10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2012

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	(I.R.S. Employer Identification No.)
incorporation or organization)
375 Phillips Boulevard
Ewing, New Jersey	08618
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (609) 671-0980

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 X   No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes X   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    X	Accelerated filer
Non-accelerated filer  ___ (Do not check if a smaller reporting company)	Smaller reporting company ___

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No X 

As of May 7, 2012, the registrant had outstanding 46,405,136 shares of common stock.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets – March 31, 2012 and December 31, 2011	3
Consolidated Statements of Comprehensive Loss– Three months ended March 31, 2012 and 2011	4
Consolidated Statements of Cash Flows – Three months ended March 31, 2012 and 2011	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4. Controls and Procedures	22
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	22
Item 1A. Risk Factors	26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3. Defaults Upon Senior Securities	27
Item 4. Mine Safety Disclosures	27
Item 5. Other Information	27
Item 6. Exhibits	27

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 (UNAUDITED)

(in thousands, except for share and per share data)

	March 31,			December 31,
	2012			2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	144,246		$	111,795
Short-term investments		194,331			234,294
Accounts receivable		8,708			10,727
Inventory		5,574			3,843
Other current assets		2,472			1,645
Total current assets		355,331			362,304
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$19,154 and $18,735		12,268			10,884
ACQUIRED TECHNOLOGY, net of accumulated amortization of
$17,014 and $17,000		376			391
INVESTMENTS		971			—
OTHER ASSETS		284			299
TOTAL ASSETS	$	369,230		$	373,878
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	4,600		$	4,776
Accrued expenses		6,506			9,020
Deferred revenue		5,897			5,534
Other current liabilities		284			187
Total current liabilities		17,287			19,517
DEFERRED REVENUE		3,636			3,874
RETIREMENT PLAN BENEFIT LIABILITY		8,401			8,260
Total liabilities		29,324			31,651
COMMITMENTS AND CONTINGENCIES (Note 11)
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 $1,500,000)		2			2
Common Stock, par value $0.01 per share, 100,000,000 shares authorized, 46,336,765 and 46,113,296 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively		463			461
Additional paid-in capital		560,346			561,492
Accumulated deficit		(215,092	)		(213,871	)
Accumulated other comprehensive loss		(5,813	)		(5,857	)
Total shareholders’ equity		339,906			342,227
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	369,230		$	373,878

The accompanying notes are an integral part of these consolidated statements.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 (UNAUDITED)

(in thousands, except for share and per share data)

	Three Months Ended March 31,
	2012			2011
REVENUE:
Material sales	$	10,529		$	4,537
Royalty and license fees		422			2,669
Technology development and support revenue		1,669			2,395
Total revenue		12,620			9,601
OPERATING EXPENSES:
Cost of material sales		1,088			103
Research and development		6,661			6,555
Selling, general and administrative		4,311			3,872
Patent costs		1,868			1,613
Royalty and license expense		250			202
Total operating expenses		14,178			12,345
Operating loss		(1,558	)		(2,744	)
INTEREST INCOME		357			96
INTEREST EXPENSE		(20	)		(10	)
LOSS ON STOCK WARRANT LIABILITY		—			(8,926	)
LOSS BEFORE INCOME TAX EXPENSE		(1,221	)		(11,584	)
INCOME TAX EXPENSE		—			(297	)
NET LOSS		(1,221	)		(11,881	)
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized (loss) gain on available-for-sale securities		(104	)		11
Amortization of prior service cost and actuarial loss for retirement plan
included in net periodic pension cost		148			150
TOTAL OTHER COMPREHENSIVE INCOME		44			161
COMPREHENSIVE LOSS	$	(1,177	)	$	(11,720	)
NET LOSS PER COMMON SHARE:
BASIC	$	(0.03	)	$	(0.31	)
DILUTED	$	(0.03	)	$	(0.31	)
WEIGHTED AVERAGE SHARES USED IN COMPUTING     NET LOSS PER COMMON SHARE:
BASIC		45,749,072			38,895,999
DILUTED		45,749,072			38,895,999

The accompanying notes are an integral part of these consolidated statements.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,221	)	$	(11,881	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization of deferred revenue		(917	)		(705	)
Depreciation		418			372
Amortization of intangibles		15			5
Amortization of premium and discount on investments, net		(238	)		(64	)
Stock-based employee compensation		800			1,039
Non-cash expense under a materials agreement		—			9
Stock-based compensation to Board of Directors and Scientific Advisory Board		213			529
Loss on stock warrant liability		—			8,926
Retirement plan benefit expense		388			382
Decrease (increase)  in assets:
Accounts receivable		2,019			1,263
Inventory		(1,731	)		(89	)
Other current assets		(827	)		394
Other assets		15			(116	)
(Decrease) increase in liabilities:
Accounts payable and accrued expenses		(1,987	)		253
Other current liabilities		(1	)		—
Deferred revenue		1,042			1,300
Net cash (used in) provided by operating activities		(2,012	)		1,617
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,802	)		(475	)
Purchase of intangibles		—			(440	)
Purchase of investments		(139,512	)		(37,346	)
Proceeds from sale of investments		178,638			23,396
Net cash provided by (used in) investing activities		37,324			(14,865	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock		71			249,803
Proceeds from the exercise of common stock options and warrants		541			5,120
Payment of withholding taxes related to stock-based employee compensation		(3,473	)		(3,938	)
Net cash (used in) provided by financing activities		(2,861	)		250,985
INCREASE IN CASH AND CASH EQUIVALENTS		32,451			237,737
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		111,795			20,369
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	144,246		$	258,106
The following non-cash activities occurred:
Unrealized (loss) gain on available-for-sale securities	$	(104	)	$	11
Common stock issued to Board of Directors and Scientific Advisory Board that was earned in a previous period		328			300
Common stock issued to employees that was accrued for in a previous period, net of shares withheld for taxes		252			1,113
Fair value of stock warrant liability reclassified to shareholders’ equity upon exercise		—			6,476

The accompanying notes are an integral part of these consolidated statements.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BACKGROUND

Universal Display Corporation (the Company) is engaged in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in flat panel displays, solid-state lighting and other product applications. The Company’s primary business strategy is to develop proprietary OLED technologies and materials, and to license these technologies and sell these materials to OLED product manufacturers. Through internal research and development efforts and relationships with entities such as Princeton University (Princeton), the University of Southern California (USC), the University of Michigan (Michigan), Motorola Solutions, Inc. (f/k/a Motorola, Inc.) (Motorola) and PPG Industries, Inc. (PPG Industries), the Company has established a significant portfolio of proprietary OLED technologies and materials (Notes 5 and 7).

2. BASIS OF PRESENTATION

Interim Financial Information

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of March  31, 2012 and results of operations and cash flows for the three months ended March 31, 2012 and 2011. 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 financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  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.

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 area of revenue recognition for license agreements, useful life of acquired technology, stock-based compensation and the valuation of stock warrant and retirement benefit plan liabilities. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying values of accounts receivable and accounts payable approximate fair value in the accompanying financial statements due to the short-term nature of those instruments. See Notes 3 and 4 for a discussion of cash equivalents and investments.

Revenue

The Company revised the presentation of its revenue categories as of the year ended December 31, 2011 to better reflect its primary sources of revenue. Revenue categories for the quarter ended March 31, 2011 were conformed to reflect the current presentation.

Cost of Material Sales

Cost of material sales represents costs associated with the sale of materials that have been classified as commercial.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued amended standards that revised the application of the valuation premise of highest and best use of an asset, the application of premiums and discounts for fair value determination, as well as the required disclosures for transfers between Level 1 and Level 2 fair value measures and the highest and best use of nonfinancial assets. The update provides additional disclosures regarding Level 3 fair value measurements and clarifies

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certain other existing disclosure requirements. The new guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company adopted this guidance in the first quarter of 2012 and such adoption did not have an impact on the Company’s results of operations or financial position.

In June 2011, the FASB issued amended standards for the reporting of other comprehensive income (loss).  The amendments require that all non-owner changes in shareholders’ equity be presented either in a single continuous statement of comprehensive income (loss) or in two separate but consecutive statements.  In either case, an entity is required to present each component of net income (loss) along with total net income (loss), each component of other comprehensive income (loss) along with a total for other comprehensive income (loss), and a total amount for comprehensive income (loss).  The new guidance is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2011.  The Company adopted this guidance in the first quarter of 2012 and such adoption did not have a material impact on its results of operations or financial position, but did change the Company’s presentation of comprehensive income (loss).

3. CASH, CASH EQUIVALENTS AND INVESTMENTS

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company classifies its remaining investments as available-for-sale. These 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.

Investments at March 31, 2012 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
March 31, 2012 –
Certificates of deposit	$	6,612	$	—	$	(7	)	$	6,605
Commercial paper		2,993		1		—			2,994
Corporate bonds		182,575		24		(109	)		182,490
U.S. government bonds		3,213		—		—			3,213
	$	195,393	$	25	$	(116	)	$	195,302

Investments at December 31, 2011 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
December 31, 2011 –
Certificates of deposit	$	5,797	$	—	$	(5	)	$	5,792
Corporate bonds		223,260		43		(25	)		223,278
U.S. government bonds		5,224		—		—			5,224
	$	234,281	$	43	$	(30	)	$	234,294

All short-term investments held at March 31, 2012 will mature within one year. All long-term investments held at March 31, 2012 will mature in more than one year.

4. FAIR VALUE MEASUREMENTS

The following table provides the assets carried at fair value measured on a recurring basis as of March 31, 2012 (in thousands):

			Fair Value Measurements, Using
	Total carrying value as of March 31, 2012		Quoted prices  in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	137,986	$	137,986	$	—	$	—
Short-term investments		194,331		194,331		—		—
Long-term investments		971		971		—		—

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The following table provides the assets carried at fair value measured on a recurring basis as of December 31, 2011 (in thousands):

			Fair Value Measurements, Using
	Total carrying  value as of December 31, 2011		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	96,538	$	96,538	$	—	$	—
Short-term investments		234,294		234,294		—		—

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 or liability’s classification is determined based on the lowest level input that is significant to the fair value measurement.

The following table is a reconciliation of the changes in fair value of the Company’s stock warrant liability for the three months ended March 31, 2011, which had been classified in Level 3 in the fair value hierarchy (in thousands):

	2011
Fair value of stock warrant liability, beginning of period	$	10,660
Loss for period		8,926
Warrants exercised		(6,476	)
Fair value of stock warrant liability, end of period	$	13,110

The fair value of the stock warrant liability was determined using the Black-Scholes option pricing model with the following inputs at March 31, 2011:

	2011
Contractual life (years)		0.4
Expected volatility		58.2	%
Risk-free interest rate		0.1	%
Annual dividend yield		—

There was no stock warrant liability as of March 31, 2012, as all remaining stock warrants were exercised in 2011.

5. RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN

The Company funded OLED technology research at Princeton and, on a subcontractor basis, at USC, for 10 years under a Research Agreement executed with Princeton in August 1997 (the 1997 Research Agreement).  The Principal Investigator conducting work under the 1997 Research Agreement transferred to Michigan in January 2006.  Following this transfer, the 1997 Research Agreement was allowed to expire on July 31, 2007.

As a result of the transfer, the Company entered into a new Sponsored Research Agreement with USC to sponsor OLED technology research at USC and, on a subcontractor basis, Michigan.  This new Research Agreement (as amended, the 2006 Research Agreement) was effective as of May 1, 2006, and had an original term of three years.  The 2006 Research Agreement superseded the 1997 Research Agreement with respect to all work being performed at USC and Michigan.  Payments under the 2006 Research Agreement were made to USC on a quarterly basis as actual expenses were incurred.  The Company incurred $2.2 million in research and development expense for work performed under the 2006 Research Agreement during the original term, which ended on April 30, 2009.

Effective May 1, 2009, the Company amended the 2006 Research Agreement to extend the term of the agreement for an additional four years.  As of March 31, 2012, the Company was obligated to pay USC up to $2.1 million for work actually performed during the extended term, which runs through April 30, 2013.  From May 1, 2009 through March 31, 2012, the Company incurred $2.9 million in research and development expense for work performed under the amended 2006 Research Agreement.

On October 9, 1997, the Company, Princeton and USC entered into an Amended License Agreement (as amended, the 1997 Amended License Agreement) under which Princeton and USC granted the Company worldwide, exclusive license rights,

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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 work performed by Princeton and USC under the 1997 Research Agreement.  Under this agreement, the Company is required to pay Princeton royalties for licensed products sold by the Company or its sublicensees.  For licensed products sold by the Company, the Company is required to pay Princeton 3% of the net sales price of these products.  For licensed products sold by the Company’s sublicensees, the Company is required to pay Princeton 3% of the revenues received by the Company from these sublicensees.  These royalty rates are subject to renegotiation for products not reasonably conceivable as arising out of the 1997 Research Agreement if Princeton reasonably determines that the royalty rates payable with respect to these products are not fair and competitive.

The Company is obligated under the 1997 Amended License Agreement to pay to Princeton minimum annual royalties.  The minimum royalty payment is $100,000 per year.  The Company accrued royalty expense in connection with this agreement of $256,000 and $199,000 for the three months ended March 31, 2012 and 2011, respectively.

The Company also is required under the 1997 Amended License Agreement to use commercially reasonable efforts to bring the licensed OLED technology to market.  However, this requirement is deemed satisfied if the Company invests a minimum of $800,000 per year in research, development, commercialization or patenting efforts respecting the patent rights licensed to the Company.

In connection with entering into the 2006 Research Agreement, the Company amended the 1997 Amended License Agreement to include Michigan as a party to that agreement effective as of January 1, 2006.  Under this amendment, Princeton, USC and Michigan have granted the Company a worldwide exclusive license, 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 work performed under the 2006 Research Agreement.  The financial terms of the 1997 Amended License Agreement were not impacted by this amendment.

6. ACQUIRED TECHNOLOGY

In 2000, the Company entered into a license agreement with Motorola whereby Motorola granted the Company perpetual license rights to what are now 74 issued U.S. patents relating to Motorola’s OLED technologies, together with foreign counterparts in various countries. These patents expire in the U.S. between 2012 and 2018.

The Company was required under the license agreement with Motorola to pay Motorola annual royalties on gross revenues received on account of the Company’s sales of OLED products or components, or from its OLED technology licensees, whether or not these revenues related specifically to inventions claimed in the patent rights licensed from Motorola.

On March 9, 2011, the Company purchased these patents from Motorola, including all existing and future claims and causes of action for any infringement of the patents, pursuant to a Patent Purchase Agreement.  The Patent Purchase Agreement effectively terminated the Company’s license agreement with Motorola, including any obligation to make royalty payments to Motorola.

The technology acquired from Motorola had an assigned value of $440,000 as of March 9, 2011, which is being amortized over a period of 7.5 years.

7. EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS

On October 1, 2000, the Company entered into a five-year Development and License Agreement (the Development Agreement) and a seven-year Supply Agreement (the Supply Agreement) with PPG Industries.  Under the Development Agreement, a team of PPG Industries scientists and engineers assisted the Company in developing its proprietary OLED materials and supplied the Company with these materials for evaluation purposes.  Under the Supply Agreement, PPG Industries supplied the Company with its proprietary OLED materials that were intended for resale to customers for commercial purposes.

On July 29, 2005, the Company entered into an OLED Materials Supply and Service Agreement with PPG Industries (the OLED Materials Agreement). The OLED Materials Agreement superseded and replaced in their entireties the Development Agreement and Supply Agreement effective as of January 1, 2006, and extended the term of the Company’s relationship with PPG Industries through December 31, 2009. The term of the OLED Materials Agreement was subsequently extended through December 31, 2014.

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG Industries (the New OLED Materials Agreement).  The New OLED Materials Agreement replaced the

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original OLED Materials Agreement with PPG Industries effective as of October 1, 2011.  The term of the New OLED Materials Agreement runs through December 31, 2014.  The new agreement contains provisions that are substantially similar to those of the original OLED Materials Agreement.  Under the New OLED Materials Agreement, PPG Industries 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 and the OLED Materials Agreement, the Company compensates PPG Industries 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 Industries 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 Industries in cash.

The Company is also to reimburse PPG Industries 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.

The Company issued 181 shares of the Company’s common stock to PPG Industries as consideration for services provided by PPG Industries under the OLED Materials Agreement during the three months ended March 31, 2011. For these shares, the Company recorded expense of $9,000 for the three months ended March 31, 2011.  No shares were issued for services to PPG for the three months ended March 31, 2012.

The Company recorded expense of $1.3 million and $1.4 million for the three months ended March 31, 2012 and 2011, respectively, in relation to the cash portion of the reimbursement of expenses and work performed by PPG Industries, excluding amounts paid for commercial chemicals.

8. SHAREHOLDERS’ EQUITY (in thousands, except for share and per share data)

	Series A														Accumulated
	Nonconvertible								Additional						Other			Total
	Preferred Stock				Common Stock				Paid-In			Accumulated			Comprehensive			Shareholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Equity
BALANCE, JANUARY 1, 2012		200,000	$	2		46,113,296	$	461	$	561,492		$	(213,871	)	$	(5,857	)	$	342,227
Net loss		—		—		—		—		—			(1,221	)		—			(1,221	)
Other comprehensive income		—		—		—		—		—			—			44			44
Exercise of common stock options		—		—		70,115		1		540			—			—			541
Stock-based employee compensation, net of shares withheld for taxes (A)		—		—		122,715		1		(2,298	)		—			—			(2,297	)
Issuance of common stock to Board of Directors and Scientific Advisory Board (B)		—		—		28,341		—		541			—			—			541
Issuance of common stock under an Employee Stock Purchase Plan		—		—		2,298		—		71			—			—			71
BALANCE, March 31, 2012		200,000	$	2		46,336,765	$	463	$	560,346		$	(215,092	)	$	(5,813	)	$	339,906

(A)	Includes $376,000 (9,376 shares) that was accrued for in a previous period and charged to expense when earned, but issued in 2012, less shares withheld for taxes in the amount of $124,000 (3,070 shares).
(B)	Includes $328,000 (7,490 shares) that was earned in a previous period and charged to expense when earned, but issued in 2012.

9. STOCK-BASED COMPENSATION

The Company recognizes in the statements of comprehensive loss the grant-date fair value of stock options and other equity based compensation, such as shares issued under employee stock purchase plans, restricted stock awards and units and stock appreciation rights (SARs), issued to employees and directors.

The grant-date fair value of stock options is determined using the Black-Scholes option pricing model.  The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of estimated forfeitures.  The Company relies primarily upon historical experience to estimate expected forfeitures and

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recognizes compensation expense on a straight-line basis from the date of the grant.  The Company issues new shares upon the respective grant, exercise or vesting of share-based payment awards, as applicable.

Cash-settled SARs awarded in share-based payment transactions are classified as liability awards; accordingly, the Company records these awards as a component of accrued expenses on its consolidated balance sheets.  The fair value of each SAR is estimated using the Black-Scholes option pricing model and is remeasured at each reporting period until the award is settled.  Changes in the fair value of the liability award are recorded as expense or income in the statements of comprehensive loss.

Equity Compensation Plan

In 1995, the Board of Directors of the Company adopted a stock option plan, which was amended and restated in 2003 and is now called the 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 Compensation Committee, but for no longer than 10 years from the grant date.  Through March 31, 2012, the Company’s shareholders have approved increases in the number of shares reserved for issuance under the Equity Compensation Plan to 8,000,000 and have extended the term of the plan through September 1, 2015.

During the three months ended March 31, 2012, the Company granted 160,425 shares of restricted stock awards and restricted stock units to employees, which had a total fair value of $6.4 million on the respective dates of grant, and will vest over three to four years from the date of grant, provided that the grantee is still an employee of the Company on the applicable vesting date.

For the three months ended March 31, 2012 and 2011, the Company recorded general and administrative expense of $573,000 and $728,000 and research and development expense of $171,000 and $270,000, respectively, related to restricted stock awards and restricted stock units.

During the three months ended March 31, 2012, the Company also granted to employees 685 shares of common stock, which shares were issued and fully vested as of the date of grant. The Company recorded research and development expense of $31,000 and $22,000 for the three months ended March 31, 2012 and 2011, respectively, related to fully vested shares issued to employees.

In connection with common stock issued to employees, for the three months ended March 31, 2012, 89,862 shares of common stock with a fair value of $3.5 million were withheld in satisfaction of tax withholding obligations.

During the three months ended March 31, 2011, the Company granted 24,000 cash-settled stock appreciation rights (SARs) to certain executive officers. The SARs represented the right to receive, for each SAR, a cash payment equal to the amount, if any, by which the fair market value of a share of the common stock of the Company on the vesting date exceeded the base price of the SAR award.  The base price of each SAR award was $34.78 per share.  The SARs vested on the first anniversary of the date of grant, provided that the grantee was still an employee of the Company on the applicable vesting date. During the three months ended March 31, 2012, all SARs were settled, resulting in cash payments of $49,000. The Company recorded $1,000 and $36,000 to general and administrative expense, and $3,000 and $87,000 to research and development expense, for the three months ended March 31, 2012 and 2011, respectively, related to the SARs.  No such grants were made in 2012.

During the three months ended March 31, 2012, the Company issued 5,000 shares of common stock to members of its Board of Directors as partial compensation for services performed.  The Company recorded general and administrative expense of $160,000 and $56,000 for the three months ended March 31, 2012 and 2011, respectively, related to shares issued to members of its Board of Directors.

During the three months ended March 31, 2012, the Company granted 5,992 shares of restricted stock to certain members of its Scientific Advisory Board.  These shares of restricted stock will vest and be issued in equal increments annually over three years from the date of grant, provided that the grantee is still engaged as a consultant of the Company on the applicable vesting date.  The Company recorded $53,000 and $474,000 to research and development expense for the three months ended March 31, 2012 and 2011, respectively, related to shares issued to members of its Scientific Advisory Board.

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

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shares of common stock for issuance under the ESPP.  Unless sooner 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 price per share of common stock on the first day of the period or the last day of the period.

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

During the three months ended March 31, 2012 and 2011, the Company issued 2,298 and 2,735 shares of its common stock, respectively, under the ESPP, resulting in proceeds of $71,000 for each period.  In relation to the ESPP, the Company recorded $5,000 and $6,000 to general and administrative expense, and $20,000 and $14,000 to research and development expense, for the three months ended March 31, 2012 and 2011, respectively. The expense recorded equals the amount of the discount and the value of the look-back feature for the shares that were issued under the ESPP.

10. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

On March 18, 2010, the Compensation Committee and the Board of Directors of the Company approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP), effective as of April 1, 2010.  The purpose of the SERP, which is unfunded, is to provide certain of the Company’s executive officers with supplemental pension benefits following a cessation of their employment. As of March 31, 2012, there were five participants in the SERP.  The SERP benefit is based on a percentage of the participant’s annual base salary and the number of years of service.

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 for the three months ended March 31 (in thousands),

	2012		2011
Service cost	$	144	$	136
Interest cost		96		96
Amortization of prior service cost		146		146
Amortization of actuarial loss		2		4
Total net periodic benefit cost	$	388	$	382

11. COMMITMENTS AND CONTINGENCIES

Commitments

Under the 2006 Research Agreement with USC, the Company is obligated to make certain payments to USC based on work performed by USC under that agreement, and by Michigan under its subcontractor agreement with USC.  See Note 5 for further explanation.

Under the terms of the 1997 Amended License Agreement, the Company is required to make minimum royalty payments to Princeton.  See Note 5 for further explanation.

The Company has agreements with five executive officers which provide for certain cash and other benefits upon termination of employment of the officer in connection with a change in control of the Company. Each executive is entitled to a lump-sum cash payment equal to two times the sum of the average annual base salary and bonus of the officer 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.

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Opposition to European Patent No. 0946958

On December 8, 2006, Cambridge Display Technology Ltd. (CDT), which was acquired in 2007 by Sumitomo Chemical Company (Sumitomo), filed a Notice of Opposition to European Patent No. 0946958 (EP ‘958 patent). The EP ‘958 patent, which was issued on March 8, 2006, is a European counterpart patent to U.S. patents 5,844,363, 6,602,540, 6,888,306 and 7,247,073. These patents relate to the Company’s FOLED™ flexible OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The European Patent Office (the EPO) conducted an Oral Hearing in this matter and on November 26, 2009 issued its written decision to reject the opposition and to maintain the patent as granted.   CDT has filed an appeal to the EPO panel decision.

At this time, based on its current knowledge, Company management believes that the EPO panel decision will be upheld on appeal. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1449238

Between March 8, 2007 and July 27, 2007, three companies filed Notices of Opposition to European Patent No. 1449238 (EP ‘238 patent). The three companies are Sumation Company Limited (Sumation), a joint venture between Sumitomo and CDT, Merck Patent GmbH, of Darmstadt, Germany, and BASF Aktiengesellschaft, of Mannheim, Germany.  The EP ‘238 patent, which was issued on November 2, 2006, is a European counterpart patent, in part, to U.S. patents 6,830,828; 6,902,830; 7,001,536; 7,291,406; 7,537,844; and 7,883,787; and to pending U.S. patent application 13/009,001, filed on January 19, 2011, and 13/205,290, filed on August 9, 2011 (hereinafter the “U.S. ‘828 Patent Family”). These patents and patent applications relate to the Company’s UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The EPO combined all three oppositions into a single opposition proceeding. The EPO conducted an Oral Hearing in this matter and at the conclusion of the Oral Hearing, the EPO panel announced its decision to maintain the patent with claims directed to OLEDs comprising phosphorescent organometallic iridium compounds. The official minutes from the Oral Hearing and written decision were published on January 13, 2012.

All the parties filed notices of appeal to the EPO’s panel decision on March 13, 2012.  The parties are permitted to file papers in support of their respective requests for appellate review.

At this time, based on its current knowledge, Company management believes that the EPO will uphold the Company’s positions on appeal. However, Company management cannot make any assurances of this result.

Invalidation Trial in Japan for Japan Patent No. 3992929

On April 19, 2010, the Company received a copy of a Notice of Invalidation Trial from the Japanese Patent Office (the JPO) for the Company’s Japan Patent No. 3992929 (the JP ‘929 patent), which was issued on August 3, 2007. The request for the Invalidation Trial was filed by Semiconductor Energy Laboratory Co., Ltd. (SEL), of Kanagawa, Japan. The JP ‘929 patent is a Japanese counterpart patent, in part, to the above-noted EP ‘238 patent and to the above-noted U.S. ‘828 Patent Family, which relate to the Company’s UniversalPHOLED phosphorescent OLED technology. Under its license agreement with Princeton, the Company is required to pay all legal costs and fees associated with this proceeding.

On February 28, 2011, the Company learned that the JPO had issued a decision recognizing the Company’s invention and upholding the validity of most of the claims, but finding the broadest claims in the patent invalid. Company management believes that the JPO’s decision invalidating these claims was erroneous, and the Company filed an appeal to the Japanese IP High Court.

Both parties filed appeal briefs in this matter with the Japanese IP High Court. A technical explanation hearing was held on February 1, 2012.  At the hearing, both parties filed technical materials supporting their respective positions.

At this time, based on its current knowledge, Company management believes that the JPO decision invalidating certain claims in the Company’s JP ‘929 patent should be overturned on appeal as to all or a significant portion of the claims. However, Company management cannot make any assurances of this result.

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Opposition to European Patent No. 1394870

On about April 20, 2010, five European companies filed Notices of Opposition to European Patent No. 1394870 (the EP ‘870 patent). The EP ‘870 patent, which was issued on July 22, 2009, is a European counterpart patent, in part, to U.S. patents 6,303,238; 6,579,632; 6,872,477; 7,279,235; 7,279,237; 7,488,542; 7,563,519; and 7,901,795; and to pending U.S. patent application 13/035,051, filed on February 25, 2011 (hereinafter the “U.S. ‘238 Patent Family”). These patents and this patent application relate to the Company’s UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding. The five companies are Merck Patent GmbH; BASF Schweitz AG of Basel, Switzerland; Osram GmbH of Munich, Germany; Siemens Aktiengesellschaft of Munich, Germany; and Koninklijke Philips Electronics N.V., of Eindhoven, The Netherlands.

The EPO combined the oppositions into a single opposition proceeding. The matter has been briefed and the Company is waiting for the EPO to provide notice of the date of the Oral Hearing.  The Company is also waiting to see whether any of the other parties in the opposition file additional documents, to which the Company might respond.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Japan for Japan Patent Nos. 4357781 and 4358168

On May 24, 2010, the Company received copies of two additional Notices of Invalidation Trials against Japan Patent Nos. 4357781 (the JP ‘781 patent) and 4358168 (the JP ‘168 patent), which were both issued on August 14, 2009. The requests for these two additional Invalidation Trials were also filed by SEL. The JP ‘781 and ‘168 patents are also Japanese counterpart patents, in part, to the above-noted U.S. ‘828 Patent Family and EP ‘238 Patent, which relate to the Company’s UniversalPHOLED phosphorescent OLED technology. Under its license agreement with Princeton, the Company is also required to pay all legal costs and fees associated with these two proceedings.

On March 31, 2011, the Company learned that the JPO had issued decisions finding all claims in the JP ‘781 and JP ‘168 patents invalid. Company management believes that the JPO’s decisions invalidating these claims were erroneous, and the Company filed appeals for both cases to the Japanese IP High Court.

Both parties are in the process of filing appeal briefs in this matter with the Japanese IP High Court. The Japanese IP High Court held hearings for this matter on November 22, 2011, and March 5, 2012.

At this time, based on its current knowledge, Company management believes that the JPO decisions invalidating all the claims in the Company’s JP ‘781 and JP ‘168 patents should be overturned on appeal as to all or a significant portion of the claims. However, Company management cannot make any assurances of this result.

Invalidation Trial in Korea for Patent No. KR-0998059

On March 10, 2011, the Company received informal notice from the Company’s Korean patent counsel of a Request for an Invalidation Trial from the Korean Intellectual Property Office (KIPO) for its Korean Patent No. 10-0998059 (the KR ‘059 patent), which was issued on November 26, 2010. The Request was filed by a certain individual petitioner, but the Company still does not know which company, if any, was ultimately responsible for filing this Request. The KR ‘059 patent is a Korean counterpart patent to the OVJP, Organic Vapor Jet Printing, family of U.S. patents originating from U.S. patent 7,431,968.

On April 21, 2011, the Company’s Korean patent counsel received a copy of the petitioner’s brief in support of the Request. The Company filed a response to the Request on June 20, 2011. The petitioner filed a rebuttal brief on August 8, 2011, and the Company filed a response to the rebuttal brief on October 12, 2011.  The petitioner filed a second rebuttal brief on January 17, 2012, and the Company filed a response to the second rebuttal brief on March 29, 2012.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

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Invalidation Trials in Korea for Patent Nos. KR-558632 and KR-963857

On May 11 and May 31, 2011, respectively, the Company learned that Requests for Invalidation Trials were filed in Korea, on May 3 and May 26, 2011, respectively, for the Company’s Korean Patent Nos. KR-558632 (the KR ‘632 patent), which issued on March 2, 2006, and KR-963857 (the KR ‘857 patent), which issued on June 8, 2010. The Requests were filed by Duk San Hi-metal, Ltd. (Duk San) of Korea. The KR ‘632 and KR ‘857 patents are both Korean counterpart patents, in part, to U.S. ‘238 Patent Family and to EP ‘870 patent, which is subject to the above-noted European Opposition; and to the JP ‘024 patent, which is subject to the below-noted Japanese Invalidation Trial, all of which relate to the Company’s UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The Company timely filed its formal responses to the Requests by the due dates of August 27, 2011 and September 8, 2011, respectively.  Duk San filed a reply brief on December 16, 2011 relating to the KR ‘857 patent, to which the Company timely filed a responsive brief on April 23, 2012.  Both parties may file additional briefs in these matters with KIPO.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Korea for Patent Nos. KR-744199 and KR-913568

On May 10 and May 31, 2011, respectively, the Company learned that Requests for Invalidation Trials were filed in Korea, on May 3 and May 26, 2011, respectively, for the Company’s Korean Patent Nos. KR-744199 (the KR ‘199 patent), which issued on July 24, 2007, and KR-913568 (the KR ‘568 patent), which issued on August 17, 2009. The Requests were also filed by Duk San. The KR ‘199 and KR ‘568 patents are both Korean counterpart patents, in part, to the U.S. ‘828 Patent Family which relate to the EP ‘238 patent, which is subject to one of the above-noted European Oppositions; and to the JP ‘929 patent, which is subject to one of the above-noted Japanese Invalidation Trials. These patents and patent applications relate to the Company’s UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The Company timely filed its formal responses to the Requests by the due dates of September 1, 2011 and August 23, 2011, respectively.  Both parties are in the process of filing briefs in these matters with KIPO.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trial in Japan for Japan Patent No. 4511024

On June 16, 2011, the Company learned that a Request for an Invalidation Trial was filed in Japan for the Company’s Japanese Patent No. JP-4511024 (the JP ‘024 patent), which issued on May 14, 2010. The Request was filed by SEL, the same opponent as in the above-noted Japanese Invalidation Trial for the JP ‘929 patent. The JP ‘024 patent is a counterpart patent, in part, to the U.S. ‘238 Patent Family, which relate to the EP ‘870 patent, which is subject to one of the above-noted European Oppositions; and to the KR ‘632 and KR ‘857 patents, which are subject to one of the above noted Korean Invalidation Trials. These patents and the pending U.S. patent application relate to the Company’s UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The Company timely filed a Written Reply to the Request for Invalidation Trial.  A hearing was held on March 15, 2012.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1252803

On July 12 and 13, 2011, three companies filed Oppositions to the Company’s European Patent No. 1252803 (the EP ‘803 patent).  The three companies are Sumitomo, Merck Patent GmbH and BASF SE, of Ludwigshaven, Germany. The EP ‘803 patent, which was issued on October 13, 2010, is a European counterpart patent, in part, to the U.S. ‘828 Patent Family,

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which relate to the Company’s UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The EPO combined the oppositions into a single opposition proceeding.  The Company’s initial response to the oppositions was timely filed prior to the February 18, 2012 extended due date.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Korea for Patent Nos. KR-794,975, KR-840,637 and KR-937,470

On August 8, 2011, the Company received information indicating that Requests for Invalidation Trials were filed against the Company’s Korean Patent Nos. KR-840,637 (the KR ‘637 patent) and KR-937,470 (the KR ‘470 patent), which issued on June 17, 2008 and January 11, 2010, respectively. On December 12, 2011, the Company received information that a further Request for an Invalidation Trial was filed against the Company’s Korean Patent No. KR-794,975 (the KR ‘975 patent).  The Requests were also filed by Duk San. The KR ‘975, KR ‘637 and KR ‘470 patents are Korean counterpart patents, in part, to the U.S. ‘828 Patent Family; to the EP ‘803 patent, which is subject to one of the above-noted European Oppositions; and to the JP ‘781 and JP ‘168 patents, which are subject to the above-noted Japanese Invalidation Trials. These patents and patent applications relate to the Company’s UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The Company’s formal responses relating to the KR ‘637, KR ‘470, and KR ‘975 patents were timely filed on December 7, 2011, December 8, 2011 and March 3, 2012, respectively.  Both parties may file additional briefs in these matters with KIPO.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1390962

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

The EPO combined the oppositions into a single opposition proceeding.  The Company is in the process of preparing its response to the oppositions.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1933395

On February 24 and 27, 2012, Oppositions were filed to the Company’s European Patent No. 1933395 (the EP ‘395 patent). These Oppositions were filed by Sumitomo, Merck Patent GmbH and BASF SE.  The EP ‘395 patent is a counterpart patent to the above-noted Japan Patent No. 4358168, and to the above-noted Patent Nos. KR-840,637 and KR-937,470, counterpart patent, in part, to the U.S. ‘828 Patent Family, which relate to the Company’s UniversalPHOLED phosphorescent OLED technology. This patent is exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

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12. CONCENTRATION OF RISK

Included in technology development and support revenue in the accompanying statements of comprehensive loss is $1.2 million and $1.9 million for the three months ended March 31, 2012 and 2011, respectively, which was derived from contracts with the United States government agencies.  Revenues derived from contracts with government agencies represented 9% and 20% of the consolidated revenue for the three months ended March 31, 2012 and 2011, respectively.

Revenues for the three months ended March 31, 2012 and 2011, and accounts receivable as of March 31, 2012, from our largest non-government customers, were as follows:

	% of Total Revenue				Accounts Receivable (in thousands)
Customer	2012		2011		March 31, 2012
A		42%		43%	$	3,831
B		13%		20%		1,602
C		12%		—		—

The Company’s relationships with customers B and C are under agreements that are presently scheduled to expire in less than twelve months.

Revenues from outside of North America represented 90% and 79% of consolidated revenue for the three months ended March 31, 2012 and 2011, respectively. Revenues by geographic area are as follows (in thousands):

Country	2012		2011
United States	$	1,274	$	2,002
South Korea		7,393		6,154
Japan		2,566		1,116
Taiwan		1,257		287
Other		130		42
All foreign locations		11,346		7,599
Total revenue	$	12,620	$	9,601

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

Long-lived tangible assets at international locations are not significant for each of the periods presented.

All chemical materials were purchased from one supplier. See Note 7.

13. INCOME TAXES

For the three months ended March 31, 2011, foreign income taxes of $297,000 were withheld in connection with royalty payments received from Samsung Mobile Display Co., Ltd. under a license agreement. No such payments or corresponding withholdings occurred in the three months ended March 31, 2012.

14. NET LOSS PER COMMON SHARE

Basic net loss per common share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, excluding unvested restricted stock awards.  Diluted net loss per common share reflects the potential dilution from the exercise or conversion of securities into common stock, the effect of unvested restricted stock awards and restricted stock units, and the impact of shares to be issued under the ESPP.

For the three months ended March 31, 2012 and 2011, the effects of the exercise of the combined outstanding stock options and warrants and unvested restricted stock awards and restricted stock units of 1,575,513 and 2,483,015, respectively, and the impact of shares to be issued under the ESPP, which was minor, were excluded from the calculation of diluted EPS as the 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 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 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 section entitled (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2011, as supplemented by disclosures, if any, 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, or OLED, technologies for use in flat panel display, solid-state lighting and other applications. Since 1994, we have been exclusively engaged, and expect to continue to be exclusively engaged, in funding and performing research and development activities relating to OLED technologies and materials, and in attempting to commercialize these technologies and materials. We derive our revenue from the following:

· intellectual property and technology licensing;

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

· technology development and support, including government contract work and support provided to third parties for commercialization of their OLED products.

While we have made significant progress over the past few years developing and commercializing our family of OLED technologies (PHOLED, TOLED, FOLED, etc.) and materials, we have incurred significant losses since our inception, resulting in an accumulated deficit of $215.1 million as of March 31, 2012.

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

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

· the timing and volume of sales of our OLED materials for both commercial usage and evaluation purposes;

· the timing and magnitude of expenditures we may incur in connection with our ongoing research and development activities; and

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

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RESULTS OF OPERATIONS

Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011

We had an operating loss of $1.6 million for the three months ended March 31, 2012, compared to an operating loss of $2.7 million for the three months ended March 31, 2011. The decrease in operating loss was due to the following:

· an increase in revenue of $3.0 million; offset by

· an increase in operating expenses of $1.8 million.

We had a net loss of $1.2 million (or $0.03 per basic and diluted share) for the three months ended March 31, 2012, compared to a net loss of $11.9 million (or $0.31 per basic and diluted share) for the three months ended March 31, 2011. In 2011, the net loss included an $8.9 million loss on stock warrant liability related to warrants that were previously recorded as a liability. In August 2011, all remaining outstanding stock warrants to purchase shares of our common stock were exercised.

Our revenues were $12.6 million for the three months ended March 31, 2012, compared to $9.6 million for the three months ended March 31, 2011.  The increase in our overall revenue was primarily due to additional OLED material sales from the expanded adoption of our technology and materials in the marketplace by display manufacturers, particularly Samsung Mobile Display Co., Ltd. (SMD).

Material sales increased to $10.5 million for the three months ended March 31, 2012, compared to $4.5 million for the same period in 2011. Material sales relates to the sale of our OLED materials for incorporation into our customers’ commercial OLED products, or for their OLED development and evaluation activities.

Material sales included sales of both phosphorescent emitter and host materials.  Phosphorescent emitter sales were 81% of our total material sales for the three months ended March 31, 2012, compared to 95% of our total material sales for the three months ended March 31, 2011.  Host material sales were 19% of our total material sales for the three months ended March 31, 2012, compared to 5% of our total material sales for the three months ended March 31, 2011. We believe we can participate in the host materials business due to our long experience in developing emitter materials, which are used together with host materials in the emissive layer of an OLED.  However, our customers are not required to purchase our host materials in order to utilize our phosphorescent emitter materials, and the host material sales business is more competitive than the phosphorescent emitter material sales business.  Thus, our long-term prospects for host material sales are uncertain.

We cannot accurately predict how long our phosphorescent emitter material sales or host material sales to particular customers will continue, as our customers frequently update and alter their product offerings in response to market demands. Continued sales of our OLED materials to these customers will depend on several factors, including pricing, availability, continued technical improvement and competitive product offerings.

Royalty and license fees decreased to $422,000 for the three months ended March 31, 2012, compared to $2.7 million for the three months ended March 31, 2011. A substantial portion of the decrease was due to the timing of royalty and license fee payments to be received under our patent license agreements with SMD.  In August 2011 we entered into a patent license agreement with SMD which replaced and superseded the then existing patent license agreement.  This patent license agreement with SMD runs through December 31, 2017.

Our new patent license agreement with SMD covers the manufacture and sale of specified OLED display products.  Under the agreement, SMD has agreed to pay us a fixed license fee, payable in semi-annual installments over the agreement term.  These installments increase on an annual basis over the term of the license agreement.  The installment amounts replaced the quarterly royalty reporting structure in the prior patent license agreement.  The installment amounts were determined through negotiation based on a number of factors, including, without limitation, estimates of SMD’s OLED business growth as a percentage of published OLED market forecasts, the use of red and green phosphorescent materials in SMD’s OLED display products, and appropriate royalty rates relating to SMD’s practice under the licensed patents.  Based upon the extended payment arrangement, such amounts are not considered fixed and determinable for revenue recognition purposes until such time the installments become due and payable. As a result, the recognition of license fees under our new agreement with SMD is scheduled to be taken in the second and fourth quarter of each year; therefore our quarterly license fees will fluctuate accordingly, depending on the timing of such payments. No such payments became due in the three months ended March 31, 2012.

At the same time we entered into the August 2011 patent license agreement with SMD, we also entered into a new supplemental material purchase agreement.  Under the August 2011 supplemental material purchase agreement, SMD agreed

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to purchase from us a minimum dollar amount of phosphorescent emitter materials for use in the manufacture of licensed products.  This minimum purchase commitment is subject to SMD’s requirements for phosphorescent emitter materials and our ability to meet these requirements over the term of the supplemental agreement.  The minimum purchase amounts increase on an annual basis over the term of the supplemental agreement.  These amounts were determined through negotiation based on a number of factors, including, without limitation, estimates of SMD’s OLED business growth as a percentage of published OLED market forecasts and SMD’s projected minimum usage of red and green phosphorescent emitter materials over the term of the agreement.

Cost of material sales increased to $1.1 million for the three months ended March 31, 2012, compared to $103,000 for the three months ended March 31, 2011, based on the aforementioned increase in material sales. Cost of material sales includes the cost of producing materials that have been classified as commercial and shipping costs for such materials, but excludes the cost of producing certain materials, which cost has already been included in research and development expense. Commercial materials are materials that have been validated by us for use in commercial OLED products.

Depending on the amounts, timing and stage of materials being classified as commercial, we expect cost of materials sales to fluctuate from quarter to quarter. As a result of these timing issues, and due to increased sales of commercial materials, cost of material sales increased for the three months ended March 31, 2012, compared to the same period in 2011. For the three months ended March 31, 2012 and 2011, costs associated with $7.5 million and $3.1 million, respectively, of material sales relating to commercial materials were included in cost of material sales.

We incurred research and development expenses of $6.7 million for the three months ended March 31, 2012, compared to $6.6 million for the three months ended March 31, 2011.  Although total expenses remained relatively consistent over the corresponding periods, the following significant changes occurred:

· increased employee costs of $351,000, due primarily to increased salaries, costs associated with retirement benefits and stock-based compensation for certain executive officers;

· increased costs of $214,000 related to outsourced research and development efforts;

· decreased costs of $421,000 related to stock-based compensation for members of our Scientific Advisory Board.

Research and development expenses for the three months ended March 31, 2012 were reduced by $603,000 due to the reversal of certain compensation accruals, resulting from actual payments made during the first quarter of 2012 being lower than previously estimated at December 31, 2011.

Selling, general and administrative expenses were $4.3 million for the three months ended March 31, 2012, compared to $3.9 million for the three months ended March 31, 2011. The overall increase in these costs was driven in part by increased employee costs, commercial activities, professional fees and non-cash expenses related to stock-based compensation. Selling, general and administrative expenses for the three months ended March 31, 2012 were reduced by $315,000 due to the reversal of certain compensation accruals, resulting from actual payments made during the first quarter of 2012 being lower than previously estimated at December 31, 2011.

Patent costs increased to $1.9 million for the three months ended March 31, 2012, compared to $1.6 million for the three months ended March 31, 2011. The increase was mainly due to increased costs associated with our defense of certain ongoing and new challenges to our issued patents, as well as the timing of prosecution and maintenance costs associated with a number of patents and patent applications.

Royalty and license expense increased to $250,000 for the three months ended March 31, 2012, compared to $202,000 for the three months ended March 31, 2011. The increase consisted mainly of royalties incurred under our amended license agreement with Princeton, USC and Michigan, resulting from increased revenues. See Note 5 in Notes to Consolidated Financial Statements for further discussion.

Interest income increased to $357,000 for the three months ended March 31, 2012, compared to $96,000 for the three months ended March 31, 2011. The increase was mainly attributable to interest earned on higher average cash and investment balances as a result of proceeds received from the completion of our public offering in March 2011.

At March 31, 2011, we had outstanding warrants to purchase shares of common stock, which warrants contained a “down-round” provision requiring liability classification.  The change in fair value of these warrants during the period resulted in an $8.9 million non-cash loss on our statement of comprehensive loss for the three months ended March 31, 2011. In August 2011, all remaining outstanding stock warrants to purchase shares of our common stock were exercised.

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Samsung SMD has been required to withhold tax upon payment of royalties to us at a rate of 16.5%. For the three months ended March 31, 2011, foreign income taxes of $297,000 were withheld in connection with royalties paid by SMD.  No such payments occurred in the three months ended March 31, 2012. We anticipate the amount of withholding taxes to increase as associated payments received from SMD increase in the future.

Liquidity and Capital Resources

As of March 31, 2012, we had cash and cash equivalents of $144.3 million and short-term investments of $194.3 million, for a total of $338.6 million. This compares to cash and cash equivalents of $111.8 million and short-term investments of $234.3 million, for a total of $346.1 million, as of December 31, 2011.

Cash used in operating activities was $2.0 million for the three months ended March 31, 2012, compared to cash provided of $1.6 million for the same period in 2011. The increase in cash used in operating activities was primarily due to the following:

· the impact of the timing of payment of accounts payable and accrued expenses of $2.2 million;

· the impact of the timing of inventory purchases of $1.6 million; and

· the impact of the timing of payment for other current assets $1.2 million; offset partially by

· a decrease in net loss of $912,000, which amount excludes the impact of non-cash items; and

· the impact of the timing of receipt of accounts receivable of $756,000.

Cash provided from investing activities was $37.3 million for the three months ended March 31, 2012, compared to cash used of $14.9 million for the same period in 2011. The increase in cash provided from investing activities was mainly due to net sales of investments as a result of the completion of our public offering described below.

Cash used in financing activities was $2.9 million for the three months ended March 31, 2012, compared to cash provided of $251.0 million for the same period in 2011. In March 2011, the Company completed a public offering of its common stock. For the three months ended March 31, 2012, we received proceeds of $541,000 from the exercise of options and warrants to purchase shares of our common stock, compared to proceeds of $5.1 million from the exercise of options and warrants to purchase shares of our common stock for the same period in 2011.

Working capital was $338.0 million as of March 31, 2012, compared to $342.8 million as of December 31, 2011.

We anticipate, based on our internal forecasts and assumptions relating to our operations (including, among others, assumptions regarding our working capital requirements, the progress of our research and development efforts, the availability of sources of funding for our research and development work, and the timing and costs associated with the preparation, filing, prosecution, maintenance, defense and enforcement of our patents and patent applications), that we have sufficient cash, cash equivalents and short-term investments to meet our obligations for at least the next 12 months.

We believe that potential additional financing sources for us include long-term and short-term borrowings, public and private sales of our equity and debt securities and the receipt of cash upon the exercise of outstanding stock options. 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

Refer to our Annual Report on Form 10-K for the year ended December 31, 2011, for a discussion of our critical accounting policies.  There have been no changes in critical accounting policies to date in 2012.

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Contractual Obligations

Refer to our Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of our contractual obligations.

Off-Balance Sheet Arrangements

Refer to our Annual Report on Form 10-K for the year ended December 31, 2011 for a discussion of off-balance sheet arrangements.  As of March 31, 2012, we had no off-balance sheet arrangements.

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 Note 4 to the consolidated financial statements included herein. We invest in investment grade financial instruments to reduce our exposure related to investments.  Our primary market risk exposure with regard to such financial instruments is to changes in interest rates, which would impact interest income earned on investments. However, based upon the conservative nature of our investment portfolio and current experience, we do not believe a decrease in investment yields would have a material negative effect on our interest income.

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2012. Based on that evaluation, the 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 three months ended March 31, 2012 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

Opposition to European Patent No. 0946958

On December 8, 2006, Cambridge Display Technology Ltd. (CDT), which was acquired in 2007 by Sumitomo Chemical Company (Sumitomo), filed a Notice of Opposition to European Patent No. 0946958 (EP ‘958 patent). The EP ‘958 patent, which was issued on March 8, 2006, is a European counterpart patent to U.S. patents 5,844,363, 6,602,540, 6,888,306 and 7,247,073. These patents relate to our FOLED™ flexible OLED technology. They are exclusively licensed to us by Princeton, and under the license agreement we are required to pay all legal costs and fees associated with this proceeding.

The European Patent Office (the EPO) conducted an Oral Hearing in this matter and on November 26, 2009 issued its written decision to reject the opposition and to maintain the patent as granted.   CDT has filed an appeal to the EPO panel decision.

At this time, based on our current knowledge, we believe that the EPO panel decision will be upheld on appeal. However, we cannot make any assurances of this result.

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Opposition to European Patent No. 1449238

Between March 8, 2007 and July 27, 2007, three companies filed Notices of Opposition to European Patent No. 1449238 (EP ‘238 patent). The three companies are Sumation Company Limited (Sumation), a joint venture between Sumitomo and CDT, Merck Patent GmbH, of Darmstadt, Germany, and BASF Aktiengesellschaft, of Mannheim, Germany.  The EP ‘238 patent, which was issued on November 2, 2006, is a European counterpart patent, in part, to U.S. patents 6,830,828; 6,902,830; 7,001,536; 7,291,406; 7,537,844; and 7,883,787; and to pending U.S. patent application 13/009,001, filed on January 19, 2011, and 13/205,290, filed on August 9, 2011 (hereinafter the “U.S. ‘828 Patent Family”). These patents and patent applications relate to our UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to us by Princeton, and under the license agreement we are required to pay all legal costs and fees associated with this proceeding.

The EPO combined all three oppositions into a single opposition proceeding. The EPO conducted an Oral Hearing in this matter and at the conclusion of the Oral Hearing, the EPO panel announced its decision to maintain the patent with claims directed to OLEDs comprising phosphorescent organometallic iridium compounds. The official minutes from the Oral Hearing and written decision were published on January 13, 2012.

All the parties filed notices of appeal to the EPO’s panel decision on March 13, 2012.  The parties are permitted to file papers in support of their respective requests for appellate review.

At this time, based on our current knowledge, we believe that the EPO will uphold our positions on appeal. However, we cannot make any assurances of this result.

Invalidation Trial in Japan for Japan Patent No. 3992929

On April 19, 2010, we received a copy of a Notice of Invalidation Trial from the Japanese Patent Office (the JPO) for our Japan Patent No. 3992929 (the JP ‘929 patent), which was issued on August 3, 2007. The request for the Invalidation Trial was filed by Semiconductor Energy Laboratory Co., Ltd. (SEL), of Kanagawa, Japan. The JP ‘929 patent is a Japanese counterpart patent, in part, to the above-noted EP ‘238 patent and to the above-noted U.S. ‘828 Patent Family, which  relate to our UniversalPHOLED phosphorescent OLED technology. Under our license agreement with Princeton, we are required to pay all legal costs and fees associated with this proceeding.

On February 28, 2011, we learned that the JPO had issued a decision recognizing our invention and upholding the validity of most of the claims, but finding the broadest claims in the patent invalid. We believe that the JPO’s decision invalidating these claims was erroneous, and we filed an appeal to the Japanese IP High Court.

Both parties filed appeal briefs in this matter with the Japanese IP High Court. A technical explanation hearing was held on February 1, 2012.  At the hearing, both parties filed technical materials supporting their respective positions.

At this time, based on our current knowledge, we believe that the JPO decision invalidating certain claims in our JP ‘929 patent should be overturned on appeal as to all or a significant portion of the claims. However, we cannot make any assurances of this result.

Opposition to European Patent No. 1394870

On about April 20, 2010, five European companies filed Notices of Opposition to European Patent No. 1394870 (the EP ‘870 patent). The EP ‘870 patent, which was issued on July 22, 2009, is a European counterpart patent, in part, to U.S. patents 6,303,238; 6,579,632; 6,872,477; 7,279,235; 7,279,237; 7,488,542; 7,563,519; and 7,901,795; and to pending U.S. patent application 13/035,051, filed on February 25, 2011 (hereinafter the “U.S. ‘238 Patent Family”). These patents and this patent application relate to our UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to us by Princeton, and under the license agreement we are required to pay all legal costs and fees associated with this proceeding. The five companies are Merck Patent GmbH; BASF Schweitz AG of Basel, Switzerland; Osram GmbH of Munich, Germany; Siemens Aktiengesellschaft of Munich, Germany; and Koninklijke Philips Electronics N.V., of Eindhoven, The Netherlands.

The EPO combined the oppositions into a single opposition proceeding. The matter has been briefed and we are waiting for the EPO to provide notice of the date of the Oral Hearing. We are also waiting to see whether any of the other parties in the opposition file additional documents, to which we might respond.

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

Invalidation Trials in Japan for Japan Patent Nos. 4357781 and 4358168

On May 24, 2010, we received copies of two additional Notices of Invalidation Trials against Japan Patent Nos. 4357781 (the JP ‘781 patent) and 4358168 (the JP ‘168 patent), which were both issued on August 14, 2009. The requests for these two additional Invalidation Trials were also filed by SEL. The JP ‘781 and ‘168 patents are also Japanese counterpart patents, in part, to the above-noted U.S. ‘828 Patent Family and EP ‘238 Patent, which relate to our UniversalPHOLED phosphorescent OLED technology. Under our license agreement with Princeton, we are also required to pay all legal costs and fees associated with these two proceedings.

On March 31, 2011, we learned that the JPO had issued decisions finding all claims in the JP ‘781 and JP ‘168 patents invalid. We believe that the JPO’s decisions invalidating these claims were erroneous, and we filed appeals for both cases to the Japanese IP High Court.

Both parties are in the process of filing appeal briefs in this matter with the Japanese IP High Court. The Japanese IP High Court held hearings for this matter on November 22, 2011, and March 5, 2012.

At this time, based on our current knowledge, we believe that the JPO decisions invalidating all the claims in our JP ‘781 and JP ‘168 patents should be overturned on appeal as to all or a significant portion of the claims. However, we cannot make any assurances of this result.

Invalidation Trial in Korea for Patent No. KR-0998059

On March 10, 2011, we received informal notice from our Korean patent counsel of a Request for an Invalidation Trial from the Korean Intellectual Property Office (KIPO) for our Korean Patent No. 10-0998059 (the KR ‘059 patent), which was issued on November 26, 2010. The Request was filed by a certain individual petitioner, but we still do not know which company, if any, was ultimately responsible for filing this Request. The KR ‘059 patent is a Korean counterpart patent to the OVJP, Organic Vapor Jet Printing, family of U.S. patents originating from U.S. patent 7,431,968.

On April 21, 2011, our Korean patent counsel received a copy of the petitioner’s brief in support of the Request. We filed a response to the Request on June 20, 2011. The petitioner filed a rebuttal brief on August 8, 2011, and we filed a response to the rebuttal brief on October 12, 2011.  The petitioner filed a second rebuttal brief on January 17, 2012, and we filed a response to the second rebuttal brief on March 29, 2012.

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

Invalidation Trials in Korea for Patent Nos. KR-558632 and KR-963857

On May 11 and May 31, 2011, respectively, we learned that Requests for Invalidation Trials were filed in Korea, on May 3 and May 26, 2011, respectively, for our Korean Patent Nos. KR-558632 (the KR ‘632 patent), which issued on March 2, 2006, and KR-963857 (the KR ‘857 patent), which issued on June 8, 2010. The Requests were filed by Duk San Hi-metal, Ltd. (Duk San) of Korea. The KR ‘632 and KR ‘857 patents are both Korean counterpart patents, in part, to U.S. ‘238 Patent Family and to EP ‘870 patent, which is subject to the above-noted European Opposition; and to the JP ‘024 patent, which is subject to the below-noted Japanese Invalidation Trial, all of which relate to our UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to us by Princeton, and under the license agreement we are required to pay all legal costs and fees associated with this proceeding.

We timely filed our formal responses to the Requests by the due dates of August 27, 2011 and September 8, 2011, respectively.  Duk San filed a reply brief on December 16, 2011 relating to the KR ‘857 patent, to which we timely filed a responsive brief on April 23, 2012.  Both parties may file additional briefs in these matters with KIPO.

At this time, based on our current knowledge, we believe there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, we cannot make any assurances of this result.

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Invalidation Trials in Korea for Patent Nos. KR-744199 and KR-913568

On May 10 and May 31, 2011, respectively, we learned that Requests for Invalidation Trials were filed in Korea, on May 3 and May 26, 2011, respectively, for our Korean Patent Nos. KR-744199 (the KR ‘199 patent), which issued on July 24, 2007, and KR-913568 (the KR ‘568 patent), which issued on August 17, 2009. The Requests were also filed by Duk San. The KR ‘199 and KR ‘568 patents are both Korean counterpart patents, in part, to the U.S. ‘828 Patent Family which relate to the EP ‘238 patent, which is subject to one of the above-noted European Oppositions; and to the JP ‘929 patent, which is subject to one of the above-noted Japanese Invalidation Trials. These patents and patent applications relate to our UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to us by Princeton, and under the license agreement we are required to pay all legal costs and fees associated with this proceeding.

We timely filed our formal responses to the Requests by the due dates of September 1, 2011 and August 23, 2011, respectively.  Both parties are in the process of filing briefs in these matters with KIPO.

At this time, based on our current knowledge, we believe there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, we cannot make any assurances of this result.

Invalidation Trial in Japan for Japan Patent No. 4511024

On June 16, 2011, we learned that a Request for an Invalidation Trial was filed in Japan for our Japanese Patent No. JP-4511024 (the JP ‘024 patent), which issued on May 14, 2010. The Request was filed by SEL, the same opponent as in the above-noted Japanese Invalidation Trial for the JP ‘929 patent. The JP ‘024 patent is a counterpart patent, in part, to the U.S. ‘238 Patent Family, which relate to the EP ‘870 patent, which is subject to one of the above-noted European Oppositions; and to the KR ‘632 and KR ‘857 patents, which are subject to one of the above noted Korean Invalidation Trials. These patents and the pending U.S. patent application relate to our UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to us by Princeton, and under the license agreement we are required to pay all legal costs and fees associated with this proceeding.

We timely filed a Written Reply to the Request for Invalidation Trial.  A hearing was held on March 15, 2012.

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

Opposition to European Patent No. 1252803

On July 12 and 13, 2011, three companies filed Oppositions to our European Patent No. 1252803 (the EP ‘803 patent).  The three companies are Sumitomo, Merck Patent GmbH and BASF SE, of Ludwigshaven, Germany. The EP ‘803 patent, which was issued on October 13, 2010, is a European counterpart patent, in part, to the U.S. ‘828 Patent Family, which relate to our UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to us by Princeton, and under the license agreement we are required to pay all legal costs and fees associated with this proceeding.

The EPO combined the oppositions into a single opposition proceeding.  Our response to the oppositions was timely filed prior to the February 18, 2012 extended due date.

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

Invalidation Trials in Korea for Patent Nos. KR-794,975, KR-840,637 and KR-937,470

On August 8, 2011, we received information indicating that Requests for Invalidation Trials were filed against our Korean Patent Nos. KR-840,637 (the KR ‘637 patent) and KR-937,470 (the KR ‘470 patent), which issued on June 17, 2008 and January 11, 2010, respectively. On December 12, 2011, we received information that a further Request for an Invalidation Trial was filed against our Korean Patent No. KR-794,975 (the KR ‘975 patent).  The Requests were also filed by Duk San. The KR ‘975, KR ‘637 and KR ‘470 patents are Korean counterpart patents, in part, to the U.S. ‘828 Patent Family; to the EP ‘803 patent, which is subject to one of the above-noted European Oppositions; and to the JP ‘781 and JP ‘168 patents, which are subject to the above-noted Japanese Invalidation Trials. These patents and patent applications relate to our UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to us by Princeton, and under the license agreement we are required to pay all legal costs and fees associated with this proceeding.

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Our formal responses relating to the KR ‘637, KR ‘470, and KR ‘975 patents, were timely filed on December 7, 2011, December 8, 2011 and March 3, 2012, respectively.  Both parties may file additional briefs in these matters with KIPO.

At this time, based on our current knowledge, we believe there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, we cannot make any assurances of this result.

Opposition to European Patent No. 1390962

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

The EPO combined the oppositions into a single opposition proceeding.  We are in the process of preparing our response to the oppositions.

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

Opposition to European Patent No. 1933395

On February 24 and 27, 2012, Oppositions were filed to our European Patent No. 1933395 (the EP ‘395 patent). These Oppositions were filed by Sumitomo, Merck Patent GmbH and BASF SE.  The EP ‘395 patent is a counterpart patent to the above-noted Japan Patent No. 4358168, and to the above-noted Patent Nos. KR-840,637 and KR-937,470, counterpart patent, in part, to the U.S. ‘828 Patent Family, which relate to our UniversalPHOLED phosphorescent OLED technology. This patent is exclusively licensed to us by Princeton, and under the license agreement we required to pay all legal costs and fees associated with this proceeding.

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

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, 2011.

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

Withholding of Shares to Satisfy Tax Liabilities

During the quarter ended March 31, 2012, we acquired 39,695 shares of common stock through transactions related to the vesting of restricted share awards previously granted to certain employees. Upon vesting, the employees turned in shares of common stock in amounts sufficient to pay their minimum statutory tax withholding at rates required by the relevant tax authorities.

The following table provides information relating to the shares we received during the quarter ended March 31, 2012.

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased		Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
January 1 – January 31		—	$	—		n/a		--
February 1 – February 29		175		44.70		n/a		--
March 1 – March 31		39,520		40.54		n/a		--
Total		39,695	$	40.56		n/a		--

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following is a list of the exhibits included as part of this report.  Where so indicated by footnote, exhibits that were previously included 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
10.1*#	OLED Technology License Agreement between the registrant and Lumiotec, Inc., dated as of January 5, 2012
10.2*	Amendment No. 7 to the Commercial Supply Agreement between the registrant and LG Display Co., Ltd., dated as of March 6, 2012
10.3*	Universal Display Corporation Equity Retention Agreement with Julia J. Brown, dated as of March 8, 2012
10.4*	Universal Display Corporation Equity Retention Agreement with Janice K. Mahon, dated as of March 8, 2012
10.5*	Universal Display Corporation Equity Retention Agreement with Michael G. Hack, dated as of March 8, 2012
31.1*	Certifications of Steven V. Abramson, Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
31.2*	Certifications of Sidney D.  Rosenblatt, Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
32.1**	Certifications of Steven V. Abramson, Chief Executive Officer, as required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C. Section 1350 (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.  Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.2**	Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C. Section 1350 (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.  Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.
**	Furnished herewith.
#	Confidential treatment has been requested as to certain portions of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Note: Any of the exhibits listed in the foregoing index not included with this report may be obtained, without charge, by writing to Mr. Sidney D. Rosenblatt, Corporate Secretary, Universal Display Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

		UNIVERSAL DISPLAY CORPORATION
Date: May 9, 2012	By:	/s/ Sidney D. Rosenblatt
		Sidney D. Rosenblatt
		Executive Vice President and Chief Financial Officer

EX-10.1

Note:  Throughout this document, certain confidential material contained herein has been omitted and has been separately filed with the Commission.  Each omission has been marked with an [***].

OLED TECHNOLOGY LICENSE AGREEMENT

THIS OLED TECHNOLOGY LICENSE AGREEMENT (this “Agreement”) is entered into effective as of January 1, 2012 (the “Effective Date”), by and between Universal Display Corporation (“Universal Display”), an entity with a place of business at 375 Phillips Blvd, Ewing, New Jersey 08618 U.S.A.; and Lumiotec, Inc. (“Lumiotec”), an entity with a place of business at 4149-8, Hachimanpara 5-chome, Yonezawa-shi, Yamagata, Japan.  Each of Universal Display and Lumiotec is referred to herein as a “Party,” and collectively as the “Parties.”

BACKGROUND

WHEREAS, Universal Display has rights in certain patents and possesses certain know-how concerning organic light emitting devices; and

WHEREAS, Lumiotec desires to obtain license rights to practice under these patents and to use this know-how on the terms and conditions set forth herein.

NOW, THEREFORE, intending to be legally bound, each of the Parties hereby agrees as follows:

AGREEMENT

Article 1Definitions

In addition to other terms defined elsewhere herein, the following terms shall have their corresponding meanings when used in this Agreement.

1.1“Affiliate” means an entity under the control of a Party, whether directly or through one or more intermediaries.  For such purposes, “control” shall mean the ownership of securities representing more than fifty percent (50%) of the voting capital stock of the relevant entity, or of other interests having majority voting rights with respect to the election of the board of directors or similar governing authority of the relevant entity, or of any other power by contract or in any other form which entitles the holder thereof to majority voting rights with respect to management decisions of the relevant entity.

1.2“Know-How” means unpatented technical information, data, specifications, plans, drawings, designs, blueprints, formulae, processes and other similar items of a trade secret or confidential nature.

1.3“Licensed Product” means an OLED Light Source, or any product that incorporates one or more OLED Light Sources, which OLED Light Source(s) are (a) covered, in whole or in part, by any Valid Claim(s) of a Universal Display Patent; (b) manufactured using a

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process that is covered, in whole or in part, by any Valid Claim of a Universal Display Patent; and/or (c) manufactured using any of the Universal Display Know-How.

1.4“Lighting” means a source of direct or indirect illumination, including, but not limited to, a room, area or architectural lighting source, a backlight for an LCD display or other consumer electronics product, or a source of illumination for signage; provided, however, that the source of illumination shall not itself utilize addressable pixel elements.

1.5“Net Sales Revenue”

1.5.1For Licensed Products sold by Lumiotec to non-Affiliated third parties solely for monetary consideration, “Net Sales Revenue” means the gross amount invoiced or received, whichever occurs sooner, on account thereof, less the following where separately itemized on the customer invoice for the Licensed Products: (a) taxes and duties actually collected and remitted to the appropriate taxing authorities; (b) reasonable shipping and insurance costs actually paid or accrued for such purpose; and (c) refunds or credits actually given for returned or defective items.

1.5.2For all other Licensed Products sold or otherwise transferred by Lumiotec, “Net Sales Revenue” means the greater of (a) or (b), where (a) is the arm’s length transfer price recorded by Lumiotec for such sale or transfer; and (b) is the average selling price at which Licensed Products of similar kind and quantity have been sold by Lumiotec to non-Affiliated third parties during the same calendar quarter, as calculated according to the preceding paragraph, or if no such selling price is available, the fair market value of such Licensed Products.  The arm’s length transfer pricing referred to in clause (a) shall include all cost components fairly attributable to the Licensed Products being sold or otherwise transferred, and shall comply with the Japan National Tax Agency guidelines and other applicable laws, rules and regulations.

1.5.3If either Party presents reasonable evidence that the amount calculated as set forth above does not fairly reflect the fair market value of a Licensed Product (such as evidence that the industry-wide average sales price of substantially similar products differs significantly from the price calculated herein, or evidence that additional consideration is being received based on the downstream sale of a Licensed Product), the Parties shall in good faith negotiate a more equitable method of calculating Net Sales Revenue with respect to the Licensed Product in question.

1.6“OLED” means a device consisting of two or more electrodes, at least one of which is transparent, together with one or more chemical substances deposited between these two electrodes, at least one of which is an organic or organometallic material, which device emits light when a voltage is applied across the electrodes.

1.7“OLED Light Source” means a Permitted OLED Device, or a series of such devices, which OLED device(s) are intended for use in Lighting applications, together with the following elements: (a) encapsulation or packaging materials or coatings for protection of the OLED device(s); (b) optical elements, coatings or enhancements added to the OLED device(s)

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for the purpose of affecting or modulating light output from the OLED device(s); (c) connectors, contacts or similar components attached to the OLED device(s) and designed to connect the OLED device(s) to an external power source or supply and/or other elements of a lighting fixture; (d) a supporting frame in direct contact with the OLED device(s) designed to stabilize or protect the OLED device(s) during shipment, installation or usage; (e) thermal elements, coatings, structures or enhancements attached to the OLED device(s) for purposes of reducing, dispersing or modulating the temperature of the OLED device(s); (f) control electronics or circuitry designed or utilized to adjust or correct light emission from the OLED device(s); and (g) power conversion components designed to allow the OLED device(s) to operate utilizing an external power source or supply (the power source or supply itself is not part of the OLED Light Source).  Two potential configurations of an OLED Light Source, by example only, are set forth in Exhibit A attached hereto.

1.8“Permitted OLED Device”means an OLED device in which all of the emissive layer materials are deposited by vacuum thermal evaporation.

1.9“Term” means the term of this Agreement, as specified in Article 8 below.

1.10“Universal Display Know-How” means Know-How of Universal Display relating to the design or manufacture of an OLED Light Source, which Know-How has been or is in the future provided to Lumiotec under other agreements between the Parties.

1.11“Universal Display Patents” means all patents and patent applications pertaining to OLED Light Sources that are issued, registered, granted, allowed or published in the world as of the Effective Date and which Universal Display owns or has the right to license to Lumiotec hereunder, including, but not limited to, the issued, registered, granted or published patents and patent applications listed in Exhibit C, together with such future patents and patent applications as are specified in Section 2.2 below.

1.12“Universal Display Technology” means the Universal Display Patents and the Universal Display Know-How.

1.13“Valid Claim” means a claim of an issued, registered, granted, allowed or published patent or patent application, which claim has neither expired nor been finally, following expiration of all rights of appeal, held unpatentable, invalid or unenforceable by a court or other government agency of competent jurisdiction.

Article 2License Rights

2.1Grant of License to Lumiotec.  Subject to the remaining provisions of this Article 2, Universal Display hereby grants to Lumiotec a worldwide, royalty-bearing, non-exclusive and non-transferable (except in connection with a permitted transfer of this Agreement as a whole) license, without rights to sublicense, under the Universal Display Patents, and to use the Universal Display Know-How, solely to manufacture (but not have manufactured), sell, offer for sale, import and use Licensed Products.

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2.2License Rights to Future Patents and Know-How.  To the extent it has the right to do so, Universal Display will expand Lumiotec’s license rights under this Article 2 to include any additional patents, patent applications and Know-How of Universal Display pertaining to OLED Light Sources that are owned by or licensed to Universal Display and which are issued, registered, granted, allowed published or generated during the Term, but excluding any such patents, patent applications or Know-How acquired by Universal Display through a merger, asset acquisition or other similar transaction unless separately agreed by the Parties in writing.  Universal Display shall periodically update Exhibit C to include any such additional patents and patent applications that are issued, registered, granted, allowed or published.

2.3No Rights Respecting Certain OLED Chemicals.  Notwithstanding the foregoing, Lumiotec is not authorized under this Agreement to sell or offer for sale any Licensed Products made using any chemical substance used or useful for the manufacture of OLEDs, the composition of matter of which is covered by a Valid Claim of a Universal Display Patent (a “Universal Display Proprietary OLED Chemical”), unless such Universal Display Proprietary OLED Chemical was purchased directly from Universal Display.  Lumiotec shall not manufacture or purchase from a third party, or encourage any third party to manufacture or sell to Lumiotec, any chemical substance that Lumiotec knows, or has reason to know, is a Universal Display Proprietary OLED Chemical.

2.4No Rights Respecting Certain OLED Manufacturing Equipment.  Notwithstanding the foregoing, Lumiotec is not authorized under this Agreement to sell or offer for sale any Licensed Products made using any manufacturing equipment or machinery used or useful for the manufacture of OLEDs, the design or construction of which is covered by a Valid Claim of a Universal Display Patent (“Universal Display Proprietary OLED Equipment”), unless such Universal Display Proprietary OLED Equipment was purchased from an authorized Universal Display equipment vendor.  Lumiotec shall not manufacture or purchase from a third party, or encourage any third party to manufacture or sell to Lumiotec, any equipment or machinery that Lumiotec knows, or has reason to know, is Universal Display Proprietary OLED Equipment.

2.5Acknowledgement of Derivative Rights.  Lumiotec acknowledges that certain of the Universal Display Technology is licensed by Universal Display from the Trustees of Princeton University (“Princeton”), the University of Southern California (“USC”) and the University of Michigan (“Michigan”), and, therefore, that Lumiotec’s license rights under this Agreement with respect to such Universal Display Technology are subject to the reserved rights of and obligations to such third parties under their license agreements with Universal Display.  Lumiotec further acknowledges that the U.S. Government has certain reserved rights with respect to those Universal Display Patents claiming inventions that were first conceived or reduced to practice under contracts between the U.S. Government and Universal Display or its licensors.  Universal Display hereby covenants to Lumiotec that: (a) Universal Display shall comply in all material respects with the terms of its license agreements with such third-party licensors and its contracts with or awards from the U.S. Government as in either case are relevant to Lumiotec’s exercise of the license rights granted by Universal Display hereunder; and (b) no additional consideration shall be owed by Lumiotec to such third-party licensors or the U.S. Government on account of Lumiotec’s exercise of such license rights.  Nothing herein shall be construed as

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limiting or restricting the reserved rights of or obligations to Universal Display’s third-party licensors or the U.S. Government with respect to the Universal Display Technology.  Upon Lumiotec’s request, Universal Display will provide Lumiotec with copies (which may be reasonably redacted by Universal Display to avoid disclosing confidential information not relevant to this Agreement) of such of Universal Display’s agreements with these third-party licensors and of the applicable portions its relevant contracts with or awards from the U.S. Government.

2.6Business Consolidations.  Should Lumiotec acquire the existing OLED business of any third party, the license rights granted to Lumiotec under this Agreement shall not extend to any then-current products of such third party’s OLED business unless expressly agreed to by Universal Display in writing.  In addition, if the OLED business of the third party is not fully integrated into Lumiotec’s OLED business, the license rights granted to Lumiotec under this Agreement shall not extend to any future products of the third party’s OLED business unless expressly agreed to by Universal Display in writing.  Should Universal Display have already entered into a similar license agreement with the third party at the time of such acquisition, there shall be no reduction in the payment or other obligations of Lumiotec under this Agreement as they pertain to products of Lumiotec’s OLED business, or of such third party under its similar license agreement as they pertain to products of the third party’s OLED business, unless expressly agreed to by Universal Display in writing.

2.7Reservation of Rights.  Except for the license rights expressly granted to Lumiotec under this Article 2, all rights to practice under the Universal Display Patents and to use the Universal Display Know-How are reserved unto Universal Display and its licensors.  No implied rights or licenses to practice under any patents or to utilize any unpatented inventions, Know-How or technical information of Universal Display are granted to Lumiotec hereunder.

Article 3Patent Matters, Attribution and Samples

3.1Patent Validity.  During the Term, Lumiotec shall not, and shall ensure that its Affiliates do not, challenge or oppose, or assist others in challenging or opposing, in whole or in part, the issuance, validity, scope or enforceability of any of the Universal Display Patents, nor shall Lumiotec initiate or continue, or assist others in initiating or continuing, proceedings to have any of the Universal Display Patents cancelled or invalidated, in whole or in part, except that the foregoing shall not apply to the extent such prohibitions are contrary to law or regulation in the relevant patent jurisdiction.  If Lumiotec or any of its Affiliates challenges, opposes or seeks to invalidate or cancel, in whole or in part, any of the Universal Display Patents, or assists others in challenging, opposing or seeking to invalidate or cancel, in whole or in part, any of the Universal Display Patents, and if the action or proceeding is fully or substantially unsuccessful, then Lumiotec shall reimburse Universal Display, promptly on demand, for all attorneys’ fees, costs and out-of-pocket expenses reasonably incurred by Universal Display or its licensors of the Universal Display Patents in resisting or responding to such action or proceeding.  The foregoing shall be in addition to, and not in lieu of, any other rights or remedies that may be available to Universal Display, at law or equity, including, without limitation, actions for injunctive relief and the recovery of damages.

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3.2Patent Marking.  Upon Universal Display’s request, Lumiotec shall apply or cause to be applied to all Licensed Products such reasonable markings or notices of the Universal Display Patents as may be requested in writing by Universal Display in order to reasonably protect Universal Display’s rights and interests therein under the laws of the countries in which such Licensed Products are or are likely to be marketed, sold or used.  Where it is not feasible to apply such markings or notices directly to a particular Licensed Product, they shall instead be applied to the packaging for such Licensed Products.

3.3Non-Use of Certain Names.  Lumiotec shall not use the names of Princeton, USC or Michigan in connection with any products, promotion or advertising without the prior consent of Princeton, USC or Michigan, as applicable, except to the extent reasonably required by law.  Notwithstanding the foregoing sentence, Lumiotec may state that its license rights hereunder are derivative of rights granted by Princeton, USC and Michigan to Universal Display under the license agreement among them.

3.4Samples.  Upon Universal Display’s written request and at no additional cost to Universal Display, Lumiotec shall supply Universal Display with [***] samples of each type of Licensed Product that Lumiotec offers for sale to third parties.  Universal Display shall limit its requests for such samples to a reasonable number of different Licensed Products and Lumiotec shall supply such samples promptly following Lumiotec’s first sale of the Licensed Product to a third party.  Universal Display agrees to use such samples only (a) to verify compliance with the terms of this Agreement, and (b) for promotional purposes such as in displays at shareholder meetings, industry conferences or other similar venues (with appropriate attribution being given to Lumiotec).

3.5Amendments to the Universal Display Patents.  To the extent applicable law requires Universal Display to obtain Lumiotec’s approval for amendments to the specifications of any Universal Display Patent licensed hereunder, Lumiotec shall promptly approve all such reasonable amendments proposed by Universal Display.

Article 4Consideration

4.1License Fees.  In partial consideration of the license rights granted by Universal Display hereunder, Lumiotec shall pay to Universal Display the license fees specified in Exhibit B hereto.  Said license fees are due and payable by the date(s) specified in Exhibit B hereto.  All such fees are non-refundable and shall be in addition to, and not applied to reduce, any royalties payable hereunder.

4.2Royalties.  In further consideration of the license rights granted by Universal Display hereunder, Lumiotec shall pay to Universal Display running royalties at the rates specified in Exhibit B hereto on account of Net Sales Revenue from Lumiotec’s worldwide sales or other disposition of Licensed Products.  No multiple royalties shall be due because any Licensed Product, or its manufacture, sale, other disposition or usage, is or may be covered by more than one Universal Display Patent licensed to Lumiotec hereunder.  Both Parties acknowledge and agree that the royalty rates and the methods by which they are to be calculated and paid hereunder have been determined through arms length negotiations between the Parties,

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and that such rates and methods have been agreed upon because they are mutually convenient, reasonable and appropriate notwithstanding whether and to what extent any of the Universal Display Patents have been issued, granted, allowed or registered, or have expired, in any particular country in which Licensed Products are made, sold or used, or whether the Universal Display Patents encompass each and every feature of any particular Licensed Product.

4.3Royalty Reports.  Within forty-five (45) days following the end of each calendar quarter during the Term (and if the Term ends in the middle of a calendar quarter, within forty-five (45) days following the end of the Term), Lumiotec shall submit to Universal Display a written report, in English, that includes the following information (each, a “Royalty Report”): (a) a description of all Licensed Products sold or otherwise disposed of by Lumiotec during such calendar quarter, including the number and type of each Licensed Product sold and the countries of destination or sale; (b) gross amounts invoiced or received on account of such sales or other disposition of Licensed Products; (c) Lumiotec’s reasonably detailed calculation of the royalties due and owing to Universal Display on account of such sales or other disposition of Licensed Products; and (d) such other information as Universal Display may reasonably request of Lumiotec which is pertinent to ensuring compliance with the terms of this Agreement.

4.4Payment of Royalties.  Within forty-five (45) days following the end of each calendar quarter during the Term (and if the Term ends in the middle of a calendar quarter, within forty-five (45) days following the end of the Term), Lumiotec shall pay directly to Universal Display the royalties due and payable with respect to Licensed Products sold or otherwise disposed of during such calendar quarter.

Article 5Payment Terms; Audit Rights

5.1Payments.  All amounts due to Universal Display hereunder shall be paid in U.S. Dollars by wire transfer to a bank designated by Universal Display in writing, or by such other means as the Parties may agree in writing.  Universal Display’s current wire instructions are as follows:

[***]

Each payment shall be fully earned when due and nonrefundable once made.  All payments due hereunder shall be made without set-off, deduction or credit for any amount owed (or alleged to be owed) by Universal Display to Lumiotec or any of its Affiliates.  Without limiting its other rights or remedies on account of any late payment, Universal Display may require Lumiotec to pay interest on any late payments at a per annum rate equal to the Prime Rate as published in The Wall Street Journal on the date of payment, plus [***] percent ([***]).

5.2Payment Authorization and Associated Charges.  Lumiotec shall secure all authorizations required for payment of all amounts due to Universal Display hereunder, and shall bear any transfer fees, taxes and any other charges associated therewith.  If Lumiotec believes that any income taxes imposed by any national, provincial or local government of relevant countries on amount payable to Universal Display hereunder need to be withheld, Lumiotec shall provide Universal Display with prompt written notice thereof.  Thereupon, the Parties shall

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cooperate in good faith and use their best efforts to promptly file for and obtain appropriate governmental exemptions that would eliminate the requirement for Lumiotec to withhold such taxes.  If, notwithstanding these efforts, tax withholding is nonetheless required, Lumiotec may make the appropriate withholding from amounts payable to Universal Display hereunder, and Lumiotec shall then promptly pay the withheld amounts to the appropriate tax authorities.  Promptly upon making each such tax payment, Lumiotec shall obtain and forward to Universal Display the official tax receipt(s) issued by the relevant government to support Universal Display’s claim to applicable tax credits or refunds.

5.3Currency Conversion and Restriction.  All royalties due hereunder based on Licensed Products sold or otherwise disposed of by Lumiotec outside of the United States shall be payable in U.S. Dollars at the rate of exchange for the currency of the country in which such sales or usage occurs, which rate of exchange shall equal the exchange rate as published in The Wall Street Journal on the last business day of the calendar quarter for which payment is being made.  All royalties shall be paid to Universal Display without deduction of currency exchange fees or other similar amounts.  If at any time the legal restrictions of countries outside of the United States prevent Lumiotec from paying Universal Display any amounts due hereunder, or otherwise upon Universal Display’s written instruction, Universal Display may direct Lumiotec to make all or any portion of these payments to Universal Display’s accounts established at banks or depositories in one or more countries other than the United States.

5.4Records; Audit and Inspection.  Lumiotec shall keep accurate and complete financial and technical records relating to all Licensed Products until the three (3) year anniversary of the date of payment of royalties with respect to such Licensed Products.  An independent certified public accountant selected by Universal Display and approved by Lumiotec (such approval not to be unreasonably withheld), together with such technical support staff as such accountant reasonably deems necessary, shall have the right to audit such records and inspect such of Lumiotec’s materials, equipment and manufacturing processes as are reasonably necessary in order to verify Lumiotec’s compliance with its obligations hereunder.  Universal Display shall give reasonable advance notice of any such audit or inspection to Lumiotec, and such audit or inspection shall be conducted during Lumiotec’s normal business hours and in a manner that does not cause unreasonable disruption to Lumiotec’s conduct of its business.  The results of any such audit or inspection shall be deemed a Confidential Item of Lumiotec and shall not be disclosed by Universal Display except as may be necessary for Universal Display to enforce its rights and interests hereunder.  If the audit or inspection reveals that Lumiotec has underpaid any royalties due to Universal Display, Lumiotec shall immediately pay to Universal Display all unpaid royalties, plus interest on the unpaid amounts from the date payment was initially due at the rate specified in Section 5.1 above.  Universal Display shall be responsible for paying the fees and expenses charged by the accountant for conducting any audit or inspection hereunder; provided, however, that if the unpaid royalties exceed [***] percent ([***]) of the total royalties that should have been paid by Lumiotec during the audited period, Lumiotec shall promptly reimburse Universal Display for the reasonable fees and expenses charged by such accountant.  Nothing herein shall limit any other rights or remedies available to Universal Display on account of Lumiotec’s underpayment of royalties or other breach of its obligations under this Agreement.

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Article 6Confidentiality and Publicity

6.1Incorporation by Reference.  The provisions of sections 1 through 8 of the Mutual Non-Disclosure Agreement entered into by the Parties effective as of February 23, 2010, as the same may be amended (the “NDA”) are incorporated into this Agreement by reference.  For purposes of this Agreement, the “Stated Purpose” shall include the implementation and administration of this Agreement.  The obligations of each Party under the provisions of the NDA incorporated herein shall continue to be in effective during the term of this Agreement and for a period of four (4) years thereafter.

6.2Confidentiality of this Agreement.  The terms of this Agreement shall be deemed Confidential Items of each Party and treated as such by both Parties.  Notwithstanding the foregoing sentence, either Party may disclose in its public filings such of the terms of this Agreement as are reasonably required for such Party to comply with applicable securities laws and regulations, including, without limitation, by filing appropriate reports with applicable securities agencies or commissions and/or by filing an appropriately redacted copy of this Agreement in connection therewith.  In addition, either Party may issue a press release or other public announcement describing the general nature of this Agreement, or the Parties may agree to issue such a release or announcement jointly; provided, however, that no such release or announcement shall disclose any information about Lumiotec’s product launch strategy without Lumiotec’s prior written consent.  Subject to the foregoing provisions of this paragraph, any such public disclosure of the specific financial terms or other provisions of this Agreement, or any other information regarding the relationship between the Parties hereunder, shall require the other Party’s prior written consent.

6.3Trading in Securities.  If information disclosed under this Agreement is material non-public information about a Party, then the other Party agrees not to trade in the securities of the first Party or in the securities of any appropriate or relevant third party until such time as no violation of the applicable securities laws would result from such securities trading.

6.4Universal Display’s Licensors.  Notwithstanding the foregoing, Universal Display shall have the right to provide an unredacted copy of this Agreement, along with copies of all Royalty Reports, to each of Princeton, USC and Michigan; provided that in such case Universal Display shall first have caused such third-party licensors to agree in writing to handle and maintain such items in accordance with the provisions of this Article 6, or provisions substantially similar thereto.

6.5Other Collaborative Efforts.  Upon request and subject to the obligations of confidentiality set forth herein, each Party shall use good faith efforts to reasonably feature the name and logo, technologies and products of the other in its public promotions respecting the Licensed Products, such as at industry conferences or in other similar venues.

Article 7Representations and Warranties; Disclaimers and Limitations of Liability

7.1Warranties by Both Parties.  Each Party represents and warrants to the other that such Party has the right, power and authority to enter into this Agreement and to perform its

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obligations hereunder, and that such performance will not violate any other agreement or understanding by which such Party is bound.

7.2Further Warranty by Universal Display.  Universal Display additionally represents and warrants to Lumiotec that Universal Display owns or has sufficient rights in the Universal Display Technology to grant the license rights granted to Lumiotec hereunder.

7.3Disclaimer of Additional Warranties.  ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF NON-INFRINGEMENT, VALIDITY, QUALITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED BY UNIVERSAL DISPLAY.  In particular, Universal Display makes no representation or warranty that Lumiotec will be able to manufacture, sell or use any Licensed Products without obtaining additional license rights from third parties.

7.4Required Disclaimer of Princeton, USC and Michigan.  PRINCETON, USC AND MICHIGAN MAKE NO REPRESENTATIONS AND WARRANTIES AS TO THE PATENTABILITY AND/OR DISCOVERIES INVOLVED IN ANY OF THE UNIVERSAL DISPLAY PATENTS LICENSED HEREUNDER.  PRINCETON, USC AND MICHIGAN MAKE NO REPRESENTATION AS TO PATENTS NOW HELD OR WHICH WILL BE HELD BY OTHERS IN ANY FIELD AND/OR FOR ANY PARTICULAR PURPOSE.  PRINCETON, USC AND MICHIGAN MAKE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

7.5Limitation on Certain Damages.  IN NO EVENT SHALL UNIVERSAL DISPLAY BE LIABLE TO LUMIOTEC, OR TO ANY THIRD PARTY CLAIMING THROUGH LUMIOTEC, WHETHER AS A RESULT OF BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING UNDER OR IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS AGREEMENT.  The foregoing shall not limit Universal Display’s liability for any breach of the provisions of Article 6 respecting Confidential Items of Lumiotec.

7.6Essential Part of the Bargain.  The Parties acknowledge that the disclaimers and limitations of liability set forth in this Article 7 reflect a deliberate and bargained for allocation of risks between them and are intended to be independent of any exclusive remedies available under this Agreement, including any failure of such a remedy to achieve its essential purpose.

Article 8Term and Termination

8.1Term.  The term of this Agreement shall commence on the Effective Date and shall continue, unless terminated sooner as permitted hereunder, until December 31, 2015.  All licenses granted by Universal Display under this Agreement shall expire immediately upon expiration or termination of this Agreement.

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8.2Termination for Breach.  Either Party may terminate this Agreement on written notice to the other Party if the other Party materially breaches any of its obligations under this Agreement and fails to cure such breach within sixty (60) days following written notice thereof by the terminating Party.

8.3Termination for Challenge of Patents.  Universal Display may terminate this Agreement on written notice to Lumiotec if Lumiotec or any of its Affiliates asserts or assists another in asserting (including through the use of a “dummy” person or entity), before any court, patent office or other governmental agency, that any of the Universal Display Patents are invalid or unenforceable, should be cancelled or invalidated in whole or in part, or should otherwise not be granted, allowed or issued in whole or in part.

8.4Termination for Change in Control.  Universal Display may terminate this Agreement on written notice to Lumiotec if Lumiotec undergoes a Change in Control.  A “Change in Control” of Lumiotec shall be deemed to have occurred if there is a change in ownership of securities representing more than [***] percent ([***]) of the voting capital stock of Lumiotec, or of other interests having majority voting rights with respect to the election of the board of directors or similar governing authority of Lumiotec, or of any other power by contract or in any other form which entitles the holder thereof to majority voting rights with respect to management decisions of Lumiotec.

8.5Other Termination.  Either Party may terminate this Agreement on written notice to the other Party if the other Party permanently ceases conducting business in the normal course, becomes insolvent or is adjudicated bankrupt, makes a general assignment for the benefit of its creditors, admits in writing its inability to pay its debts as they become due, permits the appointment of a receiver for its business or assets, or initiates or becomes the subject of any bankruptcy or insolvency proceedings which proceedings, if initiated involuntarily, are not dismissed with sixty (60) days thereafter.

8.6Survival.  The following provisions of this Agreement shall survive the expiration or termination of this Agreement:  (a) any payment or reporting obligations of Lumiotec respecting the sale or other disposition of Licensed Products occurring prior to the date of such expiration or termination; (b) any audit or inspection rights of Universal Display with respect to such Licensed Products; and (c) any other provisions necessary to interpret the respective rights and obligations of the Parties hereunder.  Any termination of this Agreement shall be in addition to, and not in lieu of, any other rights or remedies that may be available to a Party under this Agreement, at law or in equity.

Article 9Miscellaneous

9.1Independence.  This Agreement is not intended by the Parties to constitute, create, give effect to, or otherwise recognize a joint venture, partnership, or formal business organization of any kind.  Each Party hereto shall act as an independent entity, and neither shall act as an agent of the other for any purpose.  Neither Party has the authority to assume or create any obligation, express or implied, on behalf of the other.

Page 11 of 16

9.2Notices.  Any notices pertaining to the administration of this Agreement or any breach, alleged breach or termination thereof shall be in writing and shall be deemed effectively given upon receipt of such notices by the recipient.  Such notices shall be given by personal delivery, certified mail with postage prepaid and return receipt requested, or prepaid delivery using an international private courier, to each Party at its address set forth below; provided, however, that the Parties may agree to exchange information by confirmed email or facsimile correspondence in lieu of the methods described above.  Either Party may change its address for such notices at any time by means of a notice given in the manner provided in this paragraph.

All Royalty Reports and any other financial notices, to:

Universal Display Corporation	Lumiotec, Inc.
375 Phillips Boulevard	4149-8, Hachimanpara 5-chome,
Ewing, New Jersey  08618	Yonezawa-shi, Yamagata 992-1128 Japan
Attn:           [***]	Attn:           [***]
Fax No.: [***]	Fax No.: [***]
Tel No.: [***]	Tel No.: [***]
E-mail: [***]	E-mail:  [***]

All other notices and communications:

[same as above]	[same as above]
Attn:           [***]	Attn:    [***]
Fax No.: [***]	Fax No.: [***]
Tel No.: [***]	Tel No.: [***]
E-mail: [***]	E-mail:  [***]

9.3Non-Assignment.  Lumiotec may not assign or transfer any of its rights or delegate any of its obligations hereunder, by application of law or otherwise, without the prior written consent of Universal Display.  Universal Display may assign or transfer this Agreement, in its entirety and subject to the written consent of Lumiotec (not to be unreasonably withheld), to a successor in interest to all or substantially all of Universal Display’s business or assets to which this Agreement relates.  Any attempted assignment, transfer or delegation in violation of this paragraph shall be null and void and without force and effect.  Nothing herein shall confer any rights upon any person other than the Parties hereto and their respective permitted successors and assigns.

9.4Equitable Relief.  In the event of Lumiotec’s actual or reasonably anticipated infringement of the Universal Display Patents, or unauthorized use of the Universal Display Know-How, Universal Display may seek to obtain such injunctions, order and decrees as may be necessary to restrain the infringement or unauthorized use, without the necessity of proving actual damages and without posting any bond or other security.  Such relief shall be in addition to, and not in lieu of, any other rights or remedies available to Universal Display under this Agreement, at law or in equity.

Page 12 of 16

9.5Choice of Law.  This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, U.S.A., without respect to its rules on the conflict of laws.  Any law or regulation providing that the language of a contract shall be construed against the drafter shall also not apply.

9.6Severability.  In the event that any term of this Agreement is held to be invalid, illegal, or unenforceable, such invalidity, illegality, or unenforceability shall not affect any other portion of this Agreement, and there shall be deemed substituted for such term other term(s) that are permitted by applicable law and that will most fully realize the intent of the Parties as expressed in this Agreement.

9.7No Waivers.  The failure of either Party to enforce, or any delay in enforcing, any right, power or remedy that such Party may have under this Agreement shall not constitute a waiver of any such right, power or remedy, or release the other Party from any of its obligations under this Agreement, except by a written document signed by the Party against whom such waiver or release is sought to be enforced.

9.8Entire Agreement; Amendments.  This Agreement constitutes the entire understanding and agreement of the Parties respecting the subject matter hereof and, except for the NDA, supersedes any and all prior agreements, arrangements or understandings between the Parties, whether written or oral, relating thereto.  This Agreement may not be amended or supplemented in any way except by a written document signed by both of the Parties.

9.9Counterparts.  This Agreement may be executed by the Parties hereto in separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized representatives.

Lumiotec, Inc.		Universal Display Corporation
By:	/s/ Hisao Shigenaga	By:	/s/ Steven V. Abramson
Name:	Hisao Shigenaga	Name:	Steven V. Abramson
Title:	President	Title:	President & CEO
Date:	January 5, 2012	Date:	December 19, 2011

Page 13 of 16

Exhibit A

OLED Light Source

[***]

Page 14 of 16

Exhibit B

License Fees and Royalty Rates

License Fees:

US$[***], payable as follows:

o US$[***] by January 31, 2012

o US$[***] by January 31, 2013

o US$[***] by January 31, 2014

o US$[***] by January 31, 2015

Royalty Rates:

[***] for all Licensed Products; provided, however, that

o if the Licensed Product does not include every element of an OLED Light Source, this royalty rate shall be adjusted so that the overall royalty payment to Universal Display is the same as it would have been if the Licensed Product sold or otherwise disposed of had consisted of a complete OLED Light Source; and

o if the Licensed Product includes components in addition to those of an OLED Light Source, the Net Sales Revenue on which royalties are payable shall exclude the portion of such revenue attributable to the additional components.

Notwithstanding the foregoing, the Parties have agreed as follows:

o For a Licensed Product that is an OLED Light Source minus [***], the adjusted royalty rate during the term of this Agreement shall be [***].

o For a Licensed Product that is an OLED Light Source minus [***], the adjusted royalty rate during the term of this Agreement shall be [***].

Page 15 of 16

Exhibit C

Universal Display Patents

To be attached separately.

Page 16 of 16

EX-10.2

AMENDMENT #7

to the

COMMERCIAL SUPPLY AGREEMENT

(originally effective May 23, 2007)

by and between

LG DISPLAY CO., LTD. (“LGD”) - formerly named LG.PHILIPS LCD CO., LTD.

and

UNIVERSAL DISPLAY CORPORATION (“UDC”)

This Amendment #7 shall amend and modify certain provision of the above-referenced Commercial Supply Agreement, as previously amended effective as of June 30, 2008, June 30, 2009, December 31, 2009, June 30, 2010, December 31, 2010 and June 30, 2011 (the “Agreement”).  This Amendment #7 shall be effective as of December 31, 2011.

1.           Article 9.1 of the Agreement is hereby amended to extend the term of the Agreement for six (6) additional months, through June 30, 2012.

2.           Except as set forth in this Amendment #7, all other terms and conditions of the Agreement shall remain in full force and effect.  In the event of any conflict between the Agreement and in this Amendment #7, then this Amendment #7 will govern.

IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Amendment #7 to be executed by their duly authorized representatives:

LG DISPLAY CO., LTD.		UNIVERSAL DISPLAY CORPORATION
By:	/s/ Soo Jin Oh	By:	/s/ Steven V. Abramson
Name:	Soo Jin Oh	Name:	Steven Abramson
Title:	Head of Purchasing Division	Title:	President
Date:	Feb 29, 2012	Date:	March 6, 2012

EX-10.3

UNIVERSAL DISPLAY CORPORATION

EQUITY COMPENSATION PLAN

EQUITY RETENTION AGREEMENT

This EQUITY RETENTION AGREEMENT (this “Agreement”), effective as of March 8, 2012 (the “Date of Grant”), is delivered by Universal Display Corporation (the “Company”), to Julia J. Brown (the “Grantee”).

RECITALS

The Universal Display Corporation Equity Compensation Plan (the “Plan”) provides for the grant of Stock Awards in accordance with the terms and conditions of the Plan.

The Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that it is in the best interests of the shareholders to make a significant Stock Award to the Grantee, subject to the restrictions set forth in this Agreement, as an inducement for the Grantee to:

·   Devote substantial time and attention to promotion and development of the Company at a time that is important for the future success of the Company;

·   Maintain a long-term ownership interest in the Company;

·   Continue in employment in order to ensure continuity of management for the Company; and thereby

·   Increase shareholder value.

The Committee has determined that the Stock Award is reasonable and appropriate compensation for the services to be provided by the Grantee to the Company.  References in this Agreement to capitalized terms not defined herein shall have the meanings given to those terms in the Plan.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound, hereby agree as follows:

1.Stock Award.  As approved by the Committee, the Company hereby grants to the Grantee 46,807 shares of common stock of the Company, subject to the terms, conditions and restrictions set forth below and in the Plan (the “Stock Award”).

2.Vesting and Restriction on Disposition of the Stock Award.

(a)The Stock Award shall become vested according to the following schedule, if the Grantee continues to be employed by the Company from the Date of Grant until the applicable vesting date.

Page 1 of 4

Vesting Date	Vested Shares
First Anniversary of Date of Grant	11702
Second Anniversary of Date of Grant	11702
Third Anniversary of Date of Grant	11702
Fourth Anniversary of Date of Grant	11701

The vesting of the Stock Award shall be cumulative, but shall not exceed 100% of the Stock Award.

(b)Notwithstanding the foregoing, the Stock Award shall vest in accordance with the terms of the Amended and Restated Change in Control Agreement made as of November 4, 2008, between the Company and the Grantee (the “Change in Control Agreement”) in the event of a Change in Control, as defined in the Change in Control Agreement (a “Change in Control”).

(c)If the Grantee ceases to be employed by the Company for any reason before the Stock Award is fully vested, the shares of the Stock Award that are not then vested shall be forfeited and must be immediately returned to the Company, and you will forfeit any dividends or other distributions on these shares that may previously have accrued.  The Stock Award (whether or not vested) may also be forfeited under the circumstances described in Section 4 below.

(d)In no event may any unvested shares of the Stock Award be assigned, transferred, pledged or otherwise disposed of or encumbered by the Grantee before the shares vest.  After shares of the Stock Award vest, the vested shares (net of any applicable tax withholding) may not be assigned, transferred, pledged or otherwise disposed of or encumbered by the Grantee until the second anniversary of the of vesting of said shares, except in the event of the Grantee’s death or a Change in Control.  With respect to each share subject to the Stock Award, the “Restriction Period” is the period beginning on the Date of Grant and ending on the first to occur of the second anniversary of the date of vesting of such share, the Grantee’s death or a Change in Control.  Any attempt to assign, transfer, pledge or otherwise dispose of or encumber the shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon such shares, shall be null, void and without effect.

3.Issuance of Certificates.

(a)Stock certificates representing the Stock Award, with appropriate legends reflecting the restrictions under this Agreement, may be issued by the Company to the Grantee or may be held in escrow by the Company during the Restriction Period, as determined by the Committee.  When the Grantee obtains a vested right to shares of the Stock Award, the Grantee shall have the right to receive a certificate representing the vested shares (net of any applicable tax withholding), with appropriate legends reflecting the restrictions under this Agreement.  During the Restriction Period, the Grantee shall receive any cash dividends with respect to the shares of the Stock Award, may vote the shares of the Stock Award and may participate in any distribution pursuant to a plan of dissolution or complete liquidation of the Company.  In the event of a dividend or distribution payable in stock or other property or a reclassification, split up

Page 2 of 4

or similar event during the Restriction Period, the shares or other property issued or declared with respect to the Stock Award shall be subject to the same terms and conditions relating to vesting and transfer as the shares to which they relate.

(b)The Company’s obligation to deliver shares pursuant to the Stock Award shall be subject to all applicable laws, rules and regulations and also to such approvals by governmental agencies as may be deemed appropriate to comply with relevant securities laws and regulations.

4.Clawback.  Notwithstanding any provisions of this Agreement to the contrary, with respect to each share subject to the Stock Award  (whether or not vested), the share shall be forfeited, and must be immediately returned to the Company, upon request by the Committee in the event that, during the Restriction Period for such share, (i) the Grantee materially breaches a written non-competition, non-solicitation or confidentiality agreement between the Grantee and the Company and the Grantee fails to cure the breach (if such breach is curable) within 30 days after receiving written notice from the Company of the breach; (ii) the Grantee commits an act of dishonesty, fraud, embezzlement or theft in connection with his duties or in the course of the Grantee’s employment with the Company; (iii) the Grantee is convicted of a felony or a crime of moral turpitude; or (iv) the Grantee engages in actions that are materially detrimental to the Company, including, without limitation, any actions that result in a material restatement of the financial statements of the Company.

5.Grant Subject to Plan Provisions.  This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  The grant is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) the registration, qualification or listing of the shares, (ii) changes in capitalization of the Company, and (iii) other requirements of applicable law.  The Committee shall have the authority to interpret and construe the grant pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

6.Tax Withholding.  Withholding for any federal, state, local or other taxes required with respect to the vesting of the Stock Award shall be governed by the Plan, except that the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Stock Award by having shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.  The Company shall establish procedures for such an election by the Grantee.

7.No Employment or Other Rights.  This grant shall not confer upon the Grantee any right to be retained by or in the employ of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s employment at any time. The right of the Company to terminate at will the Grantee’s employment at any time for any reason is specifically reserved.

8.Assignment by Company.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company without the Grantee’s consent.

Page 3 of 4

9.Applicable Law.  The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts of laws provisions thereof.

10.Notice.  Any notice to the Company provided for in this instrument shall be addressed to the Company care of the General Counsel at 375 Phillips Boulevard, Ewing, New Jersey 08618, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing.  Any notice shall be delivered by hand or by a recognized courier service such as FedEx or UPS, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this instrument, and the Grantee has placed his signature hereon.

UNIVERSAL DISPLAY CORPORATION
By:	/s/ Sidney Rosenblatt
Name:	Sidney Rosenblatt
Title:	CFO
Date:	4/10/12

I hereby accept the grant of the Stock Award described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement.  I hereby further agree that all of the decisions and determinations of the Committee with respect to the Stock Award and this Agreement shall be final and binding.

/s/ Julia J. Brown                                                      

Grantee

4-10-2012                                                   

Date

Page 4 of 4

EX-10.4

UNIVERSAL DISPLAY CORPORATION

EQUITY COMPENSATION PLAN

EQUITY RETENTION AGREEMENT

This EQUITY RETENTION AGREEMENT (this “Agreement”), effective as of March 8, 2012 (the “Date of Grant”), is delivered by Universal Display Corporation (the “Company”), to Janice K. Mahon (the “Grantee”).

RECITALS

The Universal Display Corporation Equity Compensation Plan (the “Plan”) provides for the grant of Stock Awards in accordance with the terms and conditions of the Plan.

The Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that it is in the best interests of the shareholders to make a significant Stock Award to the Grantee, subject to the restrictions set forth in this Agreement, as an inducement for the Grantee to:

·   Devote substantial time and attention to promotion and development of the Company at a time that is important for the future success of the Company;

·   Maintain a long-term ownership interest in the Company;

·   Continue in employment in order to ensure continuity of management for the Company; and thereby

·   Increase shareholder value.

The Committee has determined that the Stock Award is reasonable and appropriate compensation for the services to be provided by the Grantee to the Company.  References in this Agreement to capitalized terms not defined herein shall have the meanings given to those terms in the Plan.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound, hereby agree as follows:

1.Stock Award.  As approved by the Committee, the Company hereby grants to the Grantee 25,804 shares of common stock of the Company, subject to the terms, conditions and restrictions set forth below and in the Plan (the “Stock Award”).

2.Vesting and Restriction on Disposition of the Stock Award.

(a)The Stock Award shall become vested according to the following schedule, if the Grantee continues to be employed by the Company from the Date of Grant until the applicable vesting date.

Page 1 of 4

Vesting Date	Vested Shares
First Anniversary of Date of Grant	6451
Second Anniversary of Date of Grant	6451
Third Anniversary of Date of Grant	6451
Fourth Anniversary of Date of Grant	6451

The vesting of the Stock Award shall be cumulative, but shall not exceed 100% of the Stock Award.

(b)Notwithstanding the foregoing, the Stock Award shall vest in accordance with the terms of the Amended and Restated Change in Control Agreement made as of November 4, 2008, between the Company and the Grantee (the “Change in Control Agreement”) in the event of a Change in Control, as defined in the Change in Control Agreement (a “Change in Control”).

(c)If the Grantee ceases to be employed by the Company for any reason before the Stock Award is fully vested, the shares of the Stock Award that are not then vested shall be forfeited and must be immediately returned to the Company, and you will forfeit any dividends or other distributions on these shares that may previously have accrued.  The Stock Award (whether or not vested) may also be forfeited under the circumstances described in Section 4 below.

(d)In no event may any unvested shares of the Stock Award be assigned, transferred, pledged or otherwise disposed of or encumbered by the Grantee before the shares vest.  After shares of the Stock Award vest, the vested shares (net of any applicable tax withholding) may not be assigned, transferred, pledged or otherwise disposed of or encumbered by the Grantee until the second anniversary of the of vesting of said shares, except in the event of the Grantee’s death or a Change in Control.  With respect to each share subject to the Stock Award, the “Restriction Period” is the period beginning on the Date of Grant and ending on the first to occur of the second anniversary of the date of vesting of such share, the Grantee’s death or a Change in Control.  Any attempt to assign, transfer, pledge or otherwise dispose of or encumber the shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon such shares, shall be null, void and without effect.

3.Issuance of Certificates.

(a)Stock certificates representing the Stock Award, with appropriate legends reflecting the restrictions under this Agreement, may be issued by the Company to the Grantee or may be held in escrow by the Company during the Restriction Period, as determined by the Committee.  When the Grantee obtains a vested right to shares of the Stock Award, the Grantee shall have the right to receive a certificate representing the vested shares (net of any applicable tax withholding), with appropriate legends reflecting the restrictions under this Agreement.  During the Restriction Period, the Grantee shall receive any cash dividends with respect to the shares of the Stock Award, may vote the shares of the Stock Award and may participate in any distribution pursuant to a plan of dissolution or complete liquidation of the Company.  In the

Page 2 of 4

event of a dividend or distribution payable in stock or other property or a reclassification, split up or similar event during the Restriction Period, the shares or other property issued or declared with respect to the Stock Award shall be subject to the same terms and conditions relating to vesting and transfer as the shares to which they relate.

(b)The Company’s obligation to deliver shares pursuant to the Stock Award shall be subject to all applicable laws, rules and regulations and also to such approvals by governmental agencies as may be deemed appropriate to comply with relevant securities laws and regulations.

4.Clawback.  Notwithstanding any provisions of this Agreement to the contrary, with respect to each share subject to the Stock Award  (whether or not vested), the share shall be forfeited, and must be immediately returned to the Company, upon request by the Committee in the event that, during the Restriction Period for such share, (i) the Grantee materially breaches a written non-competition, non-solicitation or confidentiality agreement between the Grantee and the Company and the Grantee fails to cure the breach (if such breach is curable) within 30 days after receiving written notice from the Company of the breach; (ii) the Grantee commits an act of dishonesty, fraud, embezzlement or theft in connection with his duties or in the course of the Grantee’s employment with the Company; (iii) the Grantee is convicted of a felony or a crime of moral turpitude; or (iv) the Grantee engages in actions that are materially detrimental to the Company, including, without limitation, any actions that result in a material restatement of the financial statements of the Company.

5.Grant Subject to Plan Provisions.  This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  The grant is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) the registration, qualification or listing of the shares, (ii) changes in capitalization of the Company, and (iii) other requirements of applicable law.  The Committee shall have the authority to interpret and construe the grant pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

6.Tax Withholding.  Withholding for any federal, state, local or other taxes required with respect to the vesting of the Stock Award shall be governed by the Plan, except that the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Stock Award by having shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.  The Company shall establish procedures for such an election by the Grantee.

7.No Employment or Other Rights.  This grant shall not confer upon the Grantee any right to be retained by or in the employ of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s employment at any time. The right of the Company to terminate at will the Grantee’s employment at any time for any reason is specifically reserved.

Page 3 of 4

8.Assignment by Company.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company without the Grantee’s consent.

9.Applicable Law.  The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts of laws provisions thereof.

10.Notice.  Any notice to the Company provided for in this instrument shall be addressed to the Company care of the General Counsel at 375 Phillips Boulevard, Ewing, New Jersey 08618, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing.  Any notice shall be delivered by hand or by a recognized courier service such as FedEx or UPS, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this instrument, and the Grantee has placed his signature hereon.

UNIVERSAL DISPLAY CORPORATION
By:	/s/ Sidney Rosenblatt
Name:	Sidney Rosenblatt
Title:	CFO
Date:	4/10/12

I hereby accept the grant of the Stock Award described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement.  I hereby further agree that all of the decisions and determinations of the Committee with respect to the Stock Award and this Agreement shall be final and binding.

/s/ Janice K. Mahon                                                                 

Grantee

4/10/12                                                       

Date

Page 4 of 4

EX-10.5

UNIVERSAL DISPLAY CORPORATION

EQUITY COMPENSATION PLAN

EQUITY RETENTION AGREEMENT

This EQUITY RETENTION AGREEMENT (this “Agreement”), effective as of March 8, 2012 (the “Date of Grant”), is delivered by Universal Display Corporation (the “Company”), to Michael G. Hack (the “Grantee”).

RECITALS

The Universal Display Corporation Equity Compensation Plan (the “Plan”) provides for the grant of Stock Awards in accordance with the terms and conditions of the Plan.

The Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that it is in the best interests of the shareholders to make a significant Stock Award to the Grantee, subject to the restrictions set forth in this Agreement, as an inducement for the Grantee to:

·   Devote substantial time and attention to promotion and development of the Company at a time that is important for the future success of the Company;

·   Maintain a long-term ownership interest in the Company;

·   Continue in employment in order to ensure continuity of management for the Company; and thereby

·   Increase shareholder value.

The Committee has determined that the Stock Award is reasonable and appropriate compensation for the services to be provided by the Grantee to the Company.  References in this Agreement to capitalized terms not defined herein shall have the meanings given to those terms in the Plan.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound, hereby agree as follows:

1.Stock Award.  As approved by the Committee, the Company hereby grants to the Grantee 25,764 shares of common stock of the Company, subject to the terms, conditions and restrictions set forth below and in the Plan (the “Stock Award”).

2.Vesting and Restriction on Disposition of the Stock Award.

(a)The Stock Award shall become vested according to the following schedule, if the Grantee continues to be employed by the Company from the Date of Grant until the applicable vesting date.

Page 1 of 4

Vesting Date	Vested Shares
First Anniversary of Date of Grant	6442
Second Anniversary of Date of Grant	6441
Third Anniversary of Date of Grant	6441
Fourth Anniversary of Date of Grant	6441

The vesting of the Stock Award shall be cumulative, but shall not exceed 100% of the Stock Award.

(b)Notwithstanding the foregoing, the Stock Award shall vest in accordance with the terms of the Amended and Restated Change in Control Agreement made as of November 4, 2008, between the Company and the Grantee (the “Change in Control Agreement”) in the event of a Change in Control, as defined in the Change in Control Agreement (a “Change in Control”).

(c)If the Grantee ceases to be employed by the Company for any reason before the Stock Award is fully vested, the shares of the Stock Award that are not then vested shall be forfeited and must be immediately returned to the Company, and you will forfeit any dividends or other distributions on these shares that may previously have accrued.  The Stock Award (whether or not vested) may also be forfeited under the circumstances described in Section 4 below.

(d)In no event may any unvested shares of the Stock Award be assigned, transferred, pledged or otherwise disposed of or encumbered by the Grantee before the shares vest.  After shares of the Stock Award vest, the vested shares (net of any applicable tax withholding) may not be assigned, transferred, pledged or otherwise disposed of or encumbered by the Grantee until the second anniversary of the of vesting of said shares, except in the event of the Grantee’s death or a Change in Control.  With respect to each share subject to the Stock Award, the “Restriction Period” is the period beginning on the Date of Grant and ending on the first to occur of the second anniversary of the date of vesting of such share, the Grantee’s death or a Change in Control.  Any attempt to assign, transfer, pledge or otherwise dispose of or encumber the shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon such shares, shall be null, void and without effect.

3.Issuance of Certificates.

(a)Stock certificates representing the Stock Award, with appropriate legends reflecting the restrictions under this Agreement, may be issued by the Company to the Grantee or may be held in escrow by the Company during the Restriction Period, as determined by the Committee.  When the Grantee obtains a vested right to shares of the Stock Award, the Grantee shall have the right to receive a certificate representing the vested shares (net of any applicable tax withholding), with appropriate legends reflecting the restrictions under this Agreement.  During the Restriction Period, the Grantee shall receive any cash dividends with respect to the shares of the Stock Award, may vote the shares of the Stock Award and may participate in any distribution pursuant to a plan of dissolution or complete liquidation of the Company.  In the

Page 2 of 4

event of a dividend or distribution payable in stock or other property or a reclassification, split up or similar event during the Restriction Period, the shares or other property issued or declared with respect to the Stock Award shall be subject to the same terms and conditions relating to vesting and transfer as the shares to which they relate.

(b)The Company’s obligation to deliver shares pursuant to the Stock Award shall be subject to all applicable laws, rules and regulations and also to such approvals by governmental agencies as may be deemed appropriate to comply with relevant securities laws and regulations.

4.Clawback.  Notwithstanding any provisions of this Agreement to the contrary, with respect to each share subject to the Stock Award  (whether or not vested), the share shall be forfeited, and must be immediately returned to the Company, upon request by the Committee in the event that, during the Restriction Period for such share, (i) the Grantee materially breaches a written non-competition, non-solicitation or confidentiality agreement between the Grantee and the Company and the Grantee fails to cure the breach (if such breach is curable) within 30 days after receiving written notice from the Company of the breach; (ii) the Grantee commits an act of dishonesty, fraud, embezzlement or theft in connection with his duties or in the course of the Grantee’s employment with the Company; (iii) the Grantee is convicted of a felony or a crime of moral turpitude; or (iv) the Grantee engages in actions that are materially detrimental to the Company, including, without limitation, any actions that result in a material restatement of the financial statements of the Company.

5.Grant Subject to Plan Provisions.  This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  The grant is subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) the registration, qualification or listing of the shares, (ii) changes in capitalization of the Company, and (iii) other requirements of applicable law.  The Committee shall have the authority to interpret and construe the grant pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

6.Tax Withholding.  Withholding for any federal, state, local or other taxes required with respect to the vesting of the Stock Award shall be governed by the Plan, except that the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Stock Award by having shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.  The Company shall establish procedures for such an election by the Grantee.

7.No Employment or Other Rights.  This grant shall not confer upon the Grantee any right to be retained by or in the employ of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s employment at any time. The right of the Company to terminate at will the Grantee’s employment at any time for any reason is specifically reserved.

Page 3 of 4

8.Assignment by Company.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company without the Grantee’s consent.

9.Applicable Law.  The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts of laws provisions thereof.

10.Notice.  Any notice to the Company provided for in this instrument shall be addressed to the Company care of the General Counsel at 375 Phillips Boulevard, Ewing, New Jersey 08618, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing.  Any notice shall be delivered by hand or by a recognized courier service such as FedEx or UPS, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this instrument, and the Grantee has placed his signature hereon.

UNIVERSAL DISPLAY CORPORATION
By:	/s/ Sidney Rosenblatt
Name:	Sidney Rosenblatt
Title:	CFO
Date:	4/10/12

I hereby accept the grant of the Stock Award described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement.  I hereby further agree that all of the decisions and determinations of the Committee with respect to the Stock Award and this Agreement shall be final and binding.

/s/ Michael Hack                                                      

Grantee

4/10/12                                                       

Date

Page 4 of 4

EX-31.1

Exhibit 31.1

CERTIFICATIONS REQUIRED BY

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

I, Steven V. Abramson, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Universal Display Corporation (the “registrant”) for the quarter ended March 31, 2012;

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

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

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

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

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

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

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

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

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

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

Date: May 9, 2012	By:    /s/ Steven V. Abramson
	Steven V. Abramson
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS REQUIRED BY

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

I, Sidney D. Rosenblatt, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Universal Display Corporation (the “registrant”) for the quarter ended March 31, 2012;

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

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

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

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

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

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

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

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

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

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

Date: May 9, 2012	By:    /s/ Sidney D. Rosenblatt
	Sidney D. Rosenblatt
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS REQUIRED BY

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

In connection with the quarterly report of Universal Display Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven V. Abramson, President and Chief Executive Officer of the Company, hereby certify, based on my knowledge, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2012	By:    /s/ Steven V. Abramson
	Steven V. Abramson
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATIONS REQUIRED BY

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

In connection with the quarterly report of Universal Display Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of the Company, hereby certify, based on my knowledge, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2012	By:    /s/ Sidney D. Rosenblatt
	Sidney D. Rosenblatt
	Executive Vice President and Chief Financial Officer

XML

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Details) (Supplemental Executive Retirement Plan [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of participants	5
Components of net periodic pension cost [Abstract]
Service cost	$ 144	$ 136
Interest cost	96	96
Amortization of prior service cost	146	146
Amortization of actuarial loss	2	4
Total net periodic benefit cost	$ 388	$ 382

XML

ACQUIRED TECHNOLOGY (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 09, 2011
Finite-Lived Intangible Assets [Line Items]
Number of patents under license agreement	74
Assigned value of acquired intangible assets		$ 440,000
Amortization period of acquired intangible assets (in years)	7.50

XML

CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables)

3 Months Ended

Mar. 31, 2012

Dec. 31, 2011

CASH, CASH EQUIVALENTS AND INVESTMENTS [Abstract]

Investments

Investments at March 31, 2012 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
March 31, 2012 -
Certificates of deposit	$	6,612	$	-	$	(7	)	$	6,605
Commercial paper		2,993		1		-			2,994
Corporate bonds		182,575		24		(109	)		182,490
U.S. government bonds		3,213		-		-			3,213
	$	195,393	$	25	$	(116	)	$	195,302

Investments at December 31, 2011 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
December 31, 2011 -
Certificates of deposit	$	5,797	$	-	$	(5	)	$	5,792
Corporate bonds		223,260		43		(25	)		223,278
U.S. government bonds		5,224		-		-			5,224
	$	234,281	$	43	$	(30	)	$	234,294

All short-term investments held at March 31, 2012 will mature within one year. All long-term investments held at March 31, 2012 will mature in more than one year.

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CONCENTRATION OF RISK, Revenues by Geographic Area (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenues by geographic area [Abstract]
United States	$ 1,274	$ 2,002
All foreign locations	11,346	7,599
Revenues by geographic area [Line Items]
Total revenue	12,620	9,601
Concentration Risk [Line Items]
Number of suppliers from which chemical materials were purchased	1	1
South Korea [Member]
Revenues by geographic area [Line Items]
Total revenue	7,393	6,154
Japan [Member]
Revenues by geographic area [Line Items]
Total revenue	2,566	1,116
Taiwan [Member]
Revenues by geographic area [Line Items]
Total revenue	1,257	287
Other foreign locations [Member]
Revenues by geographic area [Line Items]
Total revenue	$ 130	$ 42

XML

STOCK-BASED COMPENSATION, Equity Instruments Other Than Options (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)		24,000
Restricted Stock and Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	160,425
Fair value of shares granted	$ 6,400,000
Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	685
Compensation expense	31,000	22,000
Shares withheld for tax withholding obligations (in shares)	89,862
Fair value of shares withheld for tax withholding obligations	$ 3,500,000

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2012

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

4. FAIR VALUE MEASUREMENTS

The following table provides the assets carried at fair value measured on a recurring basis as of March 31, 2012 (in thousands):

			Fair Value Measurements, Using
	Total carrying value as of March 31, 2012		Quoted prices  in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	137,986	$	137,986	$	-	$	-
Short-term investments		194,331		194,331		-		-
Long-term investments		971		971		-		-

The following table provides the assets carried at fair value measured on a recurring basis as of December 31, 2011 (in thousands):

			Fair Value Measurements, Using
	Total carrying  value as of December 31, 2011		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	96,538	$	96,538	$	-	$	-
Short-term investments		234,294		234,294		-		-

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 or liability's classification is determined based on the lowest level input that is significant to the fair value measurement.

The following table is a reconciliation of the changes in fair value of the Company's stock warrant liability for the three months ended March 31, 2011, which had been classified in Level 3 in the fair value hierarchy (in thousands):

	2011
Fair value of stock warrant liability, beginning of period	$	10,660
Loss for period		8,926
Warrants exercised		(6,476	)
Fair value of stock warrant liability, end of period	$	13,110

The fair value of the stock warrant liability was determined using the Black-Scholes option pricing model with the following inputs at March 31, 2011:

	2011
Contractual life (years)		0.4
Expected volatility		58.2	%
Risk-free interest rate		0.1	%
Annual dividend yield		-

There was no stock warrant liability as of March 31, 2012, as all remaining stock warrants were exercised in 2011.

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INCOME TAXES (Details) (USD $)	3 Months Ended
	Mar. 31, 2011
Exemption on withholding tax on royalty payments [Abstract]
Foreign income taxes withheld related to royalty payments	$ 297,000

XML

CONCENTRATION OF RISK (Tables)

3 Months Ended

Mar. 31, 2012

CONCENTRATION OF RISK [Abstract]

Revenues and accounts receivable from our largest non-government customers

Revenues for the three months ended March 31, 2012 and 2011, and accounts receivable as of March 31, 2012 from our largest non-government customers, were as follows:

		% of Total Revenue						Accounts Receivable (in thousands)
Customer		2012			2011			March 31, 2012
	A		42	%		43	%	$	3,831
	B		13	%		20	%		1,602
	C		12	%		0	%		-

Revenues by geographic area

Revenues from outside of North America represented 90% and 79% of consolidated revenue for the three months ended March 31, 2012 and 2011, respectively. Revenues by geographic area are as follows (in thousands):

Country	2012		2011
United States	$	1,274	$	2,002
South Korea		7,393		6,154
Japan		2,566		1,116
Taiwan		1,257		287
Other		130		42
All foreign locations		11,346		7,599
Total revenue	$	12,620	$	9,601

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Tables)

3 Months Ended

Mar. 31, 2012

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN [Abstract]

Components of net periodic pension cost

The components of net periodic pension cost were as follows for the three months ended March 31 (in thousands),

	2012		2011
Service cost	$	144	$	136
Interest cost		96		96
Amortization of prior service cost		146		146
Amortization of actuarial loss		2		4
Total net periodic benefit cost	$	388	$	382

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NET INCOME (LOSS) PER COMMON SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Numerator [Abstract]
Net income (loss) - Basic	$ (1,221)	$ (11,881)
Denominator [Abstract]
Weighted average common shares outstanding - Basic	45,749,072	38,895,999
Weighted average common shares outstanding - Diluted	45,749,072	38,895,999
Net income (loss) per common share [Abstract]
Basic	$ (0.03)	$ (0.31)
Diluted	$ (0.03)	$ (0.31)
Anti-dilutive shares excluded from the calculation of diluted net loss per common share (in shares)	1,575,513	2,483,015

XML

CASH, CASH EQUIVALENTS AND INVESTMENTS (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Certificates of deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	$ 6,612	$ 5,797
Available-for-sale securities, Gross Unrealized (Losses)	(7)	(5)
Available-for-sale securities, Aggregate Fair Market Value	6,605	5,792
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	2,993
Available-for-sale securities, Gross Unrealized Gains	1
Available-for-sale securities, Aggregate Fair Market Value	2,994
Corporate bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	182,575	223,260
Available-for-sale securities, Gross Unrealized Gains	24	43
Available-for-sale securities, Gross Unrealized (Losses)	(109)	(25)
Available-for-sale securities, Aggregate Fair Market Value	182,490	223,278
U.S. government bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	3,213	5,224
Available-for-sale securities, Aggregate Fair Market Value	$ 3,213	$ 5,224

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FAIR VALUE MEASUREMENTS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2011	Mar. 31, 2011 Stock warrant [Member]	Mar. 31, 2011 Stock warrant liability [Member]	Mar. 31, 2012 Quoted prices in active markets (Level 1) [Member]	Dec. 31, 2011 Quoted prices in active markets (Level 1) [Member]	Mar. 31, 2012 Significant other observable inputs (Level 2) [Member]	Mar. 31, 2012 Significant unobservable inputs (Level 3) [Member]	Mar. 31, 2012 Total carrying value [Member]	Dec. 31, 2011 Total carrying value [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Cash equivalents				$ 137,986	$ 96,538			$ 137,986	$ 96,538
Short-term investments				194,331	234,294			194,331	234,294
Investments				971				971
Reconciliation of changes in fair value classified as Level 3 [Roll Forward]
Fair value of stock warrant liability, beginning of period	13,110		10,660
Loss for period			8,926
Warrants exercised			$ (6,476)
Derivative [Line Items]
Contractual life (years)		0.40
Expected volatility (in hundredths)		58.20%
Risk-free interest rate (in hundredths)		0.10%
Annual dividend yield (in hundredths)

XML

CASH, CASH EQUIVALENTS AND INVESTMENTS

3 Months Ended

Mar. 31, 2012

CASH, CASH EQUIVALENTS AND INVESTMENTS [Abstract]

CASH, CASH EQUIVALENTS AND INVESTMENTS

3. CASH, CASH EQUIVALENTS AND INVESTMENTS

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company classifies its remaining investments as available-for-sale. These 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.

Investments at March 31, 2012 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
March 31, 2012 -
Certificates of deposit	$	6,612	$	-	$	(7	)	$	6,605
Commercial paper		2,993		1		-			2,994
Corporate bonds		182,575		24		(109	)		182,490
U.S. government bonds		3,213		-		-			3,213
	$	195,393	$	25	$	(116	)	$	195,302

Investments at December 31, 2011 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
December 31, 2011 -
Certificates of deposit	$	5,797	$	-	$	(5	)	$	5,792
Corporate bonds		223,260		43		(25	)		223,278
U.S. government bonds		5,224		-		-			5,224
	$	234,281	$	43	$	(30	)	$	234,294

All short-term investments held at March 31, 2012 will mature within one year. All long-term investments held at March 31, 2012 will mature in more than one year.

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RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN (Details) (USD $)	3 Months Ended					3 Months Ended	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012 2006 Research Agreement - Original Term [Member]	Mar. 31, 2012 2006 Research Agreement - Extended Term [Member]	Dec. 31, 2011 2006 Research Agreement - Extended Term [Member]	Mar. 31, 2012 License Agreement 1997 Terms [Member]	Dec. 31, 2012 License Agreement 1997 Terms [Member]
Research and Development Arrangement, Contract for Others to Perform [Line Items]
Term of agreement (in years)			3	4		10
Research and Development Arrangement, Contract for Others to Perform, Costs Incurred, Gross			$ 2,200,000	$ 2,900,000
Maximum obligation					2,100,000
Royalty rate for licensed products sold by the Company (in hundredths)				3.00%
Royalty rate for licensed products sold by the Company's sublicenses (in hundredths)				3.00%
Minimum royalty payment per year							100,000
Royalty expense	250,000	202,000
Minimum investment per year							$ 800,000

XML

COMMITMENTS AND CONTINGENCIES (Details)

Mar. 31, 2012

Commitment With Executive Officers [Member]

Loss Contingencies [Line Items]

Number of executive officers under agreement

5

Multiple of sum of average annual base salary and bonus agreement terms

2

Opposition to European Patent No. 0946958 [Member]

Loss Contingencies [Line Items]

U.S. patents associated with matter

5,844,363, 6,602,540, 6,888,306 and 7,247,073

Opposition to European Patent No. 1449238 [Member]

Loss Contingencies [Line Items]

U.S. patents associated with matter

6,830,828; 6,902,830; 7,001,536; 7,291,406; 7,537,844; and 7,883,787

Pending U.S. patent applications associated with matter

13/009,001, filed on January 19, 2011, and 13/205,290, filed on August 9, 2011

Opposition To European Patent No. 1394870 [Member]

Loss Contingencies [Line Items]

U.S. patents associated with matter

6,303,238; 6,579,632; 6,872,477; 7,279,235; 7,279,237; 7,488,542; 7,563,519; and 7,901,795

Pending U.S. patent applications associated with matter

13/035,051

Invalidation Trial in Korea for Patent No. KR-0998059 [Member]

Loss Contingencies [Line Items]

U.S. patents associated with matter

7,431,968

Opposition to European Patent No. 1390962 [Member]

Loss Contingencies [Line Items]

Pending U.S. patent applications associated with matter

7,009,338 and 7,285,907

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
CURRENT ASSETS:
Cash and cash equivalents	$ 144,246	$ 111,795
Short-term investments	194,331	234,294
Accounts receivable	8,708	10,727
Inventory	5,574	3,843
Other current assets	2,472	1,645
Total current assets	355,331	362,304
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $19,154 and $18,735	12,268	10,884
ACQUIRED TECHNOLOGY, net of accumulated amortization of $17,014 and $17,000	376	391
INVESTMENTS	971
OTHER ASSETS	284	299
TOTAL ASSETS	369,230	373,878
CURRENT LIABILITIES:
Accounts payable	4,600	4,776
Accrued expenses	6,506	9,020
Deferred revenue	5,897	5,534
Other current liabilities	284	187
Total current liabilities	17,287	19,517
DEFERRED REVENUE	3,636	3,874
RETIREMENT PLAN BENEFIT LIABILITY	8,401	8,260
Total liabilities	29,324	31,651
COMMITMENTS AND CONTINGENCIES (Note 11)
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 $1,500,000)	2	2
Common Stock, par value $0.01 per share, 100,000,000 shares authorized, 46,336,765 and 46,113,296 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively	463	461
Additional paid-in capital	560,346	561,492
Accumulated deficit	(215,092)	(213,871)
Accumulated other comprehensive loss	(5,813)	(5,857)
Total shareholders' equity	339,906	342,227
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 369,230	$ 373,878

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BACKGROUND

3 Months Ended

Mar. 31, 2012

BUSINESS [Abstract]

BUSINESS

1. BACKGROUND

Universal Display Corporation (the Company) is engaged in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in flat panel displays, solid-state lighting and other product applications. The Company's primary business strategy is to develop proprietary OLED technologies and materials, and to license these technologies and sell these materials to OLED product manufacturers. Through internal research and development efforts and relationships with entities such as Princeton University (Princeton), the University of Southern California (USC), the University of Michigan (Michigan), Motorola Solutions, Inc. (f/k/a Motorola, Inc.) (Motorola) and PPG Industries, Inc. (PPG Industries), the Company has established a significant portfolio of proprietary OLED technologies and materials (Notes 5 and 7).

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SHAREHOLDERS' EQUITY (Details) (USD $)	3 Months Ended				3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012 Series A Preferred Stock [Member]	Dec. 31, 2011 Series A Preferred Stock [Member]	Mar. 31, 2012 Common Stock [Member]	Mar. 31, 2012 Additional Paid-in Capital [Member]	Mar. 31, 2012 Accumulated Deficit [Member]	Mar. 31, 2012 Accumulated Other Comprehensive Income (Loss) [Member]	Dec. 31, 2011 Accumulated Other Comprehensive Income (Loss) [Member]
Increase (Decrease) in Shareholders' Equity [Roll Forward]
BALANCE	$ 342,227,000		$ 2,000	$ 2,000	$ 461,000	$ 561,492,000	$ (213,871,000)	$ (5,813,000)	$ (5,857,000)
BALANCE (in shares)			200,000	200,000	46,113,296
Net (loss) income	(1,221,000)	(11,881,000)					(1,221,000)
Other comprehensive (loss) income:
Other comprehensive income	44,000	161,000
Comprehensive income (loss)	(1,177,000)	(11,720,000)
Exercise of common stock options and warrants, net of tendered shares					1,000	540,000
Exercise of common stock options and warrants, net of tendered shares (in shares)					70,115
Stock-based employee compensation, net of shares withheld for employee taxes					1,000	(2,298,000)
Stock-based employee compensation, net of shares withheld for employee taxes (in shares)					122,715
Issuance of common stock to Board of Directors and Scientific Advisory Board						541,000
Issuance of common stock to Board of Directors and Scientific Advisory Board (in shares)					28,341
Issuance of common stock to employees under an Employee Stock Purchase Plan						71,000
Issuance of common stock to employees under an Employee Stock Purchase Plan (in shares)					2,298
BALANCE	339,906,000		2,000	2,000	463,000	560,346,000	(215,092,000)	(5,813,000)	(5,857,000)
BALANCE (in shares)			200,000	200,000	46,336,765
Shares issued to employees, earned in prior period	376,000
Shares issued to employees, earned in prior period (in shares)	9,376
Shares withheld for employees' tax withholding obligations, earned in prior period	124,000
Shares withheld for employees' tax withholding obligations, earned in prior period (in shares)	3,070
Shares issued to Board of Directors and Scientific Advisory Board, earned in prior period	$ 328,000
Shares issued to Board of Directors and Scientific Advisory Board, earned in prior period (in shares)	7,490

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FAIR VALUE MEASUREMENTS (Policies)

3 Months Ended

Mar. 31, 2012

FAIR VALUE MEASUREMENTS [Abstract]

Fair Value Measurements

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 or liability's classification is determined based on the lowest level input that is significant to the fair value measurement.

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STOCK-BASED COMPENSATION, Stock Options (Details) (Equity Compensation Plan [Member])	3 Months Ended
	Mar. 31, 2012
Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration term (in years)	10
Number of shares authorized (in shares)	8,000,000

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NET INCOME (LOSS) PER COMMON SHARE (Policies)

3 Months Ended

Mar. 31, 2012

NET INCOME (LOSS) PER COMMON SHARE [Abstract]

Net Income (Loss) Per Common Share

Basic net loss per common share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, excluding unvested restricted stock awards.  Diluted net loss per common share reflects the potential dilution from the exercise or conversion of securities into common stock, the effect of unvested restricted stock awards and restricted stock units, and the impact of shares to be issued under the ESPP.

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2012

BASIS OF PRESENTATION [Abstract]

BASIS OF PRESENTATION

2. BASIS OF PRESENTATION

Interim Financial Information

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's financial position as of March  31, 2012 and results of operations and cash flows for the three months ended March 31, 2012 and 2011. 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 financial statements, which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.  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.

Management's Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 area of revenue recognition for license agreements, useful life of acquired technology, stock-based compensation and the valuation of stock warrant and retirement benefit plan liabilities. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying values of accounts receivable and accounts payable approximate fair value in the accompanying financial statements due to the short-term nature of those instruments. See Notes 3 and 4 for a discussion of cash equivalents and investments.

Revenue

The Company revised the presentation of its revenue categories as of the year ended December 31, 2011 to better reflect its primary sources of revenue. Revenue categories for the quarter ended March 31, 2011 were conformed to reflect the current presentation.

Cost of Material Sales

Cost of material sales represents costs associated with the sale of materials that have been classified as commercial.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) issued amended standards that revised the application of the valuation premise of highest and best use of an asset, the application of premiums and discounts for fair value determination, as well as the required disclosures for transfers between Level 1 and Level 2 fair value measures and the highest and best use of nonfinancial assets. The update provides additional disclosures regarding Level 3 fair value measurements and clarifies certain other existing disclosure requirements. The new guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company adopted this guidance in the first quarter of 2012 and such adoption did not have an impact on the Company's results of operations or financial position.

In June 2011, the FASB issued amended standards for the reporting of other comprehensive income (loss).  The amendments require that all non-owner changes in shareholders' equity be presented either in a single continuous statement of comprehensive income (loss) or in two separate but consecutive statements.  In either case, an entity is required to present each component of net income (loss) along with total net income (loss), each component of other comprehensive income (loss) along with a total for other comprehensive income (loss), and a total amount for comprehensive income (loss).  The new guidance is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2011.  The Company adopted this guidance in the first quarter of 2012 and such adoption did not have a material impact on its results of operations or financial position, but did change the Company's presentation of comprehensive income (loss).

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)	Mar. 31, 2012	Dec. 31, 2011
ASSETS
PROPERTY AND EQUIPMENT, accumulated depreciation	$ 19,154,000	$ 18,735,000
ACQUIRED TECHNOLOGY, accumulated amortization	17,014,000	17,000,000
SHAREHOLDERS' EQUITY:
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred Stock, shares issued (in shares)	200,000	200,000
Preferred Stock, shares outstanding (in shares)	200,000	200,000
Preferred Stock, liquidation value per share (in dollars per share)	$ 7.50	$ 7.50
Preferred Stock, liquidation value	$ 1,500,000	$ 1,500,000
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized (in shares)	100,000,000	100,000,000
Common Stock, shares issued (in shares)	46,336,765	46,113,296
Common Stock, shares outstanding (in shares)	46,336,765	46,113,296

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CONCENTRATION OF RISK

3 Months Ended

Mar. 31, 2012

CONCENTRATION OF RISK [Abstract]

CONCENTRATION OF RISK

12. CONCENTRATION OF RISK

Included in technology development and support revenue in the accompanying statements of comprehensive loss is $1.2 million and $1.9 million for the three months ended March 31, 2012 and 2011, respectively, which was derived from contracts with the United States government agencies.  Revenues derived from contracts with government agencies represented 9% and 20% of the consolidated revenue for the three months ended March 31, 2012 and 2011, respectively.

Revenues for the three months ended March 31, 2012 and 2011, and accounts receivable as of March 31, 2012, from our largest non-government customers, were as follows:

	% of Total Revenue				Accounts Receivable (in thousands)
Customer	2012		2011		March 31, 2012
A		42%		43%	$	3,831
B		13%		20%		1,602
C		12%		-		-

The Company's relationships with customers B and C are under agreements that are presently scheduled to expire in less than twelve months.

Revenues from outside of North America represented 90% and 79% of consolidated revenue for the three months ended March 31, 2012 and 2011, respectively. Revenues by geographic area are as follows (in thousands):

Country	2012		2011
United States	$	1,274	$	2,002
South Korea		7,393		6,154
Japan		2,566		1,116
Taiwan		1,257		287
Other		130		42
All foreign locations		11,346		7,599
Total revenue	$	12,620	$	9,601

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

Long-lived tangible assets at international locations are not significant for each of the periods presented.

All chemical materials were purchased from one supplier. See Note 7.

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Document and Entity Information (USD $)	3 Months Ended
	Mar. 31, 2012	May 07, 2012	Jun. 30, 2011
Document and Entity Information [Abstract]
Entity Registrant Name	UNIVERSAL DISPLAY CORP \PA\
Entity Central Index Key	0001005284
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,159,835,981
Entity Common Stock, Shares Outstanding		46,405,136
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012

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INCOME TAXES

3 Months Ended

Mar. 31, 2012

INCOME TAXES [Abstract]

INCOME TAXES

13. INCOME TAXES

For the three months ended March 31, 2011, foreign income taxes of $297,000 were withheld in connection with royalty payments received from Samsung Mobile Display Co., Ltd. under a license agreement. No such payments or corresponding withholdings occurred in the three months ended March 31, 2012.

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CONSOLIDATE STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
REVENUE:
Material Sales	$ 10,529	$ 4,537
Royalty and license fees	422	2,669
Technology development and support revenue	1,669	2,395
Total revenue	12,620	9,601
OPERATING EXPENSES:
Cost of material sales	1,088	103
Research and development	6,661	6,555
Selling, general and administrative	4,311	3,872
Patent costs	1,868	1,613
Royalty expense	250	202
Total operating expenses	14,178	12,345
Operating loss	(1,558)	(2,744)
INTEREST INCOME	357	96
INTEREST EXPENSE	(20)	(10)
LOSS ON STOCK WARRANT LIABILITY		(8,926)
LOSS BEFORE INCOME TAX EXPENSE	(1,221)	(11,584)
INCOME TAX EXPENSE		(297)
NET INCOME (LOSS)	(1,221)	(11,881)
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized (loss) gain on available-for-sale securities	(104)	11
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension cost	148	150
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	44	161
COMPREHENSIVE INCOME (LOSS)	$ (1,177)	$ (11,720)
NET INCOME (LOSS) PER COMMON SHARE:
BASIC (in dollars per share)	$ (0.03)	$ (0.31)
DILUTED (in dollars per share)	$ (0.03)	$ (0.31)
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER COMMON SHARE:
BASIC (in shares)	45,749,072	38,895,999
DILUTED (in shares)	45,749,072	38,895,999

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EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS

3 Months Ended

Mar. 31, 2012

EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS [Abstract]

EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS

7. EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS

On October 1, 2000, the Company entered into a five-year Development and License Agreement (the Development Agreement) and a seven-year Supply Agreement (the Supply Agreement) with PPG Industries.  Under the Development Agreement, a team of PPG Industries scientists and engineers assisted the Company in developing its proprietary OLED materials and supplied the Company with these materials for evaluation purposes.  Under the Supply Agreement, PPG Industries supplied the Company with its proprietary OLED materials that were intended for resale to customers for commercial purposes.

On July 29, 2005, the Company entered into an OLED Materials Supply and Service Agreement with PPG Industries (the OLED Materials Agreement). The OLED Materials Agreement superseded and replaced in their entireties the Development Agreement and Supply Agreement effective as of January 1, 2006, and extended the term of the Company's relationship with PPG Industries through December 31, 2009. The term of the OLED Materials Agreement was subsequently extended through December 31, 2014.

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG Industries (the New OLED Materials Agreement).  The New OLED Materials Agreement replaced the original OLED Materials Agreement with PPG Industries effective as of October 1, 2011.  The term of the New OLED Materials Agreement runs through December 31, 2014.  The new agreement contains provisions that are substantially similar to those of the original OLED Materials Agreement.  Under the New OLED Materials Agreement, PPG Industries 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 and the OLED Materials Agreement, the Company compensates PPG Industries 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 all cash.  The actual number of shares of common stock issuable to PPG Industries 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 Industries in cash.

The Company is also to reimburse PPG Industries 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.

The Company issued 181 shares of the Company's common stock to PPG Industries as consideration for services provided by PPG Industries under the OLED Materials Agreement during the three months ended March 31, 2011. For these shares, the Company recorded expense of $9,000 for the three months ended March 31, 2011.  No shares were issued for services to PPG for the three months ended March 31, 2012.

The Company recorded expense of $1.3 million and $1.4 million for the three months ended March 31, 2012 and 2011, respectively, in relation to the cash portion of the reimbursement of expenses and work performed by PPG Industries, excluding amounts paid for commercial chemicals.

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ACQUIRED TECHNOLOGY

3 Months Ended

Mar. 31, 2012

ACQUIRED TECHNOLOGY [Abstract]

ACQUIRED TECHNOLOGY

6. ACQUIRED TECHNOLOGY

In 2000, the Company entered into a license agreement with Motorola whereby Motorola granted the Company perpetual license rights to what are now 74 issued U.S. patents relating to Motorola's OLED technologies, together with foreign counterparts in various countries. These patents expire in the U.S. between 2012 and 2018.

The Company was required under the license agreement with Motorola to pay Motorola annual royalties on gross revenues received on account of the Company's sales of OLED products or components, or from its OLED technology licensees, whether or not these revenues related specifically to inventions claimed in the patent rights licensed from Motorola.

On March 9, 2011, the Company purchased these patents from Motorola, including all existing and future claims and causes of action for any infringement of the patents, pursuant to a Patent Purchase Agreement.  The Patent Purchase Agreement effectively terminated the Company's license agreement with Motorola, including any obligation to make royalty payments to Motorola.

The technology acquired from Motorola had an assigned value of $440,000 as of March 9, 2011, which is being amortized over a period of 7.5 years.

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STOCK-BASED COMPENSATION (Policies)

3 Months Ended

Mar. 31, 2012

STOCK-BASED COMPENSATION [Abstract]

Share-based Compensation

The Company recognizes in the statements of comprehensive loss the grant-date fair value of stock options and other equity based compensation, such as shares issued under employee stock purchase plans, restricted stock awards and units and stock appreciation rights (SARs), issued to employees and directors.

The grant-date fair value of stock options is determined using the Black-Scholes option pricing model.  The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of estimated forfeitures.  The Company relies primarily upon historical experience to estimate expected forfeitures and recognizes compensation expense on a straight-line basis from the date of the grant.  The Company issues new shares upon the respective grant, exercise or vesting of share-based payment awards, as applicable.

Cash-settled SARs awarded in share-based payment transactions are classified as liability awards; accordingly, the Company records these awards as a component of accrued expenses on its consolidated balance sheets.  The fair value of each SAR is estimated using the Black-Scholes option pricing model and is remeasured at each reporting period until the award is settled.  Changes in the fair value of the liability award are recorded as expense or income in the statements of comprehensive loss.

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NET INCOME (LOSS) PER COMMON SHARE

3 Months Ended

Mar. 31, 2012

NET INCOME (LOSS) PER COMMON SHARE [Abstract]

NET INCOME (LOSS) PER COMMON SHARE

14. NET LOSS PER COMMON SHARE

Basic net loss per common share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, excluding unvested restricted stock awards.  Diluted net loss per common share reflects the potential dilution from the exercise or conversion of securities into common stock, the effect of unvested restricted stock awards and restricted stock units, and the impact of shares to be issued under the ESPP.

For the three months ended March 31, 2012 and 2011, the effects of the exercise of the combined outstanding stock options and warrants and unvested restricted stock awards and restricted stock units of 1,575,513 and 2,483,015, respectively, and the impact of shares to be issued under the ESPP, which was minor, were excluded from the calculation of diluted EPS as the impact would have been antidilutive.

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

3 Months Ended

Mar. 31, 2012

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN [Abstract]

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

10. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

On March 18, 2010, the Compensation Committee and the Board of Directors of the Company approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP), effective as of April 1, 2010.  The purpose of the SERP, which is unfunded, is to provide certain of the Company's executive officers with supplemental pension benefits following a cessation of their employment. As of March 31, 2012, there were five participants in the SERP.  The SERP benefit is based on a percentage of the participant's annual base salary and the number of years of service.

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 for the three months ended March 31 (in thousands),

	2012		2011
Service cost	$	144	$	136
Interest cost		96		96
Amortization of prior service cost		146		146
Amortization of actuarial loss		2		4
Total net periodic benefit cost	$	388	$	382

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SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2012

SHAREHOLDERS' EQUITY [Abstract]

SHAREHOLDERS EQUITY

8. SHAREHOLDERS' EQUITY (in thousands, except for share and per share data)

	Series A														Accumulated
	Nonconvertible								Additional						Other			Total
	Preferred Stock				Common Stock				Paid-In			Accumulated			Comprehensive			Shareholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Equity
BALANCE, JANUARY 1, 2012		200,000	$	2		46,113,296	$	461	$	561,492		$	(213,871	)	$	(5,857	)	$	342,227
Net loss		-		-		-		-		-			(1,221	)		-			(1,221	)
Other comprehensive income		-		-		-		-		-			-			44			44
Exercise of common stock options		-		-		70,115		1		540			-			-			541
Stock-based employee compensation, net of shares withheld for taxes (A)		-		-		122,715		1		(2,298	)		-			-			(2,297	)
Issuance of common stock to Board of Directors and Scientific Advisory Board (B)		-		-		28,341		-		541			-			-			541
Issuance of common stock under an Employee Stock Purchase Plan		-		-		2,298		-		71			-			-			71
BALANCE, March 31, 2012		200,000	$	2		46,336,765	$	463	$	560,346		$	(215,092	)	$	(5,813	)	$	339,906

(A)	Includes $376,000 (9,376 shares) that was accrued for in a previous period and charged to expense when earned, but issued in 2012, less shares withheld for taxes in the amount of $124,000 (3,070 shares).
(B)	Includes $328,000 (7,490 shares) that was earned in a previous period and charged to expense when earned, but issued in 2012.

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STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2012

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

9. STOCK-BASED COMPENSATION

The Company recognizes in the statements of comprehensive loss the grant-date fair value of stock options and other equity based compensation, such as shares issued under employee stock purchase plans, restricted stock awards and units and stock appreciation rights (SARs), issued to employees and directors.

The grant-date fair value of stock options is determined using the Black-Scholes option pricing model.  The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of estimated forfeitures.  The Company relies primarily upon historical experience to estimate expected forfeitures and recognizes compensation expense on a straight-line basis from the date of the grant.  The Company issues new shares upon the respective grant, exercise or vesting of share-based payment awards, as applicable.

Cash-settled SARs awarded in share-based payment transactions are classified as liability awards; accordingly, the Company records these awards as a component of accrued expenses on its consolidated balance sheets.  The fair value of each SAR is estimated using the Black-Scholes option pricing model and is remeasured at each reporting period until the award is settled.  Changes in the fair value of the liability award are recorded as expense or income in the statements of comprehensive loss.

Equity Compensation Plan

In 1995, the Board of Directors of the Company adopted a stock option plan, which was amended and restated in 2003 and is now called the 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 Compensation Committee, but for no longer than 10 years from the grant date.  Through March 31, 2012, the Company's shareholders have approved increases in the number of shares reserved for issuance under the Equity Compensation Plan to 8,000,000 and have extended the term of the plan through September 1, 2015.

During the three months ended March 31, 2012, the Company granted 160,425 shares of restricted stock awards and restricted stock units to employees, which had a total fair value of $6.4 million on the respective dates of grant, and will vest over three to four years from the date of grant, provided that the grantee is still an employee of the Company on the applicable vesting date.

For the three months ended March 31, 2012 and 2011, the Company recorded general and administrative expense of $573,000 and $728,000 and research and development expense of $171,000 and $270,000, respectively, related to restricted stock awards and restricted stock units.

During the three months ended March 31, 2012, the Company also granted to employees 685 shares of common stock, which shares were issued and fully vested as of the date of grant. The Company recorded research and development expense of $31,000 and $22,000 for the three months ended March 31, 2012 and 2011, respectively, related to fully vested shares issued to employees.

In connection with common stock issued to employees, for the three months ended March 31, 2012, 89,862 shares of common stock with a fair value of $3.5 million were withheld in satisfaction of tax withholding obligations.

During the three months ended March 31, 2011, the Company granted 24,000 cash-settled stock appreciation rights (SARs) to certain executive officers. The SARs represented the right to receive, for each SAR, a cash payment equal to the amount, if any, by which the fair market value of a share of the common stock of the Company on the vesting date exceeded the base price of the SAR award.  The base price of each SAR award was $34.78 per share.  The SARs vested on the first anniversary of the date of grant, provided that the grantee was still an employee of the Company on the applicable vesting date. During the three months ended March 31, 2012, all SARs were settled, resulting in cash payments of $49,000. The Company recorded $1,000 and $36,000 to general and administrative expense, and $3,000 and $87,000 to research and development expense, for the three months ended March 31, 2012 and 2011, respectively, related to the SARs.  No such grants were made in 2012.

During the three months ended March 31, 2012, the Company issued 5,000 shares of common stock to members of its Board of Directors as partial compensation for services performed.  The Company recorded general and administrative expense of $160,000 and $56,000 for the three months ended March 31, 2012 and 2011, respectively, related to shares issued to members of its Board of Directors.

During the three months ended March 31, 2012, the Company granted 5,992 shares of restricted stock to certain members of its Scientific Advisory Board.  These shares of restricted stock will vest and be issued in equal increments annually over three years from the date of grant, provided that the grantee is still engaged as a consultant of the Company on the applicable vesting date.  The Company recorded $53,000 and $474,000 to research and development expense for the three months ended March 31, 2012 and 2011, respectively, related to shares issued to members of its Scientific Advisory Board.

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 sooner 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 price per share of common stock on the first day of the period or the last day of the period.

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

During the three months ended March 31, 2012 and 2011, the Company issued 2,298 and 2,735 shares of its common stock, respectively, under the ESPP, resulting in proceeds of $71,000 for each period.  In relation to the ESPP, the Company recorded $5,000 and $6,000 to general and administrative expense, and $20,000 and $14,000 to research and development expense, for the three months ended March 31, 2012 and 2011, respectively. The expense recorded equals the amount of the discount and the value of the look-back feature for the shares that were issued under the ESPP.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2012

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

11. COMMITMENTS AND CONTINGENCIES

Commitments

Under the 2006 Research Agreement with USC, the Company is obligated to make certain payments to USC based on work performed by USC under that agreement, and by Michigan under its subcontractor agreement with USC.  See Note 5 for further explanation.

Under the terms of the 1997 Amended License Agreement, the Company is required to make minimum royalty payments to Princeton.  See Note 5 for further explanation.

The Company has agreements with five executive officers which provide for certain cash and other benefits upon termination of employment of the officer in connection with a change in control of the Company. Each executive is entitled to a lump-sum cash payment equal to two times the sum of the average annual base salary and bonus of the officer 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.

Opposition to European Patent No. 0946958

On December 8, 2006, Cambridge Display Technology Ltd. (CDT), which was acquired in 2007 by Sumitomo Chemical Company (Sumitomo), filed a Notice of Opposition to European Patent No. 0946958 (EP '958 patent). The EP '958 patent, which was issued on March 8, 2006, is a European counterpart patent to U.S. patents 5,844,363, 6,602,540, 6,888,306 and 7,247,073. These patents relate to the Company's FOLEDT flexible OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The European Patent Office (the EPO) conducted an Oral Hearing in this matter and on November 26, 2009 issued its written decision to reject the opposition and to maintain the patent as granted.   CDT has filed an appeal to the EPO panel decision.

At this time, based on its current knowledge, Company management believes that the EPO panel decision will be upheld on appeal. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1449238

Between March 8, 2007 and July 27, 2007, three companies filed Notices of Opposition to European Patent No. 1449238 (EP '238 patent). The three companies are Sumation Company Limited (Sumation), a joint venture between Sumitomo and CDT, Merck Patent GmbH, of Darmstadt, Germany, and BASF Aktiengesellschaft, of Mannheim, Germany.  The EP '238 patent, which was issued on November 2, 2006, is a European counterpart patent, in part, to U.S. patents 6,830,828; 6,902,830; 7,001,536; 7,291,406; 7,537,844; and 7,883,787; and to pending U.S. patent application 13/009,001, filed on January 19, 2011, and 13/205,290, filed on August 9, 2011 (hereinafter the "U.S. '828 Patent Family"). These patents and patent applications relate to the Company's UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The EPO combined all three oppositions into a single opposition proceeding. The EPO conducted an Oral Hearing in this matter and at the conclusion of the Oral Hearing, the EPO panel announced its decision to maintain the patent with claims directed to OLEDs comprising phosphorescent organometallic iridium compounds. The official minutes from the Oral Hearing and written decision were published on January 13, 2012.

All the parties filed notices of appeal to the EPO's panel decision on March 13, 2012.  The parties are permitted to file papers in support of their respective requests for appellate review.

At this time, based on its current knowledge, Company management believes that the EPO will uphold the Company's positions on appeal. However, Company management cannot make any assurances of this result.

Invalidation Trial in Japan for Japan Patent No. 3992929

On April 19, 2010, the Company received a copy of a Notice of Invalidation Trial from the Japanese Patent Office (the JPO) for the Company's Japan Patent No. 3992929 (the JP '929 patent), which was issued on August 3, 2007. The request for the Invalidation Trial was filed by Semiconductor Energy Laboratory Co., Ltd. (SEL), of Kanagawa, Japan. The JP '929 patent is a Japanese counterpart patent, in part, to the above-noted EP '238 patent and to the above-noted U.S. '828 Patent Family, which relate to the Company's UniversalPHOLED phosphorescent OLED technology. Under its license agreement with Princeton, the Company is required to pay all legal costs and fees associated with this proceeding.

On February 28, 2011, the Company learned that the JPO had issued a decision recognizing the Company's invention and upholding the validity of most of the claims, but finding the broadest claims in the patent invalid. Company management believes that the JPO's decision invalidating these claims was erroneous, and the Company filed an appeal to the Japanese IP High Court.

Both parties filed appeal briefs in this matter with the Japanese IP High Court. A technical explanation hearing was held on February 1, 2012.  At the hearing, both parties filed technical materials supporting their respective positions.

At this time, based on its current knowledge, Company management believes that the JPO decision invalidating certain claims in the Company's JP '929 patent should be overturned on appeal as to all or a significant portion of the claims. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1394870

On about April 20, 2010, five European companies filed Notices of Opposition to European Patent No. 1394870 (the EP '870 patent). The EP '870 patent, which was issued on July 22, 2009, is a European counterpart patent, in part, to U.S. patents 6,303,238; 6,579,632; 6,872,477; 7,279,235; 7,279,237; 7,488,542; 7,563,519; and 7,901,795; and to pending U.S. patent application 13/035,051, filed on February 25, 2011 (hereinafter the "U.S. '238 Patent Family"). These patents and this patent application relate to the Company's UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding. The five companies are Merck Patent GmbH; BASF Schweitz AG of Basel, Switzerland; Osram GmbH of Munich, Germany; Siemens Aktiengesellschaft of Munich, Germany; and Koninklijke Philips Electronics N.V., of Eindhoven, The Netherlands.

The EPO combined the oppositions into a single opposition proceeding. The matter has been briefed and the Company is waiting for the EPO to provide notice of the date of the Oral Hearing.  The Company is also waiting to see whether any of the other parties in the opposition file additional documents, to which the Company might respond.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Japan for Japan Patent Nos. 4357781 and 4358168

On May 24, 2010, the Company received copies of two additional Notices of Invalidation Trials against Japan Patent Nos. 4357781 (the JP '781 patent) and 4358168 (the JP '168 patent), which were both issued on August 14, 2009. The requests for these two additional Invalidation Trials were also filed by SEL. The JP '781 and '168 patents are also Japanese counterpart patents, in part, to the above-noted U.S. '828 Patent Family and EP '238 Patent, which relate to the Company's UniversalPHOLED phosphorescent OLED technology. Under its license agreement with Princeton, the Company is also required to pay all legal costs and fees associated with these two proceedings.

On March 31, 2011, the Company learned that the JPO had issued decisions finding all claims in the JP '781 and JP '168 patents invalid. Company management believes that the JPO's decisions invalidating these claims were erroneous, and the Company filed appeals for both cases to the Japanese IP High Court.

Both parties are in the process of filing appeal briefs in this matter with the Japanese IP High Court. The Japanese IP High Court held hearings for this matter on November 22, 2011, and March 5, 2012.

At this time, based on its current knowledge, Company management believes that the JPO decisions invalidating all the claims in the Company's JP '781 and JP '168 patents should be overturned on appeal as to all or a significant portion of the claims. However, Company management cannot make any assurances of this result.

Invalidation Trial in Korea for Patent No. KR-0998059

On March 10, 2011, the Company received informal notice from the Company's Korean patent counsel of a Request for an Invalidation Trial from the Korean Intellectual Property Office (KIPO) for its Korean Patent No. 10-0998059 (the KR '059 patent), which was issued on November 26, 2010. The Request was filed by a certain individual petitioner, but the Company still does not know which company, if any, was ultimately responsible for filing this Request. The KR '059 patent is a Korean counterpart patent to the OVJP, Organic Vapor Jet Printing, family of U.S. patents originating from U.S. patent 7,431,968.

On April 21, 2011, the Company's Korean patent counsel received a copy of the petitioner's brief in support of the Request. The Company filed a response to the Request on June 20, 2011. The petitioner filed a rebuttal brief on August 8, 2011, and the Company filed a response to the rebuttal brief on October 12, 2011.  The petitioner filed a second rebuttal brief on January 17, 2012, and the Company filed a response to the second rebuttal brief on March 29, 2012.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Korea for Patent Nos. KR-558632 and KR-963857

On May 11 and May 31, 2011, respectively, the Company learned that Requests for Invalidation Trials were filed in Korea, on May 3 and May 26, 2011, respectively, for the Company's Korean Patent Nos. KR-558632 (the KR '632 patent), which issued on March 2, 2006, and KR-963857 (the KR '857 patent), which issued on June 8, 2010. The Requests were filed by Duk San Hi-metal, Ltd. (Duk San) of Korea. The KR '632 and KR '857 patents are both Korean counterpart patents, in part, to U.S. '238 Patent Family and to EP '870 patent, which is subject to the above-noted European Opposition; and to the JP '024 patent, which is subject to the below-noted Japanese Invalidation Trial, all of which relate to the Company's UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The Company timely filed its formal responses to the Requests by the due dates of August 27, 2011 and September 8, 2011, respectively.  Duk San filed a reply brief on December 16, 2011 relating to the KR '857 patent, to which the Company timely filed a responsive brief on April 23, 2012.  Both parties may file additional briefs in these matters with KIPO.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Korea for Patent Nos. KR-744199 and KR-913568

On May 10 and May 31, 2011, respectively, the Company learned that Requests for Invalidation Trials were filed in Korea, on May 3 and May 26, 2011, respectively, for the Company's Korean Patent Nos. KR-744199 (the KR '199 patent), which issued on July 24, 2007, and KR-913568 (the KR '568 patent), which issued on August 17, 2009. The Requests were also filed by Duk San. The KR '199 and KR '568 patents are both Korean counterpart patents, in part, to the U.S. '828 Patent Family which relate to the EP '238 patent, which is subject to one of the above-noted European Oppositions; and to the JP '929 patent, which is subject to one of the above-noted Japanese Invalidation Trials. These patents and patent applications relate to the Company's UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The Company timely filed its formal responses to the Requests by the due dates of September 1, 2011 and August 23, 2011, respectively.  Both parties are in the process of filing briefs in these matters with KIPO.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trial in Japan for Japan Patent No. 4511024

On June 16, 2011, the Company learned that a Request for an Invalidation Trial was filed in Japan for the Company's Japanese Patent No. JP-4511024 (the JP '024 patent), which issued on May 14, 2010. The Request was filed by SEL, the same opponent as in the above-noted Japanese Invalidation Trial for the JP '929 patent. The JP '024 patent is a counterpart patent, in part, to the U.S. '238 Patent Family, which relate to the EP '870 patent, which is subject to one of the above-noted European Oppositions; and to the KR '632 and KR '857 patents, which are subject to one of the above noted Korean Invalidation Trials. These patents and the pending U.S. patent application relate to the Company's UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The Company timely filed a Written Reply to the Request for Invalidation Trial.  A hearing was held on March 15, 2012.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1252803

On July 12 and 13, 2011, three companies filed Oppositions to the Company's European Patent No. 1252803 (the EP '803 patent).  The three companies are Sumitomo, Merck Patent GmbH and BASF SE, of Ludwigshaven, Germany. The EP '803 patent, which was issued on October 13, 2010, is a European counterpart patent, in part, to the U.S. '828 Patent Family, which relate to the Company's UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The EPO combined the oppositions into a single opposition proceeding.  The Company's initial response to the oppositions was timely filed prior to the February 18, 2012 extended due date.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Korea for Patent Nos. KR-794,975, KR-840,637 and KR-937,470

On August 8, 2011, the Company received information indicating that Requests for Invalidation Trials were filed against the Company's Korean Patent Nos. KR-840,637 (the KR '637 patent) and KR-937,470 (the KR '470 patent), which issued on June 17, 2008 and January 11, 2010, respectively. On December 12, 2011, the Company received information that a further Request for an Invalidation Trial was filed against the Company's Korean Patent No. KR-794,975 (the KR '975 patent).  The Requests were also filed by Duk San. The KR '975, KR '637 and KR '470 patents are Korean counterpart patents, in part, to the U.S. '828 Patent Family; to the EP '803 patent, which is subject to one of the above-noted European Oppositions; and to the JP '781 and JP '168 patents, which are subject to the above-noted Japanese Invalidation Trials. These patents and patent applications relate to the Company's UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

The Company's formal responses relating to the KR '637, KR '470, and KR '975 patents were timely filed on December 7, 2011, December 8, 2011 and March 3, 2012, respectively.  Both parties may file additional briefs in these matters with KIPO.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patents being challenged will be declared valid, and that all or a significant portion of their claims will be upheld. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1390962

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

The EPO combined the oppositions into a single opposition proceeding.  The Company is in the process of preparing its response to the oppositions.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1933395

On February 24 and 27, 2012, Oppositions were filed to the Company's European Patent No. 1933395 (the EP '395 patent). These Oppositions were filed by Sumitomo, Merck Patent GmbH and BASF SE.  The EP '395 patent is a counterpart patent to the above-noted Japan Patent No. 4358168, and to the above-noted Patent Nos. KR-840,637 and KR-937,470, counterpart patent, in part, to the U.S. '828 Patent Family, which relate to the Company's UniversalPHOLED phosphorescent OLED technology. This patent is exclusively licensed to the Company by Princeton, and under the license agreement the Company is required to pay all legal costs and fees associated with this proceeding.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of its claims will be upheld. However, Company management cannot make any assurances of this result.

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EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Development Agreement [Member]
Long-term Purchase Commitment [Line Items]
Time period	5
Supply Agreement [Member]
Long-term Purchase Commitment [Line Items]
Time period	7
New OLED Materials Agreement and OLED Materials Agreement [Member]
Long-term Purchase Commitment [Line Items]
Specified form of payment	Up to 50%
Minimum average closing price of common stock (in dollars per share)	$ 20.00
Issuance of common stock in connection with materials and license agreements (in shares)		181
Charges to expense for issuance of common stock in connection with materials and license agreements		$ 9,000
Charges to expense for cash portion of reimbursement of expenses	$ 1,300,000	$ 1,400,000

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Policies)

3 Months Ended

Mar. 31, 2012

CASH, CASH EQUIVALENTS AND INVESTMENTS [Abstract]

Cash, Cash Equivalents and Investments

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company classifies its remaining investments as available-for-sale. These 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.

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2012

Dec. 31, 2011

Mar. 31, 2011

Dec. 31, 2011

FAIR VALUE MEASUREMENTS [Abstract]

Assets and liabilities carried at fair value measured on a recurring basis

The following table provides the assets carried at fair value measured on a recurring basis as of March 31, 2012 (in thousands):

			Fair Value Measurements, Using
	Total carrying value as of March 31, 2012		Quoted prices  in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	137,986	$	137,986	$	-	$	-
Short-term investments		194,331		194,331		-		-
Long-term investments		971		971		-		-

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2011 (in thousands):

			Fair Value Measurements, Using
	Total carrying  value as of December 31, 2011		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	96,538	$	96,538	$	-	$	-
Short-term investments		234,294		234,294		-		-

Reconciliation of the changes in fair value of the Company's stock warrant liability

The following table is a reconciliation of the changes in fair value of the Company's stock warrant liability for the three months ended March 31, 2011, which had been classified in Level 3 in the fair value hierarchy (in thousands):

	2011
Fair value of stock warrant liability, beginning of period	$	10,660
Loss for period		8,926
Warrants exercised		(6,476	)
Fair value of stock warrant liability, end of period	$	13,110

Valuation inputs using the Black-Scholes option pricing model

The fair value of the stock warrant liability was determined using the Black-Scholes option pricing model with the following inputs at March 31, 2011:

	2011
Contractual life (years)	0.4
Expected volatility	58.2%
Risk-free interest rate	0.1%
Annual dividend yield	-

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CONCENTRATION OF RISK, Revenues and Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Dec. 31, 2011
Concentration Risk [Line Items]
Total revenue	$ 12,620	$ 9,601
Accounts receivable	8,708		10,727
Major Customer A [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (in hundredths)	42.00%	43.00%
Accounts receivable	3,831
Major Customer B [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (in hundredths)	13.00%	20.00%
Accounts receivable	1,602
Major Customer C [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (in hundredths)	12.00%
Accounts receivable	0
Government Contracts Concentration Risk [Member]
Concentration Risk [Line Items]
Total revenue	$ 1,200	$ 1,900
Concentration risk, percentage (in hundredths)	9.00%	20.00%
Geographic Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (in hundredths)	90.00%	79.00%

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,221)	$ (11,881)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of deferred revenue	(917)	(705)
Depreciation	418	372
Amortization of intangibles	15	5
Amortization of premium and discount on investments, net	(238)	(64)
Stock-based employee compensation	800	1,039
Non-cash expense under a materials agreement		9
Stock-based compensation to Board of Directors and Scientific Advisory Board	213	529
Loss on stock warrant liability		8,926
Retirement plan benefit expense	388	382
Decrease (increase) in assets:
Accounts receivable	2,019	1,263
Inventory	(1,731)	(89)
Other current assets	(827)	394
Other assets	15	(116)
(Decrease) increase in liabilities:
Accounts payable and accrued expenses	(1,987)	253
Other current liabilities	(1)
Deferred revenue	1,042	1,300
Net cash (used in) provided by operating activities	(2,012)	1,617
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,802)	(475)
Purchase of intangibles		(440)
Purchase of investments	(139,512)	(37,346)
Proceeds from sale of investments	178,638	23,396
Net cash provided by (used in) investing activities	37,324	(14,865)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock	71	249,803
Proceeds from the exercise of common stock options and warrants	541	5,120
Payment of withholding taxes related to stock-based employee compensation	(3,473)	(3,938)
Net cash (used in) provided by financing activities	(2,861)	250,985
INCREASE IN CASH AND CASH EQUIVALENTS	32,451	237,737
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	111,795	20,369
CASH AND CASH EQUIVALENTS, END OF PERIOD	144,246	258,106
The following non-cash activities occurred:
Unrealized (loss) gain on available-for-sale securities	(104)	11
Common stock issued to Board of Directors and Scientific Advisory Board that was earned in a previous period	328	300
Common stock issued to employees that was accrued for in a previous period, net of shares withheld for taxes	252	1,113
Fair value of stock warrant liability reclassified to shareholders' equity upon exercise		$ 6,476

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RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN

3 Months Ended

Mar. 31, 2012

RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN [Abstract]

RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN

5. RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN

The Company funded OLED technology research at Princeton and, on a subcontractor basis, at USC, for 10 years under a Research Agreement executed with Princeton in August 1997 (the 1997 Research Agreement).  The Principal Investigator conducting work under the 1997 Research Agreement transferred to Michigan in January 2006.  Following this transfer, the 1997 Research Agreement was allowed to expire on July 31, 2007.

As a result of the transfer, the Company entered into a new Sponsored Research Agreement with USC to sponsor OLED technology research at USC and, on a subcontractor basis, Michigan.  This new Research Agreement (as amended, the 2006 Research Agreement) was effective as of May 1, 2006, and had an original term of three years.  The 2006 Research Agreement superseded the 1997 Research Agreement with respect to all work being performed at USC and Michigan.  Payments under the 2006 Research Agreement were made to USC on a quarterly basis as actual expenses were incurred.  The Company incurred $2.2 million in research and development expense for work performed under the 2006 Research Agreement during the original term, which ended on April 30, 2009.

Effective May 1, 2009, the Company amended the 2006 Research Agreement to extend the term of the agreement for an additional four years.  As of March 31, 2012, the Company was obligated to pay USC up to $2.1 million for work actually performed during the extended term, which runs through April 30, 2013.  From May 1, 2009 through March 31, 2012, the Company incurred $2.9 million in research and development expense for work performed under the amended 2006 Research Agreement.

On October 9, 1997, the Company, Princeton and USC entered into an Amended License Agreement (as amended, the 1997 Amended License Agreement) under which Princeton and USC 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 work performed by Princeton and USC under the 1997 Research Agreement.  Under this agreement, the Company is required to pay Princeton royalties for licensed products sold by the Company or its sublicensees.  For licensed products sold by the Company, the Company is required to pay Princeton 3% of the net sales price of these products.  For licensed products sold by the Company's sublicensees, the Company is required to pay Princeton 3% of the revenues received by the Company from these sublicensees.  These royalty rates are subject to renegotiation for products not reasonably conceivable as arising out of the 1997 Research Agreement if Princeton reasonably determines that the royalty rates payable with respect to these products are not fair and competitive.

The Company is obligated under the 1997 Amended License Agreement to pay to Princeton minimum annual royalties.  The minimum royalty payment is $100,000 per year.  The Company accrued royalty expense in connection with this agreement of $256,000 and $199,000 for the three months ended March 31, 2012 and 2011, respectively.

The Company also is required under the 1997 Amended License Agreement to use commercially reasonable efforts to bring the licensed OLED technology to market.  However, this requirement is deemed satisfied if the Company invests a minimum of $800,000 per year in research, development, commercialization or patenting efforts respecting the patent rights licensed to the Company.

In connection with entering into the 2006 Research Agreement, the Company amended the 1997 Amended License Agreement to include Michigan as a party to that agreement effective as of January 1, 2006.  Under this amendment, Princeton, USC and Michigan have granted the Company a worldwide exclusive license, 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 work performed under the 2006 Research Agreement.  The financial terms of the 1997 Amended License Agreement were not impacted by this amendment.

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SHAREHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2012

SHAREHOLDERS' EQUITY [Abstract]

Shareholders equity

SHAREHOLDERS' EQUITY (in thousands, except for share and per share data)

	Series A														Accumulated
	Nonconvertible								Additional						Other			Total
	Preferred Stock				Common Stock				Paid-In			Accumulated			Comprehensive			Shareholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Loss			Equity
BALANCE, JANUARY 1, 2012		200,000	$	2		46,113,296	$	461	$	561,492		$	(213,871	)	$	(5,857	)	$	342,227
Net loss		-		-		-		-		-			(1,221	)		-			(1,221	)
Other comprehensive income		-		-		-		-		-			-			44			44
Exercise of common stock options		-		-		70,115		1		540			-			-			541
Stock-based employee compensation, net of shares withheld for taxes (A)		-		-		122,715		1		(2,298	)		-			-			(2,297	)
Issuance of common stock to Board of Directors and Scientific Advisory Board (B)		-		-		28,341		-		541			-			-			541
Issuance of common stock under an Employee Stock Purchase Plan		-		-		2,298		-		71			-			-			71
BALANCE, March 31, 2012		200,000	$	2		46,336,765	$	463	$	560,346		$	(215,092	)	$	(5,813	)	$	339,906

(A)	Includes $376,000 (9,376 shares) that was accrued for in a previous period and charged to expense when earned, but issued in 2012, less shares withheld for taxes in the amount of $124,000 (3,070 shares).
(B)	Includes $328,000 (7,490 shares) that was earned in a previous period and charged to expense when earned, but issued in 2012.

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STOCK-BASED COMPENSATION, Employee Stock Purchase Plan (Details) (USD $)	3 Months Ended					12 Months Ended
	Mar. 31, 2012 General and Administrative Expense [Member]	Mar. 31, 2011 General and Administrative Expense [Member]	Mar. 31, 2012 Research and Development Expense [Member]	Mar. 31, 2011 Research and Development Expense [Member]	Mar. 31, 2012 Employee Stock Purchase Plan (ESPP) [Member]	Dec. 31, 2012 Employee Stock Purchase Plan (ESPP) [Member]	Jun. 25, 2009 Employee Stock Purchase Plan (ESPP) [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Reserved for issuance (in shares)							1,000,000
Percentage of market value (in hundredths)					85.00%
Maximum allocation of base compensation (in hundredths)						10.00%
Maximum shares per purchase date (in shares)					12,500
Maximum value per calendar year, per employee						$ 25,000
Common stock issued (in shares)					2,298
Proceeds from common stock issued					71,000
Charges to expense	$ 5,000	$ 6,000	$ 20,000	$ 14,000

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BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2012

BASIS OF PRESENTATION [Abstract]

Management's Use of Estimates

Management's Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 area of revenue recognition for license agreements, useful life of acquired technology, stock-based compensation and the valuation of stock warrant and retirement benefit plan liabilities. Actual results could differ from those estimates.

Fair Value of Financial Instruments

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 or liability's classification is determined based on the lowest level input that is significant to the fair value measurement.

Cost of Material Sales

Cost of Material Sales

Cost of material sales represents costs associated with the sale of materials that have been classified as commercial.