	50.00%		50.00%
Issuance of common stock in connection with materials and license agreements (in shares)			0
Charges to expense for cash portion of reimbursement of expenses	$ 1.5	$ 2.6	$ 6.1	$ 4.9
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

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SHAREHOLDERS' EQUITY - Additional Information (Details) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended
	Oct. 31, 2023 $ / shares	Sep. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2022 $ / shares shares	Sep. 30, 2023 USD ($) Board_member $ / shares shares	Sep. 30, 2022 $ / shares shares	Dec. 31, 2022 $ / shares shares
Class Of Stock [Line Items]
Preferred Stock, shares authorized ( in shares)		5,000,000		5,000,000		5,000,000
Preferred Stock, par value (in dollars per share) | $ / shares		$ 0.01		$ 0.01		$ 0.01
Common Stock, shares authorized (in shares)		200,000,000		200,000,000		200,000,000
Common Stock, par value (in dollars per share) | $ / shares		$ 0.01		$ 0.01		$ 0.01
Common Stock, shares issued (in shares)		48,720,530		48,720,530		49,136,030
Common Stock, shares outstanding (in shares)		47,354,882		47,354,882		47,770,382
Treasury stock repurchased shares		0	0	0	0
Common stock dividends declared per share | $ / shares		$ 0.35	$ 0.3	$ 1.05	$ 0.9
Common stock dividends paid per share | $ / shares		$ 0.35		$ 1.05
Common stock dividends paid | $		$ 16.7		$ 50.1
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	$ 0.35
Dividend payable date	Dec. 29, 2023
Dividend record date	Dec. 15, 2023
Series A Nonconvertible Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred Stock, shares issued (in shares)		200,000		200,000		200,000
Preferred Stock, shares outstanding (in shares)		200,000		200,000		200,000
Preferred Stock, liquidation value per share (in dollars per share) | $ / shares		$ 7.5		$ 7.5		$ 7.5
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		200,000

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SHAREHOLDERS' EQUITY - Deferred Compensation Arrangement - Additional Information (Details) - Employees And Non Employee Members Of Scientific Advisory Board Member - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Deferred Compensation Arrangement with Employees and Non-Employees, Share-Based Payments [Line Items]
Shares issued (in shares)	2,366	2,024
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		9 Months Ended
		Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE		$ 1,338,766,000	$ 1,165,309,000	$ 1,275,369,000	$ 1,099,914,000
Reclassification to net income				759,000	1,500,000
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		1,347,000	(1,378,000)	3,487,000	(6,321,000)
BALANCE		1,382,366,000	1,211,825,000	1,382,366,000	1,211,825,000
Unrealized gain (loss) on available-for-sale securities [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE				(7,887,000)	(142,000)
Other comprehensive gain (loss) before reclassification				2,706,000	(7,231,000)
Reclassification to net income	[1]			0	0
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)				2,706,000	(7,231,000)
BALANCE		(5,181,000)	(7,373,000)	(5,181,000)	(7,373,000)
Net unrealized gain (loss) on retirement plan [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE	[2]			(10,011,000)	(18,019,000)
Other comprehensive gain (loss) before reclassification	[2]			0	0
Reclassification to net income	[1],[2]			759,000	1,511,000
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	[2]			759,000	1,511,000
BALANCE	[2]	(9,252,000)	(16,508,000)	(9,252,000)	(16,508,000)
Change in cumulative foreign currency translation adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE				(554,000)	(74,000)
Other comprehensive gain (loss) before reclassification				22,000	(601,000)
Reclassification to net income	[1]			0	0
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)				22,000	(601,000)
BALANCE		(532,000)	(675,000)	(532,000)	(675,000)
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE		(16,312,000)	(23,178,000)	(18,452,000)	(18,235,000)
Other comprehensive gain (loss) before reclassification				2,728,000	(7,832,000)
Reclassification to net income	[1]			759,000	1,511,000
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		1,347,000	(1,378,000)	3,487,000	(6,321,000)
BALANCE		$ (14,965,000)	$ (24,556,000)	$ (14,965,000)	$ (24,556,000)

[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 $759,000 and $1.5 million for the nine months ended September 30, 2023 and 2022, respectively.

[2] Refer to Note 17: Retirement Plan Benefit Liability.

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Reclassification to net income	$ 759,000	$ 1,500,000

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STOCK-BASED COMPENSATION - Equity Compensation Plan - Additional Information (Details) - Equity Compensation Plan [Member]	9 Months Ended
	Sep. 30, 2023 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant (in shares)	1,520,274
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		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of shares withheld for tax withholding obligations	$ 466,000	$ 306,000	$ 7,895,000	$ 9,150,000
Employees And Non Employee Members Of Scientific Advisory Board Member
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of shares issued			$ 300,000	$ 300,000
Shares issued (in shares)			2,366	2,024
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	$ 363,000	$ 315,000	$ 1,100,000	$ 937,000
Shares issued (in shares)			9,712	6,588
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			110,279
Total fair value of performance unit awards granted			$ 16,400,000
Shares withheld for employee taxes (shares)	3,190	2,852	51,154	54,252
Shares withheld for employee taxes	$ 465,000	$ 305,000	$ 7,100,000	$ 8,300,000
Restricted Stock [Member] | Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	2,400,000	3,400,000	7,800,000	10,800,000
Restricted Stock [Member] | Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	1,400,000	1,500,000	4,400,000	4,600,000
Restricted Stock [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	454,000	573,000	$ 1,400,000	1,700,000
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	60,000	32,000	$ 188,000	$ 183,000
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			21,113
Total fair value of performance unit awards granted			$ 12,600,000
Shares withheld for tax withholding obligations (in shares)			5,350	5,082
Fair value of shares withheld for tax withholding obligations			$ 775,000	$ 826,000
Performance Shares [Member] | Performance-Based Vesting Requirement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			42,222
Performance Shares [Member] | Incremental Performance Based [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			84,448
Performance Shares [Member] | Market-Based Vesting Requirement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			21,113
Performance Shares [Member] | Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	1,500,000	1,900,000	$ 1,700,000	3,700,000
Performance Shares [Member] | Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	607,000	488,000	982,000	873,000
Performance Shares [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 376,000	$ 303,000	$ 609,000	$ 539,000

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STOCK-BASED COMPENSATION - Employee Stock Purchase Plan - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Jun. 25, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from common stock issued	$ 703,000	$ 436,000	$ 1,944,000	$ 1,627,000
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)			13,915	13,026
Proceeds from common stock issued			$ 1,500,000	$ 1,200,000
Employee stock purchase plan ESPP purchase period			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	36,000	3,000	$ 105,000	86,000
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	61,000	19,000	186,000	183,000
Employee Stock Purchase Plan (ESPP) [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charges to expense	$ 46,000	$ 14,000	$ 121,000	$ 110,000

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RETIREMENT PLAN BENEFIT LIABILITY - Additional Information (Details) - Supplemental Executive Retirement Plan [Member] $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) Participant
Defined Benefit Plan Disclosure [Line Items]
Number of participants | Participant	8
Benefit Payments | $	$ 1.5

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RETIREMENT PLAN BENEFIT LIABILITY - Components of Net Periodic Pension Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Components of net periodic pension cost [Abstract]
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) Excluding Service Cost, Statement of Income or Comprehensive Income [Extensible Enumeration]	Liability, Defined Benefit Plan, Noncurrent	Liability, Defined Benefit Plan, Noncurrent	Liability, Defined Benefit Plan, Noncurrent	Liability, Defined Benefit Plan, Noncurrent
Defined Benefit Plan, Net Periodic Benefit (Cost) Credit, Amortization of Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Liability, Defined Benefit Plan, Noncurrent	Liability, Defined Benefit Plan, Noncurrent	Liability, Defined Benefit Plan, Noncurrent	Liability, Defined Benefit Plan, Noncurrent
Supplemental Executive Retirement Plan [Member]
Components of net periodic pension cost [Abstract]
Service cost	$ 238	$ 282	$ 713	$ 1,005
Interest cost	725	346	2,174	1,038
Amortization of prior service cost	203	280	611	839
Amortization of loss	120	372	360	1,116
Total net periodic benefit cost	$ 1,286	$ 1,280	$ 3,858	$ 3,998

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COMMITMENTS AND CONTINGENCIES - Additional Information (Details) $ in Millions	Sep. 30, 2023 USD ($) Multiple ExecutiveOfficer Employee	Dec. 31, 2022 USD ($)
Loss Contingencies [Line Items]
Purchase commitments for inventory | $	$ 26.2	$ 31.9
Commitment With Executive Officers [Member]
Loss Contingencies [Line Items]
Number of executive officers under agreement | ExecutiveOfficer	5
Number of employees under agreement | Employee	12
Commitment With Senior Level Employees [Member]
Loss Contingencies [Line Items]
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		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Concentration Risk [Line Items]
Accounts Receivable	$ 122,192		$ 122,192		$ 92,664
Major Customer A [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	45.00%	46.00%	37.00%	42.00%
Major Customer A [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 12,525		$ 12,525
Major Customer B [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	20.00%	23.00%	23.00%	26.00%
Major Customer B [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 32,879		$ 32,879
Major Customer C [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	12.00%	12.00%	15.00%	14.00%
Major Customer C [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 43,314		$ 43,314
Major Customer D [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	8.00%	4.00%	10.00%	4.00%
Major Customer D [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 20,442		$ 20,442

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CONCENTRATION OF RISK - Additional Information (Details) - Supplier	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
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)	98.00%	97.00%	98.00%	97.00%

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CONCENTRATION OF RISK - Revenues by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Concentration Risk [Line Items]
Total revenue	$ 141,077	$ 160,556	$ 418,109	$ 447,587
South Korea [Member]
Concentration Risk [Line Items]
Total revenue	87,231	100,555	235,320	269,338
China [Member]
Concentration Risk [Line Items]
Total revenue	48,687	52,906	163,634	159,486
Japan [Member]
Concentration Risk [Line Items]
Total revenue	2,019	2,011	5,175	4,456
Other Non-U.S. Locations [Member]
Concentration Risk [Line Items]
Total revenue	541	976	3,856	1,991
Total Non-U.S. Locations [Member]
Concentration Risk [Line Items]
Total revenue	138,478	156,448	407,985	435,271
United States [Member]
Concentration Risk [Line Items]
Total revenue	$ 2,599	$ 4,108	$ 10,124	$ 12,316

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CONCENTRATION OF RISK - Long-Lived Assets (Net) by Geographic Area (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Segment Reporting Information [Line Items]
Property and equipment, net	$ 174,638	$ 143,445
United States [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	119,458	117,255
Ireland [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	40,860	20,270
Other [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	$ 14,320	$ 5,920

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INCOME TAXES - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		48 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Nov. 30, 2022
Income Taxes [Line Items]
Effective income tax rate (benefit) expense, percent	4.40%	23.70%	16.80%	22.70%
Income tax expense (benefit)	$ (2,363)	$ (16,636)	$ (28,531)	$ (42,657)
Other current assets	18,000		$ 18,000
Prepaid Taxes						$ 18,800
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
South Korea [Member]
Income Taxes [Line Items]
Long-term asset	57,600		$ 57,600		$ 60,900
Current income tax expense					14,900
Foreign exchange loss	1,500		3,300
Allocation of Withholding to Non-Korean Patents [Member]
Income Taxes [Line Items]
Prepaid Taxes						$ 16,000
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	$ 15,700		$ 15,700		$ 14,600

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REVENUE RECOGNITION - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation Of Revenue [Line Items]
Backlog associated with committed purchase orders from customers	$ 30.5		$ 30.5
Contract with customer liability, transaction price			$ 5.1	$ 17.3
Revenue from Contracts with Customers - ASU No. 2014-09 [Member]
Disaggregation Of Revenue [Line Items]
Percentage of revenue recorded from sales of materials	98.00%	97.00%	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	2.00%	3.00%	3.00%	3.00%

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REVENUE RECOGNITION - Schedule of Assets and Liabilities Associated with Contracts from Customers (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Disaggregation Of Revenue [Line Items]
Accounts receivable	$ 122,192	$ 92,664
Short-term unbilled receivables	21,896
Short-term contract assets	2,585
Long-term unbilled receivables	6,379
Long-term contract assets	9,938
Short-term deferred revenue	66,828	45,599
Long-term deferred revenue	$ 8,859	$ 18,279

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REVENUE RECOGNITION - Summary of Significant Changes in Unbilled Receivables and Deferred Liabilities Balances (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Deferred Revenue (Increase) Decrease
Balance	$ (63,878)	$ (157,081)
Revenue recognized that was previously included in deferred revenue, net	143,064	178,737
Increases due to cash received	(159,989)	(132,961)
Cumulative catch-up adjustment arising from changes in estimates of transaction price, net	5,116	17,290
Net change	(11,809)	63,066
Balance	(75,687)	(94,015)
Unbilled Receivables Increase (Decrease)
Balance	38,457	8,127
Unbilled receivables recorded, net	29,094	5,502
Contract assets recorded, net	(1,860)
Transferred to receivables from unbilled receivables	(24,893)
Net change	2,341	5,502
Balance	$ 40,798	$ 13,629

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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
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net income	$ 51,516	$ 53,455	$ 141,033	$ 144,927
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders	(243)	(289)	(709)	(849)
Adjusted net income	$ 51,273	$ 53,166	$ 140,324	$ 144,078
Denominator:
Weighted average common shares outstanding – Basic	47,570,099	47,396,495	47,555,734	47,386,426
Effect of dilutive shares:
Common stock equivalents arising from ESPP	499	729	1,764	1,814
Restricted stock awards and units and performance units	61,833	69,710	52,194	67,653
Weighted average common shares outstanding – Diluted	47,632,431	47,466,934	47,609,692	47,455,893
Basic	$ 1.08	$ 1.12	$ 2.95	$ 3.04
Diluted	$ 1.08	$ 1.12	$ 2.95	$ 3.04

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NET INCOME PER COMMON SHARE - Additional Information (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Antidilutive securities excluded from calculation of diluted EPS	39,426	173,707	34,291	121,962