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What changed in UNIVERSAL DISPLAY CORP \PA\'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of UNIVERSAL DISPLAY CORP \PA\'s 2022 and 2023 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 2023 report.

+207 added−220 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in UNIVERSAL DISPLAY CORP \PA\'s 2023 10-K

207 paragraphs added · 220 removed · 175 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

81 edited+7 added−15 removed135 unchanged
Biggest changeWe also supply phosphorescent OLED materials to BOE for use in its licensed products. 8 In 2018, we entered into long-term, multi-year OLED patent license and material purchase agreements with 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.
Biggest changeUnder 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.
We also are funding research by existing and new academic partners and research institutions on the use of OLED related technologies in other applications.
We also are funding research by existing and new academic partners and research institutions on the use of OLED and other related technologies in other applications.
Mahon was Vice President of SAGE Electrochromics, Inc., a thin-film electrochromic technology company, where she oversaw a variety of business development, marketing and finance and administrative activities. From 1984 to 1989, Ms. Mahon was a Vice President and General Manager for Chronar Corporation, a leading developer and manufacturer of amorphous silicon photovoltaic (PV) panels. Prior to that, Ms.
Mahon was Vice President of SAGE Electrochromics, Inc., a thin-film electrochromic technology company, where she oversaw a variety of business development, marketing, finance and administrative activities. From 1984 to 1989, Ms. Mahon was a Vice President and General Manager for Chronar Corporation, a leading developer and manufacturer of amorphous silicon photovoltaic (PV) panels. Prior to that, Ms.
We make available through our Internet website, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we file such material with the 14 U.S.
We make available through our Internet website, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we file such material with the U.S.
In addition, we have entered into a number of host 4 material strategic partnerships through development agreements with OLED material partners that are focused on combining our proprietary PHOLED emitters with hosts and other OLED materials of these companies in order to optimize the performance of our emitters in our customers’ newest product designs.
In addition, we have entered into a number of host material strategic partnerships through development agreements with OLED material partners that are focused on combining our proprietary PHOLED emitters with hosts and other OLED materials of these companies in order to optimize the performance of our emitters in our customers’ newest product designs.
Display and lighting manufacturers, including customers of ours, are engaged in their own OLED research, development and commercialization activities, and have developed and may continue to develop proprietary OLED technologies that are necessary or useful for commercial OLED devices. In addition, other material manufacturers, such as Sumitomo, Idemitsu Kosan Co., Ltd.
Display and lighting manufacturers, including customers of ours, are engaged in their own OLED research, development and commercialization activities, and have developed and may continue to develop proprietary OLED technologies and materials that are necessary or useful for commercial OLED devices. In addition, other material manufacturers, such as Sumitomo, Idemitsu Kosan Co., Ltd.
As the utilization of PHOLED technology continues to expand, we intend to further engage key researchers at other universities and research institutions to help identify additional fundamental technologies that could benefit PHOLED technology implementation. Intellectual Property 11 Along with our personnel, our primary and most fundamental assets are patents and other intellectual property.
As the utilization of PHOLED technology continues to expand, we intend to further engage key researchers at other universities and research institutions to help identify additional fundamental technologies that could benefit PHOLED technology implementation. Intellectual Property Along with our personnel, our primary and most fundamental assets are patents and other intellectual property.
As part of these programs, we may provide compensation in the form of support for research program-related 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 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.
Non-patented Technical Know-How 12 We have accumulated, and continue to accumulate, a substantial amount of non-patented technical know-how relating to OLED technologies and materials. Where practicable, we share portions of this information with display manufacturers and other business partners on a confidential basis.
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. Where practicable, we share portions of this information with display manufacturers and other business partners on a confidential basis.
Our focus on next-generation technologies is designed to enable us to maintain our position as a leading provider of OLED and other organic electronics technologies and materials as new markets emerge. 5 Business and Geographic Markets We derive revenue from the following: • sales of OLED materials for evaluation, development and commercial manufacturing; • intellectual property and technology licensing; • technology development and support, including third-party collaboration efforts and providing support to third parties for commercialization of their OLED products; and • contract research services in the areas of chemical materials synthesis research, development and commercialization for non-OLED applications.
Our focus on next-generation technologies is designed to enable us to maintain our position as a leading provider of OLED and other organic electronics technologies and materials as new markets emerge. 6 Business and Geographic Markets We derive revenue from the following: • sales of OLED materials for evaluation, development and commercial manufacturing; • intellectual property and technology licensing; • technology development and support, including third-party collaboration efforts and providing support to third parties for commercialization of their OLED products; and • contract research services in the areas of chemical synthesis research, development and commercialization for non-OLED applications.
However, others, such as those working to develop thermally activated delayed fluorescence (TADF) and microLED alternative technologies, 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), may succeed in developing new OLED technologies, materials and alternative solutions that may supplement or be utilized in place of ours.
Our OLED Materials Manufacturing Business We supply our proprietary UniversalPHOLED® materials to display manufacturers, lighting manufacturers and others. These materials are produced in batch quantities by PPG to our exacting product specifications using our manufacturing process and 9 know-how.
Our OLED Materials Manufacturing Business We supply our proprietary UniversalPHOLED® materials to display manufacturers, lighting manufacturers and others. These materials are produced in batch quantities by PPG to our exacting product specifications using our manufacturing process and know-how.
We believe that if these efforts are successful, they could result in sizeable markets for OLED displays. 2 Organic materials make technically possible the development of flexible displays for use in an entirely new array of product applications. Such applications include display devices that fold in use, or conform to various shapes for wearable, rollable, industrial and ruggedized applications.
We believe that if these efforts are successful, they could result in sizeable markets for OLED displays. 3 Organic materials make technically possible the development of flexible displays for use in an entirely new array of product applications. Such applications include display devices that fold in use, or conform to various shapes for wearable, rollable, industrial and ruggedized applications.
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 2022, 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 2023, our largest customers for our PHOLED materials included Samsung Display Co., Ltd.
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 2022, we continued our commercial supply relationships with companies such as BOE, LG Display, SDC, Tianma, CSOT and Visionox to use our PHOLED materials to manufacture OLED displays.
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 2022, 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 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.
(f/k/a Motorola, Inc.) (Motorola) in 2011, and the following portfolios from Fujifilm Corporation and BASF: 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, 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.
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 7 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 8 wholly-owned subsidiary, OVJP Corporation (OVJP Corp), as a Delaware corporation.
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 6 the OLED device. We began selling emitter materials commercially in 2003.
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.
We also are committing significant resources to 3 further the development of next-generation emissive layer technologies and dry printing technologies such as organic vapor jet printing (OVJP).
We also are committing significant resources to 4 further the development of next-generation emissive layer technologies and dry printing technologies such as organic vapor jet printing (OVJP).
Other licensed customers of our technology in 2022 included Kaneka Corporation, Pioneer Corporation, and OLEDWorks L.L.C. 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 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.
This includes more than 5,500 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.
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.
As of December 31, 2022, we owned more than 5,000 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, 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.
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 5,500 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 6,000 patents issued and pending worldwide.
(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), Shenzhen Royale Display Technologies Co. Ltd., 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), Japan Display, Inc., Sharp Corporation, and AU Optronics Corporation (AU Optronics).
We currently own, exclusively license or have the sole right to sublicense more than 5,500 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 6,000 patents issued and pending worldwide. We manufacture and sell our proprietary OLED materials to customers for evaluation and use in commercial OLED products.
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 $853,000 for 2022.
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.
We believe that OLED display technologies can compete with LCDs, QLEDs and other display technologies for many product applications on the basis of lower power consumption, better contrast ratios, faster video rates, form factor and lower manufacturing cost.
OLED display technologies compete with LCDs, QLEDs and other display technologies for many product applications on the basis of lower power consumption, better contrast ratios, faster video rates, form factor and lower manufacturing cost.
Based in California, OVJP Corp was founded to advance the commercialization of our proprietary OVJP technology. As of December 31, 2022, OVJP Corp employed a team of 22 research, mechanical, electrical and software engineers and laboratory technicians.
Based in California, OVJP Corp was founded to advance the commercialization of our proprietary OVJP technology. As of December 31, 2023, OVJP Corp employed a team of 28 research, mechanical, electrical and software engineers and laboratory technicians.
As of December 31, 2022, the patent rights we exclusively license from all our university research partners included more than 650 issued patents and pending patent applications in jurisdictions around the world.
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.
Our facility also includes state-of-the-art synthetic and analytical chemistry laboratories in which we conduct OLED materials research and make small quantities of new materials that we then test in OLED devices. 10 Application Centers In addition to our laboratory facilities in Ewing, New Jersey, in 2019 we completed the construction of new, leased, Application Centers in Hong Kong and Pangyo, South Korea.
Our facility also includes state-of-the-art synthetic and analytical chemistry laboratories in which we conduct OLED materials research and make small quantities of new materials that we then test in OLED devices. Application Centers In addition to our laboratory facilities in Ewing, New Jersey, we have Application Centers in Hong Kong and Pangyo, South Korea.
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 2022 our voluntary turnover rate was 13%, and we had overall employee growth rate of 8%.
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%.
Weston, Inc., a worldwide environmental consulting and engineering firm. From December 1982 to December 1991, Mr. Abramson held various positions at InterDigital Communications, Inc., formerly International Mobile Machines Corporation, including General Counsel, Executive Vice President and General Manager of the Technology Licensing Division. Julia J.
Weston, Inc., a worldwide environmental consulting and engineering firm. From December 1982 to December 1991, Mr. Abramson held various positions at InterDigital, Inc., including General Counsel, Executive Vice President and General Manager of the Technology Licensing Division. Julia J.
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 a full-color flexible OLED system and an OVJP system.
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.
Mahon 65 Senior Vice President of Technology Commercialization and General Manager, Commercial Sales Business Mauro Premutico 57 Senior Vice President, Planning and General Manager, Patents and Licensing, and Secretary Brian Millard 40 Vice President, Chief Financial Officer, and Treasurer Our Board of Directors has appointed these executive officers to hold office until their successors are duly appointed. Steven V.
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.
However, we note that many of our technology partners have their own host solutions and the 13 competitive landscape includes many well-established companies such as Solus Advanced Materials Co., Ltd., Dow Chemical, Duksan Neolux Co., Ltd., Idemitsu Kosan, Merck KGaA, NSCC and Samsung SDI Co. Ltd.
However, we note that many of our technology partners have their own host solutions and the competitive landscape includes many well-established companies such as Solus Advanced Materials Co., Ltd., Dow Chemical, Duksan Neolux Co., Ltd., Idemitsu Kosan, Merck KGaA, NSCC, Beijing Sineva Technology Co., Ltd., China Ray, Lumilan, Eternal Material Technology (EMT) and Samsung SDI Co. Ltd.
We have been working with LG Display and its affiliates for over 15 years. 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, 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.
We intend to make available on our Internet website any future amendments or waivers to our Code of Ethics & Business Conduct for Employees and our Code of Conduct for Directors. The information on our Internet website is not part of this report.
We intend to make available on our Internet website any future amendments or waivers to our Code of Ethics & Business Conduct for Employees and our Code of Conduct for Directors.
(UDC Ireland), is responsible for all material sales worldwide (excluding the United States) and for licensing and managing intellectual property and undertaking certain other business transactions in all non-U.S. territories.
Our wholly-owned subsidiary formed under the laws of the Republic of Ireland, UDC Ireland Ltd. (UDC Ireland), is responsible for all material sales worldwide (excluding the United States) and for licensing and managing intellectual property and undertaking certain other business transactions in all non-U.S. territories.
In February 2021, we entered into an amendment to the PPG agreement extending the term of the agreement and specifying operation and maintenance services that will be provided by PPG affiliate, PPG SCM Ireland Limited, to UDC Ireland at our new manufacturing site in Shannon, Ireland, currently being leased by a wholly-owned subsidiary of UDC Ireland, OLED Material Manufacturing Limited (OMM), for the production of OLED materials.
In February 2021, we entered into an amendment to the PPG agreement extending the term of the agreement and specifying operation and maintenance services that will be provided by PPG affiliate, PPG SCM Ireland Limited (PPG SCM), to UDC Ireland at our manufacturing site in Shannon, Ireland, which we began leasing at such time for the production of our OLED materials.
He has also been our Secretary since September 2022. Prior to joining us, Mr. Premutico was the Managing Vice President and Chief Patent Counsel for The Walt Disney Company from 2009 to 2012, and Vice President of Intellectual Property and Associate General Counsel for Lenovo Group Ltd. from 2005 to 2009. Mr.
Premutico was the Managing Vice President and Chief Patent Counsel for The Walt Disney Company from 2009 to 2012, and Vice President of Intellectual Property and Associate General Counsel for Lenovo Group Ltd. from 2005 to 2009. Mr.
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. Our product manufacturing customers are not required to purchase host materials from us.
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.
As of December 31, 2022, Adesis employed a team of 150 research scientists, chemists, engineers and laboratory technicians. Although we expect to continue to utilize the majority of its technology research capacity for the benefit of our OLED technology development, Adesis is expected to continue operating as a CRO in the above-mentioned industries.
Although we expect to continue to utilize the majority of its technology research capacity for the benefit of our OLED technology development, Adesis is expected to continue operating as a CDMO in the above-mentioned industries.
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. Our Contract Research Organization Business: Adesis, Inc. In 2016, we acquired 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. 11 Our Contract Development and Manufacturing Organization: Adesis, Inc.
Fluorescent materials may also be viewed as complementary in that they can be used in the same OLED stack as phosphorescent materials. The competitive landscape with respect to our host materials business is characterized by a larger number of established chemical material suppliers who have long-term relationships with many of our existing customers and licensees.
The competitive landscape with respect to our host materials business is characterized by a larger number of established chemical material suppliers who have long-term relationships with many of our existing customers and licensees.
In 2006, Professor Forrest transferred to Michigan, where we continue to fund his research. Since 2006, in connection with Dr. Forrest’s transfer, we entered into a new sponsored research agreement with USC under which we are funding organic electronics research being conducted by Drs. Forrest and Thompson (the 2006 Research Agreement).
Forrest’s transfer, we entered into a new sponsored research agreement with USC under which we are funding organic electronics research being conducted by Drs. Forrest and Thompson (the 2006 Research Agreement). Work by Professor Forrest is being funded through a subcontract between USC and Michigan.
Work by Professor Forrest is being funded through a subcontract between USC and Michigan. The 2006 Research Agreement extends through April 2023 with an option to further extend for an additional two years. We make payments under the 2006 Research Agreement to USC on a quarterly basis as actual expenses are incurred.
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.
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 display technologies that compete with our OLED display technologies.
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.
Our Venture Capital Business: UDC Ventures LLC We formed a wholly-owned subsidiary, UDC Ventures LLC, in March 2019, as 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. 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.
To provide on-the-ground support to these manufacturers, we have established wholly-owned subsidiaries in Ireland, Korea, Japan, China and Hong Kong, as well as a representative office in Taiwan.
To provide on-the-ground support to these manufacturers, we have established wholly-owned subsidiaries in Ireland, Korea, Japan, China and Hong Kong, as well as a representative office in Taiwan. We have Application Centers in Hong Kong and Pangyo, South Korea, which allow our Asia-based display manufacturers to evaluate our technology more quickly and incorporate the technology into their commercial designs.
We continue to license our OLED patents, and to provide our OLED materials, to OLEDWorks for use in OLED lighting products under patent license and commercial supply agreements signed in 2015. We have also extended the rights under these agreements to OLEDWorks GmbH, the German company and facility that OLEDWorks acquired in 2015 from Philips Technologie GmbH.
We have also extended the rights under these agreements to OLEDWorks GmbH, the German company and facility that OLEDWorks acquired in 2015 from Philips Technologie GmbH. We also have strategic relationships with Kaneka, Konica Minolta and Sumitomo, and continue to license our OLED patents and technologies to these customers.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following table sets forth certain information with respect to our executive officers as of February 23, 2023: Name Age Position Steven V. Abramson 71 President, Chief Executive Officer and Director Julia J. Brown 61 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.
We also supply phosphorescent OLED materials to CSOT for use in its licensed products. 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.
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.
The license agreement calls for license fees and running royalties on licensed products. Additionally, we supply phosphorescent OLED materials to Visionox for use in its licensed products. In 2021, we announced an extension of the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd.
In 2021, we announced an extension of the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd. In 2016, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma.
This research, subject to an agreement entered into by the parties (as amended, the 1997 Amended License Agreement), generated many of the original fundamental PHOLED concepts and underlying patents that we commercialized, and had been performed at Princeton under the direction of Professor Forrest and at USC under the direction of Professor Thompson.
This research, subject to an agreement entered into by the parties (as amended, the 1997 Amended License Agreement) had been performed at Princeton under the direction of Professor Forrest and at USC under the direction of Professor Thompson. In 2006, Professor Forrest transferred to Michigan, where we continue to fund his research. Since 2006, in connection with Dr.
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 2016, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma.
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.
Millard served as Senior Vice President, Finance and Corporate Controller at Emergent BioSolutions from January 2020 to September 2022 and as Vice President, Corporate Controller from October 2017 to January 2020. Previously, Mr.
Millard joined us in September 2022 with more than 15 years of financial, operational and strategic experience across several industries. Prior to joining us, Mr. Millard served as Senior Vice President, Finance and Corporate Controller at Emergent BioSolutions from January 2020 to September 2022 and as Vice President, Corporate Controller from October 2017 to January 2020. Previously, Mr.
Our venture capital company, UDC Ventures LLC, continues to seek to invest in companies that we believe are developing synergistic or complementary technologies to ours. Internal Development Efforts Ewing, New Jersey Facility We conduct a substantial portion of our OLED development activities at our state-of-the-art development and testing facility in Ewing, New Jersey.
Internal Development Efforts Ewing, New Jersey Facility We conduct a substantial portion of our OLED development activities at our state-of-the-art development and testing facility in Ewing, New Jersey.
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, 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.
(Adesis), a contract research organization (CRO) that provides support services to the OLED, pharma, biotech, catalysis and other industries. 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.
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.
Mahon was a member of the Technical Council of the FlexTech Alliance from 1997 through 2010, and a member of its Governing Board from 2008 through 2010. Ms.
Mahon was a member of the Technical Council of the FlexTech Alliance from 1997 through 2010, and a member of its Governing Board from 2008 through 2010. Ms. Mahon was a member of the Board of Directors and Marketing Committee Chairperson of the OLED Association from 2009-2014. Brian Millard is our Vice President, Chief Financial Officer and Treasurer. Mr.
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 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.
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 this portfolio includes fundamental patents in the field of phosphorescent OLED materials and devices, as well as certain additional complementary OLED technologies. As discussed above, alternative technologies, such as fluorescent OLED emitter materials, exist and could be competitive to our phosphorescent OLED material solutions.
Our licensing business is based on our control of a broad portfolio of OLED-related device patents and technologies. We believe this portfolio includes fundamental patents in the field of phosphorescent OLED materials and devices, as well as certain additional complementary OLED technologies.
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. The supplemental purchase agreement provides for minimum annual purchase obligations of red and green phosphorescent emitter material from us for use in the manufacture of licensed products.
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.
Prior to the expiration of the then-current 2018 license and purchase agreements with SDC on December 31, 2022, we entered into, on December 2, 2022, new patent license and supplemental purchase agreements, both with an effective date of January 1, 2023.
On December 2, 2022, we entered into new patent license and supplemental purchase agreements with SDC, both with an effective date of January 1, 2023. These agreements, which cover the manufacture and sale of specified OLED display materials, last through the end of 2027 with an additional two-year extension option for SDC.
As a result, we do not believe these collaboration efforts will generate significant revenue for us as compared to our emitter and licensing businesses. We believe, however, that collaborative relationships such as these are important for ensuring success of the OLED industry and broader adoption of our PHOLED and other OLED technologies.
We believe, however, that collaborative relationships such as these are important for ensuring success of the OLED industry and broader adoption of our PHOLED and other OLED technologies. Research and Development Our research and development activities are focused on the advancement of our OLED technologies and materials for displays, lighting and other applications.
Human Capital As of December 31, 2022, we had 443 active full-time employees and two part-time employees, none of whom are unionized. Of these employees, 318 are research scientists, engineers and laboratory technicians at our domestic and international facilities.
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.
As with our initial agreement with PPG, under our 2021 amendment we will compensate PPG on a cost-plus basis for the services provided at the Shannon manufacturing facility. Collaborations with Other OLED Material Manufacturers We continued our non-exclusive collaborative relationships with OLED material manufacturing customers during 2022.
The first phase of facility improvements has been completed and operations commenced in June 2022. As with our initial agreement with PPG, under our amended and restated 2021 amendment we compensate PPG on a cost-plus basis for the services provided at the Shannon manufacturing facility.
The minimum commitment is subject to SDC's requirements for phosphorescent emitter materials and our ability to meet these requirements over the term of the supplemental agreement. SDC is currently the largest manufacturer of AMOLED displays for smartphones and other personal electronic devices and produces displays for a number of different smartphone and electronic device manufacturers.
SDC is currently the largest manufacturer of AMOLED displays for smartphones and other personal electronic devices and produces displays for a number of different smartphone and electronic device manufacturers. We have been working with LG Display and its affiliates for over 15 years.
(Idemitsu Kosan), Merck KGaA and Kyulux Inc., are selling or sampling competing OLED materials to customers, including companies to which we sell our proprietary PHOLED materials. Our licensing business is based on our control of a broad portfolio of OLED-related device patents and technologies.
(Idemitsu Kosan), Merck KGaA, Kyulux Inc., Summer Sprout Technology, UIV OLED, Aglaia Tech, Jilin OLED Photoelectric Materials Co., Ltd., and Nanjing Topto Semiconductor Materials Co., Ltd. are selling or sampling competing OLED materials to customers, including companies to which we sell our proprietary PHOLED materials.
Women represent 40% of our executive management team, 15% of our leadership (Director level and above) and 23% 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, 21% of our leadership (Director level and above) and 22% of our total workforce, as well as 38% of our Board of Directors.
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 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 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.
However, fluorescent materials have characteristics that we believe many market participants consider less desirable than those of phosphorescent materials. Suppliers of fluorescent emitter materials include Solus Advanced Materials Co., Ltd., Dow Chemical (previously Gracel Display), Idemitsu Kosan and SFC Co. Ltd.
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.
Many of these strategic relationships have also been in place for longer than a decade. Since 2004, we have been supporting Konica Minolta in its efforts to develop OLED lighting products.
Some of these strategic relationships have also been in place for longer than a decade. We continue to license our OLED patents, and to provide our OLED materials, to OLEDWorks for use in OLED lighting products under patent license and commercial supply agreements signed in 2015.
In 2022, 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. In addition, the scope of our ISO 9001:2015 certification was expanded to include OLED fulfillment operations at our Shannon, Ireland and Pangyo, South Korea locations.
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.
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. Brian Millard is our Vice President, Chief Financial Officer and Treasurer. Mr. Millard joined us in September 2022 with more than 15 years of financial, operational and strategic experience across several industries. Prior to joining us, Mr.
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
In 2021, we mutually agreed to extend the terms of both the patent license and material purchase agreements for an additional multi-year term. In 2017, we entered into long-term, multi-year agreements with BOE. 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.
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.
When fully operational, the new facility is expected to double our production capacity and allow for the diversification of our manufacturing base for phosphorescent emitters. The first phase of facility improvements has been completed and operations commenced in June 2022.
We purchased the site in September 2023 and amended and restated the February 2021 amendment to the PPG agreement to reflect our ownership and PPG SCM’s updated operation and maintenance services after such purchase. When fully operational, the facility is expected to double our production capacity and allow for the diversification of our manufacturing base for phosphorescent emitters.
Research and Development Our research and development activities are focused on the advancement of our OLED technologies and materials for displays, lighting and other applications. We conduct this research and development primarily internally and also through various relationships with commercial business partners, academic partners, and research institutions.
We conduct this research and development primarily internally and also through various relationships with commercial business partners, academic partners, and research institutions. Our venture capital company, UDC Ventures LLC, continues to seek to invest in companies that we believe are developing synergistic or complementary technologies to ours.
He received his M.S. and B.B.A. degrees in accounting from James Madison University.
He received his M.S. and B.B.A. degrees in accounting from James Madison University and is a licensed certified public accountant. Mauro Premutico has served as our Secretary since September 2022, and our Senior Vice President, Planning, and Chief Legal Officer since April 2021.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRecent 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. Recent case law may make it more difficult for patent holders to secure future patents and/or enforce existing patents.
Biggest changeThe 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.
Changes in environmental laws or regulations, including laws relating to manufacturing operations and export restrictions, also could lead to new or additional investment in product designs and an increase in raw materials costs, and could increase our environmental compliance expenditures.
Changes in environmental and export laws or regulations, including laws relating to manufacturing operations and export restrictions, also could lead to new or additional investment in product designs and an increase in raw materials costs, and could increase our environmental and export compliance expenditures.
If environmental laws or regulations are either changed or adopted and impose additional operational restrictions and compliance requirements upon us or our products, they could negatively impact our business, capital expenditures, results of operations and financial condition. Our effective tax rate may increase or decrease. We are subject to income taxes in the U.S. and numerous foreign jurisdictions.
If environmental and/or export laws or regulations are either changed or adopted and impose additional operational restrictions and compliance requirements upon us or our products, they could negatively impact our business, capital expenditures, results of operations and financial condition. Our effective tax rate may increase or decrease. We are subject to income taxes in the U.S. and numerous foreign jurisdictions.
By developing enhanced material processing methods and more efficient manufacturing techniques, our customers who purchase our phosphorescent emitter and host materials could become more efficient in the utilization of our materials by developing designs that 20 require less materials on a per square meter basis, or by modifying their manufacturing process to make more efficient use of our materials, which could limit or reduce the amount of materials they purchase from us.
By developing enhanced material processing methods and more efficient manufacturing techniques, our customers who purchase our phosphorescent emitter and host materials could become more efficient in the utilization of our materials by developing designs that require less materials on a per square meter basis, or by modifying their manufacturing process to make more efficient use of our materials, which could limit or reduce the amount of materials they purchase from us.
However, payment of future cash dividends will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other 25 factors deemed relevant by our Board of Directors. As such, we may modify, suspend or cancel our cash dividend policy in any manner and at any time.
However, payment of future cash dividends will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by our Board of Directors. As such, we may modify, suspend or cancel our cash dividend policy in any manner and at any time.
If we are unable to protect the proprietary nature of our intellectual property and proprietary information, it will harm our business. 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. 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.
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.
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.
We might not be able to attract, hire, train, retain and motivate the highly skilled employees we need to be successful. If we fail to attract and retain the necessary technical and managerial personnel, our business will suffer and might fail. 21 We rely solely on PPG to manufacture the OLED materials we use and sell to product manufacturers.
We might not be able to attract, hire, train, retain and motivate the highly skilled employees we need to be successful. If we fail to attract and retain the necessary technical and managerial personnel, our business will suffer and might fail. We rely solely on PPG to manufacture the OLED materials we use and sell to product manufacturers.
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. 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. 20 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. 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. 24 In addition, at any time, U.S. federal tax laws or the administrative interpretations of those laws may be changed.
If we are unable to supply the components needed by our existing customers in a 22 timely manner, or if potential customers do not utilize OLED technology because of concerns about our ability to meet supply demands, our business may materially suffer.
If we are unable to supply the components needed by our existing customers in a timely manner, or if potential customers do not utilize OLED technology because of concerns about our ability to meet supply demands, our business may materially suffer.
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 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 22 obtain such materials in a timely manner and/or could lead to increased costs.
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 laws and certain registration requirements for the OLED materials we sell; • legal uncertainties 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; • 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.
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.
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.
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
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 2022, 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 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.
Changes in environmental laws or regulations of our products could result in higher operating and compliance expenses and limit the markets in which we can manufacture and to which we can export our products.
Changes in environmental and export laws or regulations of our products could result in higher operating and compliance expenses and limit the markets in which we can manufacture and to which markets and customers we can export and sell our products.
Some of these laws and regulations may be changed or augmented as governments and regulatory bodies seek to address the effects of climate change.
Some of these laws and regulations may be changed or augmented as governments and regulatory bodies seek to address the effects of climate change and export compliance.
As of February 23, 2023, 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 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.
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. 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.
Factors such as the following may have a significant impact on the market price of our common stock in the future: • our revenues, expenses and operating results; • announcements by us, by our licensors, customers, or our competitors of technological developments, new product applications or contractual arrangements; • announcements relating to dividends and share repurchases; and • other factors affecting the display and solid-state lighting industries in general. 24 Our operating results may have significant period-to-period fluctuations, which would make it difficult to predict our future performance.
Factors such as the following may have a significant impact on the market price of our common stock in the future: • our revenues, expenses and operating results; • announcements by us, by our licensors, customers, or our competitors of technological developments, new product applications or contractual arrangements; • announcements relating to dividends and share repurchases; and • other factors affecting the display and solid-state lighting industries in general.
Others may independently develop the same or similar technologies or otherwise obtain access to our unpatented technologies. Furthermore, these parties may obtain patent protection for such technology, inhibiting or preventing us from practicing the technology. To protect our trade secrets, know-how and other non-patented proprietary information, we require employees, consultants, financial advisors and strategic partners to enter into confidentiality agreements.
Furthermore, these parties may obtain patent protection for such technology, inhibiting or preventing us from practicing the technology. To protect our trade secrets, know-how and other non-patented proprietary information, we require employees, consultants, financial advisors and strategic partners to enter into confidentiality agreements.
Moreover, if successful, these actions could result in the loss of patent or other intellectual property rights protection for the key OLED technologies and materials on which our business depends. 16 We rely, in part, on several non-patented proprietary technologies to operate our business.
Moreover, if successful, these actions could result in the loss of patent or other intellectual property rights protection for the key OLED technologies and materials on which our business depends. We rely, in part, on several non-patented proprietary technologies to operate our business. Others may independently develop the same or similar technologies or otherwise obtain access to our unpatented technologies.
We have more than 5,500 issued and pending patents relating to our OLED technologies.
We have more than 6,000 issued and pending patents relating to our OLED technologies.
Recent court decisions 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.
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.
Decreased sales of our customers’ products incorporating our technology or materials would have an adverse effect on our royalty revenues under existing licenses and material sales under our existing sales agreements. 17 Were this to occur, it would likely harm our ability to (i) obtain new licensees which would have an adverse effect on the terms of the royalty arrangements we could enter into with any new licensees, and (ii) sell our UniversalPHOLED® materials to existing and new customers.
Were this to occur, it would likely harm our ability to (i) obtain new licensees which would have an adverse effect on the terms of the royalty arrangements we could enter into with any new licensees, and (ii) sell our UniversalPHOLED® materials to existing and new customers.
Also, we may face increased difficulty enjoining infringement of our patents. The U.S. 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.
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.
If such changes occur, we may be required to pay additional taxes on our assets or income. Risks Related to Our Stock and Capitalization We may require additional funding in the future in order to continue our business. Our capital requirements have been and will continue to be significant.
Risks Related to Our Stock and Capitalization We may require additional funding in the future in order to continue our business. Our capital requirements have been and will continue to be significant.
There have been significant and sustained economic downturns in the U.S. and globally in the past. These downturns have placed pressure on consumer demand, and the resulting impact on consumer spending has had a material adverse effect on the demand for consumer electronic products.
These downturns have placed pressure on consumer demand, and the resulting impact on consumer spending has had a material adverse effect on the demand for consumer electronic products.
If we cannot keep our key employees or hire other talented persons as we grow, our business might not succeed. Our performance is substantially dependent on the continued services of our executive officers and other key technical and managerial personnel, and on our ability to offer competitive salaries and benefits to these and our other employees.
Our performance is substantially dependent on the continued services of our executive officers and other key technical and managerial personnel, and on our ability to offer competitive salaries and benefits to these and our other employees.
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.
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.
We cannot be certain that this work will yield additional advances in the research and development of these technologies and materials.
Further advances in our OLED technologies and materials depend, in part, on the success of the research and development work we conduct, both alone and with our research partners. We cannot be certain that this work will yield additional advances in the research and development of these technologies and materials.
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. As a result of the less rigid approach to assessing obviousness, defending the validity of or obtaining patents may be more difficult.
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.
A resulting by-product of such natural disasters or other unforeseen catastrophic events could be a temporary or long-term disruption in the supply of or demand for our products. 23 Risks Related to Legal, Regulatory and Tax Matters We may be subject to environmental laws and regulations, including without limitation those associated with the effects of climate change, that impose additional compliance costs and that could negatively impact our business.
Risks Related to Legal, Regulatory and Tax Matters We may be subject to environmental and export laws and regulations, including without limitation those associated with the effects of climate change, that impose additional compliance costs and that could negatively impact our business.
Additionally, PPG manufactures our materials at facilities based in the United States and Ireland. As a result, such materials may be subject to tariffs or other barriers from or to countries where some of our product manufacturer customers have operations and to where we would need to ship product.
Additionally, PPG manufactures our materials at facilities based in the United States and Ireland, which materials we then predominantly export to our customers that have manufacturing locations in countries in the Asia-Pacific region. As a result, such materials may be subject to tariffs, export restrictions or other barriers from or to these countries and/or customers.
Many current and potential customers for our OLED technologies utilize and have invested significant resources in competing technologies, and may, therefore, be reluctant to redesign their products or manufacturing processes to incorporate our OLED technologies. 19 During the entire product development process for a new product, we face the risk that our materials or technologies will fail to meet the manufacturer’s technical, performance or cost requirements or will be replaced by a competing product or alternative technology.
During the entire product development process for a new product, we face the risk that our materials or technologies will fail to meet the manufacturer’s technical, performance or cost requirements or will be replaced by a competing product or alternative technology.
The COVID-19 pandemic has negatively impacted the global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets, which in turn has had a material adverse effect on our operations and business. We expect the COVID-19 pandemic to continue to have an adverse impact on our business and financial performance.
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.
The COVID-19 pandemic has had, and we expect it to continue to have, a material adverse effect on our operations and business, and similar future epidemics, pandemics, disease outbreaks and other public health crises could also have a similar effect.
Epidemics, pandemics, disease outbreaks and other public health crises could have a material adverse effect on our operations and business.
In addition, our business could be adversely impacted if our customers experience budget, inflationary or other pressures, such as increases in the cost of borrowing from rising interest rates. Many of our competitors have greater resources, which may make it difficult for us to compete successfully against them. The display and solid-state lighting industries are characterized by intense competition.
Many of our competitors have greater resources and are based in the same Asia-Pacific countries where our significant customers are located, which may make it difficult for us to compete successfully against them. The display and solid-state lighting industries are characterized by increasingly intense competition.
If we fail to continue to make advances in our OLED research and development activities, we might not succeed in continuing to commercialize our OLED technologies and materials. 18 Further advances in our OLED technologies and materials depend, in part, on the success of the research and development work we conduct, both alone and with our research partners.
Failure to do so may cause our business strategy to fail. If we fail to continue to make advances in our OLED research and development activities, we might not succeed in continuing to commercialize our OLED technologies and materials.
Many of our competitors have better name recognition and greater financial, technical, marketing, personnel and research capabilities than we do. Because of these differences, we may never be able to compete successfully in these markets or maintain any competitive advantages we are able to achieve over time.
Many of our competitors have better name recognition and greater financial, technical, marketing, personnel and research capabilities than we do.
Removed
Litigation may be necessary to defend against such claims. 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.
Added
Decreased sales of our customers’ products incorporating our technology or materials would have an adverse effect on our royalty revenues under existing licenses and material sales under our existing sales agreements.
Removed
Failure to do so may cause our business strategy to fail.
Added
Litigation may be necessary to defend against such claims.
Removed
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. This would adversely affect our revenues.
Added
As 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.
Removed
The extent of the continued impact of the COVID-19 pandemic on our business and financial performance, including our ability to execute our near-term and long-term business strategies and initiatives in the expected time frame, will depend on future developments, including the duration and severity of the pandemic, which are uncertain and cannot be predicted.
Added
Many current and potential customers for our OLED technologies utilize and have invested significant resources in competing technologies, and may, therefore, be reluctant to redesign their products or manufacturing processes to incorporate our OLED technologies.
Removed
In addition, consumer spending generally may also be negatively impacted by general macroeconomic conditions and consumer confidence, including the impact of any recession, resulting from the ongoing COVID-19 pandemic. This may negatively continue to impact sales for our customers and may also have an impact on their development of new products.
Added
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.
Removed
Should there be in the future any epidemics, pandemics, disease outbreaks and other public health crises, such as the COVID-19 pandemic, that harm the global economy in general, our business, financial condition and results of operations could be adversely affected.
Added
In addition, our business could be adversely impacted if our customers experience budget, inflationary or other pressures, such as increases in the cost of borrowing from rising interest rates.
Removed
We may also experience impacts to certain of our customers as a result of public health crises occurring in one or more locations, which in turn may materially and adversely affect our business, financial condition and results of operations. Any downturn in U.S. or global economic conditions may have a significant adverse effect on our business.
Added
Also, many of them are based in the same Asia-Pacific countries where our customers’ operations are located, and as such they may receive preference from such countries and/or not be subject to the same laws, regulations and requirements as we are.
Added
Because of these differences, we may never be able to compete successfully in these markets or maintain any competitive advantages we are able to achieve over time. If we cannot keep our key employees or hire other talented persons as we grow, our business might not succeed.
Added
A resulting by-product of such natural disasters or other unforeseen catastrophic events could be a temporary or long-term disruption in the supply of or demand for our products.
Added
If such changes occur, we may be required to pay additional taxes on our assets or income. The Organization for Economic Development’s Base Erosion Profit Shifting Pillar 2.0 (BEPS Pillar 2.0) initiative provides a minimum global tax rate of 15% for multinational organizations with a global turnover of €750 million or more.
Added
The Company is not expected to reach this threshold in the coming year. Rules and regulations surrounding the BEPS Pillar 2.0 initiative are continually evolving. At the current time, the impact and timing of BEPS Pillar II cannot be estimated.
Added
Our operating results may have significant period-to-period fluctuations, which would make it difficult to predict our future performance.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeEwing, New Jersey (1) Corporate and Collaboration Offices United States 2019 27 McCullough Drive New Castle, Delaware Corporate Offices and Manufacturing Laboratories United States 2017 Shannon Industrial Estate, Shannon, County Clare (2) Manufacturing Facility Ireland 2021* * Leased property; represents lease commencement date (1) Approximately 88,000 square feet for the expansion of research and development activities, collaboration, manufacturing logistics and other corporate functions.
Biggest changeEwing, New Jersey (1) Corporate and Collaboration Offices United States 27 McCullough Drive New Castle, Delaware Adesis Offices and Manufacturing Laboratories United States Shannon Industrial Estate, Shannon, County Clare (2) Manufacturing Facility Ireland Block A, 7F.
ITEM 2. P ROPERTIES As of December 31, 2022, we operated facilities at the following locations: Location Description of Use Country Acquisition Year 375 Phillips Blvd. Ewing, New Jersey Corporate Offices and Research & Development Laboratories United States 2004 250 Phillips Blvd. Ewing, New Jersey (1) Corporate Offices and Manufacturing Logistics United States 2019 300 Phillips Blvd.
ITEM 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.
Removed
(2) Leased, with an option to purchase, for production by PPG of our PHOLED materials.
Added
Korea Bio Park 700 Daewangpangyo-ro, Bundang-gu Seongnam-si, Gyeonggi-do, 13488, South Korea (3) Application Center South Korea (1) Approximately 88,000 square feet for the expansion of research and development activities, collaboration, manufacturing logistics and other corporate functions. (2) Leased beginning in 2021 for production by PPG of our PHOLED materials and purchased in September 2023.
Added
(3) Leased beginning in 2017 and purchased in May 2023. 27

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.
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
Removed
Below is a summary of an active proceeding that has been commenced against an issued patent that is exclusively licensed to us.
Removed
We do not believe that the confirmation, loss or modification of our rights in any individual claim or set of claims that are the subject of the following legal proceeding would have a material impact on our material sales or licensing business or on our Consolidated Financial Statements, including our Consolidated Statements of Income, as a whole.
Removed
In certain circumstances, when permitted, we may also utilize a proceeding to request modification of the claims to better distinguish the patented invention from any newly identified prior art and/or improve the claim scope of the patent relative to commercially important categories of the invention.
Removed
Opposition to European Patent No. 1390962 In September 2022, the Opposition Division made a final determination that the patent, which was described in prior filings and has now expired in accordance with its original term, was valid based on amended claims submitted by us to the Opposition Division in 2016. 26 ITEM 4.
Removed
MINE SAF ETY DISCLOSURES Not applicable. 27 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 12/17 12/18 12/19 12/20 12/21 12/22 Universal Display Corp. $ 100.00 $ 54.32 $ 119.89 $ 134.20 $ 96.77 $ 64.00 Russell 2000 100.00 88.99 111.70 134.00 153.85 122.41 NASDAQ Electronic Components 100.00 86.61 129.69 185.86 275.79 177.31 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 2023 Annual Meeting of Shareholders, and herein by reference. 29 ITEM 6 . [RESERVED] None. 30
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
During 2020, 2021 and 2022, we declared and paid cash dividends on our common stock.
During 2021, 2022 and 2023, 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 23, 2023, there were approximately 275 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 16, 2024, there were approximately 261 holders of record of our common stock.
As such, we may modify, suspend or cancel our cash dividend policy in any manner and at any time. 28 Performance Graph The performance graph below compares the change in the cumulative shareholder return of our common stock from December 31, 2017 to December 31, 2022, with the percentage change in the cumulative total return over the same period on (i) the Russell 2000 Index, and (ii) the Nasdaq 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.
This performance graph assumes an initial investment of $100 on December 31, 2017 in each of our common stock, the Russell 2000 Index and the Nasdaq Electronics Components Index.
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.
Added
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

46 edited+10 added−17 removed34 unchanged
Biggest changeComparison of the Years Ended December 31, 2022 and 2021 Year Ended December 31, 2022 2021 (Decrease) Increase REVENUE: Material sales $ 331,081 $ 318,623 $ 12,458 Royalty and license fees 267,115 219,032 48,083 Contract research services 18,423 15,870 2,553 Total revenue 616,619 553,525 63,094 COST OF SALES 127,896 114,991 12,905 Gross margin 488,723 438,534 50,189 OPERATING EXPENSES: Research and development 117,062 99,673 17,389 Selling, general and administrative 77,886 80,372 (2,486 ) Amortization of acquired technology and other intangible assets 17,459 21,994 (4,535 ) Patent costs 8,329 8,160 169 Royalty and license expense 877 691 186 Total operating expenses 221,613 210,890 10,723 OPERATING INCOME 267,110 227,644 39,466 Interest income, net 7,811 505 7,306 Other (loss) income, net (6,691 ) 98 (6,789 ) Interest and other income, net 1,120 603 517 INCOME BEFORE INCOME TAXES 268,230 228,247 39,983 INCOME TAX EXPENSE (58,169 ) (44,034 ) (14,135 ) NET INCOME $ 210,061 $ 184,213 $ 25,848 Revenue Our total material sales were $331.1 million for the year ended December 31, 2022, as compared to $318.6 million for the year ended December 31, 2021, an increase of 4% with a commensurate increase in unit material volume of 4%. • Green emitter sales for the year ended December 31, 2022, which include our yellow-green emitters, were $251.6 million as compared to $242.9 million for the year ended December 31, 2021, with unit material volumes increasing by 3%. • Red emitter sales for the year ended December 31, 2022, were $79.0 million as compared to $75.2 million for the year ended December 31, 2021, with unit material volumes increasing by 8%.
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%.
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; 32 • 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; 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.
There can be no assurance that additional funds will be available to us when needed, on commercially reasonable terms or at all, particularly in the current economic environment. Recently Issued Accounting Pronouncements Recently issued accounting pronouncements are addressed in Note 2 in the Notes to Consolidated Financial Statements.
There can be no assurance that additional funds will be available to us when needed, on commercially reasonable terms or at all, particularly in the current economic environment. Recently Issued Accounting Pronouncements Recently issued accounting pronouncements are addressed in Note 2 in the Notes to the Consolidated Financial Statements included herein.
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, 2022 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, 2023 compared to the prior year as well as higher available-for-sale investment balances.
RESULTS OF OPERATIONS For a discussion of our results of operations comparison for the years ended December 31, 2021 and 2020, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on February 23, 2022.
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.
We continue to utilize a significant portion of its technology research capacity for the benefit of our OLED technology development, and Adesis uses the remaining capacity to operate as a CRO in the above-mentioned industries by providing contract research services for non-OLED applications to those third-party customers.
We continue to utilize a significant portion of its technology research capacity for the benefit of our OLED technology development, and Adesis uses the remaining capacity to operate as a CDMO by providing contract research services for non-OLED applications to third-party customers in the above-mentioned industries.
Based in California, OVJP Corp was founded to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology. As of December 31, 2022, OVJP Corp employed a team of 22 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.
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.
In 2020, we entered into long-term, multi-year agreements with CSOT. Under these agreements, we have granted CSOT non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to CSOT for use in its licensed products. In 2016, we acquired Adesis, Inc.
(CSOT). In 2020, we entered into long-term, multi-year agreements with CSOT. Under these agreements, we have granted CSOT non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to CSOT for use in its licensed products.
Revenue from contract research services consists of revenue earned by our subsidiary, Adesis, which provides support services to the pharma, biotech, catalysis and other industries on a contractual basis for those third-party customers.
Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries.
The decrease was due to the timing of maturities and purchases of investments resulting in net purchases of $233.5 million for the year ended December 31, 2022, as compared to $414.2 million for the year ended December 31, 2021, partially offset by an increase in purchases of intangibles and property, plant and equipment of $3.6 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
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.
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 $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.
Cash used in investing activities was $280.7 million for the year ended December 31, 2022, as compared to $457.8 million for the year ended December 31, 2021.
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 financing activities was $64.6 million for the year ended December 31, 2022, as compared to $51.4 million for the year ended December 31, 2021.
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.
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.
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.
Changes in our operating assets and liabilities related to an increase in inventory of $42.6 million, an increase in other assets of $32.6 million, an increase in accounts receivable of $25.4 million and a decrease in deferred revenue of $5.2 million, partially offset by an increase in other liabilities of $22.3 million and an increase in accounts payable and accrued expenses of $1.9 million.
Changes in our operating assets and liabilities related to an increase in accounts receivable of $47.2 million, an increase in other assets of $37.1 million, a decrease in other liabilities of $26.5 million and a decrease in deferred revenue of $4.2 million, partially offset by a decrease in inventory of $7.4 million and an increase in accounts payable and accrued expenses of $4.1 million.
(Adesis) which has operations in New Castle and Wilmington, Delaware. Adesis is a contract research organization (CRO) that provides support services to the OLED, pharma, biotech, catalysis and other industries. As of December 31, 2022, Adesis employed a team of 150 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, 2023, Adesis employed a team of 138 research scientists, chemists, engineers and laboratory technicians.
Cash provided by operating activities for the year ended December 31, 2021 was $191.1 million resulting from $184.2 million of net income and an increase of $88.5 million due to non-cash items including stock-based compensation, amortization of intangibles and depreciation, partially offset by a $81.6 million reduction due to changes in our operating assets and liabilities.
Cash provided by operating activities for the year ended December 31, 2023 was $154.8 million resulting from $203.0 million of net income and an increase of $55.3 million due to non-cash items including depreciation, stock-based compensation, and amortization of intangibles, partially offset by a $103.5 million reduction due to changes in our operating assets and liabilities.
During the year ended December 31, 2022, 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.
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.
Under these agreements, we have granted BOE non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. We also supply phosphorescent OLED materials to BOE for use in its licensed products. In 2018, we entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox).
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.
It is not clear what effects any such potential actions could have on our business, including on our customers, employees, and financial results. 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.
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.
In February 2021, we announced the establishment of a new manufacturing site in Shannon, Ireland and an agreement between UDC Ireland Limited and PPG for the production of our OLED materials. We currently lease the Shannon site and have a contractual option to purchase the facility.
In February 2021, we announced the establishment of a new manufacturing site in Shannon, Ireland and an agreement between UDC Ireland Limited and PPG for the production of our OLED materials. We purchased the site during September 2023.
Other (loss) income, net primarily consisted of impairment of minority investments of $7.0 million during the year ended December 31, 2022, net exchange gains and losses on foreign currency transactions and rental income.
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.
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. 31 In 2016, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma).
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. 32 In 2023, we entered into new long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE).
Amortization of acquired technology and other intangible assets Amortization of acquired technology and other intangible assets was $17.5 million for the year ended December 31, 2022, as compared to $22.0 million for the year ended December 31, 2021. The decrease was due to the Fujifilm patents becoming fully amortized during the year ended December 31, 2022.
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.
Interest and other (loss) income, net Interest income, net was $7.8 million for the year ended December 31, 2022, as compared to $505,000 for the year ended December 31, 2021.
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.
The increase was due to an increase in the cash payment of dividends in the current year of $19.0 million, partially offset by a decrease in the payment of withholding taxes related to stock-based compensation to employees of $5.7 million and an increase in the proceeds from issuance of common stock of $63,000. 36 Working capital was $763.8 million as of December 31, 2022, as compared to $738.0 million as of December 31, 2021.
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.
Revenue from royalty and license fees was $267.1 million for the year ended December 31, 2022 as compared to $219.0 million for the year ended December 31, 2021, an increase of 22%.
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%.
In such circumstances, revenue will be recognized at the earlier of the expiration of the customer’s general right of return or once it becomes unlikely that the customer will exercise its right of return. The rights and benefits to our OLED technologies are conveyed to the customer through technology license agreements and material supply agreements.
In such circumstances, revenue will be recognized at the earlier of the expiration of the customer’s general right of return or once it becomes unlikely that the customer will exercise its right of return.
As a result of the increase in revenue from royalty and license fees and material sales, gross margin for the year ended December 31, 2022 increased by $50.2 million as compared to the year ended December 31, 2021, with gross margin as a percentage of revenue remaining consistent at 79%.
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%.
Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management's best assessment of estimated future taxes to be paid. 33 In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of our deferred tax assets will not be realized.
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of our deferred tax assets will not be realized.
The effective income tax rate was an expense of 21.7% and 19.3% for the years ended December 31, 2022 and 2021, respectively, and we recorded income tax expense of $58.2 million and $44.0 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 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.
The increase in research and development expenses was primarily due to increased contract research and PPG development activity, higher employee-related compensation expenses and operating costs, including those associated with OVJP technology development.
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.
Liquidity and Capital Resources Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of December 31, 2022, we had cash and cash equivalents of $93.4 million, short-term investments of $484.3 million, and long-term corporate bond and U.S. Government bond investments of $247.9 million for a total of $825.6 million.
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.
Significant judgments and estimates are required in evaluating our tax positions for future realization and determining our provision for income taxes.
Significant judgments and estimates are required in evaluating our tax positions for future realization and determining our provision for income taxes. Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management's best assessment of estimated future taxes to be paid.
The effective income tax rate increased due to a change in U.S. tax legislation associated with the ability to credit Chinese withholding taxes, as well as the impact to the global intangible low-taxed income (GILTI) arising from a change in the capitalization rules for research and development expenses.
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.
In 2021, we announced an extension of the Visionox agreement by entering into new five-year OLED material supply and license agreements with a new affiliate of Visionox, Visionox Hefei Technology Co. Ltd. In 2019, we entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT).
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.
Selling, general and administrative Selling, general and administrative expenses decreased to $77.9 million for the year ended December 31, 2022, as compared to $80.4 million for the year ended December 31, 2021.
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.
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.
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 Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd.
The increase in intangible purchases during the year ended December 31, 2022 was primarily due to a patent purchase. The increase in property, plant and equipment purchases during the year ended December 31, 2022 was primarily due to the manufacturing facility in Shannon, Ireland and improvements to our facilities in Ewing, New Jersey.
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.
Contract research services revenue was $18.4 million for the year ended December 31, 2022 as compared to $15.9 million for the year ended December 31, 2021, an increase of 16%.
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.
This increase was primarily the result of a favorable cumulative catch-up adjustment arising from changes in estimates of transaction price and higher unit material volume. 34 The cumulative catch-up adjustment arising from changes in estimates of transaction price, net was $30.3 million for the year ended December 31, 2022 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, resulting from the continued deterioration in the global market economy as evidenced by weakness in consumer demand caused by higher interest rates and inflationary pricing pressures.
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.
Cost of Sales Cost of sales for the year ended December 31, 2022 increased by $12.9 million as compared to the year ended December 31, 2021, primarily due to an increase in the level of material sales with an associated increase in manufacturing costs, underutilization of the manufacturing facility in Shannon, Ireland and higher per unit material costs.
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.
Patent costs Patent costs increased to $8.3 million for the year ended December 31, 2022, as compared to $8.2 million for the year ended December 31, 2021. 35 Royalty and license expense Royalty and license expense increased to $877,000 for the year ended December 31, 2022, as compared to $691,000 for the year ended December 31, 2021.
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.
Payments towards the retirement plan obligations will commence during fiscal year 2023 in the amount of $2.0 million and are expected to total $93.1 million over the life of the plan. Existing lease obligations are $4.6 million for fiscal year 2023, $9.3 million in total for fiscal years 2023 and 2024 and $21.6 million thereafter.
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.
In 2021, we mutually agreed to extend the terms of both the patent license and material purchase agreements for an additional multi-year term. In 2017, we entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE).
The license agreement calls for license fees and running royalties on Tianma’s sales of licensed products. Additionally, we supply phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, we mutually agreed to extend the terms of both the patent license and material purchase agreements for an additional multi-year term. In 2016, we acquired Adesis, Inc.
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 2016, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, we have granted Tianma non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products.
Removed
Further, we continue to monitor the impact of COVID-19 on our business. Our global operations, and the global nature of our customer base and their respective customers, expose us to risks associated with public health crises, such as pandemics, epidemics and disease outbreaks.
Added
The vast majority of revenue attributed to material sales is determined through technology license agreements and material supply agreements the terms of which are jointly agreed upon with our customers. The remaining revenue recognized is in the form of contract research services revenue earned by our subsidiary, Adesis, Inc., and our occasional material sales to smaller customers.
Removed
The ongoing COVID-19 pandemic had a substantial impact on our operations and financial results during the year ended December 31, 2020 and continued to have a gradually lesser impact during the years ended December 31, 2021 and 2022.
Added
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.
Removed
We expect that as the pandemic continues to evolve, there is the potential for continued impact on the results of our operations due to uncertainties involving the continued disruption of the global economy, uncertainties associated with consumer demand for finished OLED goods, and the potential resulting impact on our customers and their demand for our phosphorescent emitters.
Added
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.
Removed
At this time, the crisis has not had a significant impact on our ability to fulfill shipments of commercial materials as required by our customers.
Added
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%.
Removed
We continue to actively monitor the COVID-19 situation and may take further actions that we determine are in the best interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities.
Added
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.
Removed
At this time, substantial uncertainty exists as to the projected duration and intensity of this global market deterioration and the extent to which it will negatively impact such customers' near-term production requirements.
Added
The Shannon facility became operational during June 2022 and the costs associated with this facility have since been included in cost of sales.
Removed
The underutilization charges related to the Shannon facility were $7.9 million for the year ended December 31, 2022. Shannon facility charges began to be recorded as cost of sales in June 2022 when the facility was first used for production activities. Shannon facility costs prior to June 2022 were recorded in selling, general and administrative expenses.
Added
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.
Removed
We anticipate that the Shannon facility will continue to be underutilized in the near-term as we have begun to bring this additional capacity online in preparation for anticipated growth in the years ahead.
Added
Government bond investments of $247.9 million for a total of $825.6 million as of December 31, 2022.
Removed
Included in the cost of sales for both fiscal years ended December 31, 2022 and 2021 was an increase in inventory reserve of $3.6 million due to excess inventory levels in certain products.
Added
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.
Removed
Research and development Research and development expenses increased to $117.1 million for the year ended December 31, 2022, as compared to $99.7 million for the year ended December 31, 2021.
Added
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.
Removed
The decrease in selling, general and administrative expenses was primarily due to lower stock-based compensation, partially offset by increased pre-production costs associated with the Shannon facility, an increase in depreciation expense resulting from corporate expansion, as well as an increase in overall general office expenses.
Removed
See Note 7 in Notes to Consolidated Financial Statements for further discussion.
Removed
We recorded other loss, net of $6.7 million for the year ended December 31, 2022 as compared to other income, net of $98,000 for the year ended December 31, 2021. Income tax expense We are subject to income taxes in both the United States and foreign jurisdictions.
Removed
This compares to cash and cash equivalents of $312.0 million, short-term investments of $351.2 million, and long-term U.S. Government bond investments of $159.6 million for a total of $822.8 million as of December 31, 2021.
Removed
The increase was primarily due to an increase in short-term investments, a decrease in deferred revenue and an increase in inventory, partially offset by decreases in cash and cash equivalents. 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.
Removed
Existing PPG inventory commitments are $31.9 million and will fluctuate based on PPG production needs to fulfill to our demand for commercial emitter material.
Removed
However, the extent to which the COVID-19 pandemic and our precautionary measures in response thereto may impact our business and thus our liquidity will depend on future developments, which are highly uncertain and cannot be precisely estimated at this time.

Other OLED 10-K year-over-year comparisons