8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 2, 2019

UNIVERSAL DISPLAY CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Pennsylvania	1-12031	23-2372688
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
375 Phillips Boulevard, Ewing, NJ		08618
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (609) 671-0980

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	OLED	The NASDAQ Stock Market LLC

Item 2.02 Results of Operations and Financial Condition.

On May 2, 2019, the Registrant issued a press release regarding its financial results for the quarter ended March 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report.

The information set forth under this “Item 2.02. Results of Operations and Financial Condition” (including the exhibit) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing made by the Registrant pursuant to the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
99.1	Press Release by the Registrant, dated May 2, 2019, furnished pursuant to Item 2.02 of Form 8-K.

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release by the Registrant, dated May 2, 2019, furnished pursuant to Item 2.02 of Form 8-K.

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 2, 2019	By:	/s/ Sidney D. Rosenblatt
		Sidney D. Rosenblatt
		Executive Vice President, Chief Financial Officer, Treasurer and Secretary

EX-99.1

Exhibit 99.1

                                                       Press Release

Universal Display Contact:

Darice Liu

investor@oled.com

media@oled.com

+1 609-964-5123

Universal Display Corporation Announces First Quarter 2019 Financial Results

EWING, N.J. – May 2, 2019 – Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED^® technology and materials, today reported financial results for the first quarter ended March 31, 2019.

“We are pleased to report solid first quarter 2019 results,” said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. “Looking to the year, we continue to see strong momentum in the industry. As seen by leading OEM product launches, OLEDs are the display technology of choice for premium smartphones and TVs. Additionally, one of the major themes emerging in the consumer electronics market is form factor. Driven by a robust pipeline of activity, from both panel makers and end users, we believe that the flexible, foldable display path will lead to a myriad of new products, designs and applications.”

Rosenblatt continued, “2019 marks the 25th anniversary of Universal Display Corporation. In June 1994, we were founded on the mission to develop and commercialize key OLED technologies. Today, we are a leading player enabling the OLED ecosystem, and our proprietary technologies and materials can be found in virtually every consumer OLED product around the world. We believe that the tremendousvalue of our phosphorescent portfolio has solidified UDC as an integral partner in the commercialization of OLEDs into the marketplace.”

Financial Highlights for the First Quarter of 2019

Effective January 1, 2018, we adopted ASC Topic 606 using the “modified retrospective” approach, meaning the standard was applied only to the financial results commencing with the first quarter of 2018 with a cumulative adjustment to retained earnings. Under this transition method, we applied the standard only to contracts that were not complete at the initial adoption date. Material sales and cost of material sales referenced below relate solely to OLED activity and exclude activity from contract research services.

• Total revenue in the first quarter of 2019 was $87.8 million as compared to $43.6 million in the first quarter of 2018. On the basis of ASC Topic 605 (the applicable accounting standard prior to the adoption of ASC Topic 606), total revenue in the first quarter of 2019 would have been $101.6 million, compared to $68.2 million in the first quarter of 2018. Under ASC Topic 606, license fee revenue is recognized on a per gram sales basis, whereas under ASC Topic 605, revenue was recognized for license payments upon receipt or on a straight-line basis over the term of the contract.

• Revenue from material sales was $54.5 million in the first quarter of 2019 as compared to $25.3 million in the first quarter of 2018. On an ASC Topic 605 basis, revenue from material sales in the first quarter of 2019 would have been $57.3 million, compared to $28.7 million in the first quarter of 2018.

• Revenue from royalty and license fees was $30.3 million in the first quarter of 2019 as compared to $15.9 million in the first quarter of 2018. On an ASC Topic 605 basis, revenue from royalty and license fees in the first quarter of 2019would have been $41.3 million as compared to $37.1 million in the first quarter of 2018.

• Cost of materials was $13.0 million in the first quarter of 2019, compared to $5.7 million in the first quarter of 2018.

• Operating income was $34.4 million in the first quarter of 2019 compared to $4.5 million in the first quarter of 2018. On an ASC Topic 605 basis, operating income in the first quarter of 2019 would have been $48.2 million, compared to $29.2 million in the first quarter of 2018.

• Net income was $31.5 million or $0.66 per diluted share in the first quarter of 2019 compared to $6.0 million or $0.13 per diluted share in the first quarter of 2018. On an ASC Topic 605 basis, net income in the first quarter of 2019 would have been $42.5 million or $0.90 per diluted share, compared to $25.9 million or $0.55 per diluted share in the first quarter of 2018.

Revenue Comparison

($ in thousands)	Three Months Ended March 31,
	2019		2018
Material sales	$	54,496	$	25,250
Royalty and license fees		30,269		15,911
Contract research services		3,000		2,411
Total revenue	$	87,765	$	43,572

Cost of Materials Comparison

($ thousands)	Three Months Ended March 31,
	2019		2018
Material sales	$	54,496	$	25,250
Cost of material sales		12,975		5,690
Gross margin on material sales		41,521		19,560
Gross margin as a % of material sales		76%		77%

ASC Topic 606 versus 605 Adjusted Results1 For the three months ended March 31, 2019 (in thousands)	As reported		Adjustment		Balances without adoption of ASC Topic 606
Revenue	$	87,765	$	13,816	$	101,581
Gross margin		71,951		13,816		85,767
Operating income		34,360		13,816		48,176
Net income		31,474		11,053		42,527
Diluted earnings per share	$	0.66	$	0.24	$	0.90
For the three months ended March 31, 2018 (in thousands)	As reported		Adjustment		Balances without adoption of ASC Topic 606
Revenue	$	43,572	$	24,653	$	68,225
Gross margin		36,114		24,653		60,767
Operating income		4,519		24,653		29,172
Net income		5,959		19,969		25,928
Diluted earnings per share	$	0.13	$	0.43	$	0.55

________________

(1) Amounts shown in the following tables as balances without adoption of ASC Topic 606 are presented in order to provide a basis for comparison against the Company’s operating results for periods prior to 2018, which were calculated and disclosed without adoption of ASC Topic 606.

2019 Revised Guidance

Although the OLED industry is still at an early state where many variables can have a material impact on its growth, and the Company thus caveats its financial guidance accordingly, the Company now believes that its 2019 revenue will be approximately in the range of $345 million to $365 million. The guidance was prepared utilizing accounting standard ASC Topic 606; under the prior accounting standard ASC Topic 605, the Company estimates that its 2019 revenues would be approximately $405 million to $425 million.

Dividend

The Company also announced a second quarter cash dividend of $0.10 per share on the Company’s common stock. The dividend is payable on June 28, 2019 to all shareholders of record on June 14, 2019.

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on May 2, 2019 at 5:00 p.m. Eastern Time. The live webcast of the conference call can be accessed under the events page of the Company's Investor Relations website at ir.oled.com. Those wishing to participate in the live call should dial 1-877-524-8416 (toll-free) or 1-412-902-1028. Please dial in 5-10 minutes prior to the scheduled conference call time. An online archive of the webcast will be available within two hours of the conclusion of the call.

About Universal Display Corporation

Universal Display Corporation (Nasdaq: OLED) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications.  Founded in 1994, the Company currently owns, exclusively licenses or has the sole right to sublicense more than 5,000 patents issued and pending worldwide.  Universal Display licenses its proprietary technologies, including its breakthrough high-efficiency UniversalPHOLED® phosphorescent OLED technology that can enable the development of low power and eco-friendly displays and solid-state lighting. The Company also develops and offers high-quality, state-of-the-art UniversalPHOLED materials that are recognized as key ingredients in the fabrication of OLEDs with peak performance.  In addition, Universal Display delivers innovative and customized solutions to its clients and partners through technology transfer, collaborative technology development and on-site training.

Headquartered in Ewing, New Jersey, with international offices in China, Hong Kong, Ireland, Japan, South Korea and Taiwan, and wholly-owned subsidiary Adesis, Inc. based in New Castle, Delaware, Universal Display works and partners with a network of world-class organizations. To learn more about Universal Display Corporation, please visit https://oled.com/.

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

# # #

All statements in this document that are not historical, such as those relating to Universal Display Corporation’s technologies and potential applications of those technologies, the Company’s expected results and future declaration of dividends, as well as the growth of the OLED market and the Company’s opportunities in that market, are forward-looking financial statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements in this document, as they reflect Universal Display Corporation’s current views with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. These risks and uncertainties are discussed in greater detail in Universal Display Corporation’s periodic reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, including, in particular, the section entitled “Risk Factors” in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2018. Universal Display Corporation disclaims any obligation to update any forward-looking statement contained in this document.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

	March 31, 2019		December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	225,048	$	211,022
Short-term investments		301,549		304,323
Accounts receivable		52,124		43,129
Inventory		68,041		70,000
Other current assets		5,410		6,366
Total current assets		652,172		634,840
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $47,701 and $44,943		80,615		69,739
ACQUIRED TECHNOLOGY, net of accumulated amortization of $117,034     and $111,890		106,208		110,951
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $3,726 and $3,384		13,114		13,456
GOODWILL		15,535		15,535
DEFERRED INCOME TAXES		24,781		24,377
OTHER ASSETS		75,765		64,526
TOTAL ASSETS	$	968,190	$	933,424
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	7,024	$	10,532
Accrued expenses		27,470		36,057
Deferred revenue		86,296		80,782
Other current liabilities		10,784		5,811
Total current liabilities		131,574		133,182
DEFERRED REVENUE		41,596		41,785
RETIREMENT PLAN BENEFIT LIABILITY		44,747		44,055
OTHER LIABILITIES		34,072		23,896
Total liabilities		251,989		242,918
SHAREHOLDERS’ EQUITY:
Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized, 200,000    shares of Series A Nonconvertible Preferred Stock issued and outstanding    (liquidation value of $7.50 per share or $1,500)		2		2
Common Stock, par value $0.01 per share, 200,000,000 shares authorized, 48,760,311 and 48,681,524 shares issued, and 47,394,663 and 47,319,887 shares outstanding, at March 31, 2019 and December 31, 2018, respectively		488		487
Additional paid-in capital		616,206		617,334
Retained earnings		156,309		129,552
Accumulated other comprehensive loss		(15,520)		(16,234	)
Treasury stock, at cost (1,365,648 and 1,361,637 shares at March 31, 2019    and December 31, 2018, respectively)		(41,284)		(40,635)
Total shareholders’ equity		716,201		690,506
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	968,190	$	933,424

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)

	Three Months Ended March 31,
	2019		2018
REVENUE	$	87,765	$	43,572
COST OF SALES		15,814		7,458
Gross margin		71,951		36,114
OPERATING EXPENSES:
Research and development		15,829		12,357
Selling, general and administrative		11,969		10,791
Amortization of acquired technology and other intangible assets		5,486		5,491
Patent costs		1,770		1,725
Royalty and license expense		2,537		1,231
Total operating expenses		37,591		31,595
OPERATING INCOME		34,360		4,519
Interest income, net		2,831		1,271
Other income (expense), net		282		(47)
Interest and other income, net		3,113		1,224
INCOME BEFORE INCOME TAXES		37,473		5,743
INCOME TAX (EXPENSE) BENEFIT		(5,999)		216
NET INCOME	$	31,474	$	5,959
NET INCOME PER COMMON SHARE:
BASIC	$	0.66	$	0.13
DILUTED	$	0.66	$	0.13
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET    INCOME PER COMMON SHARE:
BASIC		46,892,914		46,783,158
DILUTED		46,931,999		46,848,798
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.10	$	0.06

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	31,474	$	5,959
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue and recognition of unbilled receivables		(26,976)		(12,589)
Depreciation		2,758		2,172
Amortization of intangibles		5,486		5,491
Change in excess inventory reserve		224		—
Amortization of premium and discount on investments, net		(1,741)		(966)
Stock-based compensation to employees		3,610		2,776
Stock-based compensation to Board of Directors and Scientific Advisory Board		516		897
Deferred income tax (benefit) expense		(592)		72
Retirement plan expense		1,501		1,126
Decrease (increase) in assets:
Accounts receivable		(8,995)		29,587
Inventory		1,735		(17,373)
Other current assets		177		(4,025)
Other assets		(2,966)		(177)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(12,117)		(4,441)
Other current liabilities		3,744		(25)
Deferred revenue		33,080		30,331
Other liabilities		3,132		—
Net cash provided by operating activities		34,050		38,815
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(13,283)		(8,733)
Purchases of intangibles		(401)		—
Purchases of investments		(165,471)		(123,375)
Proceeds from sale of investments		170,050		146,546
Net cash (used in) provided by investing activities		(9,105)		14,438
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		204		201
Repurchase of common stock		(649)		(477)
Payment of withholding taxes related to stock-based compensation to employees		(5,757)		(5,832)
Cash dividends paid		(4,717)		(2,831)
Net cash used in financing activities		(10,919)		(8,939)
INCREASE IN CASH AND CASH EQUIVALENTS		14,026		44,314
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		211,022		132,840
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	225,048	$	177,154
The following non-cash activities occurred:
Unrealized gain on available-for-sale securities	$	60	$	69
Common stock issued to Board of Directors and Scientific Advisory Board that was    earned and accrued for in a previous period		300		300
Net change in accounts payable and accrued expenses related to purchases of                                                 property and equipment		(351)		4,583