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What changed in UNIVERSAL DISPLAY CORP \PA\'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of UNIVERSAL DISPLAY CORP \PA\'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+184 added−185 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

Top changes in UNIVERSAL DISPLAY CORP \PA\'s 2024 10-K

184 paragraphs added · 185 removed · 159 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

79 edited+11 added−12 removed132 unchanged
Biggest changeWe have commercially produced and sold phosphorescent emitter materials that produce red, yellow, green and light-blue light, which are combined in various ways for the display and lighting markets. Our current materials business, conducted outside the United States by UDC Ireland, is focused primarily on the delivery of such emissive materials.
Biggest changeDepending on the nature of the OLED device, the emissive materials and emissive layer system may be designed to emit different colors. We have commercially produced and sold phosphorescent emitter materials that can produce red, yellow, green and light-blue light, which are combined in various ways for the display and lighting markets.
Our primary business strategy is to (1) develop new OLED materials and sell existing and new materials to product manufacturers for display applications, such as mobile phones, televisions, monitors, wearables, tablets, portable media devices, notebook computers, personal computers and automotive applications, and specialty and general lighting products; and (2) further develop and either license or otherwise commercialize our proprietary OLED material, device design and manufacturing technologies to those manufacturers.
Our primary business strategy is to (1) develop new OLED materials and sell existing and new materials to product manufacturers for display applications, such as mobile phones, televisions, monitors, wearables, tablets, portable media devices, notebook computers, personal computers and automotive applications, and specialty lighting products; and (2) further develop and either license or otherwise commercialize our proprietary OLED material, device design and manufacturing technologies to those manufacturers.
Manufacturers also may be able to produce FOLEDs using more efficient continuous, or roll-to-roll, processing methods in the future. Our internal research and development efforts are expected to enhance and promote the future adoption of consumer and industrial FOLED devices. OVJP® Organic Vapor Jet Printing OLEDs could be manufactured using other processes as well, including OVJP.
Manufacturers also may be able to produce FOLEDs using more efficient continuous, or roll-to-roll, processing methods in the future. Our internal research and development efforts are expected to enhance and promote the future adoption of consumer and industrial FOLED devices. OVJP® Organic Vapor Jet Printing 8 OLEDs could be manufactured using other processes as well, including OVJP.
At this expanded facility, which now exceeds 50,000 square feet, we perform technology development, including device and process optimization, prototype fabrication, manufacturing scale-up studies, process and product testing, characterization and reliability studies, and technology transfer with our business partners. Our Ewing facility houses multiple OLED deposition systems, including numerous display fabrication tools and OVJP systems.
At this expanded facility, which now exceeds 50,000 square feet, we perform technology development, including device and process optimization, prototype fabrication, manufacturing scale-up studies, process and product testing, characterization and reliability studies, and technology transfer with our business partners. Our Ewing facility houses multiple OLED deposition systems, including numerous display fabrication tools.
Our strong patent and non-patented know-how portfolios in the areas of PHOLED emitter materials, complementary PHOLED materials, OLED device designs, and OLED manufacturing technologies are reflective of our continued commitment to innovate and invest. We believe that our extensive portfolio of patents and non-patented know-how provides us with a competitive advantage in the OLED industry.
Our strong patent and non-patented know-how portfolios in the areas of PHOLED emitter materials, complementary PHOLED materials, OLED device designs, and OLED manufacturing technologies are reflective of our continued commitment to 4 innovate and invest. We believe that our extensive portfolio of patents and non-patented know-how provides us with a competitive advantage in the OLED industry.
Lighting Industry Competitors Although there has been a movement to phase out traditional incandescent bulbs throughout many countries, traditional incandescent bulbs and fluorescent lamps remain well-entrenched products in the lighting industry. In addition, compact fluorescent lamps and solid-state LEDs have been introduced into the market and would compete with OLED lighting products.
Lighting Industry Competitors Although there has been a movement to phase out traditional incandescent bulbs throughout many countries, traditional incandescent bulbs and fluorescent lamps remain entrenched products in the lighting industry. In addition, compact fluorescent lamps and solid-state LEDs have been introduced into the market and would compete with OLED lighting products.
However, other companies may succeed in continuing to improve these competing display technologies, or in developing new display technologies, that are superior to OLED display technologies in various respects. We cannot predict the timing or extent to which such improvements or developments may occur.
However, other companies may succeed in continuing to improve these competing display 14 technologies, or in developing new display technologies, that are superior to OLED display technologies in various respects. We cannot predict the timing or extent to which such improvements or developments may occur.
OLEDs, on the other hand, can be designed to provide improved lighting characteristics because they can be larger in size and can be viewed directly, without using diffusers that are required to temper the intense brightness of LEDs.
OLEDs, on the other hand, can be designed to provide improved lighting characteristics because they can be larger in size and can be viewed directly, without using diffusers that are required to temper the intense brightness of traditional LEDs.
We cannot be sure of the extent to which product manufacturers will adopt and continue to utilize our OLED technologies and materials for the production of commercial displays and lighting products. 14 Our Venture Capital Business: UDC Ventures LLC Our wholly-owned subsidiary, UDC Ventures LLC, is a corporate venture capital entity that funds companies we believe are developing innovative products and technologies that may be synergistic or complementary to our business and/or business strategies or which may otherwise provide favorable investment opportunities.
We cannot be sure of the extent to which product manufacturers will adopt and continue to utilize our OLED technologies and materials for the production of commercial displays and lighting products. 15 Our Venture Capital Business: UDC Ventures LLC Our wholly-owned subsidiary, UDC Ventures LLC, is a corporate venture capital entity that funds companies we believe are developing innovative products and technologies that may be synergistic or complementary to our business and/or business strategies or which may otherwise provide favorable investment opportunities.
We believe that our unparalleled manufacturing partners, namely PPG, our well-established supply chain, our multi-tier quality testing, and our product assurance protocols make us a preferred partner for our customers and for any large-scale OLED display manufacturer that wants to deliver to high-quality international end-customers. In 2023, our largest customers for our PHOLED materials included Samsung Display Co., Ltd.
We believe that our unparalleled manufacturing partners, namely PPG, our well-established supply chain, our multi-tier quality testing, and our product assurance protocols make us a preferred partner for our customers and for any large-scale OLED display manufacturer that wants to deliver to high-quality international end-customers. In 2024, our largest customers for our PHOLED materials included Samsung Display Co., Ltd.
These centers, which include state-of-the-art OLED laboratories, better assist our Asia-based customers in their timely evaluation and adoption of our proprietary PHOLED materials, know-how and technologies in their respective PHOLED designs. We purchased the real estate housing our Application Center in Pangyo, South Korea in May 2023. 11 Our Contract Development and Manufacturing Organization: Adesis, Inc.
These centers, which include state-of-the-art OLED laboratories, better assist our Asia-based customers in their timely evaluation and adoption of our proprietary PHOLED materials, know-how and technologies in their respective PHOLED designs. We purchased the real estate housing our Application Center in Pangyo, South Korea in May 2023. 12 Our Contract Development and Manufacturing Organization: Adesis, Inc.
Our technology leadership, our current intellectual property position, and our more than 20 years of experience working closely with leading OLED display manufacturers are some of the competitive advantages that should enable us to continue to share in the revenues from OLED displays and lighting products as they gain wider acceptance.
Our technology leadership, our current intellectual property position, and our more than 20 years of experience working closely with leading OLED display manufacturers are some of the competitive advantages that should enable us to continue to share in the revenues from OLED displays and lighting products as they continue to gain wider adoption.
Under these agreements, we are being paid a license fee, which includes quarterly and annual payments over the agreement term of five years. These agreements convey to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.
Under these agreements, we are being paid a license fee, which includes quarterly and annual payments over the agreement term. These agreements convey to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.
In 2023, we received a majority of our revenue from three customers domiciled in the Asia-Pacific region, BOE, LG Display and SDC, from each of which we had revenue in excess of 10% of our consolidated revenue. Our business is heavily dependent on our relationships with these customers. Substantially all revenue derived from our customers is denominated in U.S. dollars.
In 2024, we received a majority of our revenue from three customers domiciled in the Asia-Pacific region, BOE, LG Display and SDC, from each of which we had revenue in excess of 10% of our consolidated revenue. Our business is heavily dependent on our relationships with these customers. Substantially all revenue derived from our customers is denominated in U.S. dollars.
In 2011, we entered into an agreement with PPG, the term of which, by amendment in February 2021, continues through December 31, 2024, and thereafter is automatically renewed for additional one-year terms, unless terminated by us with prior notice of one year or terminated by PPG with prior notice of two years.
In 2011, we entered into an agreement with PPG, the term of which, by amendment in February 2021, continues through December 31, 2025, and thereafter is automatically renewed for additional one-year terms, unless terminated by us with prior notice of one year or terminated by PPG with prior notice of two years.
As part of these programs, we may provide compensation in the form of support for research program-related 12 activities, reimbursement for patent related costs, as well as providing for some forms of licensing and/or sublicensing fees for licensed technology that is commercialized by us or our customers.
As part of these programs, we may provide compensation in the form of support for research program-related 13 activities, reimbursement for patent related costs, as well as providing for some forms of licensing and/or sublicensing fees for licensed technology that is commercialized by us or our customers.
This includes more than 6,000 U.S. and foreign patents and patent applications that we own, exclusively license or have the sole right to sublicense. It also includes a substantial body of non-patented technical know-how that we have accumulated over time.
This includes more than 6,500 U.S. and foreign patents and patent applications that we own, exclusively license or have the sole right to sublicense. It also includes a substantial body of non-patented technical know-how that we have accumulated over time.
Through our internal development efforts, acquisitions, and long-standing relationships with academic partners, research institutions and product manufacturers, we own, exclusively license or have the sole right to sublicense more than 6,000 patents issued and pending worldwide.
Through our internal development efforts, acquisitions, and long-standing relationships with academic partners, research institutions and product manufacturers, we own, exclusively license or have the sole right to sublicense more than 6,500 patents issued and pending worldwide.
Develop Next-Generation Organic Technologies We continue to conduct research and development activities relating to next-generation OLED technologies for both displays and lighting products, including next generation emissive layer technologies and dry printing technologies such as OVJP, which we discuss in more detail below.
Develop Next-Generation Organic Technologies We continue to conduct research and development activities relating to next-generation OLED technologies for both displays and lighting products, including next generation emissive layer technologies and dry printing technologies such as organic vapor jet printing (OVJP), which we discuss in more detail below.
We currently own, exclusively license or have the sole right to sublicense more than 6,000 patents issued and pending worldwide. We manufacture and sell our proprietary OLED materials to customers for evaluation and use in commercial OLED products.
We currently own, exclusively license or have the sole right to sublicense more than 6,500 patents issued and pending worldwide. We manufacture and sell our proprietary OLED materials to customers for evaluation and use in commercial OLED products.
Based on these characteristics, product manufacturers have adopted small-area OLED displays for use in a wide variety of electronic devices, such as smartphones, wearables and tablets. Manufacturers are increasingly commercializing large-area OLED displays for use in televisions and monitors.
Based on these characteristics, product manufacturers have adopted small-area OLED displays for use in a wide variety of electronic devices, such as smartphones, wearables, notebook computers and tablets. Manufacturers are increasingly commercializing large-area OLED displays for use in televisions and monitors.
However, others, such as those working to develop thermally activated delayed fluorescence (TADF), may succeed in developing new OLED technologies, materials and alternative solutions that may supplement or be utilized in place of ours.
However, others, such as those working to develop thermally activated delayed fluorescence (TADF) and phosphorescent sensitized fluorescence, may succeed in developing new OLED technologies, materials and alternative solutions that may supplement or be utilized in place of ours.
Our product manufacturing customers are not required to purchase host materials from us. As a result, we do not believe these collaboration efforts will generate significant revenue for us as compared to our emitter and licensing businesses.
Our product manufacturing customers are not required to purchase host materials from us. As a result, we do not believe these collaboration efforts will generate significant revenue for us as compared to our dopant and licensing businesses.
We are committed to diverse representation across all levels of our workforce to reflect the vibrant and thriving diversity of the communities in which we live and work. Women represent 40% of our executive management team, 21% of our leadership (Director level and above) and 22% of our total workforce, as well as 38% of our Board of Directors.
We are committed to diverse representation across all levels of our workforce to reflect the vibrant and thriving diversity of the communities in which we live and work. Women represent 40% of our executive management team, 16% of our leadership (Director level and above) and 22% of our total workforce, as well as 40% of our Board of Directors.
Many OLED smartphone displays are built on plastic substrates including those produced by SDC and LG Display. Several of our customers demonstrated different foldable and rollable FOLED displays at recent Consumer Electronics Shows in Las Vegas, NV.
Many OLED smartphone displays are built on plastic substrates including those produced by many of our customers. Several of our customers demonstrated different foldable and rollable FOLED displays at recent Consumer Electronics Shows in Las Vegas, NV.
Premutico received a J.D. from Boston University School of Law, an M.B.A. from Yale University, and a B.S.E.E. from Worcester Polytechnic Institute. 16
Premutico received a J.D. from Boston University School of Law, an M.B.A. from Yale University, and a B.S.E.E. from Worcester Polytechnic Institute. 17
Adesis currently operates in its headquarters facility, which it purchased in 2017 and consists of over 47,500 square feet in New Castle, Delaware, and in another, leased, over 40,000 square foot facility in Wilmington, Delaware. As of December 31, 2023, Adesis employed a team of 138 research scientists, chemists, engineers and laboratory technicians.
Adesis currently operates in its headquarters facility, which it purchased in 2017 and consists of over 47,500 square feet in New Castle, Delaware, and in another, leased, over 40,000 square foot facility in Wilmington, Delaware. As of December 31, 2024, Adesis employed a team of 139 research scientists, chemists, engineers and laboratory technicians.
As of December 31, 2023, we owned more than 6,000 unexpired issued patents and pending patent applications around the world in addition to the hundreds of patents and patent applications we exclusively license from our research partners, as discussed below. Patents We License from Research Partners We exclusively license patent rights from a number of university research partners.
As of December 31, 2024, we owned more than 6,500 unexpired issued patents and pending patent applications around the world in addition to the hundreds of patents and patent applications we exclusively license from our research partners, as discussed below. Patents We License from Research Partners We exclusively license patent rights from a number of university research partners.
As of December 31, 2023, we were obligated to pay USC up to $2.0 million for work to be performed during the remaining extended term. Other Academic Relationships Over the years, we have also entered into research agreements with various universities and research institutions that have been able to provide tailored research capabilities and insights relating to our PHOLED technology.
As of December 31, 2024, we were obligated to pay USC up to $1.7 million for work to be performed during the remaining extended term. Other Academic Relationships Over the years, we have also entered into research agreements with various universities and research institutions that have been able to provide tailored research capabilities and insights relating to our PHOLED technology.
Other licensed customers of our technology in 2023 included Kaneka Corporation, Pioneer Corporation, and OLEDWorks L.L.C. 5 Complementary UniversalPHOLED ® Host Material Business In addition to our proprietary UniversalPHOLED® emitter materials, we continue to develop, supply and offer for sale certain of our proprietary phosphorescent host materials to OLED device manufacturers.
Other licensed customers of our technology in 2024 included Sharp Corporation, AU Optronics Corporation (AU Optronics), Kaneka Corporation, Pioneer Corporation, and OLEDWorks L.L.C. 5 Complementary UniversalPHOLED ® Host Material Business In addition to our proprietary UniversalPHOLED® emitter materials, we continue to develop, supply and offer for sale certain of our proprietary phosphorescent host materials to OLED device manufacturers.
We believe that relations with our employees are good. Our goal is to be a diverse and inclusive company. Guided by our values, we are committed to creating a company where everyone is included and respected, and where we support each other in reaching our full potential.
We believe that relations with our employees are good. Guided by our values, we are committed to creating a company where everyone is included and respected, and where we support each other in reaching our full potential.
Human Capital As of December 31, 2023, we had 456 active employees, none of whom are unionized. Of these employees, 321 are research scientists, engineers and laboratory technicians at our domestic and international facilities. This team includes chemists, physicists, engineers and technicians with physics, electrical engineering, mechanical engineering and organic/inorganic chemistry backgrounds, and highly-trained theoreticians and experimentalists.
Human Capital As of December 31, 2024, we had 468 active employees, none of whom are unionized. Of these employees, 345 are research scientists, engineers and laboratory technicians at our domestic and international facilities. This team includes chemists, physicists, engineers and technicians with physics, electrical engineering, mechanical engineering and organic/inorganic chemistry backgrounds, and highly-trained theoreticians and experimentalists.
We provide just-in-time supply to our customers and serve as a sole source to them for many of our critical materials.
We provide just-in-time supply to our customers and serve as a sole source to them for many of our critical proprietary PHOLED dopant materials.
As of December 31, 2023, the patent rights we exclusively license from all our university research partners included more than 626 issued patents and pending patent applications in jurisdictions around the world.
As of December 31, 2024, the patent rights we exclusively license from all our university research partners included more than 600 issued patents and pending patent applications in jurisdictions around the world.
Mahon 66 Senior Vice President of Technology Commercialization and General Manager, Commercial Sales Business Brian Millard 41 Vice President, Chief Financial Officer and Treasurer Mauro Premutico 58 Senior Vice President, Planning, Chief Legal Officer and Secretary Our Board of Directors has appointed these executive officers to hold office until their successors are duly appointed. Steven V.
Mahon 67 Senior Vice President of Technology Commercialization and General Manager, Commercial Sales Business Brian Millard 42 Vice President, Chief Financial Officer and Treasurer Mauro Premutico 59 Senior Vice President, Planning, Chief Legal Officer and Secretary Our Board of Directors has appointed these executive officers to hold office until their successors are duly appointed. Steven V.
In 2023, we completed successful Surveillance Audits on our ISO 9001:2015 Quality Management Systems, our ISO 14001:2015 Environmental Management Systems, and our ISO 45001:2018 Occupational Health and Safety Management Systems. 10 PPG We have maintained a close working relationship with PPG since 2000.
In 2024, we 10 completed successful Recertification Audits on our ISO 9001:2015 Quality Management Systems, our ISO 14001:2015 Environmental Management Systems, and our ISO 45001:2018 Occupational Health and Safety Management Systems. 11 PPG We have maintained a close working relationship with PPG since 2000.
Collaborations with Other OLED Material Manufacturers We continued our non-exclusive collaborative relationships with OLED material manufacturing customers during 2023. Most of these relationships are focused on combining our proprietary PHOLED emitters with hosts and other OLED materials of these companies in an effort to optimize our PHOLED emitter products and deliver a high-performance system to the end customer.
Collaborations with Other OLED Material Manufacturers We continued our non-exclusive collaborative relationships with OLED material manufacturing customers during 2024. Most of these relationships are focused on combining our proprietary PHOLED emitting dopants with hosts and other OLED materials of these companies in an effort to optimize our PHOLED emitting dopant products and deliver a high-performance system to the end customer.
Under these agreements, we have granted CSOT non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to CSOT for use in its licensed products. 9 In 2018, we entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox.
In 2020, we entered into long-term, multi-year agreements with CSOT. Under these agreements, we have granted CSOT non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to CSOT for use in its licensed products.
We have been collaborating with some of these display manufacturers for over 20 years. We have been working with SDC and providing our PHOLED materials to SDC for evaluation since 2001. Under the terms of a patent license agreement, we license our patents and technologies to SDC for its manufacture and sale of AMOLED (active-matrix organic light-emitting diode) display products.
We have been working with SDC and providing our PHOLED materials to SDC for evaluation since 2001. Under the terms of a patent license agreement, we license our patents and technologies to SDC for its manufacture and sale of AMOLED (active-matrix organic light-emitting diode) display products.
We have employees from over 25 countries in our workforce, and we believe that a diverse workforce made up of people with different ideas, strengths, interests and cultural backgrounds drives employee and business success. In 2023 our voluntary turnover rate was 9%, and we had overall employee growth rate of 2%.
We have employees from over 25 countries in our workforce, and we believe that a diverse workforce made up of people with different ideas, strengths, interests and cultural backgrounds drives employee and business success. In 2024 our voluntary turnover rate was 6%, and we had an overall employee growth rate of 3%.
(SDC), LG Display Co., Ltd. (LG Display), BOE Technology Group Co., Ltd. (BOE), Tianma Micro-electronics Co., Ltd. (Tianma), Visionox Technology, Inc. (Visionox), Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT), Japan Display, Inc., Sharp Corporation, and AU Optronics Corporation (AU Optronics).
(SDC), LG Display Co., Ltd. (LG Display), BOE Technology Group Co., Ltd. (BOE), Tianma Micro-electronics Co., Ltd. (Tianma), Visionox Technology, Inc. (Visionox), Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT), and Japan Display, Inc.
Patents We Acquired from BASF In 2016, UDC Ireland entered into an IP Transfer Agreement (the BASF Agreement) with BASF. Under the BASF Agreement, BASF sold us more than 500 OLED-related patents and patent applications for a total cost of $96.0 million. The transactions contemplated by the BASF Agreement were consummated on June 28, 2016.
Under the BASF Agreement, BASF sold us more than 500 OLED-related patents and patent applications for a total cost of $96.0 million. The transactions contemplated by the BASF Agreement were consummated on June 28, 2016. Patents We Acquired from Merck KGaA In 2023, UDC Ireland entered into a Patent Sale and License Agreement with Merck KGaA.
Brown 62 Executive Vice President and Chief Technical Officer Janice K.
Brown 63 Executive Vice President and Chief Technical Officer Janice K.
The information on our Internet website is not part of this report. 15 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth certain information with respect to our executive officers as of February 22, 2024: Name Age Position Steven V. Abramson 72 President, Chief Executive Officer and Director Julia J.
The information on our Internet website is not part of this report. 16 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth certain information with respect to our executive officers as of February 20, 2025: Name Age Position Steven V. Abramson 73 President, Chief Executive Officer and Director Julia J.
Suppliers of fluorescent emitter materials include Solus Advanced Materials Co., Ltd., Dow Chemical (previously Gracel Display), Idemitsu Kosan and SFC Co. Ltd. Fluorescent materials may also be viewed as complementary in that they can be used in the same OLED stack as phosphorescent materials.
Suppliers of fluorescent emitter materials include Solus Advanced Materials Co., Ltd., Dow Chemical (previously Gracel Display), Idemitsu Kosan and SFC Co. Ltd. Fluorescent materials may also be viewed as complementary in that they can be used in the same OLED stack as phosphorescent materials, and within the same emissive layer as phosphorescent materials to provide unique performance characteristics.
In 2019, we installed a red-green-blue OVJP pilot tool at our Ewing, New Jersey facility, and we continue to collaborate on OVJP technology development with Professor Forrest of Michigan. In June 2020, we formed a 8 wholly-owned subsidiary, OVJP Corporation (OVJP Corp), as a Delaware corporation.
In 2019, we installed a red-green-blue OVJP pilot tool at our Ewing, New Jersey facility, and we continue to collaborate on OVJP technology development with Professor Forrest of Michigan. In June 2020, we formed a wholly-owned subsidiary, OVJP Corporation (OVJP Corp) in California, as a Delaware corporation, which was founded to advance the commercialization of our proprietary OVJP technology.
We have also developed host materials for the emissive layer and began selling them commercially in 2011. In addition to our materials, which are generally protected by patents covering various molecular structures, we also have system and process patents that cover various fundamentally important aspects of the OLED device, device architectures, use of materials in devices and OLED manufacturing processes.
In addition to our materials, which are generally protected by patents covering various molecular structures, we also have system and process patents that cover various fundamentally important aspects of the OLED device, device architectures, use of materials in devices and OLED manufacturing processes.
These royalties amount to 3% of the net sales price for licensed products sold by us and 3% of the revenues we receive for licensed patents used by our sublicensees. We owed royalties under the 1997 Amended License Agreement of $575,000 for 2023.
These royalties amount to 3% of the net sales price for licensed products sold by us and 3% of the revenues we receive for licensed patents used by our sublicensees. We owed royalties under the 1997 Amended License Agreement of $2.0 million for the year ended December 31, 2024.
Patents We Acquired from Merck KGaA In 2023, UDC Ireland entered into a Patent Sale and License Agreement with Merck KGaA. Under this agreement, Merck KGaA sold to UDC Ireland all of its rights, title and interest to over 550 of its owned and licensed OLED-related patents and patent applications in exchange for a cash payment of $66.0 million.
Under this agreement, Merck KGaA sold to UDC Ireland all of its rights, title and interest to over 550 of its owned and licensed OLED-related patents and patent applications in exchange for a cash payment of $66.0 million. The Patent Sale and License Agreement contains customary representations, warranties and covenants of the parties.
We also compete in the lighting market against incumbent technologies, such as incandescent and fluorescent bulbs, and inorganic LEDs, and against emerging technologies, such as other OLED technologies. 13 Display Panel Industry Competitors Numerous domestic and foreign companies have developed or are developing and improving LCD, which includes quantum dot LCDs (which are sometimes referred to as QLEDs), and other early-stage display technologies, including microLED technologies, that are attempting to compete with our OLED display technologies.
Display Panel Industry Competitors Numerous domestic and foreign companies have developed or are developing and improving LCD, which includes quantum dot LCDs (which are sometimes referred to as QLEDs), and other early-stage display technologies, including microLED technologies, that are attempting to compete with our OLED display technologies.
In addition, due to the inherent transparency of the organic materials and transparent electrode technologies, OLEDs eventually may enable the production of transparent displays for use in products such as automotive windshields and windows with embedded displays.
In addition, due to the inherent transparency of the organic materials and transparent electrode technologies, OLEDs eventually may enable the production of transparent displays for use in products such as automotive windshields and windows with embedded displays. The Solid-State Lighting Market Solid-state lighting relies on the direct conversion of electricity to visible light using semiconductor materials.
Our business was commenced in 1994 by a company then known as Universal Display Corporation, which had been incorporated under the laws of the State of New Jersey. In 1995, a wholly-owned subsidiary of ours merged into this New Jersey corporation. The surviving corporation in this merger became a wholly-owned subsidiary of ours and changed its name to UDC, Inc.
Our business commenced in 1994 through the operations of a company then known as Universal Display Corporation, which had been incorporated under the laws of the State of New Jersey. In 1995, a wholly-owned subsidiary of ours merged into this New Jersey corporation.
Under the license agreement, we have granted Tianma non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on Tianma’s sales of licensed products. Additionally, we supply phosphorescent OLED materials to Tianma for use in its licensed products.
In 2016, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma. Under the license agreement, we have granted Tianma non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on Tianma’s sales of licensed products.
Our ultimate objective is to license our OLED technologies and sell our OLED materials to these manufacturers for their commercial production of OLED products. Relationships with OLED Display Manufacturers We license our OLED technologies and patents to display manufacturers for use in commercial products and supply our proprietary OLED materials to these manufacturers for both commercial use and evaluative purposes.
Relationships with OLED Display Manufacturers We license our OLED technologies and patents to display manufacturers for use in commercial products and supply our proprietary OLED materials to these manufacturers for both commercial use and evaluative purposes. We have been collaborating with some of these display manufacturers for over 20 years.
LG Display is currently the largest manufacturer of AMOLED displays for large-area televisions and produces display panels for a number of different television manufacturers. In 2023, we entered into new long-term, multi-year agreements with BOE. Under these agreements, we have granted BOE non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products.
LG Display is currently the largest manufacturer of AMOLED displays for large-area televisions and produces display panels for a number of different television manufacturers. 9 In 2023, we entered into new long-term, multi-year agreements with BOE.
Our Strategic Relationships with Product Manufacturers We have established early-stage evaluation programs, development and pre-commercial programs, and commercial arrangements with a substantial number of manufacturers or potential manufacturers of OLED display and lighting products. Many of these relationships are directed towards tailoring our proprietary OLED technologies and materials for use by individual manufacturers.
We believe the successful implementation of OVJP technology has the potential to grow the market for our proprietary PHOLED materials and technologies. Our Strategic Relationships with Product Manufacturers We have established early-stage evaluation programs, development and pre-commercial programs, and commercial arrangements with a substantial number of manufacturers or potential manufacturers of OLED display and lighting products.
In 2021, we mutually agreed to extend the terms of both the patent license and material purchase agreements for an additional multi-year term. We have been collaborating with AU Optronics since 2001, and we continue to provide our proprietary PHOLED materials to AU Optronics under a 2016 commercial supply agreement through which AU Optronics also has certain license rights.
We have been collaborating with AU Optronics since 2001, and we continue to provide our proprietary PHOLED materials to AU Optronics under a 2016 commercial supply agreement through which AU Optronics also has certain license rights.
Simultaneously with the consummation of this merger, we changed our name to Universal Display Corporation. UDC, Inc. functions as an operating subsidiary of ours and has certain overlapping officers and directors. We have also formed or acquired other wholly-owned subsidiaries, including Universal Display Corporation Hong Kong, Limited (2008), Universal Display Corporation Korea, Y.H.
The surviving corporation in this merger became a wholly-owned subsidiary of ours and changed its name to UDC, Inc. Simultaneously with the consummation of this merger, we changed our name to Universal Display Corporation. UDC, Inc. functions as an operating subsidiary of ours and has certain overlapping officers and directors.
A manufacturer will use a small amount of emitter material for each device through a process called “doping” into a host material. The emitter material(s) and the host material(s) together form an emissive layer system. Depending on the nature of the OLED device, the emissive materials and emissive layer system may be designed to emit different colors.
We began selling phosphorescent emitter materials commercially in 2003. A manufacturer will use a small amount of such material for each device through a process called “doping” into a host material. The emitter material(s) and the host material(s) together form an emissive layer system.
Many of our key technologies relate primarily to phosphorescent emitter materials, which we believe are more energy efficient than fluorescent emitter materials that can also be used to generate light within the emissive layer of 7 the OLED device. We began selling emitter materials commercially in 2003.
Many of our key technologies relate primarily to phosphorescent materials that efficiently harvest energy for the direct and indirect emission of light, which we believe enable more energy efficient utilization of energy 7 conversion to light relative to the use of fluorescent emitter materials that can also be used to generate light within the emissive layer of the OLED device without the assistance of a phosphorescent material.
The 2006 Research Agreement extends through April 2024 with an option to further extend for an additional one-year period. We make payments under the 2006 Research Agreement to USC on a quarterly basis as actual expenses are incurred.
The 2006 Research Agreement currently extends through April 2025, at which time the parties expect to extend the agreement. We make payments under the 2006 Research Agreement to USC on a quarterly basis as actual expenses are incurred.
These patents are important to our licensing business because they enable us to provide our business partners important OLED related technologies. Our PHOLED Technologies PHOLED technologies utilize specialized materials and device structures that allow OLEDs to emit light through a process known as phosphorescence. Traditional fluorescent OLEDs emit light through an inherently less efficient process.
These patents are important to our licensing business because they enable us to provide our business partners important OLED related technologies. Our PHOLED Technologies PHOLED technologies utilize specialized materials and device structures that enable OLEDs to achieve reduced power consumption thereby providing an energy efficient product.
Under the license agreement, we have granted certain of Visionox’s affiliates non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products.
In 2024, we entered into new long-term, multi-year agreements with Visionox Technology, Inc. (Visionox). Under these agreements, we have granted Visionox non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products.
The Patent Sale and License Agreement contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of $66.0 million as acquired technology, which is being amortized over a period of 10 years. The transactions contemplated by the Merck KGaA Agreement were consummated on April 28, 2023.
UDC Ireland recorded the payment of $66.0 million as acquired technology, which is being amortized over a period of 10 years. The transactions contemplated by the Merck KGaA Agreement were consummated on April 28, 2023. Non-patented Technical Know-How We have accumulated, and continue to accumulate, a substantial amount of non-patented technical know-how relating to OLED technologies and materials.
Our Compliance with Environmental Protection Laws We are not aware of any material effects that compliance with Federal, state or local environmental protection laws or regulations will have on our business. We have not incurred substantial costs to comply with any environmental protection laws or regulations, and we do not anticipate having to do so in the foreseeable future.
Ltd. (2024), and we established a representative office in Taiwan (2011). Our Compliance with Environmental Protection Laws We are not aware of any material effects that compliance with Federal, state or local environmental protection laws or regulations will have on our business.
We devote a substantial portion of our efforts to developing new and improved proprietary PHOLED materials and device architectures for red, green, yellow, blue and white OLED devices. In 2023, we continued our commercial supply relationships with companies such as BOE, CSOT, LG Display, SDC, Tianma, and Visionox to use our PHOLED materials to manufacture OLED displays.
In 2024, we continued our commercial supply relationships with companies such as BOE, CSOT, LG Display, SDC, Tianma, and Visionox to use our PHOLED materials to manufacture OLED displays.
The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty revenue.
The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty revenue.
In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display, which were effective as of January 1, 2015. The terms of these agreements were extended by a January 1, 2021 amendment through the end of 2025.
In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display. The terms of these agreements have been extended through the end of 2025. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio.
We believe this business model allows us to concentrate on our core strengths of technology development and innovation, while at the same time provides significant operating leverage. We also believe that this approach may reduce potential competitive conflicts with our customers.
We believe this business model allows us to concentrate on our core strengths of technology development and innovation, while at the same time provides significant operating leverage. Long-Standing Customer Relationships We have long-standing customer relationships with OLED device manufacturers that are using, or are evaluating for use, our OLED materials in commercial OLED products.
However, most commercial LED offerings are characterized by high operating temperatures and intense brightness which may make them less desirable for many lighting applications.
There are currently two basic types of solid-state lighting devices: inorganic light emitting diodes, or LEDs, and OLEDs. Current commercial LED offerings are gnerally characterized by high operating temperatures and intense brightness which may make them less desirable for many lighting applications.
We also supply phosphorescent OLED materials to BOE for use in its licensed products. In 2019, we entered into an evaluation and commercial supply relationship with CSOT. In 2020, we entered into long-term, multi-year agreements with CSOT.
Under these agreements, we have granted BOE non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to BOE for use in its licensed products. In 2019, we entered into an evaluation and commercial supply relationship with CSOT.
(f/k/a Motorola, Inc.) (Motorola) in 2011, and the following portfolios from Fujifilm Corporation, BASF, and Merck KGaA: Patents We Acquired from Fujifilm Corporation In 2012, we entered into a Patent Sale Agreement (the Fujifilm Agreement) with Fujifilm. Under the Fujifilm Agreement, Fujifilm sold more than 1,200 OLED-related patents and patent applications for a total cost of $109.5 million.
(f/k/a Motorola, Inc.) (Motorola) in 2011, Fujifilm Corporation in 2012 and the following portfolios from BASF, and Merck KGaA: Patents We Acquired from BASF In 2016, UDC Ireland entered into an IP Transfer Agreement (the BASF Agreement) with BASF.
(2010), Universal Display Corporation Japan GK (2011), UDC Ireland Limited (2012), Universal Display Corporation China, Ltd. (2016), Adesis, Inc. (2016), UDC Ventures LLC (2019), OLED Material Manufacturing Limited (2020), and OVJP Corporation (2020), and we established a representative office in Taiwan (2011).
We have also formed or acquired other wholly-owned subsidiaries, including Universal Display Corporation Hong Kong, Limited (2008), Universal Display Corporation Korea, Y.H. (2010), Universal Display Corporation Japan GK (2011), UDC Ireland Limited (2012), Universal Display Corporation China, Ltd. (2016), Adesis, Inc. (2016), UDC Ventures LLC (2019), OLED Material Manufacturing Limited (2020), OVJP Corporation (2020), and Universal Vapor Jet Corporation Pte.
We also cannot prevent the actual independent development of the same or similar information and know-how by third parties. Competition The industry in which we operate is highly competitive. We compete against alternative display technologies, in particular LCDs, as well as other OLED technologies.
Moreover, because we derive some of this information and know-how from academic institutions, there is an increased potential for public disclosure. We also cannot prevent the actual independent development of the same or similar information and know-how by third parties. Competition The industry in which we operate is highly competitive.
Phosphorescence is also important for large-area displays such as televisions, where higher device efficiency and lower heat generation may enable longer product lifetimes and increased energy efficiency. We have a strong intellectual property portfolio surrounding our existing PHOLED technologies and materials for both displays and lighting products which we market under the UniversalPHOLED® brand.
The efficient emission of light through the use of phosphorescence technology is also important for large-area displays such as televisions, where higher device efficiency and lower heat generation may enable longer product lifetimes and increased energy efficiency.
Theory and experiment show that PHOLEDs exhibit device efficiencies up to four times higher than those exhibited by fluorescent OLEDs. Phosphorescence substantially reduces the power requirements of an OLED and is useful in displays for hand-held devices, such as smartphones, where battery power is often a limiting factor.
The use of a phosphorescent material to harvest energy for the efficient emission of light, whether directly or indirectly, substantially reduces the power requirements of an OLED and is useful in displays for hand-held devices, such as smartphones, where battery power is often a limiting factor.
We also employ various methods to protect this information from unauthorized use or disclosure, although no such methods can afford complete protection. Moreover, because we derive some of this information and know-how from academic institutions, there is an increased potential for public disclosure.
Where practicable, we share portions of this information with display manufacturers and other business partners on a confidential basis. We also employ various methods to protect this information from unauthorized use or disclosure, although no such methods can afford complete protection.
The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products.
The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials.
By avoiding the heat and plasma-producing processes of incandescent bulbs and fluorescent lamps, respectively, solid-state lighting products can have substantially higher energy conversion efficiencies. There are currently two basic types of solid-state lighting devices: inorganic light emitting diodes, or LEDs, and OLEDs. Current LEDs are very small in size (about one square millimeter) and are extremely bright.
By avoiding the heat and plasma-producing processes of traditional incandescent bulbs and fluorescent lamps, respectively, solid-state lighting products can have substantially higher energy conversion efficiencies and have been widely adopted in many countries around the world as the use of non-efficient light sources has been curtailed through the adoption of regulatory standards for lighting products.
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The Solid-State Lighting Market Traditional incandescent light bulbs are inefficient because they convert only about 5% of the energy they consume into visible light, with the rest emerging as heat. Fluorescent lamps use excited gases, or plasmas, to achieve a higher energy conversion efficiency of about 20%.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result of the less rigid approach to assessing obviousness, defending the validity of or obtaining patents may be more difficult. Recent court decisions may also impact the enforcement of our patents.
Biggest changeRecent and continuously evolving changes in law in the various jurisdictions in which we operate may make it more difficult for patent holders to secure future patents and/or enforce existing patents. As a result of the less rigid approach to assessing obviousness, defending the validity of or obtaining patents may be more difficult.
In addition to the other factors described above relating to our customers’ sales opportunities, our quarter-to-quarter sales may be materially impacted by our customers’ inventory management plans, which may vary substantially based on financial management considerations, changes in their product mix plans, modified material processing techniques and manufacturing line modifications.
In addition to the other factors described above relating to our customers’ sales opportunities, our quarter-to-quarter sales may be 26 materially impacted by our customers’ inventory management plans, which may vary substantially based on financial management considerations, changes in their product mix plans, modified material processing techniques and manufacturing line modifications.
In addition, our reliance on a relatively small number of licensees with large volumes of consumer product sales makes our quarterly operating results subject to our licensees’ specific plans and the success of their specific product offerings. 25 With respect to material sales, our sales are primarily dependent on purchases made by a relatively small number of customers.
In addition, our reliance on a relatively small number of licensees with large volumes of consumer product sales makes our quarterly operating results subject to our licensees’ specific plans and the success of their specific product offerings. With respect to material sales, our sales are primarily dependent on purchases made by a relatively small number of customers.
This would adversely affect our revenues. Conflicts or other problems could arise between us and our customers or joint development partners, some of which we have made strategic investments in, as to royalty rates, milestone payments or other commercial terms.
This would adversely affect our revenues. 20 Conflicts or other problems could arise between us and our customers or joint development partners, some of which we have made strategic investments in, as to royalty rates, milestone payments or other commercial terms.
While we hold a wide range of additional patents and patent applications relating to our commercial OLED materials and technologies whose expiration dates extend (and in the case of patent applications, will extend) beyond 2023, many of which are also of importance in the OLED industry, none may be of an equally essential nature as our original fundamental patents, and therefore our competitive position may be less certain as a result of the expiration of these patents.
While we hold a wide range of additional patents and patent applications relating to our commercial OLED materials and technologies whose expiration dates extend (and in the case of patent applications, will extend) beyond 2024, many of which are also of importance in the OLED industry, none may be of an equally essential nature as our original fundamental patents, and therefore our competitive position may be less certain as a result of the expiration of these patents.
The costs associated with these actions or the loss of rights critical to our or our customers’ businesses could negatively impact our revenues or cause our business to fail. 18 Recent court decisions in various patent cases may make it more difficult for us to obtain future patents, enforce our patents against third parties or obtain favorable judgments in cases where the patents are enforced.
The costs associated with these actions or the loss of rights critical to our or our customers’ businesses could negatively impact our revenues or cause our business to fail. 19 Recent court decisions in various patent cases may make it more difficult for us to obtain future patents, enforce our patents against third parties or obtain favorable judgments in cases where the patents are enforced.
The extent of such impact would depend on factors such as the duration and severity of the event, which would likely be difficult to predict. 21 Any downturn in U.S. or global economic conditions may have a significant adverse effect on our business. There have been significant and sustained economic downturns in the U.S. and globally in the past.
The extent of such impact would depend on factors such as the duration and severity of the event, which would likely be difficult to predict. 22 Any downturn in U.S. or global economic conditions may have a significant adverse effect on our business. There have been significant and sustained economic downturns in the U.S. and globally in the past.
If we are unable to protect the proprietary nature of our intellectual property and proprietary information, it will harm our business. 17 We or our customers may incur substantial costs or lose important rights as a result of litigation or other proceedings relating to our patent and other intellectual property rights or with respect to our OLED materials business.
If we are unable to protect the proprietary nature of our intellectual property and proprietary information, it will harm our business. 18 We or our customers may incur substantial costs or lose important rights as a result of litigation or other proceedings relating to our patent and other intellectual property rights or with respect to our OLED materials business.
Thus, even if our OLED technologies are a viable alternative to competing approaches, if product manufacturers are unable to obtain access to this equipment and these components, materials and other technologies, they may not utilize our OLED technologies. 20 There are numerous potential alternatives to OLEDs, which may limit our ability to commercialize our OLED technologies and materials.
Thus, even if our OLED technologies are a viable alternative to competing approaches, if product manufacturers are unable to obtain access to this equipment and these components, materials and other technologies, they may not utilize our OLED technologies. 21 There are numerous potential alternatives to OLEDs, which may limit our ability to commercialize our OLED technologies and materials.
An increase or decrease in our effective tax rate could have a material adverse impact on our financial condition and results of operations. 24 In addition, at any time, U.S. federal tax laws or the administrative interpretations of those laws may be changed.
An increase or decrease in our effective tax rate could have a material adverse impact on our financial condition and results of operations. 25 In addition, at any time, U.S. federal tax laws or the administrative interpretations of those laws may be changed.
Therefore, as a result of such rulings, it may be more difficult for us to defend our currently issued patents, obtain additional patents in the future or achieve the desired competitive effect even when our patents are enforced.
Therefore, as a result of such rulings and principles, it may be more difficult for us to defend our currently issued patents, obtain additional patents in the future or achieve the desired competitive effect even when our patents are enforced.
In addition, any increase in the cost or reduced availability of critical materials for our OLED materials could lead to higher production costs. Further, uncertain supply of such materials could disrupt our or our suppliers’ ability to 22 obtain such materials in a timely manner and/or could lead to increased costs.
In addition, any increase in the cost or reduced availability of critical materials for our OLED materials could lead to higher production costs. Further, uncertain supply of such materials could disrupt our or our suppliers’ ability to 23 obtain such materials in a timely manner and/or could lead to increased costs.
Our agreement with PPG currently runs through the end of 2024 and shall be automatically renewed for additional one-year terms, unless terminated by us with prior notice of one year or terminated by PPG with prior notice of two years.
Our agreement with PPG currently runs through the end of 2025 and shall be automatically renewed for additional one-year terms, unless terminated by us with prior notice of one year or terminated by PPG with prior notice of two years.
As of February 22, 2024, we have issued and outstanding 200,000 shares of Series A Nonconvertible Preferred Stock, all of which are held by an entity controlled by members of the family of Sherwin I. Seligsohn, our late founder and former Chairman of the Board of Directors.
As of February 20, 2025, we have issued and outstanding 200,000 shares of Series A Nonconvertible Preferred Stock, all of which are held by an entity controlled by members of the family of Sherwin I. Seligsohn, our late founder and former Chairman of the Board of Directors.
Risks associated with our doing business outside of the United States include, without limitation: • compliance with a wide variety of U.S. and foreign laws and regulations, including foreign anti-corruption and export laws, and certain registration and licensing requirements for the OLED materials we sell; • legal uncertainties on doing business in certain countries or with certain parties regarding taxes, tariffs, quotas, export controls, export licenses and other trade barriers; • economic instability in the countries of our customers, causing delays or reductions in orders for their products and therefore our royalties; • political instability in the countries in which we and/or our customers operate, particularly in South Korea relating to its disputes with and proximity to North Korea, in Hong Kong relating to anti-government protests and in Taiwan relating to its disputes with China; • third party theft or compromise of our products, technology, data or intellectual property, including by means of counterfeiting or reverse-engineering; • difficulties in collecting accounts receivable and longer accounts receivable payment cycles; 23 • fluctuations in foreign currency exchange rates for any revenues or expenses not denominated in U.S. dollars; • potentially adverse tax and tariff consequences; and • trade conflicts between and among various geopolitical factions that could result in trade restrictions being placed on our business and sale of OLED materials.
Risks associated with our doing business outside of the United States include, without limitation: • compliance with a wide variety of U.S. and foreign laws and regulations, including foreign anti-corruption and export laws, and certain registration and licensing requirements for the OLED materials we sell; • legal uncertainties on doing business in certain countries or with certain parties regarding taxes, tariffs, quotas, export controls, export licenses and other trade barriers; • economic instability in the countries of our customers, causing delays or reductions in orders for their products and therefore our royalties; • political instability in the countries in which we and/or our customers operate, particularly in South Korea with respect to South Korea's disputes with and proximity to North Korea, in Hong Kong relating to anti-government protests and in Taiwan relating to its disputes with China; • third party theft or compromise of our products, technology, data or intellectual property, including by means of counterfeiting or reverse-engineering; • difficulties in collecting accounts receivable and longer accounts receivable payment cycles; 24 • fluctuations in foreign currency exchange rates for any revenues or expenses not denominated in U.S. dollars; • potentially adverse tax and tariff consequences • potential mandatory regulatory requirements in some jurisdictions that domestic manufacturers source at least a portion of their critical OLED materials from domestic manufacturers; and • trade conflicts between and among various geopolitical factions that could result in trade restrictions being placed on our business and sale of OLED materials.
We have more than 6,000 issued and pending patents relating to our OLED technologies.
We have more than 6,500 issued and pending patents relating to our OLED technologies.
Our competitors have developed and continue to develop OLED technologies that differ from or compete with our OLED technologies. In particular, competing fluorescent and thermally activated delayed fluorescence OLED technology may become a viable alternative to our phosphorescent OLED technology.
Our competitors have developed and continue to develop OLED technologies that differ from, compete with or reduce the requirements for our OLED technologies. In particular, competing and complementary fluorescent and thermally activated delayed fluorescence OLED technology may become a viable alternative or supplement to our phosphorescent OLED technology.
There is no guarantee that our common stock will appreciate in value or even maintain the price at which current shareholders purchased their shares. ITEM 1B. UNRESOLV ED STAFF COMMENTS None. 26
There is no guarantee that our common stock will appreciate in value or even maintain the price at which current shareholders purchased their shares.
As we experienced in the past during the COVID-19 epidemic and pandemic, such events could negatively impact the global economy, disrupt consumer spending and global supply chains, and create significant volatility and disruption of financial markets, which in turn could have a material adverse effect on our business, financial condition and results of operations.
Epidemics and pandemics could negatively impact the global economy, disrupt consumer spending and global supply chains, and create significant volatility and disruption of financial markets, which in turn could have a material adverse effect on our business, financial condition and results of operations.
For example, we may not be able to enjoin certain third party uses of products or methods covered by our patents following the initial authorized sale, even where those uses are expressly proscribed in an agreement with the buyer. Also, we may face increased difficulty enjoining infringement of our patents. The U.S.
Recent court decisions and changes in regulations may also impact the enforcement of our patents. For example, we may not be able to enjoin certain third party uses of products or methods covered by our patents following the initial authorized sale, even where those uses are expressly proscribed in an agreement with the buyer.
Supreme Court has held that an injunction should not automatically issue based on a finding of patent infringement, but should be determined based on a test balancing considerations of the patentee’s interest, the infringer’s interest, and the public’s interest.
Also, we may face increased difficulty enjoining infringement of our patents. Some jurisdictions have held that an injunction should not automatically issue based on a finding of patent infringement, but should be determined based on a test balancing considerations of the patentee’s interest, the infringer’s interest, and the public’s interest.
Accordingly, our Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of shareholders of our common stock.
Our Articles of Incorporation authorize us to issue up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time-to-time by our Board of Directors. Accordingly, our Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of shareholders of our common stock.
If we cannot complete research and development of our OLED technologies and materials successfully, or if we experience delays in completing research and development of our OLED technologies and materials for use in potential commercial applications, particularly after incurring significant expenditures, our business may fail. 19 Conflicts or other problems may arise with our customers or joint development partners, resulting in renegotiation, breach or termination of, or litigation related to, our agreements with them.
If we cannot complete research and development of our OLED technologies and materials successfully, or if we experience delays in completing research and development of our OLED technologies and materials for use in potential commercial applications, particularly after incurring significant expenditures, our business may fail.
Broad market, industry and global economic factors may also materially reduce the market price of our common stock, regardless of our operating performance. The issuance of additional shares of our common stock could drive down the price of our stock.
Broad market, industry and global economic factors may also materially reduce the market price of our common stock, regardless of our operating performance. We can issue shares of preferred stock that may adversely affect the rights of shareholders of our common stock.
Consumer demand and the condition of the display and lighting industries may also be impacted by other external factors such as war, terrorism, geopolitical uncertainties, epidemics and other business interruptions. The impact of these external factors is difficult to predict, and one or more of these factors could adversely impact the demand for our customers’ products, and thus our business.
Consumer demand and the condition of the display and lighting industries may also be impacted by other external factors such as war, terrorism, geopolitical uncertainties, trade wars, epidemics and other business interruptions.
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Recent case law may make it more difficult for patent holders to secure future patents and/or enforce existing patents. For example, in KSR International Co. vs. Teleflex, Inc . (2007), the U.S. Supreme Court mandated a more expansive and flexible approach to determine whether a patent is obvious and invalid.
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Conflicts or other problems may arise with our customers or joint development partners, resulting in renegotiation, breach or termination of, or litigation related to, our agreements with them.
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The price of our common stock could decrease if: • shares of our common stock that are currently subject to restriction on sale become freely salable, whether through an effective registration statement or based on Rule 144 under the Securities Act of 1933, as amended; or • we issue additional shares of our common stock that might be or become freely salable, including shares that would be issued upon conversion of our preferred stock or the exercise of outstanding stock options.
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The impact of these external factors is difficult to predict, and one or more of these factors could adversely impact the demand for our customers’ products, and thus our business.
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We can issue shares of preferred stock that may adversely affect the rights of shareholders of our common stock. Our Articles of Incorporation authorize us to issue up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time-to-time by our Board of Directors.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Head of Information Technology, who has managed information technology services and security for over 25 years, and our Chief Financial Officer maintain their expertise through participating in events such as continuing education and training, and information-sharing collaborations. We also retain a third-party Information Security consulting firm to advise on and assess our cybersecurity processes on an ongoing basis.
Biggest changeOur Vice President, Head of Global Information Technology, who has decades of information technology leadership experience, and our Chief Financial Officer maintain their expertise through participating in events such as continuing education and training, and information-sharing collaborations. We also retain a third-party Information Security consulting firm to advise on and assess our cybersecurity processes on an ongoing basis.
The Audit Committee of our Board of Directors has oversight responsibility for our cybersecurity program. Our Chief Financial Officer and Head of Information Technology provide periodic updates regarding our cybersecurity risk management strategy and related activities to the Audit Committee, and provide other information as needed or requested to facilitate the committee’s oversight of our cybersecurity risk.
The Audit Committee of our Board of Directors has oversight responsibility for our cybersecurity program. Our Chief Financial Officer and Information Technology leadership provide periodic updates regarding our cybersecurity risk management strategy and related activities to the Audit Committee, and provide other information as needed or requested to facilitate the committee’s oversight of our cybersecurity risk.
Other members of our full Board of Directors, which also receives periodic briefings on cybersecurity matters, also have received professional education and training related to cybersecurity. Despite our efforts to manage the risk from cybersecurity threats, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. See Item 1A.
Other members of our full Board of Directors, which also receives periodic briefings on cybersecurity matters, also have received professional education and training related to cybersecurity . Despite our efforts to manage the risk from cybersecurity threats, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.
Our management team meets regularly with our information technology leadership personnel, including our Head of Information Technology, who reports to our Chief Financial Officer, to receive updates and data on cybersecurity management activities, including assessments on emerging technologies and evaluations of recommended practices related to cybersecurity measures.
Our management team meets regularly with our information technology leadership personnel, including our Vice President, Head of Global Information Technology, who reports to our Chief Financial Officer, to receive updates and data on cybersecurity management activities, including assessments on emerging technologies and evaluations of recommended practices related to cybersecurity measures.
“Risk Factors” for a further discussion of our cybersecurity risks.
See Item 1A. “Risk Factors” for a further discussion of our cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. P ROPERTIES As of December 31, 2023, we operated facilities at the following locations: Location Description of Use Country 375 Phillips Blvd. Ewing, New Jersey Corporate Offices and Research & Development Laboratories United States 250 Phillips Blvd. Ewing, New Jersey (1) Corporate Offices and Manufacturing Logistics United States 300 Phillips Blvd.
Biggest changeITEM 2. P ROPERTIES As of December 31, 2024, our principal operating facilities were located at the following locations: Location Description of Use Country 375 Phillips Blvd. Ewing, New Jersey Corporate Offices and Research & Development Laboratories United States 250 Phillips Blvd. Ewing, New Jersey (1) Corporate Offices and Manufacturing Logistics United States 300 Phillips Blvd.
(3) Leased beginning in 2017 and purchased in May 2023. 27
(3) Leased beginning in 2017 and purchased in May 2023. 28

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDepending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. We believe that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 28 PART II
Biggest changeDepending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. We believe that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 29 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCumulative Total Return 12/18 12/19 12/20 12/21 12/22 12/23 Universal Display Corp. $ 100.00 $ 220.73 $ 247.08 $ 178.17 $ 117.83 $ 210.46 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 S&P 500 Electronic Components 100.00 117.20 145.76 179.27 158.18 190.05 Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans will be set forth in our definitive Proxy Statement for the 2024 Annual Meeting of Shareholders, and herein by reference. 30 IT EM 6 . [RESERVED] None. 31
Biggest changeCumulative Total Return 12/19 12/20 12/21 12/22 12/23 12/24 Universal Display Corp. $ 100.00 $ 111.93 $ 80.71 $ 53.38 $ 95.35 $ 73.54 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93 S&P 500 Electronic Components 100.00 124.37 152.97 134.97 162.17 237.86 Securities Authorized for Issuance under Equity Compensation Plans The information required by this item with respect to our equity compensation plans will be set forth in our definitive Proxy Statement for the 2025 Annual Meeting of Shareholders, and herein by reference.
This performance graph assumes an initial investment of $100 on December 31, 2018 in each of our common stock, the Russell 2000 Index and the S&P 500 Electronics Components Index.
This performance graph assumes an initial investment of $100 on December 31, 2019 in each of our common stock, the Russell 2000 Index and the S&P 500 Electronics Components Index.
As such, we may modify, suspend or cancel our cash dividend policy in any manner and at any time. 29 Performance Graph The performance graph below compares the change in the cumulative shareholder return of our common stock from December 31, 2018 to December 31, 2023, with the percentage change in the cumulative total return over the same period on (i) the Russell 2000 Index, and (ii) the S&P 500 Electronics Components Index.
As such, we may modify, suspend or cancel our cash dividend policy in any manner and at any time. 30 Performance Graph The performance graph below compares the change in the cumulative shareholder return of our common stock from December 31, 2019 to December 31, 2024, with the percentage change in the cumulative total return over the same period on (i) the Russell 2000 Index, and (ii) the S&P 500 Electronics Components Index.
During 2021, 2022 and 2023, we declared and paid cash dividends on our common stock.
During 2022, 2023 and 2024, we declared and paid cash dividends on our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock Our common stock is quoted on the NASDAQ Global Select Market website under the symbol “OLED.” As of February 16, 2024, there were approximately 261 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock Our common stock is quoted on the Nasdaq Global Select Market website under the symbol “OLED.” As of February 20, 2025, there were approximately 239 holders of record of our common stock.
Removed
For the year-ended December 31, 2023, the NASDAQ Electronics Components Index was no longer publicly accessible to shareholders and was replaced with the S&P 500 Electronics Components Index, which management considers a closely-related index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

41 edited+10 added−10 removed39 unchanged
Biggest changeComparison of the Years Ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 (Decrease) Increase REVENUE: Material sales $ 322,029 $ 331,081 $ (9,052 ) Royalty and license fees 238,389 267,115 (28,726 ) Contract research services 16,011 18,423 (2,412 ) Total revenue 576,429 616,619 (40,190 ) COST OF SALES 135,376 127,896 7,480 Gross margin 441,053 488,723 (47,670 ) OPERATING EXPENSES: Research and development 130,481 117,062 13,419 Selling, general and administrative 67,387 77,886 (10,499 ) Amortization of acquired technology and other intangible assets 15,993 17,459 (1,466 ) Patent costs 9,356 8,329 1,027 Royalty and license expense 647 877 (230 ) Total operating expenses 223,864 221,613 2,251 OPERATING INCOME 217,189 267,110 (49,921 ) Interest income, net 28,166 7,811 20,355 Other loss, net (184 ) (6,691 ) 6,507 Interest and other loss, net 27,982 1,120 26,862 INCOME BEFORE INCOME TAXES 245,171 268,230 (23,059 ) INCOME TAX EXPENSE (42,160 ) (58,169 ) 16,009 NET INCOME $ 203,011 $ 210,061 $ (7,050 ) Revenue Our total material sales were $322.0 million for the year ended December 31, 2023, as compared to $331.1 million for the year ended December 31, 2022, a decrease of 3% with a decrease in unit material volume of less than 1%.
Biggest changeComparison of the Years Ended December 31, 2024 and 2023 Year Ended December 31, 2024 2023 (Decrease) Increase REVENUE: Material sales $ 365,419 $ 322,029 $ 43,390 Royalty and license fees 266,820 238,389 28,431 Contract research services 15,445 16,011 (566 ) Total revenue 647,684 576,429 71,255 COST OF SALES 148,461 135,376 13,085 Gross margin 499,223 441,053 58,170 OPERATING EXPENSES: Research and development 157,187 130,481 26,706 Selling, general and administrative 74,286 67,387 6,899 Amortization of acquired technology and other intangible assets 18,200 15,993 2,207 Patent costs 8,699 9,356 (657 ) Royalty and license expense 2,048 647 1,401 Total operating expenses 260,420 223,864 36,556 OPERATING INCOME 238,803 217,189 21,614 Interest income, net 40,682 28,166 12,516 Other loss, net (7,357 ) (184 ) (7,173 ) Interest and other loss, net 33,325 27,982 5,343 INCOME BEFORE INCOME TAXES 272,128 245,171 26,957 INCOME TAX EXPENSE (50,049 ) (42,160 ) (7,889 ) NET INCOME $ 222,079 $ 203,011 $ 19,068 Revenue Our total material sales were $365.4 million for the year ended December 31, 2024, as compared to $322.0 million for the year ended December 31, 2023, an increase of 13% with an increase in unit material volume of 15%.
The increase in property, plant and equipment and intangibles during the year ended December 31, 2023 was primarily due to the Merck KGaA patent acquisition and the purchases of the Shannon facility and the South Korea application center.
The increase in property and equipment and intangibles during the year ended December 31, 2023 was primarily due to the Merck KGaA patent acquisition and the purchases of the Shannon facility and the South Korea application center.
Under this agreement, we are being paid a license fee, which includes quarterly and annual payments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.
Under this agreement, we are being paid a license fee, which includes quarterly and annual payments over the agreement term. The agreement conveys to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.
None of the revenue recognized during the years ended December 31, 2023, 2022 or 2021 resulted solely from royalty or license fee arrangements as to which there were not associated material sales. The rights and benefits to our OLED technologies are conveyed to the customer through technology license agreements and material supply agreements.
None of the revenue recognized during the years ended December 31, 2024, 2023 or 2022 resulted solely from royalty or license fee arrangements as to which there were not associated material sales. The rights and benefits to our OLED technologies are conveyed to the customer through technology license agreements and material supply agreements.
Several significant contractual obligations are anticipated to be incurred in future periods and include payments for retirement benefit plan obligations, lease obligations and PPG inventory commitments. Payments towards the retirement plan obligations commenced during fiscal year 2023 and are expected to total $75.6 million over the remaining life of the plan.
Several significant contractual obligations are anticipated to be incurred in future periods and include payments for retirement benefit plan obligations, lease obligations and PPG inventory commitments. Payments towards the retirement plan obligations commenced during fiscal year 2023 and are expected to total $79.6 million over the remaining life of the plan.
Existing PPG inventory commitments are $29.8 million and will fluctuate based on PPG production needs to fulfill to our demand for commercial emitter material. 37 We anticipate, based on our internal forecasts and assumptions relating to our operations (including, among others, assumptions regarding our working capital requirements, the progress of our research and development efforts, the availability of sources of funding for our research and development work, and the timing and costs associated with the preparation, filing, prosecution, maintenance, defense and enforcement of our patents and patent applications), that we have sufficient cash, cash equivalents and short-term investments to meet our obligations for at least the next twelve months.
Existing PPG inventory commitments are $46.5 million and will fluctuate based on PPG production needs to fulfill our demand for commercial emitter material. 37 We anticipate, based on our internal forecasts and assumptions relating to our operations (including, among others, assumptions regarding our working capital requirements, the progress of our research and development efforts, the availability of sources of funding for our research and development work, and the timing and costs associated with the preparation, filing, prosecution, maintenance, defense and enforcement of our patents and patent applications), that we have sufficient cash, cash equivalents and short-term investments to meet our obligations for at least the next twelve months.
(Adesis) which has operations in New Castle and Wilmington, Delaware. Adesis is a contract development and manufacturing organization (CDMO) that provides support services on a contractual basis to third-party customers in the OLED, pharma, biotech, catalysis and other industries. As of December 31, 2023, Adesis employed a team of 138 research scientists, chemists, engineers and laboratory technicians.
(Adesis) which has operations in New Castle and Wilmington, Delaware. Adesis is a contract development and manufacturing organization (CDMO) that provides support services on a contractual basis to third-party customers in the OLED, pharma, biotech, catalysis and other industries. As of December 31, 2024, Adesis employed a team of 139 research scientists, chemists, engineers and laboratory technicians.
As of December 31, 2023, we had cash and cash equivalents of $92.0 million, short-term investments of $422.1 million, and long-term U.S. Government bond investments of $285.5 million for a total of $799.6 million. This compares to cash and cash equivalents of $93.4 million, short-term investments of $484.3 million, and long-term corporate bond and U.S.
This compares to cash and cash equivalents of $92.0 million, short-term investments of $422.1 million, and long-term U.S. Government bond investments of $285.5 million for a total of $799.6 million as of December 31, 2023.
Amortization of acquired technology and other intangible assets Amortization of acquired technology and other intangible assets was $16.0 million for the year ended December 31, 2023, as compared to $17.5 million for the year ended December 31, 2022.
Amortization of acquired technology and other intangible assets Amortization of acquired technology and other intangible assets was $18.2 million for the year ended December 31, 2024, as compared to $16.0 million for the year ended December 31, 2023.
The increase was due to an increase in the cash payment of dividends in the current year of $9.7 million, partially offset by a decrease in the payment of withholding taxes related to stock-based compensation to employees of $1.0 million and an increase in the proceeds from issuance of common stock of $442,000.
The increase was due to an increase in the cash payment of dividends in the current year of $9.4 million and an increase in the payment of withholding taxes related to stock-based compensation to employees of $180,000, partially offset by an increase in the proceeds from issuance of common stock of $208,000.
Income tax expense We are subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was an expense of 17.2% and 21.7% for the years ended December 31, 2023 and 2022, respectively, and we recorded income tax expense of $42.2 million and $58.2 million, respectively, for those periods.
Income tax expense We are subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was 18.4% and 17.2% for the years ended December 31, 2024 and 2023, respectively, and we recorded income tax expense of $50.0 million and $42.2 million, respectively, for those periods.
Changes in our operating assets and liabilities related to a decrease in deferred revenue of $93.2 million, an increase in inventory of $49.1 million and a decrease in other liabilities of $11.4 million, partially offset by a decrease in accounts receivable of $15.0 million, an increase in accounts payable and accrued expenses of $3.3 million and a decrease in other assets of $1.1 million.
Changes in our operating assets and liabilities related to an increase in other assets of $26.2 million, a decrease in deferred revenue of $26.1 million, an increase in inventory of $7.2 million and a decrease in other liabilities of $2.4 million, partially offset by a decrease in accounts receivable of $26.2 million and an increase in accounts payable and accrued expenses of $10.4 million.
Cash used in investing activities was $83.3 million for the year ended December 31, 2023, as compared to $280.7 million for the year ended December 31, 2022.
Cash used in investing activities was $164.4 million for the year ended December 31, 2024, as compared to $83.3 million for the year ended December 31, 2023.
Cash used in financing activities was $72.9 million for the year ended December 31, 2023, as compared to $64.6 million for the year ended December 31, 2022.
Cash used in financing activities was $82.3 million for the year ended December 31, 2024, as compared to $72.9 million for the year ended December 31, 2023.
The ultimate realization of deferred tax assets is dependent on our ability to generate future taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits.
The ultimate realization of deferred tax assets is dependent on our ability to generate future taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. As part of our assessment, we consider the scheduled reversal of deferred tax assets and liabilities, projected future taxable income, and tax planning strategies.
Patent costs Patent costs increased to $9.4 million for the year ended December 31, 2023, as compared to $8.3 million for the year ended December 31, 2022. The results in the current year reflected higher internal prosecution related costs.
Patent costs Patent costs decreased to $8.7 million for the year ended December 31, 2024, as compared to $9.4 million for the year ended December 31, 2023. The results in the current year reflected lower internal prosecution related costs.
The decrease was due to the timing of maturities and purchases of investments resulting in net sales and maturities of $43.1 million for the year ended December 31, 2023, as compared to net purchases $233.5 million for the year ended December 31, 2022, partially offset by an increase in purchases of intangibles and property, plant and equipment of $79.1 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
The increase was due to the timing of maturities and purchases of investments resulting in net purchases of $121.8 million for the year ended December 31, 2024, as compared to net sales and maturities of $43.1 million for the year ended December 31, 2023, partially offset by a decrease in purchases of intangibles and property and equipment of $83.7 million.
Cash provided by operating activities for the year ended December 31, 2022 was $126.8 million resulting from $210.1 million of net income and an increase of $51.0 million due to non-cash items including stock-based compensation, depreciation, amortization of intangibles and deferred income taxes, partially offset by a $134.3 million reduction due to changes in our operating assets and liabilities.
Cash provided by operating activities for the year ended December 31, 2024 was $253.7 million resulting from $222.1 million of net income and an increase of $56.9 million due to non-cash items including stock-based compensation, depreciation, and amortization of intangibles, partially offset by a $25.3 million reduction due to changes in our operating assets and liabilities.
Contract research services revenue is earned by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis for those third-party customers. In June 2020, a wholly-owned subsidiary, OVJP Corporation (OVJP Corp), was formed as a Delaware corporation.
Contract research services revenue is earned by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis for those third-party customers. In June 2020, we formed a wholly-owned subsidiary, OVJP Corporation (OVJP Corp) in California, as a Delaware corporation, which was founded to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology.
We anticipate fluctuations in our annual and quarterly results of operations due to uncertainty regarding, among other factors: • the timing, cost and volume of sales of our OLED materials; • the timing of our receipt of license fees and royalties, as well as fees for future technology development and evaluation; 33 • the timing and magnitude of expenditures we may incur in connection with our ongoing research and development and patent-related activities; and • the timing and financial consequences of our formation of new business relationships and alliances.
We anticipate fluctuations in our annual and quarterly results of operations due to uncertainty regarding, among other factors: • the timing, cost and volume of sales of our OLED materials; • the timing of our receipt of license fees and royalties, as well as fees for future technology development and evaluation; • the timing and magnitude of expenditures we may incur in connection with our ongoing research and development and patent-related activities; and • the timing and financial consequences of our formation of new business relationships and alliances. 33 Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
As part of our assessment, we consider the scheduled reversal of deferred tax assets and liabilities, projected future taxable income, and tax planning strategies. 34 During the year ended December 31, 2023, based on our previous earnings history, a current evaluation of expected future taxable income and other evidence, we determined to retain the valuation allowance that relates to New Jersey research and development credits and unrealized loss on investments.
During the year ended December 31, 2024, based on our previous earnings history, a current evaluation of expected future taxable income and other evidence, we determined to retain the valuation allowance that relates to New Jersey research and development credits and unrealized loss on investments.
Existing lease obligations are $4.3 million for fiscal years 2024 and 2025, $4.4 million for fiscal year 2026 and $16.4 million thereafter.
Existing lease obligations are $4.3 million for fiscal year 2025, $4.4 million for fiscal year 2026, $4.3 million for fiscal year 2027 and $12.1 million thereafter.
The decrease was due to the Fujifilm patents becoming fully amortized during July 2022, partially offset by the commencement of amortization expense associated with the Merck KGaA patent acquisition that was completed in April 2023. See Note 7 in Notes to Consolidated Financial Statements for further discussion.
The increase was due to the commencement of amortization expense associated with the Merck KGaA patent acquisition that was completed in April 2023. See Note 7 in Notes to Consolidated Financial Statements for further discussion.
The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the year ended December 31, 2023 compared to the prior year as well as higher available-for-sale investment balances.
The increase in interest income, net was primarily due to an increase in bond yields on available-for-sale investments held during the year ended December 31, 2024 compared to the prior year as well as higher available-for-sale investment balances. Other loss, net primarily consisted of net exchange gains and losses on foreign currency transactions and rental income.
These adjustments resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated OLED materials demand by several of our customers over the remaining lives of their contracts.
For the years ended December 31, 2024 and 2023, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of our customers over the remaining lives of their contracts.
The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials.
The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials.
Royalty and license expense Royalty and license expense decreased to $647,000 for the year ended December 31, 2023, as compared to $877,000 for the year ended December 31, 2022. Interest and other loss, net Interest income, net was $28.2 million for the year ended December 31, 2023, as compared to $7.8 million for the year ended December 31, 2022.
Interest and other loss, net Interest income, net was $40.7 million for the year ended December 31, 2024, as compared to $28.2 million for the year ended December 31, 2023.
Revenue from royalty and license fees was $238.4 million for the year ended December 31, 2023 as compared to $267.1 million for the year ended December 31, 2022, a decrease of 11%.
Revenue from royalty and license fees was $266.8 million for the year ended December 31, 2024 as compared to $238.4 million for the year ended December 31, 2023, an increase of 12%.
As a result of the decrease in revenue from royalty and licenses fees and material sales, gross margin for the year ended December 31, 2023 decreased by $47.7 million as compared to the year ended December 31, 2022, with gross margin as a percentage of revenue decreasing to 77% from 79%.
As a result of the increase in revenue from material sales and royalty and license fees, gross margin for the year ended December 31, 2024 increased by $58.2 million as compared to the year ended December 31, 2023, with gross margin as a percentage of revenue remaining consistent at 77%.
In 2018, we entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, we have granted certain of Visionox’s affiliates non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products.
In 2024, we entered into new long-term, multi-year agreements with Visionox Technology, Inc. (Visionox). Under these agreements, we have granted Visionox non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products.
Working capital was $798.3 million as of December 31, 2023, as compared to $763.8 million as of December 31, 2022. The increase was primarily due to increases in accounts receivable and other current assets and a decrease in other current liabilities, partially offset by a decrease in short-term investments.
Working capital was $774.4 million as of December 31, 2024, as compared to $798.3 million as of December 31, 2023. The decrease was primarily due to decreases in short-term investments and accounts receivable and an increase in accounts payable.
Contract research services revenue was $16.0 million for the year ended December 31, 2023 as compared to $18.4 million for the year ended December 31, 2022, a decrease of 13%. The decrease in contract research services revenue was primarily due to reduced demand from several CDMO customers of our subsidiary, Adesis, during the year ended December 31, 2023.
Contract research services revenue was $15.4 million for the year ended December 31, 2024 as compared to $16.0 million for the year ended December 31, 2023, a decrease of 4%.
In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display), which were effective as of January 1, 2015. The terms of these agreements were extended by a January 1, 2021 amendment through the end of 2025.
In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display). The terms of these agreements have been extended through the end of 2025. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio.
RESULTS OF OPERATIONS For a discussion of our results of operations comparison for the years ended December 31, 2022 and 2021, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on February 23, 2023.
To the extent we establish a new valuation allowance or change a previously established valuation allowance in a future period, income tax expense will be impacted. 34 RESULTS OF OPERATIONS For a discussion of our results of operations comparison for the years ended December 31, 2023 and 2022, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 22, 2024.
Other loss, net primarily consisted of impairment of minority investments, net exchange gains and losses on foreign currency transactions 36 and rental income. We recorded other loss, net of $184,000 for the year ended December 31, 2023 as compared to $6.7 million for the year ended December 31, 2022.
We 36 recorded other loss, net of $7.4 million for the year ended December 31, 2024 as compared to $184,000 for the year ended December 31, 2023.
Cost of Sales Cost of sales for the year ended December 31, 2023 increased by $7.5 million as compared to the year ended December 31, 2022, primarily due to a $5.1 million increase in expenses related to the Shannon manufacturing facility due to pre-production costs being classified as SG&A in the prior year, a $4.9 million increase in inventory reserves, and changes in product mix.
Cost of Sales Cost of sales for the year ended December 31, 2024 increased by $13.1 million as compared to the year ended December 31, 2023, primarily due to an increase in the level of material sales and product mix, partially offset by a $5.4 million decrease in inventory reserve expense.
The decrease in royalty and license fees was primarily the result of higher estimated future demand for several of our customers over the remaining lives of their contracts, as well as the impact of the cumulative catch-up adjustments noted below. 35 The cumulative catch-up adjustment arising from changes in estimates of transaction price, net was an increase of $10.6 million for the year ended December 31, 2023 as compared to an increase of $30.3 million for the year ended December 31, 2022, resulting in a net reduction in revenue between periods of $19.7 million, the majority of which was recorded to royalty and license fees.
The increase in royalty and license fees was primarily the result of higher unit material volume and changes in customer mix. 35 The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was $10.8 million for the year ended December 31, 2024 as compared to $10.6 million for the year ended December 31, 2023.
Selling, general and administrative Selling, general and administrative expenses decreased to $67.4 million for the year ended December 31, 2023, as compared to $77.9 million for the year ended December 31, 2022. The decrease in selling, general and administrative expenses was primarily due to lower stock-based compensation expenses and a decrease in pre-production costs associated with the Shannon facility.
Selling, general and administrative Selling, general and administrative expenses increased to $74.3 million for the year ended December 31, 2024, as compared to $67.4 million for the year ended December 31, 2023. The increase in selling, general and administrative expenses was primarily due to an increase in employee-related expenses, including higher salaries expenses and stock-based compensation.
Actual results could differ from our assessments if adequate taxable income is generated in future periods. To the extent we establish a new valuation allowance or change a previously established valuation allowance in a future period, income tax expense will be impacted.
Actual results could differ from our assessments if adequate taxable income is generated in future periods.
Research and development Research and development expenses increased to $130.5 million for the year ended December 31, 2023, as compared to $117.1 million for the year ended December 31, 2022. The increase in research and development expenses was primarily due to higher operating costs, including increased contract research costs, employee-related expenses and those costs associated with PPG development activity.
Research and development Research and development expenses increased to $157.2 million for the year ended December 31, 2024, as compared to $130.5 million for the year ended December 31, 2023.
This weakness resulted from the continuation of unfavorable macroeconomic conditions that have negatively impacted the OLED display market segment. • Green emitter sales for the year ended December 31, 2023, which include our yellow-green emitters, were $243.2 million as compared to $251.6 million for the year ended December 31, 2022, with unit material volumes decreasing by 2%. • Red emitter sales for the year ended December 31, 2023, were $73.2 million as compared to $79.0 million for the year ended December 31, 2022, with unit material volumes increasing by less than 1%.
The increase in material sales was primarily due to strengthened demand for our emitter materials, partially offset by changes in customer mix. • Green emitter sales for the year ended December 31, 2024, which include our yellow-green emitters, were $272.4 million as compared to $243.2 million for the year ended December 31, 2023, with unit material volumes increasing by 12%. • Red emitter sales for the year ended December 31, 2024 were $88.5 million as compared to $73.2 million for the year ended December 31, 2023, with unit material volumes increasing by 25%.
Removed
The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products.
Added
In December 2024, we announced that the OVJP Corp facility in California would be closing and OVJP operations would be relocated to our newly formed subsidiary, Universal Vapor Jet Corporation Pte. Ltd. (UVJC) in Singapore, as well as continued operations in our Tech and Innovation Center in New Jersey.
Removed
The license agreement calls for license fees and running royalties on licensed products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products. In 2021, we announced an extension of the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd.
Added
While we continue to focus on the long-term opportunity in the large-area display market for OVJP, the industry’s current focus is on the growing demand for IT capacity. Our UVJC subsidiary plans to assess additional market opportunities where this technology may be transformative.
Removed
Based in California, OVJP Corp was founded to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology. As of December 31, 2023, OVJP Corp employed a team of 28 research, mechanical, electrical and software engineers and laboratory technicians. As a direct printing technique, OVJP technology has the potential to offer high deposition rates for large-area OLEDs.
Added
As a result of the planned closure of the OVJP Corp location in California, we determined to record $8.9 million of restructuring costs for the year ended December 31, 2024.
Removed
In addition, OVJP technology reduces OLED material waste associated with use of a shadow mask (i.e., the waste of material that deposits on the shadow mask itself when fabricating an OLED). By comparison to inkjet printing, an OVJP process does not use liquid solvents and therefore the OLED materials utilized are not limited by their viscosity or solvent solubility.
Added
In addition, a portion of the investment loss was realized resulting in a capital loss carryforward that is not more likely than not to be used within the carryforward period. As such, we provided a valuation allowance against the capital loss. There are no indicators against the realizability of the remaining net deferred tax assets.
Removed
OVJP also avoids generation of solvent wastes and eliminates the additional step of removing residual solvent from the OLED device. We believe the successful implementation of the OVJP technology has the potential to increase the addressable market for large-size OLED panels while also serving another potential growth market for our proprietary PHOLED materials and technologies.
Added
The decrease in contract research services revenue was primarily due to the timing of completion of several contract research projects by our subsidiary, Adesis, during the year ended December 31, 2023.
Removed
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles.
Added
The increase in research and development expenses was primarily due to an increase in PPG development activity, including new product development and commencement of development activities in Shannon, Ireland, and OVJP Corp reorganization expenses. As a result of the planned closure of OVJP Corp's California location, we recorded $8.9 million of restructuring costs for the year ended December 31, 2024.
Removed
The decline in material sales was primarily due to reduced demand for our emitter material during 2023, partially offset by the introduction of blue emitter and host sales.
Added
Royalty and license expense Royalty and license expense increased to $2.0 million for the year ended December 31, 2024, as compared to $647,000 for the year ended December 31, 2023.
Removed
The Shannon facility became operational during June 2022 and the costs associated with this facility have since been included in cost of sales.
Added
This increase was due to a one-time expense of $1.5 million in connection with an amendment to our existing amended license agreement, effective as of October 9, 1997, with Princeton University and the University of Southern California.
Removed
The effective income tax rate decreased due to a change in U.S. tax regulations associated with the ability to credit Chinese withholding taxes, as well as a change in the capitalization rules for research and development expenses. Liquidity and Capital Resources Our principal sources of liquidity are our cash and cash equivalents and short-term investments.
Added
The increase in other loss, net during the year ended December 31, 2024 was due to a $7.2 million foreign exchange loss that was caused by the fluctuation in the Korean Won to the U.S. Dollar exchange rate and resulting remeasurement of a Korean Won-denominated withholding tax receivable.
Removed
Government bond investments of $247.9 million for a total of $825.6 million as of December 31, 2022.
Added
Liquidity and Capital Resources Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of December 31, 2024, we had cash and cash equivalents of $99.0 million, short-term investments of $393.7 million, and long-term U.S. Government bond investments of $435.5 million for a total of $928.2 million.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+2 added−0 removed2 unchanged
Biggest changeHowever, 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.
Biggest changeHowever, 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.
Added
Substantially all our revenue is derived from outside of North America and primarily denominated in U.S. dollars and therefore we bear no significant foreign exchange risk from routine customer sales transactions.
Added
However, due to a withholding tax receivable denominated in Korean Won, we do bear foreign exchange risk from fluctuations in the Korean Won to U.S. dollar exchange rate and resulting remeasurement.

Other OLED 10-K year-over-year comparisons