Universal Display Corporation Announces Third Quarter 2009 Financial Results

November 9, 2009 4:18 PM EST

EWING, N.J.--(BUSINESS WIRE)-- Universal Display Corporation (NASDAQ: PANL), a key innovator behind today's and tomorrow's evolving displays and lighting with its Universal PHOLED(TM) phosphorescent OLED technology and materials, today announced its results for the third quarter and nine months ended September 30, 2009.

Revenues for the third quarter of 2009 were $5,145,393, compared to $2,625,639 for the third quarter of 2008. Commercial revenue, which includes commercial chemical revenue, license and royalty revenues, and commercialization assistance revenue, was $1,621,416 for the quarter, compared to $1,324,924 for the third quarter of 2008. Developmental revenue, which includes development chemical revenue, contract research revenue, and technology development revenue, was $3,523,977 for the quarter, compared to $1,300,715 for the third quarter of 2008.

The increase in development revenue for the third quarter of 2009 included a non-refundable payment of $1,500,000 that the company received from Kyocera Corporation ("Kyocera") last year. This payment was for technical assistance previously provided to a subsidiary of Kyocera established to conduct its OLED activities. The payment was previously classified as deferred revenue because it was creditable against a portion of the upfront fee under the company's license agreement with Kyocera. The license agreement was to become effective upon notice from Kyocera given on or before December 31, 2009. Kyocera has since indicated that it will not be providing this notice because its OLED subsidiary has been dissolved.

For the third quarter of 2009, the company reported a net loss of $4,672,847, or $(0.13) per diluted share, versus a net loss of $5,302,983, or $(0.15) per diluted share, for the third quarter of 2008. The improvement in the net loss was primarily due to an increase in revenues during the quarter, partially offset by a decrease in interest income, an increase in operating expenses and a loss on a stock warrant liability.

For the nine-months ended September 30, 2009, the company reported revenues of $10,935,605, compared to revenues of $7,488,056 for the same period of 2008. Commercial revenue for the first nine months of 2009 totalled $4,229,609, compared to $4,275,476 for the same period of 2008. Developmental revenue for the first nine months of 2009 totalled $6,705,996, compared to $3,212,580 for the same period of 2008.

For the nine months ended September 30, 2009, the net loss totalled $16,657,624, or $(0.46) per diluted share, versus a net loss of $14,702,158, or $(0.41) per diluted share, for the same period of 2008.

"This was an encouraging quarter for Universal Display, with gains in both royalty and license fee revenue," said Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display. "We are seeing increased advertising and marketing of our licensees' products that feature AMOLED displays and our technology and materials, and an associated increase in adoption of these products. We believe that this trend will continue and sales of these products will increase as the global economic environment continues to improve."

Mr. Rosenblatt continued, "We are encouraged by the rate of research and development on flexible displays for the U.S. Department of Defense and energy efficient white OLED lighting for the U.S. Department of Energy. Looking ahead, as the market for small-area AMOLED displays continues to mature, we expect growth in larger-area AMOLED displays for the TV market in 2010 and beyond."

Operating expenses were $8,938,169 for the third quarter of 2009, compared to $8,458,503 for the same quarter of 2008. Operating expenses for the quarter were consistent with expectations and are expected to remain at or near the same level in the near-term.

Cash used in operating activities was $11,831,763 for the nine months ended September 30, 2009, compared to $6,034,956 for the same period of 2008. The increase in cash used in operating activities was mainly due to additional net losses, excluding non-cash charges, of $2,452,975 and a decrease in deferred license fees and deferred revenues as a result of lower cash payments of $2,033,333 from various customers.

The company's balance sheet remained strong at quarter end, with cash, cash equivalents and short-term investments totalling $66,024,043 as of September 30, 2009, compared to $77,454,200 as of December 31, 2008.

In conjunction with this release, Universal Display will host a conference call, followed by a question and answer session, on Monday, November 9, at 5:00 p.m. Eastern Time. Interested parties may participate by calling 706-634-1395 at 4:55 p.m. Eastern Time and referencing conference PIN 39209446. A taped replay of the conference call will be available within two hours of the conclusion of the call and will remain available through Monday, November 23, 2009. The number to call for the taped replay is 706-645-9291 and the conference PIN is 39209446.

The conference call will be simultaneously broadcast live over the Internet through a webcast on the Universal Display website. To access the call, please visit the website at www.universaldisplay.com. An online archive of the webcast will be available within two hours of the conclusion of the call.

About Universal Display Corporation

Universal Display Corporation is a world leader in developing and commercializing innovative OLED technologies and materials for use in flat panel displays, solid-state lighting products, electronic communications and other opto-electronic devices. Universal Display is working with a network of world-class organizations, including Princeton University, the University of Southern California, the University of Michigan, and PPG Industries, Inc. Universal Display has also established numerous commercial relationships with companies such as Chi Mei EL Corporation, DuPont Displays, Inc., Konica Minolta Technology Center, Inc., LG Display Co., Ltd., Samsung Mobile Display Co, Ltd., Seiko Epson Corporation, Sony Corporation, Tohoku Pioneer Corporation and Toyota Industries Corporation. Universal Display currently owns or has exclusive or sole license rights with respect to more than 960 issued and pending patents worldwide.

Universal Display is located in the Princeton Crossroads Corporate Center in Ewing, New Jersey. Universal Display's state-of-the-art facility is designed to further technology and materials development, technology transfer to manufacturing partners and work with customers to develop OLED products that meet their needs. Visit Universal Display on the Web at www.universaldisplay.com.

Forward-Looking Statements: All statements in this document that are not historical, such as those relating to Universal Display Corporation's technologies and potential applications of those technologies, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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, 2008, as amended. Universal Display Corporation disclaims any obligation to update any forward-looking statement contained in this document.

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

                                              September 30,     December 31,

                                              2009              2008

ASSETS

CURRENT ASSETS:

 Cash and cash equivalents                    $ 10,608,785      $ 28,321,581

 Short-term investments                         55,415,258        49,132,619

 Accounts receivable                            1,886,345         2,450,444

 Inventory                                      42,700            2,209

 Other current assets                           502,479           462,908

 Total current assets                           68,455,567        80,369,761

PROPERTY AND EQUIPMENT, net                     11,509,541        12,859,628

ACQUIRED TECHNOLOGY, net                        1,658,040         2,929,344

OTHER ASSETS                                    237,758           69,772

TOTAL ASSETS                                  $ 81,860,906      $ 96,228,505

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

 Accounts payable                             $ 1,915,730       $ 1,585,015

 Accrued expenses                               4,719,417         5,296,433

 Deferred license fees                          6,097,868         6,148,267

 Deferred revenue                               287,634           2,739,790

 Total current liabilities                      13,020,649        15,769,505

DEFERRED LICENSE FEES                           2,946,237         3,407,037

DEFERRED REVENUE                                225,000           337,500

STOCK WARRANT LIABILITY                         3,810,190         -

 Total liabilities                              20,002,076        19,514,042

SHAREHOLDERS' EQUITY:

 Preferred Stock, par value $0.01 per share,
 5,000,000 shares authorized, 200,000 shares
 of Series A Nonconvertible Preferred Stock     2,000             2,000
 issued and outstanding (liquidation value
 of $7.50 per share or $1,500,000)

 Common Stock, par value $0.01 per share,
 50,000,000 shares authorized, 36,677,168
 and 36,131,981 shares issued and               366,772           361,320
 outstanding at September 30, 2009 and
 December 31, 2008, respectively

 Additional paid-in capital                     254,673,492       256,696,849

 Unrealized gain on available-for-sale          77,575            126,497
 securities

 Accumulated deficit                            (193,261,009 )    (180,472,203 )

 Total shareholders' equity                     61,858,830        76,714,463

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $ 81,860,906      $ 96,228,505

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

                                             Three Months Ended September 30,

                                             2009            2008

REVENUE:

Commercial revenue                           $ 1,621,416     $ 1,324,924

Developmental revenue                          3,523,977       1,300,715

Total revenue                                  5,145,393       2,625,639

OPERATING EXPENSES:

Cost of chemicals sold                         277,218         226,574

Research and development                       4,938,705       4,848,724

Selling, general and administrative            2,656,005       2,445,145

Patent costs                                   955,119         839,443

Royalty and license expense                    111,122         98,617

Total operating expenses                       8,938,169       8,458,503

Operating loss                                 (3,792,776 )    (5,832,864 )

INTEREST INCOME                                121,927         545,561

INTEREST EXPENSE                               (386       )    (15,680    )

LOSS ON STOCK WARRANT LIABILITY                (1,001,612 )    -

NET LOSS                                     $ (4,672,847 )  $ (5,302,983 )

BASIC AND DILUTED NET LOSS PER COMMON SHARE  $ (0.13      )  $ (0.15      )

WEIGHTED AVERAGE SHARES USED IN COMPUTING      36,481,603      35,989,473
BASIC AND DILUTED NET LOSS PER COMMON SHARE

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

                                             Nine Months Ended September 30,

                                             2009             2008

REVENUE:

Commercial revenue                           $ 4,229,609      $ 4,275,476

Developmental revenue                          6,705,996        3,212,580

Total revenue                                  10,935,605       7,488,056

OPERATING EXPENSES:

Cost of chemicals sold                         766,396          669,012

Research and development                       15,482,462       13,506,318

Selling, general and administrative            7,994,021        7,658,508

Patent costs                                   2,510,379        2,226,853

Royalty and license expense                    279,484          297,086

Total operating expenses                       27,032,742       24,357,777

Operating loss                                 (16,097,137 )    (16,869,721 )

INTEREST INCOME                                563,920          2,202,123

INTEREST EXPENSE                               (3,327      )    (34,560     )

LOSS ON STOCK WARRANT LIABILITY                (1,121,080  )    -

NET LOSS                                     $ (16,657,624 )  $ (14,702,158 )

BASIC AND DILUTED NET LOSS PER COMMON SHARE  $ (0.46       )  $ (0.41       )

WEIGHTED AVERAGE SHARES USED IN COMPUTING      36,388,939       35,887,264
BASIC AND DILUTED NET LOSS PER COMMON SHARE

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

                                                Nine Months Ended September 30,

                                                2009             2008

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                        $ (16,657,624 )  $ (14,702,158 )

Adjustments to reconcile net loss to net cash
used in operating activities:

  Amortization of deferred license fees and       (3,342,522  )    (756,200    )
  deferred revenue

  Depreciation                                    1,552,826        1,421,274

  Amortization of intangibles                     1,271,304        1,271,304

  Amortization of premium and discount on         (356,571    )    (942,761    )
  investments, net

  Stock-based employee compensation               1,420,170        1,117,727

  Stock-based non-employee compensation           7,011            4,119

  Non-cash expense under a materials agreement    851,587          882,540

  Stock-based compensation to Board of
  Directors and

  Scientific Advisory Board                       321,300          345,691

  Loss on stock warrant liability                 1,121,080        -

(Increase) decrease in assets:

  Accounts receivable                             564,099          602,655

  Inventory                                       (40,491     )    38,956

  Other current assets                            (39,571     )    24,031

  Other assets                                    (167,986    )    7,500

Increase in liabilities:

  Accounts payable and accrued expenses           1,396,958        2,350,366

  Deferred license fees                           -                2,000,000

  Deferred revenue                                266,667          300,000

                                                  -                -

  Net cash used in operating activities           (11,831,763 )    (6,034,956  )

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchases of property and equipment             (202,739    )    (1,171,327  )

  Purchases of short-term investments             (57,674,990 )    (62,028,220 )

  Proceeds from sale of short-term investments    51,700,000       88,158,000

  Net cash (used in) provided by investing        (6,177,729  )    24,958,453
  activities

CASH FLOWS FROM FINANCING ACTIVITIES:

  Proceeds from the issuance of common stock      52,887           -

  Proceeds from the exercise of common stock      1,102,335        2,387,660
  options and warrants

  Payment of withholding taxes related to         (858,526    )    (766,721    )
  stock-based employee compensation

  Net cash provided by financing activities       296,696          1,620,939

(DECREASE) INCREASE IN CASH AND CASH              (17,712,796 )    20,544,436
EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    28,321,581       33,870,696

CASH AND CASH EQUIVALENTS, END OF PERIOD        $ 10,608,785     $ 54,415,132

    Source: Universal Display Corporation

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