10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission File Number 1-12031

 

UNIVERSAL DISPLAY CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	23-2372688
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
375 Phillips Boulevard, Ewing, New Jersey	08618
(Address of principal executive offices)	(Zip Code)

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting company	☐

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

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

As of November 2, 2021, the registrant had outstanding 47,125,672 shares of common stock.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets – September 30, 2021 and December 31, 2020	1
Consolidated Statements of Income – Three and nine months ended September 30, 2021 and 2020	2
Consolidated Statements of Comprehensive Income – Three and nine months ended September 30, 2021 and 2020	3
Consolidated Statements of Shareholders’ Equity – Three and nine months ended September 30, 2021 and 2020	4
Consolidated Statements of Cash Flows – Nine months ended September 30, 2021 and 2020	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	35
Item 4. Controls and Procedures	35
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3. Defaults Upon Senior Securities	36
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	37

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

	September 30, 2021			December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	535,157		$	630,012
Short-term investments		253,786			99,996
Accounts receivable		96,235			82,261
Inventory		121,485			91,591
Other current assets		48,476			20,746
Total current assets		1,055,139			924,606
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $86,962 and $72,493		118,988			102,113
ACQUIRED TECHNOLOGY, net of accumulated amortization of $168,489 and $153,050		54,814			70,253
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $7,206 and $6,155		10,028			10,685
GOODWILL		15,535			15,535
INVESTMENTS		8,500			5,000
DEFERRED INCOME TAXES		32,476			37,695
OTHER ASSETS		133,111			103,341
TOTAL ASSETS	$	1,428,591		$	1,269,228
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	10,939		$	13,801
Accrued expenses		42,736			41,404
Deferred revenue		123,475			105,215
Other current liabilities		3,111			4,540
Total current liabilities		180,261			164,960
DEFERRED REVENUE		43,458			57,086
RETIREMENT PLAN BENEFIT LIABILITY		80,676			78,527
OTHER LIABILITIES		87,874			55,941
Total liabilities		392,269			356,514
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS’ EQUITY:
Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized, 200,000     shares of Series A Nonconvertible Preferred Stock issued and outstanding    (liquidation value of $7.50 per share or $1,500)		2			2
Common Stock, par value $0.01 per share, 200,000,000 shares authorized, 49,060,909    and 49,013,476 shares issued, and 47,695,261 and 47,647,828 shares outstanding, at    September 30, 2021 and December 31, 2020, respectively		491			490
Additional paid-in capital		646,049			635,595
Retained earnings		463,820			353,930
Accumulated other comprehensive loss		(32,756	)		(36,019	)
Treasury stock, at cost (1,365,648 shares at September 30, 2021 and December 31, 2020)		(41,284	)		(41,284	)
Total shareholders’ equity		1,036,322			912,714
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,428,591		$	1,269,228

The accompanying notes are an integral part of these Consolidated Financial Statements.

1

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2021			2020			2021			2020
REVENUE:
Material sales	$	75,609		$	68,709		$	232,855		$	167,211
Royalty and license fees		63,939			44,550			163,037			110,008
Contract research services		4,070			3,820			11,386			10,105
Total revenue		143,618			117,079			407,278			287,324
COST OF SALES		31,481			23,378			82,748			58,480
Gross margin		112,137			93,701			324,530			228,844
OPERATING EXPENSES:
Research and development		25,327			20,814			72,733			61,708
Selling, general and administrative		20,960			13,579			57,603			45,129
Amortization of acquired technology and other intangible assets		5,505			5,494			16,490			16,474
Patent costs		2,359			2,095			6,003			5,591
Royalty and license expense		258			3,293			519			8,195
Total operating expenses		54,409			45,275			153,348			137,097
OPERATING INCOME		57,728			48,426			171,182			91,747
Interest income, net		137			1,029			345			4,444
Other (loss) income, net		(102	)		262			178			634
Interest and other income, net		35			1,291			523			5,078
INCOME BEFORE INCOME TAXES		57,763			49,717			171,705			96,825
INCOME TAX EXPENSE		(11,654	)		(9,217	)		(33,368	)		(17,355	)
NET INCOME	$	46,109		$	40,500		$	138,337		$	79,470
NET INCOME PER COMMON SHARE:
BASIC	$	0.97		$	0.85		$	2.91		$	1.67
DILUTED	$	0.97		$	0.85		$	2.90		$	1.67
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET    INCOME PER COMMON SHARE:
BASIC		47,291,192			47,227,061			47,286,927			47,182,625
DILUTED		47,362,575			47,260,331			47,355,583			47,212,660
CASH DIVIDENDS DECLARED PER COMMON SHARE	$	0.20		$	0.15		$	0.60		$	0.45

The accompanying notes are an integral part of these Consolidated Financial Statements.

2

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
NET INCOME	$	46,109		$	40,500		$	138,337		$	79,470
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized (loss) gain on available-for-sale securities,    net of tax of $1, $177, $10 and $97, respectively		(3	)		(626	)		(35	)		342
Amortization of prior service cost and actuarial loss for    retirement plan included in net periodic pension costs,    net of tax of $334, $181, $1,004 and $543, respectively		1,174			639			3,522			1,917
Change in cumulative foreign currency translation    adjustment		(155	)		1			(224	)		(29	)
TOTAL OTHER COMPREHENSIVE INCOME		1,016			14			3,263			2,230
COMPREHENSIVE INCOME	$	47,125		$	40,514		$	141,600		$	81,700

The accompanying notes are an integral part of these Consolidated Financial Statements.

3

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except for share data)

	Three Months Ended September 30, 2021
	Series A Nonconvertible									Additional						Accumulated Other								Total
	Preferred Stock				Common Stock					Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount		Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, JUNE 30, 2021		200,000	$	2		49,054,059		$	491	$	638,991		$	427,188		$	(33,772	)		1,365,648	$	(41,284	)	$	991,616
Net income		—		—		—			—		—			46,109			—			—		—			46,109
Other comprehensive income		—		—		—			—		—			—			1,016			—		—			1,016
Cash dividend		—		—		—			—		—			(9,477	)		—			—		—			(9,477	)
Issuance of common stock to employees		—		—		5,111			—		8,131			—			—			—		—			8,131
Shares withheld for employee taxes		—		—		(2,025	)		—		(1,862	)		—			—			—		—			(1,862	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		1,361			—		348			—			—			—		—			348
Issuance of common stock to employees under an ESPP		—		—		2,403			—		441			—			—			—		—			441
BALANCE, SEPTEMBER 30, 2021		200,000	$	2		49,060,909		$	491	$	646,049		$	463,820		$	(32,756	)		1,365,648	$	(41,284	)	$	1,036,322
	Nine Months Ended September 30, 2021
	Series A Nonconvertible									Additional						Accumulated Other								Total
	Preferred Stock				Common Stock					Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount		Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, DECEMBER 31, 2020		200,000	$	2		49,013,476		$	490	$	635,595		$	353,930		$	(36,019	)		1,365,648	$	(41,284	)	$	912,714
Net income		—		—		—			—		—			138,337			—			—		—			138,337
Other comprehensive income		—		—		—			—		—			—			3,263			—		—			3,263
Cash dividend		—		—		—			—		—			(28,447	)		—			—		—			(28,447	)
Issuance of common stock to employees		—		—		62,501			1		22,542			—			—			—		—			22,543
Shares withheld for employee taxes		—		—		(28,733	)		—		(14,880	)		—			—			—		—			(14,880	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		7,157			—		1,352			—			—			—		—			1,352
Issuance of common stock to employees under an ESPP		—		—		6,508			—		1,440			—			—			—		—			1,440
BALANCE, SEPTEMBER 30, 2021		200,000	$	2		49,060,909		$	491	$	646,049		$	463,820		$	(32,756	)		1,365,648	$	(41,284	)	$	1,036,322

The accompanying notes are an integral part of these Consolidated Financial Statements.

4

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except for share data)

	Three Months Ended September 30, 2020
	Series A Nonconvertible										Additional						Accumulated Other								Total
	Preferred Stock				Common Stock						Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount			Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, JUNE 30, 2020		200,000	$	2		48,992,532		$	490		$	621,585		$	273,758		$	(14,781	)		1,365,648	$	(41,284	)	$	839,770
Net income		—		—		—			—			—			40,500			—			—		—			40,500
Other comprehensive loss		—		—		—			—			—			—			14			—		—			14
Cash dividend		—		—		—			—			—			(7,114	)		—			—		—			(7,114	)
Issuance of common stock to employees		—		—		19,733			1			6,804			—			—			—		—			6,805
Shares withheld for employee taxes		—		—		(7,199	)		(1	)		(1,127	)		—			—			—		—			(1,128	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		1,614			—			425			—			—			—		—			425
Issuance of common stock to employees under an ESPP		—		—		2,235			—			364			—			—			—		—			364
BALANCE, SEPTEMBER 30, 2020		200,000	$	2		49,008,915		$	490		$	628,051		$	307,144		$	(14,767	)		1,365,648	$	(41,284	)	$	879,636
	Nine Months Ended September 30, 2020
	Series A Nonconvertible										Additional						Accumulated Other								Total
	Preferred Stock				Common Stock						Paid-in			Retained			Comprehensive			Treasury Stock					Shareholders’
	Shares		Amount		Shares			Amount			Capital			Earnings			Loss			Shares		Amount			Equity
BALANCE, DECEMBER 31, 2019		200,000	$	2		48,852,193		$	489		$	620,236		$	249,003		$	(16,997	)		1,365,648	$	(41,284	)	$	811,449
Net income		—		—		—			—			—			79,470			—			—		—			79,470
Other comprehensive income		—		—		—			—			—			—			2,230			—		—			2,230
Cash dividend		—		—		—			—			—			(21,329	)		—			—		—			(21,329	)
Issuance of common stock to employees		—		—		238,996			2			19,532			—			—			—		—			19,534
Shares withheld for employee taxes		—		—		(98,882	)		(1	)		(14,292	)		—			—			—		—			(14,293	)
Issuance of common stock to Board of Directors and Scientific Advisory Board		—		—		8,906			—			1,433			—			—			—		—			1,433
Issuance of common stock to employees under an ESPP		—		—		7,702			—			1,142			—			—			—		—			1,142
BALANCE, SEPTEMBER 30, 2020		200,000	$	2		49,008,915		$	490		$	628,051		$	307,144		$	(14,767	)		1,365,648	$	(41,284	)	$	879,636

The accompanying notes are an integral part of these Consolidated Financial Statements.

5

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Nine Months Ended September 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	138,337		$	79,470
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue and recognition of unbilled receivables, net		(165,723	)		(112,508	)
Depreciation		14,471			11,147
Amortization of intangibles		16,490			16,474
Change in excess inventory reserve		2,058			808
Amortization of premium and discount on investments, net		(229	)		(4,293	)
Stock-based compensation to employees		22,846			19,807
Stock-based compensation to Board of Directors and Scientific Advisory Board		1,052			1,133
Deferred income tax expense (benefit)		4,226			(2,242	)
Retirement plan expense		6,676			4,242
Decrease (increase) in assets:
Accounts receivable		(13,974	)		(38,898	)
Inventory		(31,952	)		(20,953	)
Other current assets		(13,626	)		(2,854	)
Other assets		(33,540	)		(8,721	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(3,311	)		(19,633	)
Other current liabilities		(1,429	)		(806	)
Deferred revenue		160,021			144,200
Other liabilities		31,933			9,454
Net cash provided by operating activities		134,326			75,827
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(29,496	)		(19,213	)
Purchases of intangibles		(394	)		(25	)
Purchases of investments		(272,340	)		(604,153	)
Proceeds from sale and maturity of investments		115,240			613,310
Net cash used in investing activities		(186,990	)		(10,081	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		1,136			869
Payment of withholding taxes related to stock-based compensation to employees		(14,880	)		(14,293	)
Cash dividends paid		(28,447	)		(21,329	)
Net cash used in financing activities		(42,191	)		(34,753	)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(94,855	)		30,993
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		630,012			131,627
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	535,157		$	162,620
The following non-cash activities occurred:
Unrealized (loss) gain on available-for-sale securities	$	(39	)	$	451
Common stock issued to Board of Directors and Scientific Advisory Board that was    earned and accrued for in a previous period		300			300
Net change in accounts payable and accrued expenses related to purchases of property    and equipment		(1,849	)		(892	)

The accompanying notes are an integral part of these Consolidated Financial Statements.

6

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BUSINESS:

Universal Display Corporation and its subsidiaries (the Company) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. OLEDs are thin, lightweight and power-efficient solid-state devices that emit light that can be manufactured on both flexible and rigid substrates, making them highly suitable for use in full-color displays and as lighting products. OLED displays are capturing a growing share of the display market, especially in the mobile phone, television, wearable, tablet, notebook and personal computer, augmented reality (AR), virtual reality (VR) and automotive markets. The Company believes this is because OLEDs offer potential advantages over competing display technologies with respect to power efficiency, contrast ratio, viewing angle, video response time, form factor and manufacturing cost. The Company also believes that OLED lighting products have the potential to replace many existing light sources in the future because of their high-power efficiency, excellent color rendering index, low operating temperature and novel form factor. The Company’s technology leadership, intellectual property position, and the Company’s more than 20 years of experience working closely with leading OLED display manufacturers are some of the competitive advantages that should enable the Company to continue to share in the revenues from OLED displays and lighting products as they gain wider acceptance.

The Company’s primary business strategy is to (1) develop new OLED materials and sell existing and any new materials to product manufacturers of products for display applications, such as mobile phones, televisions, wearables, tablets, portable media devices, notebook computers, personal computers and automotive applications, and specialty and general lighting products; and (2) further develop and license the Company’s proprietary OLED technologies to those manufacturers. The Company has established a significant portfolio of proprietary OLED technologies and materials, primarily through internal research and development efforts and acquisitions of patents and patent applications, as well as maintaining long-standing, and establishing new relationships with world-class universities, research institutions and strategic manufacturing partnerships. The Company currently owns, exclusively licenses or has the sole right to sublicense more than 5,000 patents issued and pending worldwide.

The Company manufactures and sells its proprietary OLED materials to customers for evaluation and use in commercial OLED products. The Company also enters into agreements with manufacturers of OLED display and lighting products under which it grants them licenses to practice under the Company’s patents and to use the Company's proprietary know-how. At the same time, the Company works with these and other companies that are evaluating the Company's OLED technologies and materials for possible use in commercial OLED display and lighting products.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information

In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of September 30, 2021 and results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020. While management believes that the disclosures presented are adequate to make the information not misleading, these unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the Company’s latest year-end Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The results of the Company’s operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for the full year.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Universal Display Corporation and its wholly owned subsidiaries, UDC, Inc., UDC Ireland Limited (UDC Ireland), Universal Display Corporation Hong Kong, Limited, Universal Display Corporation Korea, Y.H., Universal Display Corporation Japan GK, Universal Display Corporation China, Ltd., Adesis, Inc. (Adesis), UDC Ventures LLC, OVJP Corporation (OVJP Corp) and OLED Material Manufacturing Limited (OMM). All intercompany transactions and accounts have been eliminated.

In November 2020, a wholly-owned subsidiary of UDC Ireland, OMM, was formed as an Ireland limited company. Based out of Shannon, Ireland, OMM was formed to increase the Company’s production capacity to meet market demand and diversify the manufacturing base due to evolving industry requirements.

7

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates made are principally in the areas of revenue recognition including estimates of material unit sales and royalties, the useful life of acquired intangibles, lease liabilities, right-of-use assets, the use and recoverability of inventories, intangibles, investments and income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Inventories

Inventories consist of raw materials, work-in-process and finished goods, including inventory consigned to customers, and are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventory valuation and firm committed purchase order assessments are performed on a quarterly basis and those items that are identified to be obsolete or in excess of forecasted usage are written down to their estimated realizable value. Estimates of realizable value are based upon management’s analyses and assumptions, including, but not limited to, forecasted sales levels by product, expected product lifecycle, product development plans and future demand requirements. A 12-month rolling forecast based on factors, including, but not limited to, production cycles, anticipated product orders, marketing forecasts, backlog, and shipment activities is used in the inventory analysis. If market conditions are less favorable than forecasts or actual demand from customers is lower than estimates, additional inventory write-downs may be required. If demand is higher than expected, inventories that had previously been written down may be sold.

Fair Value of Financial Instruments

The carrying values of accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value in the accompanying Consolidated Financial Statements due to the short-term nature of those instruments. The Company’s other financial instruments, which include cash equivalents, investments, retirement plan benefit liability and other liabilities are carried at fair value.

Minority Equity Investments

The Company accounts for minority equity investments in companies that are not accounted for under the equity method as equity securities without readily determinable fair values. The fair value of these securities is based on original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Under this method, the share of income or loss of such companies is not included in the Consolidated Statements of Income. The carrying value of these investments is included in investments on the Consolidated Balance Sheets.

The Company’s policy is to recognize an impairment in the value of its minority equity investments when clear evidence of an impairment exists. Factors considered in the assessment include a significant adverse change in the regulatory, economic, or technological environment, the completion of new equity financing that may indicate a decrease in value, the failure to complete new equity financing arrangements after seeking to raise additional funds, or the commencement of proceedings under which the assets of the business may be placed in receivership or liquidated to satisfy the claims of debt and equity stakeholders.

Leases

The Company is a lessee in operating leases primarily incurred to facilitate the expansion of manufacturing, research and development, and selling, general and administrative activities. At contract inception, the Company determines if an arrangement is or contains a lease, and if so recognizes a right-of-use asset and lease liability at the lease commencement date. For operating leases, the lease liability is measured at the present value of the unpaid lease payments at the lease commencement date, whereas for finance leases, the lease liability is initially measured at the present value of the unpaid lease payments and subsequently measured at amortized cost using the interest method. Operating lease right-of-use assets are included in other assets on the Consolidated Balance Sheets. The short-term portion of operating lease liabilities is included in other current liabilities on the Consolidated Balance Sheets and the long-term portion is included in other liabilities on the Consolidated Balance Sheets. As of September 30, 2021, the Company had no leases that qualified as financing arrangements.

Key estimates and judgments include how the Company determines the discount rate used to discount the unpaid lease payments to present value and the lease term. The Company monitors for events or changes in circumstances that could potentially require recognizing an impairment loss.

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Revenue Recognition and Deferred Revenue

Material sales relate to the Company’s sale of its OLED materials for incorporation into its customers’ commercial OLED products or for their OLED development and evaluation activities. Revenue associated with material sales is generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties. Revenue may be recognized after control of the material passes in the event the transaction price includes variable consideration. For example, a customer may be provided an extended opportunity to stock materials prior to use in mass production and given a general right of return not conditioned on breaches of warranties associated with the specific product. 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 the Company’s OLED technologies are conveyed to the customer through technology license agreements and material supply agreements. The Company believes that the licenses and materials sold under these combined agreements are not distinct from each other for financial reporting purposes and as such, are accounted for as a single performance obligation. Accordingly, total contract consideration is estimated and recognized over the contract term based on material units sold at the estimated per unit fee over the life of the contract. Total contract consideration is allocated to material sales and royalty and licensing fees on the Consolidated Statements of Income based on contract pricing.

Various estimates are relied upon to recognize revenue. The Company estimates total material units to be purchased by its customers over the contract term based on historical trends, industry estimates and its forecast process. Management uses the expected value method to estimate the material per unit fee. Additionally, management estimates the total sales-based royalties based on the estimated net sales revenue of its customers over the contract term.

Contract research services revenue is revenue earned by Adesis by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis. These services range from intermediates for structure-activity relationship studies, reference agents and building blocks for combinatorial synthesis, re-synthesis of key intermediates, specialty organic chemistry needs, and selective toll manufacturing. These services are provided to third-party pharmaceutical and life sciences firms and other technology firms at fixed costs or on an annual contract basis. Revenue is recognized as services are performed with billing schedules and payment terms negotiated on a contract-by-contract basis. Payments received in excess of revenue recognized are recorded as deferred revenue. In other cases, services may be provided and revenue is recognized before the customer is invoiced. In these cases, revenue recognized will exceed amounts billed and the difference, representing amounts which are currently unbillable to the customer pursuant to contractual terms, is recorded as an unbilled receivable.

Technology development and support revenue is revenue earned from development and technology evaluation agreements and commercialization assistance fees, along with, to a minimal extent, government contracts. Relating to the Company’s government contracts, the Company may receive reimbursements by government entities for all or a portion of the research and development costs the Company incurs. Revenues are recognized as services are performed, proportionally as research and development costs are incurred, or as defined milestones are achieved. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

In 2018, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC). This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2018 and lasts through the end of 2022 with an additional two-year extension option. Under this agreement, the Company is being paid a license fee, payable in quarterly installments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets.

At the same time the Company entered into the current commercial license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC. Under the supplemental material purchase agreement, SDC agrees to purchase from the Company a minimum amount of phosphorescent emitter materials for use in the manufacture of licensed products. This minimum commitment is subject to SDC’s requirements for phosphorescent emitter materials and the Company’s ability to meet these requirements over the term of the supplemental agreement.

In 2015, the Company entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display) which were effective as of January 1, 2015 and superseded the existing 2007 commercial supply agreement between the parties. The terms of the agreements were set to expire by the end of 2022. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under the Company's patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The agreements include customary provisions relating to warranties, indemnities, confidentiality, assignability and business terms. 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

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revenue to be generated under the patent license agreement. The Company generates revenue under these agreements that are predominantly tied to LG Display’s sales of OLED licensed products. The OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials.

In 2021, the Company entered into amendments of the OLED patent license agreement and the OLED commercial supply agreement with LG Display, which were effective as of January 1, 2021. The amended agreements included a term extension and are set to expire by the end of 2025.

In 2016, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, the Company has granted Tianma non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, the parties extended the terms of both the patent license and material purchase agreements for an additional multi-year-term.

In 2017, the Company entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, the Company has granted BOE non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company supplies phosphorescent OLED materials to BOE for use in its licensed products.

In 2018, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, the Company granted certain of Visionox’s affiliates a non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Visionox for use in its licensed products. On April 22, 2021, the Company announced that it had extended 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, the Company entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, the Company entered into long-term, multi-year agreements with CSOT. Under these agreements, the Company has granted CSOT non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company also supplies phosphorescent OLED materials to CSOT for use in its licensed products.

All material sales transactions that are not variable consideration transactions are billed and due within 90 days and substantially all are transacted in U.S. dollars.

Cost of Sales

Cost of sales consists of labor and material costs associated with the production of materials processed at the Company's manufacturing partners and at the Company's internal manufacturing processing facility. The Company’s portion of cost of sales also includes depreciation of manufacturing equipment, as well as manufacturing overhead costs and inventory adjustments for excess and obsolete inventory.

Research and Development

Expenditures for research and development are charged to expense as incurred.

Patent Costs

Costs associated with patent applications, patent prosecution, patent defense and the maintenance of patents are charged to expense as incurred. Costs to successfully defend a challenge to a patent are capitalized to the extent of an evident increase in the value of the patent. Costs that relate to an unsuccessful outcome are charged to expense.

Amortization of Acquired Technology

Amortization costs primarily relate to technology acquired from BASF and Fujifilm. These acquisitions were completed in the years ended December 31, 2016 and 2012, respectively. Acquisition costs are being amortized over a period of 10 years for both the BASF and Fujifilm patents.

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Amortization of Other Intangible Assets

Other intangible assets primarily relate to the Adesis acquisition and are being amortized over a period of 10 to 15 years. See Note 7 for further discussion.

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

The Company’s reporting currency is the U.S. dollar. The functional currency for the UDC Ireland subsidiary is also the U.S. dollar and the functional currency for the OMM subsidiary and each of the Company's Asia-Pacific foreign subsidiaries is its local currency. The Company translates the amounts included in the Consolidated Statements of Income from OMM and its Asia-Pacific foreign subsidiaries into U.S. dollars at weighted-average exchange rates, which the Company believes are representative of the actual exchange rates on the dates of the transactions. The Company's foreign subsidiaries' assets and liabilities are translated into U.S. dollars from the local currency at the actual exchange rates as of the end of each reporting date, and the Company records the resulting foreign exchange translation adjustments in the Consolidated Balance Sheets as a component of accumulated other comprehensive loss. The overall effect of the translation of foreign currency and foreign currency transactions to date has been insignificant.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties, if any, related to unrecognized tax benefits as a component of tax expense.

Share-Based Payment Awards

The Company recognizes in the Consolidated Statements of Income the grant-date fair value of equity-based awards such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units and performance unit awards issued to employees and directors.

The grant-date fair value of stock awards is based on the closing price of the stock on the date of grant. The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of forfeitures. The Company issues new shares upon the respective grant, exercise or vesting of the share-based payment awards, as applicable.

Performance unit awards are subject to either a performance-based or market-based vesting requirement. For performance-based vesting, the grant-date fair value of the award, based on fair value of the Company's common stock, is recognized over the service period based on an assessment of the likelihood that the applicable performance goals will be achieved and compensation expense is periodically adjusted based on actual and expected performance. Compensation expense for performance unit awards with market-based vesting is calculated based on the estimated fair value as of the grant date utilizing a Monte Carlo simulation model and is recognized over the service period on a straight-line basis. 

3. CASH, CASH EQUIVALENTS AND INVESTMENTS:

The Company’s portfolio of fixed income securities consists of term bank certificates of deposit, U.S. Government bonds, corporate bonds and convertible notes. The Company considers all highly liquid debt instruments purchased with an original maturity (maturity at the purchase date) of three months or less to be cash equivalents. The Company classifies its remaining debt security

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investments as available-for-sale. These debt securities are carried at fair market value, with unrealized gains and losses reported in shareholders’ equity. Gains or losses on securities sold are based on the specific identification method.

Cash and Cash Equivalents

The following table provides details regarding the Company’s portfolio of cash and cash equivalents (in thousands):

	Amortized		Unrealized					Aggregate Fair
Cash and Cash Equivalents Classification	Cost		Gains		(Losses)			Market Value
September 30, 2021
Cash accounts in banking institutions	$	222,833	$	—	$	—		$	222,833
Money market accounts		17,339		—		—			17,339
U.S. Government bonds		294,988		—		(3	)		294,985
	$	535,160	$	—	$	(3	)	$	535,157
December 31, 2020
Cash accounts in banking institutions	$	163,779	$	—	$	—		$	163,779
Money market accounts		17,261		—		—			17,261
U.S. Government bonds		448,970		6		(4	)		448,972
	$	630,010	$	6	$	(4	)	$	630,012

Short-term Investments

The following table provides details regarding the Company’s portfolio of short-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Short-term Investments Classification	Cost		Gains		(Losses)			Market Value
September 30, 2021
Certificates of deposit	$	480	$	—	$	—		$	480
Corporate bonds		253,279		43		(16	)		253,306
	$	253,759	$	43	$	(16	)	$	253,786
December 31, 2020
U.S. Government bonds	$	99,929	$	67	$	—		$	99,996
	$	99,929	$	67	$	—		$	99,996

Minority Investments and Convertible Notes

The Company’s portfolio of minority investments and convertible notes consist of investments in privately held early-stage companies primarily motivated to gain early access to new technology and are passive in nature in that the Company does not obtain representation on the board of directors of the companies in which it invests. Minority investments and convertible notes are included in investments on the Consolidated Balance Sheets. As of September 30, 2021, the Company had two minority investments with a total carrying value of $8.0 million accounted for as equity securities without readily determinable fair values. As of September 30, 2021, the Company had one convertible note investment with a fair value of $500,000 accounted for as an available-for-sale debt security with a level 3 fair value measurement.

4. FAIR VALUE MEASUREMENTS:

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2021 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of September 30,  2021		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	312,324	$	312,324	$	—	$	—
Short-term investments		253,786		253,786		—		—
Convertible notes		500		—		—		500

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The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2020 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of December 31,  2020		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	466,233	$	466,233	$	—	$	—
Short-term investments		99,996		99,996		—		—

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification is determined based on the lowest level input that is significant to the fair value measurement.

Changes in fair value of the debt investments are recorded as unrealized gains and losses in accumulated other comprehensive loss on the Consolidated Balance Sheets and any credit losses on debt investments are recorded as an allowance for credit losses with an offset recognized in other income, net on the Consolidated Statements of Income. There were no credit losses on debt investments as of September 30, 2021 or December 31, 2020.

5. INVENTORY:

Inventory consisted of the following (in thousands):

	September 30, 2021		December 31, 2020
Raw materials	$	73,100	$	46,843
Work-in-process		11,411		9,904
Finished goods		36,974		34,844
Inventory	$	121,485	$	91,591

The Company recorded an increase in inventory reserve of $1.0 million and $198,000 for the three months ended September 30, 2021 and 2020, respectively, and $2.1 million and $808,000 for the nine months ended September 30, 2021 and 2020, respectively, due to excess inventory levels in certain products.

6. PROPERTY AND EQUIPMENT:

Property and equipment, net consist of the following (in thousands):

	September 30, 2021			December 31, 2020
Land	$	2,642		$	2,642
Building and improvements		74,983			53,568
Office and lab equipment		101,344			85,881
Furniture, fixtures and computer related assets		15,826			8,921
Construction-in-progress		11,155			23,594
		205,950			174,606
Less: Accumulated depreciation		(86,962	)		(72,493	)
Property and equipment, net	$	118,988		$	102,113

Depreciation expense was $5.3 million and $3.9 million for the three months ended September 30, 2021 and 2020, respectively, and $14.5 million and $11.1 million for the nine months ended September 30, 2021 and 2020, respectively.

7. GOODWILL AND INTANGIBLE ASSETS:

The Company monitors the recoverability of goodwill annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Purchased intangible assets subject to amortization consist of acquired technology and other intangible assets that include trade names, customer relationships and developed intellectual property (IP) processes.

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Acquired Technology

Acquired technology consists of acquired license rights for patents and know-how obtained from PD-LD, Inc., Motorola, BASF SE (BASF) and Fujifilm. These intangible assets consist of the following (in thousands):

	September 30, 2021			December 31, 2020
PD-LD, Inc.	$	1,481		$	1,481
Motorola		15,909			15,909
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		462			462
		223,303			223,303
Less: Accumulated amortization		(168,489	)		(153,050	)
Acquired technology, net	$	54,814		$	70,253

Amortization expense related to acquired technology was $5.1 million for both three-month periods ended September 30, 2021 and 2020, and $15.4 million for both nine-month periods ended September 30, 2021 and 2020. Amortization expense is included in amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $5.1 million for the three months ending December 31, 2021, $15.8 million in the year ending December 31, 2022, $9.7 million in the year ending December 31, 2023, $9.6 million in the years ending December 31, 2024 and 2025 and $5.0 million in total thereafter.

Fujifilm Patent Acquisition

On July 23, 2012, the Company entered into a Patent Sale Agreement with Fujifilm. Under the agreement, Fujifilm sold more than 1,200 OLED-related patents and patent applications in exchange for a cash payment of $105.0 million, plus costs incurred in connection with the purchase. The agreement contains customary representations and warranties and covenants, including respective covenants not to sue by both parties thereto. The agreement permitted the Company to assign all of its rights and obligations under the agreement to its affiliates, and the Company assigned, prior to the consummation of the transactions contemplated by the agreement, its rights and obligations to UDC Ireland, a wholly-owned subsidiary of the Company formed under the laws of the Republic of Ireland. The transactions contemplated by the agreement were consummated on July 26, 2012. The Company recorded the $105.0 million plus $4.5 million of purchase costs as acquired technology, which is being amortized over a period of 10 years.

BASF Patent Acquisition

On June 28, 2016, UDC Ireland entered into and consummated an IP Transfer Agreement with BASF. Under the IP Transfer Agreement, BASF sold to UDC Ireland all of its rights, title and interest to certain of its owned and co-owned intellectual property rights relating to the composition of, development, manufacture and use of OLED materials, including OLED lighting and display stack technology, as well as certain tangible assets. The intellectual property includes knowhow and more than 500 issued and pending patents in the area of phosphorescent materials and technologies. These assets were acquired in exchange for a cash payment of €86.8 million ($95.8 million). In addition, UDC Ireland also took on certain rights and obligations under three joint research and development agreements to which BASF was a party. The IP Transfer Agreement also contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of €86.8 million ($95.8 million) and acquisition costs incurred of $217,000 as acquired technology, which is being amortized over a period of 10 years.

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Other Intangible Assets

As a result of the Adesis acquisition in June 2016, the Company recorded $16.8 million of other intangible assets, including $10.5 million assigned to customer relationships with a weighted average life of 11.5 years, $4.8 million of internally developed IP, processes and recipes with a weighted average life of 15 years, and $1.5 million assigned to trade name and trademarks with a weighted average life of 10 years.

At September 30, 2021, these other intangible assets consist of the following (in thousands):

	September 30, 2021
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(4,743	)	$	5,777
Developed IP, processes and recipes		4,820		(1,668	)		3,152
Trade name/Trademarks		1,500		(780	)		720
Other		394		(15	)		379
Total identifiable other intangible assets	$	17,234	$	(7,206	)	$	10,028

Amortization expense related to other intangible assets was $358,000 and $348,000 for the three months ended September 30, 2021 and 2020, respectively, and $1.1 million and $1.0 million for the nine months ended September 30, 2021 and 2020, respectively. Amortization expense is included in amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $358,000 for the three months ending December 31, 2021, $1.4 million for each of the next four fiscal years (2022 – 2025) and $4.0 million in total thereafter.

8. LEASES:

The Company has entered into operating leases to facilitate the expansion of its manufacturing, research and development, and selling, general and administrative activities. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when those events are reasonably certain to occur. The interest rate implicit in lease contracts is typically not readily determinable and as such the Company uses the appropriate incremental borrowing rate based on information available at the lease commencement date in determining the present value of the lease payments. Current lease agreements do not contain any residual value guarantees or material restrictive covenants. As of September 30, 2021, the Company did not have any finance leases and no additional operating leases that have not yet commenced.

The following table presents the Company’s operating lease cost and supplemental cash flow information related to the Company’s operating leases (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating lease cost	$	1,163	$	537	$	2,536	$	1,609
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	16,103	$	—	$	26,174	$	—

The increase in right-of-use assets obtained in exchange for lease obligations for the three and nine months ended September 30, 2021 was primarily due to the commencement of the operating lease related to expansion of the Adesis research facilities in Wilmington, Delaware.

The following table presents the Company’s operating right-of-use assets and liabilities (in thousands):

	September 30, 2021		December 31, 2020
Right-of-use assets	$	31,627	$	8,750
Short-term lease liabilities		3,111		1,871
Long-term lease liabilities		28,516		6,879

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The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities:

	September 30, 2021
Weighted average remaining lease term (in years)		8.8
Weighted average discount rate		2.8	%

As of September 30, 2021, current operating leases had remaining terms between eleven months and ten years with options to extend the lease terms.

Undiscounted future minimum lease payments as of September 30, 2021, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows (in thousands):

	Maturities of Operating Lease Liabilities
2021 (1)	$	771
2022		4,111
2023		4,032
2024		3,980
2025		4,022
Thereafter		18,656
Total lease payments		35,572
Less: Imputed interest		(3,945	)
Present value of lease payments	$	31,627

(1)Scheduled maturities of lease liabilities represent the period from October 1, 2021 to December 31, 2021.

9. RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON UNIVERSITY, UNIVERSITY OF SOUTHERN CALIFORNIA AND THE UNIVERSITY OF MICHIGAN:

The Company has long-standing relationships with Princeton University (Princeton) and the University of Southern California (USC), dating back to 1994, for the conduct of research relating to the Company’s OLED and other organic thin-film technologies and materials. This research had been performed at Princeton under the direction of Professor Stephen R. Forrest and at USC under the direction of Professor Mark E. Thompson.

Under an Amended License Agreement entered into in 1997 by the Company, Princeton and USC (as amended, the 1997 Amended License Agreement), Princeton and USC granted the Company worldwide, exclusive license rights, with rights to sublicense, to make, have made, use, lease and/or sell products and to practice processes based on patent applications and issued patents arising out of research performed by Princeton and USC for the Company. Under the 1997 Amended License Agreement, the Company pays Princeton royalties of 3% of the net sales price for licensed products it sells or 3% of the revenues the Company receives from its sublicensees for their sale of licensed products. The Company recorded royalty expense in connection with this agreement of $258,000 and $3.3 million for the three months ended September 30, 2021 and 2020, respectively, and $519,000 and $8.2 million for the nine months ended September 30, 2021 and 2020, respectively. The decline in the royalty expense was primarily due to the expiration of patents relating to the licensed products, as specified in the 1997 Amended License Agreement.

In 2006, Professor Forrest transferred from Princeton to the University of Michigan (Michigan) and the Company amended the 1997 Amended License Agreement to include Michigan as a party to that agreement. Also in connection with the transfer, the Company entered into a sponsored research agreement with USC under which the Company continues to fund organic electronics research being conducted by Professors Forrest and Thompson (the 2006 Research Agreement). 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.

The Company makes payments under the 2006 Research Agreement to USC on a quarterly basis as actual expenses are incurred. As of September 30, 2021, the Company was obligated to pay USC up to $4.5 million for work to be performed during the remaining extended term. The Company recorded research and development expense in connection with work performed under the 2006 Research Agreement of $384,000 and $309,000 for the three months ended September 30, 2021 and 2020, respectively, and $1.1 million and $890,000 for the nine months ended September 30, 2021 and 2020, respectively.

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10. EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS:

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG Industries, Inc. (PPG) (the New OLED Materials Agreement), which replaced the original OLED Materials Agreement with PPG effective as of October 1, 2011. The term of the New OLED Materials Agreement ran through December 31, 2015 and is automatically renewed for additional one-year terms, unless terminated by the Company by providing prior notice of one year or terminated by PPG by providing prior notice of two years. The agreement was automatically renewed through December 31, 2021. The New OLED Materials Agreement contains provisions that are substantially similar to those of the original OLED Materials Agreement. Under the New OLED Materials Agreement, PPG continues to assist the Company in developing its proprietary OLED materials and supplying the Company with those materials for evaluation purposes and for resale to its customers.

Under the New OLED Materials Agreement, the Company compensates PPG on a cost-plus basis for the services provided during each calendar quarter. The Company is required to pay for some of these services in all cash. Up to 50% of the remaining services are payable, at the Company’s sole discretion, in cash or shares of the Company’s common stock, with the balance payable in cash. The actual number of shares of common stock issuable to PPG is determined based on the average closing price for the Company’s common stock during a specified number of days prior to the end of each calendar half-year period ending on March 31 and September 30. If, however, this average closing price is less than $20.00, the Company is required to compensate PPG in cash. No shares were issued for services to PPG for the three or nine months ended September 30, 2021 or 2020.

The Company is also required to reimburse PPG for raw materials used for research and development. The Company records the purchases of these raw materials as a current asset until such materials are used for research and development efforts.

On February 23, 2021, the Company entered into an amendment to the New OLED Materials Agreement specifying operation and maintenance services that will be provided by PPG affiliate, PPG SCM Ireland Limited, to OMM, at the new manufacturing site in Shannon, Ireland, currently being leased by OMM for the production of OLED materials. Facility improvements and regulatory approvals are expected to be completed in the next 12 months and operations are scheduled to commence by mid-year 2022. As with the initial New OLED Materials Agreement, the Company will compensate PPG on a cost-plus basis for the services provided at the Shannon manufacturing facility.

The Company recorded research and development expense of $789,000 and $821,000 for the three months ended September 30, 2021 and 2020, respectively, and $3.0 million and $2.1 million for the nine months ended September 30, 2021 and 2020, respectively, in relation to the cash portion of the reimbursement of expenses and work performed by PPG, excluding amounts paid for commercial chemicals.

11. SHAREHOLDERS’ EQUITY:

Preferred Stock

The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to 5,000,000 shares of $0.01 par value preferred stock with designations, rights and preferences determined from time-to-time by the Company’s Board of Directors. Accordingly, the Company’s Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of shareholders of the Company’s common stock.

In 1995, the Company issued 200,000 shares of Series A Nonconvertible Preferred Stock (Series A) to American Biomimetics Corporation (ABC) pursuant to a certain Technology Transfer Agreement between the Company and ABC. The Series A shares have a liquidation value of $7.50 per share. Series A shareholders, as a single class, have the right to elect two members of the Company’s Board of Directors. This right has never been exercised. Holders of the Series A shares are entitled to one vote per share on matters which shareholders are generally entitled to vote. The Series A shareholders are not entitled to any dividends.

As of September 30, 2021, the Company had issued 200,000 shares of preferred stock, all of which were outstanding.

Common Stock

The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to 200,000,000 shares of $0.01 par value common stock. Each share of the Company’s common stock entitles the holder to one vote on all matters to be voted upon by the shareholders.

As of September 30, 2021, the Company had issued 49,060,909 shares of common stock, of which 47,695,261 were outstanding. During the three and nine months ended September 30, 2021 and 2020, the Company repurchased no shares of common stock.

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Scientific Advisory Board Awards

During the nine months ended September 30, 2021 and 2020, the Company granted a total of 1,400 and 1,926 shares, respectively, of fully vested common stock to non-employee members of the Scientific Advisory Board for services performed in 2020 and 2019, respectively. The fair value of shares issued to members of the Scientific Advisory Board was $300,000 for both nine-month periods.

Dividends

During the three months ended September 30, 2021, the Company declared and paid cash dividends of $0.20 per share, or $9.5 million, and during the nine months ended September 30, 2021, the Company declared and paid cash dividends of $0.60 per share, or $28.5 million, on the Company’s outstanding common stock.

On November 1, 2021, the Company’s Board of Directors declared a fourth quarter dividend of $0.20 per share to be paid on December 30, 2021 to all shareholders of record of the Company’s common stock as of the close of business on December 16, 2021. All future dividends will be subject to the approval of the Company’s Board of Directors.

12. ACCUMULATED OTHER COMPREHENSIVE LOSS:

Amounts related to the changes in accumulated other comprehensive loss were as follows (in thousands):

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2020, net of tax	$	91		$	(36,075	)	$	(35	)	$	(36,019	)
Other comprehensive loss    before reclassification		(35	)		—			(224	)		(259	)
Reclassification to net income (1)		—			3,522			—			3,522		Selling, general and administrative, research and development and cost of sales
Change during period		(35	)		3,522			(224	)		3,263
Balance September 30, 2021, net of tax	$	56		$	(32,553	)	$	(259	)	$	(32,756	)

	Unrealized Gain (Loss) on Available-for-Sale Securities		Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2019, net of tax	$	191	$	(17,167	)	$	(21	)	$	(16,997	)
Other comprehensive gain (loss)    before reclassification		342		—			(29	)		313
Reclassification to net income (1)		—		1,917			—			1,917		Selling, general and administrative, research and development and cost of sales
Change during period		342		1,917			(29	)		2,230
Balance September 30, 2020, net of tax	$	533	$	(15,250	)	$	(50	)	$	(14,767	)

(1)The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $3.5 million and $1.9 million for the nine months ended September 30, 2021 and 2020, respectively.

(2)Refer to Note 14: Supplemental Executive Retirement Plan.

13. STOCK-BASED COMPENSATION:

Equity Compensation Plan

The Equity Compensation Plan provides for the granting of incentive and nonqualified stock options, shares of common stock, stock appreciation rights and performance units to employees, directors and consultants of the Company. Stock options are exercisable over periods determined by the Company’s Human Capital Committee, but for no longer than 10 years from the grant date. Through September 30, 2021, the Company’s shareholders have approved increases in the number of shares reserved for issuance under the Equity Compensation Plan to 10,500,000, and have extended the term of the plan through 2024. As of September 30, 2021, there were 1,794,738 shares that remained available to be granted under the Equity Compensation Plan.

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Restricted Stock Awards and Units

The Company has issued restricted stock awards and units to employees and non-employees with vesting terms of one to six years. The fair value is equal to the market price of the Company’s common stock on the date of grant for awards granted to employees and equal to the market price at the end of the reporting period for unvested non-employee awards or upon the date of vesting for vested non-employee awards. Expense for restricted stock awards and units is amortized ratably over the vesting period for the awards issued to employees and using a graded vesting method for the awards issued to non-employees.

During the nine months ended September 30, 2021, the Company granted 132,473 shares of restricted stock awards and restricted stock units to employees and non-employees, which had a total fair value of $28.3 million on the respective dates of grant, and will vest over three to five years from the date of grant, provided that the grantee is still an employee of the Company or is still providing services to the Company on the applicable vesting date.

For the three months ended September 30, 2021 and 2020, the Company recorded, as compensation charges related to all restricted stock awards and units granted to employees and non-employees, selling, general and administrative expense of $3.8 million and $3.4 million, respectively, research and development expense of $1.3 million and $1.2 million, respectively, and cost of sales of $598,000 and $526,000, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded, as compensation charges related to all restricted stock awards and units granted to employees and non-employees, selling, general and administrative expense of $11.4 million and $10.4 million, respectively, research and development expense of $3.9 million and $3.2 million, respectively, and cost of sales of $1.9 million and $1.4 million, respectively.

In connection with the vesting of restricted stock awards and units during the three months ended September 30, 2021 and 2020, 8,525 and 7,199 shares, respectively, with aggregate fair values of $1.9 million and $1.1 million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows. For the nine months ended September 30, 2021 and 2020, 69,352 and 86,005 shares, respectively, with aggregate fair values of $14.0 million and $12.4 million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

For the three months ended September 30, 2021 and 2020, the Company recorded as compensation charges related to all restricted stock units granted to non-employee members of the Scientific Advisory Board, whose unvested shares are marked to market each reporting period, research and development expense of $48,000 and $123,000, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded as compensation charges related to all restricted stock units granted to non-employee members of the Scientific Advisory Board, whose unvested shares are marked to market each reporting period, research and development expense of $160,000 and $235,000, respectively.

The Company has granted restricted stock units to non-employee members of the Board of Directors with quarterly vesting over a period of approximately one year. The fair value is equal to the market price of the Company's common stock on the date of grant. The restricted stock units are issued and expense is recognized ratably over the vesting period. For the three months September 30, 2021 and 2020, the Company recorded compensation charges for services performed, related to all restricted stock units granted to non-employee members of the Board of Directors, selling, general and administrative expense of $300,000 and $301,000, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded compensation charges for services performed, related to all restricted stock units granted to non-employee members of the Board of Directors, selling, general and administrative expense of $891,000 and $897,000, respectively. In connection with the vesting of the restricted stock, the Company issued to non-employee members of the Board of Directors 4,062 and 4,842 shares, respectively, during the nine months ended September 30, 2021 and 2020.

Performance Unit Awards

Each performance unit award is subject to both a performance-vesting requirement (either performance-based or market-based) and a service-vesting requirement. The performance-based vesting requirement is tied to the Company's cumulative revenue growth compared to the cumulative revenue growth of companies comprising the Nasdaq Electronics Components Index, as measured over a specific performance period. The market-based vesting requirement is tied to the Company's total shareholder return relative to the total shareholder return of companies comprising the Nasdaq Electronics Components Index, as measured over a specific performance period. The maximum number of performance units that may vest based on performance is two times the shares granted. Further, if the Company's total shareholder return is negative, the performance units may not vest at all.

During the nine months ended September 30, 2021, the Company granted 74,086 performance units, of which 39,291 units are subject to performance-based vesting requirements and 34,795 units are subject to market-based vesting requirements, and which will vest over the terms described below. The grant date fair value of the performance unit awards granted was $16.5 million for the nine

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months ended September 30, 2021, as determined by the Company’s common stock on date of grant for the units with performance-based vesting and a Monte-Carlo simulation for the units with market-based vesting.

For the three months ended September 30, 2021 and 2020, the Company recorded selling, general and administrative expense of $1.8 million and $1.2 million, respectively, research and development expense of $476,000 and $323,000, respectively, and cost of sales of $292,000 and $196,000, respectively, related to performance units. For the nine months ended September 30, 2021 and 2020, the Company recorded selling, general and administrative expense of $3.8 million and $3.2 million, respectively, research and development expense of $1.0 million and $826,000, respectively, and cost of sales of $624,000 and $491,000, respectively, related to performance units.

In connection with the vesting of performance units during the nine months ended September 30, 2021 and 2020, 3,881 and 12,877 shares, respectively, with an aggregate fair value of $875,000 and $1.9 million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

Employee Stock Purchase Plan

On April 7, 2009, the Board of Directors of the Company adopted an Employee Stock Purchase Plan (ESPP). The ESPP was approved by the Company’s shareholders and became effective on June 25, 2009. The Company has reserved 1,000,000 shares of common stock for issuance under the ESPP. Unless terminated by the Board of Directors, the ESPP will expire when all reserved shares have been issued.

Eligible employees may elect to contribute to the ESPP through payroll deductions during consecutive three-month purchase periods, the first of which began on July 1, 2009. Each employee who elects to participate will be deemed to have been granted an option to purchase shares of the Company’s common stock on the first day of the purchase period. Unless the employee opts out during the purchase period, the option will automatically be exercised on the last day of the period, which is the purchase date, based on the employee’s accumulated contributions to the ESPP. The purchase price will equal 85% of the lesser of the closing price per share of common stock on the first day of the period or the last business day of the period.

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

During the nine months ended September 30, 2021 and 2020, the Company issued 6,508 and 7,702 shares, respectively, of its common stock under the ESPP, resulting in proceeds of $1.1 million and $869,000, respectively.

For the three months ended September 30, 2021 and 2020, the Company recorded charges of $20,000 and $21,000, respectively, to selling, general and administrative expense, $46,000 and $34,000, respectively, to research and development expense, and $25,000 and $29,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature. For the nine months ended September 30, 2021 and 2020, the Company recorded charges of $78,000 and $81,000, respectively, to selling, general and administrative expense, $140,000 and $107,000, respectively, to research and development expense, and $86,000 and $85,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature.

14. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN:

On March 18, 2010, the Human Capital Committee and the Board of Directors of the Company approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP). The SERP is currently unfunded and includes salary and bonus as part of the plan. The purpose of the SERP is to provide certain of the Company’s key employees with supplemental pension benefits following a cessation of their employment and to encourage their continued employment with the Company. As of September 30, 2021, there were seven participants in the SERP.

The Company records amounts relating to the SERP based on calculations that incorporate various actuarial and other assumptions, including discount rates, rate of compensation increases, retirement dates and life expectancies. The net periodic costs are recognized as employees render the services necessary to earn the SERP benefits.

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The components of net periodic pension cost were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Service cost	$	419	$	273	$	1,276	$	819
Interest cost		291		321		874		963
Amortization of prior service cost		275		275		824		824
Amortization of loss		1,234		545		3,702		1,636
Total net periodic benefit cost	$	2,219	$	1,414	$	6,676	$	4,242

15. COMMITMENTS AND CONTINGENCIES:

Commitments

Under the 2006 Research Agreement with USC, the Company is obligated to make certain payments to USC based on work performed by USC under that agreement, and by Michigan under its subcontractor agreement with USC. See Note 9 for further explanation.

Under the terms of the 1997 Amended License Agreement, the Company is required to make minimum royalty payments to Princeton. See Note 9 for further explanation.

The Company has agreements with six executive officers and 12 senior level employees which provide for certain cash and other benefits upon termination of employment of the officer or employee in connection with a change in control of the Company. If a covered person’s employment is terminated in connection with the change in control, the person is entitled to a lump-sum cash payment equal to two times (in the case of the executive officers) or either one or two times (in the case of the senior level employees) the sum of the average annual base salary and bonus of the person and immediate vesting of all stock options and other equity awards that may be outstanding at the date of the change in control, among other items.

In order to manage manufacturing lead times and help ensure adequate material supply, the Company entered into the New OLED Materials Agreement (see Note 10) that allows PPG to procure and produce inventory based upon criteria as defined by the Company. These purchase commitments consist of firm, noncancelable and unconditional commitments. In certain instances, this agreement allows the Company the option to reschedule and adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of September 30, 2021 and December 31, 2020, the Company had purchase commitments for inventory of $28.4 million and $13.7 million, respectively.

Patent Related Challenges and Oppositions

Each major jurisdiction in the world that issues patents provides both third parties and applicants an opportunity to seek a further review of an issued patent. The process for requesting and considering such reviews is specific to the jurisdiction that issued the patent in question, and generally does not provide for claims of monetary damages or a review of specific claims of infringement. The conclusions made by the reviewing administrative bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

The Company believes that opposition proceedings are frequently commenced in the ordinary course of business by third parties who may believe that one or more claims in a patent do not comply with the technical or legal requirements of the specific jurisdiction in which the patent was issued. The Company views these proceedings as reflective of its goal of obtaining the broadest legally permissible patent coverage permitted in each jurisdiction. Once a proceeding is initiated, as a general matter, the issued patent continues to be presumed valid until the jurisdiction’s applicable administrative body issues a final non-appealable decision. Depending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. The Company believes that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings.

Below is a summary of an active proceeding that has been commenced against an issued patent that is exclusively licensed to the Company. The Company does not believe that the confirmation, loss or modification of the Company’s rights in any individual claim or set of claims that are the subject of the following legal proceeding would have a material impact on the Company’s material sales or licensing business or on the Company’s Consolidated Financial Statements, including its Consolidated Statements of Income, as a whole. However, as noted within the description, the following proceeding involves an issued patent that relates to the Company’s fundamental phosphorescent OLED technologies and the Company intends to vigorously defend against claims that, in the Company’s opinion, seek to restrict or reduce the scope of the originally issued claim, which may require the expenditure of significant amounts of the Company’s

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resources. In certain circumstances, when permitted, the Company 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.

Opposition to European Patent No. 1390962

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

The European Patent Office (EPO) combined the oppositions into a single opposition proceeding, and a hearing on this matter was held in December 2015, wherein the EPO Opposition Division revoked the patent claims for alleged insufficiencies under European Patent Convention Article 83. The Company believes the EPO's decision is erroneous and appealed the decision. Subsequent to the filing of the appeal, BASF withdrew its opposition to the patent. On appeal, the Appeals Division withdrew the lower Opposition Division’s rejections with respect to a portion of the original subject matter and remanded the matter to the lower Opposition Division for further consideration. The patent, as originally granted, is deemed valid during the pendency of the opposition process.

At this time, based on its current knowledge, the Company believes that the patent being challenged should be declared valid and that a significant portion of the Company's claims should be upheld. However, the Company cannot make any assurances of this result.

In addition to the above proceeding and now concluded proceedings which have been referenced in prior filings, from time to time, the Company may have other proceedings that are pending which relate to patents the Company acquired as part of the Fujifilm or BASF OLED patent acquisitions or which relate to technologies that are not currently widely used in the marketplace.

16. CONCENTRATION OF RISK:

Revenues and accounts receivable from the Company's largest customers were as follows (in thousands):

	% of Total Revenue for the Three Months Ended September 30,		% of Total Revenue for the  Nine Months Ended September 30,		Accounts Receivable as of
Customer	2021	2020	2021	2020	September 30, 2021
A	50%	41%	46%	38%	$	10,129
B	27%	28%	25%	28%	$	23,786
C	7%	14%	14%	17%	$	33,520

Revenues from outside of North America represented approximately 97% of consolidated revenue for both three-month periods ended September 30, 2021 and 2020, and approximately 97% and 96% for the nine months ended September 30, 2021 and 2020, respectively. Revenues by geographic area are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Country	2021		2020		2021		2020
South Korea	$	95,741	$	66,667	$	250,040	$	167,154
China		41,323		43,569		138,135		101,911
Japan		1,911		2,279		5,227		6,263
Other non-U.S. locations		537		663		2,257		1,475
Total non-U.S. locations		139,512		113,178		395,659		276,803
United States		4,106		3,901		11,619		10,521
Total revenue	$	143,618	$	117,079	$	407,278	$	287,324

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

Long-lived assets (net), by geographic area are as follows (in thousands):

	September 30, 2021		December 31, 2020
United States	$	109,461	$	93,230
Other		9,527		8,883
Total long-lived assets	$	118,988	$	102,113

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Substantially all chemical materials were purchased from one supplier. See Note 10.

17. INCOME TAXES:

The Company is subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was an expense of 20.2% and 18.5% for the three months ended September 30, 2021 and 2020, respectively, and 19.4% and 17.9% for the nine months ended September 30, 2021 and 2020, respectively. The discrepancy between the statutory tax rate and the effective tax rate is primarily due to the benefit of income taxed in foreign jurisdictions partially offset by nondeductible employee compensation and U.S. international tax (GILTI and Subpart F). The Company recorded an income tax expense of $11.7 million and $9.2 million for the three months ended September 30, 2021 and 2020, respectively, and $33.4 million and $17.4 million for the nine months ended September 30, 2021 and 2020, respectively.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the Company's 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 its assessment, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. At this time there is no evidence to release the valuation allowance that has historically been recorded for the New Jersey research and development credit.

On December 27, 2018 the Korean Supreme Court, citing prior cases, held that the applicable law and interpretation of the Korea-U.S. Tax Treaty were clear that only royalties paid with respect to Korean registered patents are Korean source income and subject to Korean withholding tax. Based on this decision, in October 2021, a tax refund request on behalf of Universal Display Corporation was filed with the Korean National Tax Service (KNTS) for over-withheld taxes from 2018 to the second quarter of 2021. The Company has been advised by a leading Korean law firm that there is a more-likely-than-not chance of success. As a result, as of September 30, 2021 and December 31, 2020, the Company has recorded a long-term asset of $49.9 million and $40.1 million, respectively, representing the allocation of withholding to non-Korean patents and a long-term liability of $42.5 million and $32.7 million, respectively, for estimated amounts due to the U.S. Federal government based on the amendment of U.S. tax returns for lower withholding amounts.

With respect to the Korean withholding for the years 2011 through 2017, the Company has decided to continue the U.S.-Korean Mutual Agreement Procedure which was accepted by the KNTS on September 15, 2017. The Company believes that it is more-likely-than-not that a favorable settlement will be reached resulting in a reduction of the Korean withholding taxes previously withheld since 2011. A long-term asset of $36.9 million for estimated refunds due from the Korean government, a long-term payable of $16.2 million for estimated amounts due to the U.S. Federal government based on amendment of prior year U.S. tax returns for the lower withholding amounts, and a reduction of deferred tax assets for foreign tax credits and research and development credits of $20.7 million has been recorded on the September 30, 2021 and December 31, 2020 Consolidated Balance Sheets for this matter.

On October 30, 2018, the KNTS concluded a tax audit with LG Display that included the licensing and royalty payments made to UDC Ireland during the years 2015 through 2017. The KNTS questioned whether UDC Ireland was the beneficial owner of these payments and assessed UDC Ireland a charge of $13.2 million for withholding and interest for the three-year period. UDC Ireland has engaged a leading Korean law firm which believes it is more-likely-than-not that UDC Ireland has beneficial ownership of the underlying intellectual property. Based on this authority, UDC Ireland has paid the assessment which is recorded as a long-term asset as of September 30, 2021 and December 31, 2020. In September 2020, the Korean District Court ruled entirely in the favor of UDC Ireland on the beneficial ownership issue and the ruling was affirmed by the Korean High Court in August 2021. However, the KNTS has decided to appeal the ruling to the Korean Supreme Court.

The Company’s federal income tax returns for the years 2017 to 2020 are open and subject to examination. The State of New Jersey is currently auditing the 2014 to 2017 tax returns of UDC, Inc. The state and foreign tax returns are open for a period of generally three to four years.

The above estimates may change in the future and upon settlement.

18. REVENUE RECOGNITION:

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (Topic 606). The standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows from a contract with a customer.

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For both three-month periods ended September 30, 2021 and 2020, the Company recorded 97% of its revenue from OLED related sales, and 3% from the providing of services through Adesis, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded 97% and 96% of its revenue from OLED related sales, respectively, and 3% and 4% from the providing of services through Adesis, respectively.

Contract Balances

The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):

	As of September 30, 2021
Accounts receivable	$	96,235
Short-term unbilled receivables		27,491
Long-term unbilled receivables		—
Short-term deferred revenue		123,475
Long-term deferred revenue		43,458

Short-term and long-term unbilled receivables are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. The deferred revenue balance at September 30, 2021 will be recognized as materials are shipped to customers over the remaining contract periods. As of September 30, 2021, the Company had $11.8 million of backlog associated with committed purchase orders from its customers for phosphorescent emitter material. These orders are anticipated to be fulfilled within the next 90 days.

Significant changes in the unbilled receivables and deferred liabilities balances for the nine months ended September 30, 2021 and 2020, are as follows (in thousands):

	Nine Months Ended September 30, 2021
	Unbilled Receivables			Deferred Revenue
Balance at December 31, 2020	$	10,429		$	(162,301	)
Revenue recognized that was previously included in deferred revenue, net		—			145,535
Increases due to cash received		—			(160,021	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			9,854
Unbilled receivables recorded, net		24,209
Transferred to receivables from unbilled receivables		(7,147	)		—
Net change		17,062			(4,632	)
Balance at September 30, 2021	$	27,491		$	(166,933	)

	Nine Months Ended September 30, 2020
	Unbilled Receivables		Deferred Revenue
Balance at December 31, 2019	$	1,362	$	(144,862	)
Revenue recognized that was previously included in deferred revenue, net		—		97,556
Increases due to cash received		—		(144,200	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		1,458
Unbilled receivables recorded, net		13,494		—
Net change		13,494		(45,186	)
Balance at September 30, 2020	$	14,856	$	(190,048	)

Unbilled receivables increased by $17.1 million during the nine months ended September 30, 2021 primarily due to a contractual amendment with an existing customer that revised the payment terms of royalty consideration in which the minimum royalty payment amount due is known prior to a fiscal period end, but ancillary supporting billing information is delayed, necessitating postponement of the issuance of the invoice until such ancillary information has been confirmed. As such, payments due the Company are recorded as an unbilled receivable as opposed to accounts receivable until the final customer invoice can be generated. There was no impact on the ASC 606 revenue recognition process which requires periodic updating of estimated total contract consideration which is then allocated based on the total material sales anticipated over the life of the individual contracts.

Cumulative catch-up adjustment arising from changes in estimates of transaction price, net increased $9.9 million during the nine months ended September 30, 2021 as compared to $1.5 million during the nine months ended September 30, 2020. The increase in the cumulative catch-up adjustment arising from changes in estimates of transaction price, net was primarily due to a reduction in the

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forecast of emitters to be procured over the contract life by one of the Company's customers that resulted from a change in their near-term production needs, as well as improved forecasted royalty consideration resulting from higher levels of current and anticipated customer sales of OLED products.

19. NET INCOME PER COMMON SHARE:

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share, which requires earnings per share (EPS) for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and the Company's participating security holders. Under the two-class method, income for the reporting period is allocated between common shareholders and other security holders based on their respective participation rights in undistributed income. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method.

Basic net income per common share is computed by dividing net income allocated to common shareholders by the weighted-average number of shares of common stock outstanding for the period excluding unvested restricted stock units and performance units. Net income allocated to the holders of the Company's unvested restricted stock awards is calculated based on the shareholders proportionate share of weighted average shares of common stock outstanding on an if-converted basis.

For purposes of determining diluted net income per common share, basic net income per share is further adjusted to include the effect of potential dilutive common shares outstanding, including stock options, restricted stock units and performance units, and the impact of shares to be issued under the Employee Stock Purchase Plan.

The following table is a reconciliation of net income and the shares used in calculating basic and diluted net income per common share for the three and nine months ended September 30, 2021 and 2020 (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Numerator:
Net income	$	46,109		$	40,500		$	138,337		$	79,470
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(255	)		(277	)		(857	)		(613	)
Adjusted net income	$	45,854		$	40,223		$	137,480		$	78,857
Denominator:
Weighted average common shares outstanding – Basic		47,291,192			47,227,061			47,286,927			47,182,625
Effect of dilutive shares:
Common stock equivalents arising from stock options and ESPP		400			339			769			1,263
Restricted stock awards and units and performance units		70,983			32,931			67,887			28,772
Weighted average common shares outstanding – Diluted		47,362,575			47,260,331			47,355,583			47,212,660
Net income per common share:
Basic	$	0.97		$	0.85		$	2.91		$	1.67
Diluted	$	0.97		$	0.85		$	2.90		$	1.67

For both three-month and nine-month periods ended September 30, 2021 and 2020, there were no unvested restricted stock awards, restricted stock units, performance unit awards and stock options excluded from the calculation of diluted EPS as their impact would have been antidilutive.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited Consolidated Financial Statements and related notes above.

CAUTIONARY STATEMENT

CONCERNING FORWARD-LOOKING STATEMENTS

This discussion and analysis contains some “forward-looking statements.” Forward-looking statements concern possible or assumed future results of operations, including descriptions of our business strategies and customer relationships. These statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “seek,” “will,” “may” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate in these circumstances.

As you read and consider this discussion and analysis, you should not place undue reliance on any forward-looking statements. You should understand that these statements involve substantial risk and uncertainty and are not guarantees of future performance or results. They depend on many factors that are discussed further in the sections entitled (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2020, as supplemented by disclosures in Item 1A of Part II below. Changes or developments in any of these areas could affect our financial results or results of operations and could cause actual results to differ materially from those contemplated in the forward-looking statements.

All forward-looking statements speak only as of the date of this report or the documents incorporated by reference, as the case may be. We do not undertake any duty to update any of these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

OVERVIEW

We are a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display applications, such as mobile phones, televisions, wearables, tablets, portable media devices, notebook computers, personal computers, and automotive applications, as well as specialty and general lighting products. Since 1994, we have been engaged and expect to continue to be primarily engaged, in funding and performing research and development activities relating to OLED technologies and materials, and commercializing these technologies and materials. We derive our revenue primarily 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.

Material sales relate to our sale of OLED materials for incorporation into our customers’ commercial OLED products or for their OLED development and evaluation activities. Material sales are generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties.

We receive license and royalty payments under certain commercial, development and technology evaluation agreements, some of which are non-refundable advances. These payments may include royalty and license fees made pursuant to license agreements and also license fees included as part of certain commercial supply agreements. These payments are included in the estimate of total contract consideration by customer and recognized as revenue over the contract term based on material units sold at the estimated per unit fee over the life of the contract.

In 2018, we entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC). This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2018 and lasts through the end of 2022 with an additional two-year extension option. Under this agreement, we are being paid a license fee, payable in quarterly installments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of our intellectual property assets for a limited period of time that is less than the estimated life of the assets.

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At the same time that we entered into the current commercial license agreement with SDC, we also entered into a material purchase agreement with SDC. Under the material purchase agreement, SDC agrees to purchase from us a minimum amount of phosphorescent emitter materials for use in the manufacture of licensed products. This 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.

In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display), which were effective as of January 1, 2015. The terms of the agreements were set to expire by the end of 2022. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The agreements include customary provisions relating to warranties, indemnities, confidentiality, assignability and business terms. 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 to be generated under the patent license agreement. We generate revenue under these agreements that are predominantly tied to LG Display’s sales of OLED licensed products. The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials.

In 2021, we entered into amendments of the OLED patent license agreement and the OLED commercial supply agreement with LG Display, which were effective as of January 1, 2021. The amended agreements included a term extension and are set to expire by the end of 2025.

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. 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 2017, we entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (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. 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). Under the license agreement, we have granted certain of Visionox’s affiliates a 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. On April 22, 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). 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. (Adesis) with operations in New Castle, Delaware. Adesis is a contract research organization (CRO) that provides support services to the OLED, pharma, biotech, catalysis and other industries. As of September 30, 2021, Adesis employed a team of 118 research scientists, chemists, engineers and laboratory technicians. Prior to our acquisition of Adesis in 2016, we utilized more than 50% of Adesis’ technology service and production output. 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. Contract research services revenue is earned by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis for those third-party customers.

In June 2020, a wholly-owned subsidiary, OVJP Corporation (OVJP Corp) was formed as a Delaware corporation. Based out of California, OVJP Corp was founded to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology. As a direct printing technique, OVJP technology has the potential to offer high deposition rates for large-area OLEDs. In addition, OVJP technology reduces OLED material waste associated with use of a shadow mask (i.e., the waste of material that deposits on the shadow mask itself when fabricating an OLED). By comparison to inkjet printing, an OVJP process does not use liquid solvents and therefore the OLED materials utilized are not limited by their viscosity or solvent solubility. OVJP also avoids generation of solvent wastes and eliminates the additional step of removing residual solvent from the OLED device. We believe the successful implementation of the

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OVJP technology has the potential to increase the addressable market for large-size OLED panels while also serving another potential growth market for our proprietary phosphorescent organic light-emitting diode (PHOLED) materials and technologies.

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. The new facility is expected to double our production capacity and allow for the diversification of our manufacturing base for phosphorescent emitters. We anticipate the facility to be operational by mid-year 2022.

We also generate technology development and support revenue earned from development and technology evaluation agreements and commercialization assistance fees, along with, to a minimal extent, government contracts. Relating to our government contracts, we may receive reimbursements by government entities for all or a portion of the research and development costs we incur. Revenues are recognized as services are performed, proportionally as research and development costs are incurred, or as defined milestones are achieved.

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

the timing, cost and volume of sales of our OLED materials;

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

the timing and magnitude of expenditures we may incur in connection with our ongoing research and development and patent-related activities; and

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

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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 and epidemics. 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 an impact in the three and nine months ended September 30, 2021. We expect that as the pandemic continues to evolve, it may potentially have a further adverse impact on our results of 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.

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. However, the sustainability of maintaining our testing and manufacturing operations at levels needed to meet fluctuating customer demand is uncertain and is dependent upon the rapidly evolving situations being encountered by our logistics and supply chain partners. In an effort to protect the health and safety of our employees, we have taken proactive measures to adopt social distancing policies at all of our locations, employing nurses to check everyone entering our buildings, working from home, reducing the number of people in our sites at any one time, and suspending employee travel.

While the ultimate health and economic impact of the COVID-19 pandemic is highly uncertain, we expect that our business operations and results of operations, including our revenues, net income and cash flows, will continue to be adversely impacted for at least the fourth quarter of 2021, including as a result of:

temporary closure of electronics and other retail stores through which our customers sell the products for which they use our technology and materials;

consumer confidence and consumer spending habits, including spending for the products that our customers sell and negative trends in consumer purchasing patterns due to consumers’ disposable income, credit availability and debt levels;

possible disruption to the supply chain caused by distribution and other logistical issues, which may impact suppliers of our raw materials as well as our ability to ship our materials to customers on a timely basis;

decreased productivity due to travel ban, work-from-home policies or shelter-in-place orders;

a slowdown in the U.S. economy, and uncertain global economic outlook or a credit crisis; and

uncertain trade restrictions amongst jurisdictions seeking to manage their respective exposure to risks, including the COVID-19 pandemic.

We are focused on navigating these recent challenges presented by COVID-19 through preserving our liquidity and managing our cash flow. We continue to actively monitor the COVID-19 situation and may take further actions altering our business operations 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. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers, employees, and on our financial results for the remainder of the 2021 fiscal year.

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RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2021 and 2020

	Three Months Ended September 30,
	2021			2020			Increase (Decrease)
REVENUE:
Material sales	$	75,609		$	68,709		$	6,900
Royalty and license fees		63,939			44,550			19,389
Contract research services		4,070			3,820			250
Total revenue		143,618			117,079			26,539
COST OF SALES		31,481			23,378			8,103
Gross margin		112,137			93,701			18,436
OPERATING EXPENSES:
Research and development		25,327			20,814			4,513
Selling, general and administrative		20,960			13,579			7,381
Amortization of acquired technology and other intangible assets		5,505			5,494			11
Patent costs		2,359			2,095			264
Royalty and license expense		258			3,293			(3,035	)
Total operating expenses		54,409			45,275			9,134
OPERATING INCOME		57,728			48,426			9,302
Interest income, net		137			1,029			(892	)
Other (loss) income, net		(102	)		262			(364	)
Interest and other income, net		35			1,291			(1,256	)
INCOME BEFORE INCOME TAXES		57,763			49,717			8,046
INCOME TAX EXPENSE		(11,654	)		(9,217	)		(2,437	)
NET INCOME	$	46,109		$	40,500		$	5,609

Revenue

Our total material sales were $75.6 million for the three months ended September 30, 2021, as compared to $68.7 million for the three months ended September 30, 2020, an increase of 10% with a commensurate increase in unit material volume of 20%. The increase in material sales was due to strengthened demand for OLED products utilizing our emitter material.

Green emitter sales for the three months ended September 30, 2021, which include our yellow-green emitters, were $57.8 million as compared to $52.9 million for the three months ended September 30, 2020, with unit material volumes increasing by 22%.

Red emitter sales for the three months ended September 30, 2021 were $17.7 million as compared to $15.2 million for the three months ended September 30, 2020, with unit material volumes increasing by 11%.

Revenue from royalty and license fees was $63.9 million for the three months ended September 30, 2021 as compared to $44.6 million for the three months ended September 30, 2020, an increase of 44%. This increase was primarily due to an overall strengthening of our customers’ sales of royalty-bearing OLED licensed products. In addition, there was an increase in the cumulative catch-up adjustment arising from changes in estimates of transaction price, net arising from a reduction in the forecast of emitters to be procured over the contract life by one of our customers that resulted from a change in their near-term production needs, as well as improved forecasted royalty consideration resulting from higher levels of current and anticipated customer sales of OLED products.

Contract research services revenue was $4.1 million for the three months ended September 30, 2021 as compared to $3.8 million for the three months ended September 30, 2020, an increase of 7%. 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.

Cost of sales

Cost of sales for the three months ended September 30, 2021 increased by $8.1 million as compared to the three months ended September 30, 2020, primarily due to an increase in the level of material sales. Included in the cost of sales for the three months ended September 30, 2021 and 2020 was an increase in inventory reserve of $1.0 million and $198,000, respectively, due to excess inventory levels in certain products. As a result of the increase in revenue from material sales and royalty and license fees, gross margin for the

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three months ended September 30, 2021 increased by $23.8 million as compared to the three months ended September 30, 2020, with gross margin as a percentage of revenue decreasing to 78% from 80%. The decrease in gross margin as a percentage of revenue was primarily due to the increase in costs associated with the introduction of new red and green emitters to our customers.

Research and development

Research and development expenses increased to $25.3 million for the three months ended September 30, 2021, as compared to $20.8 million for the three months ended September 30, 2020. The increase in research and development expenses was primarily due to higher employee-related compensation expenses and operating costs, including those associated with OVJP technology development, increased contract research, and PPG development activity.

Selling, general and administrative

Selling, general and administrative expenses increased to $21.0 million for the three months ended September 30, 2021, as compared to $13.6 million for the three months ended September 30, 2020. The increase in selling, general and administrative expenses was primarily due to higher employee-related compensation expenses, increased pre-production costs associated with the new manufacturing facility in Shannon, Ireland, as well as an increase in depreciation expenses resulting from corporate expansion.

Amortization of acquired technology and other intangible assets

Amortization of acquired technology and other intangible assets was $5.5 million for both three-month periods ended September 30, 2021 and 2020.

Patent costs

Patent costs increased to $2.4 million for the three months ended September 30, 2021, as compared to $2.1 million for the three months ended September 30, 2020. The results in the current quarter reflected higher internal patent prosecution related costs.

Royalty and license expense

Royalty and license expense decreased to $258,000 for the three months ended September 30, 2021, as compared to $3.3 million for the three months ended September 30, 2020. The decrease was due to decreased royalties incurred under our amended license agreement with Princeton, USC and Michigan, resulting from a decrease in qualifying material sales. See Note 9 in Notes to the Consolidated Financial Statements for further discussion.

Interest and other (loss) income, net

Interest income, net was $137,000 for the three months ended September 30, 2021, as compared to $1.0 million for the three months ended September 30, 2020. The decrease in interest income, net was primarily due to a decrease in bond yields on available-for-sale investments held in the current year over bond yields on available-for-sale investments held in the comparable period in 2020. Other (loss) income, net primarily consisted of net exchange gains and losses on foreign currency transactions and rental income. We recorded other loss, net of $102,000 for the three months ended September 30, 2021 as compared to other income, net of $262,000 for the three months ended September 30, 2020.

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 20.2% and 18.5% for the three months ended September 30, 2021 and 2020, respectively, and we recorded income tax expense of $11.7 million and $9.2 million, respectively, for those periods.

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Comparison of the Nine Months Ended September 30, 2021 and 2020

	Nine Months Ended September 30,
	2021			2020			Increase (Decrease)
REVENUE:
Material sales	$	232,855		$	167,211		$	65,644
Royalty and license fees		163,037			110,008			53,029
Contract research services		11,386			10,105			1,281
Total revenue		407,278			287,324			119,954
COST OF SALES		82,748			58,480			24,268
Gross margin		324,530			228,844			95,686
OPERATING EXPENSES:
Research and development		72,733			61,708			11,025
Selling, general and administrative		57,603			45,129			12,474
Amortization of acquired technology and other intangible assets		16,490			16,474			16
Patent costs		6,003			5,591			412
Royalty and license expense		519			8,195			(7,676	)
Total operating expenses		153,348			137,097			16,251
OPERATING INCOME		171,182			91,747			79,435
Interest income, net		345			4,444			(4,099	)
Other income, net		178			634			(456	)
Interest and other income, net		523			5,078			(4,555	)
INCOME BEFORE INCOME TAXES		171,705			96,825			74,880
INCOME TAX EXPENSE		(33,368	)		(17,355	)		(16,013	)
NET INCOME	$	138,337		$	79,470		$	58,867

Revenue

Our total material sales were $232.9 million for the nine months ended September 30, 2021, as compared to $167.2 million for the nine months ended September 30, 2020, an increase of 39% with a commensurate increase in unit material volume of 41%. The increase in material sales was due to the recovery in sales that were adversely impacted due to the COVID-19 pandemic during the nine months ended September 30, 2020, as well as strengthened demand for OLED products utilizing our emitter material. Even though we believe we have experienced the worst effects of the COVID-19 pandemic, we remain uncertain as to the possibility of its re-emergence and corresponding negative impact on OLED market demand.

Green emitter sales for the nine months ended September 30, 2021, which include our yellow-green emitters, were $176.2 million as compared to $129.6 million for the nine months ended September 30, 2020, with unit material volumes increasing by 41%.

Red emitter sales for the nine months ended September 30, 2021 were $56.3 million as compared to $36.6 million for the nine months ended September 30, 2020, with unit material volumes increasing by 42%.

Revenue from royalty and license fees was $163.0 million for the nine months ended September 30, 2021 as compared to $110.0 million for the nine months ended September 30, 2020, an increase of 48%. This increase was due primarily to an overall strengthening of our customers’ sales of royalty-bearing OLED licensed products. In addition, there was an increase in the cumulative catch-up adjustment arising from changes in estimates of transaction price, net arising from a reduction in the forecast of emitters to be procured over the contract life by one of our customers that resulted from a change in their near-term production needs, as well as improved forecasted royalty consideration resulting from higher levels of current and anticipated customer sales of OLED products.

Contract research services revenue was $11.4 million for the nine months ended September 30, 2021 as compared to $10.1 million for the nine months ended September 30, 2020, an increase of 13%. 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.

Cost of sales

Cost of sales for the nine months ended September 30, 2021 increased by $24.3 million as compared to the nine months ended September 30, 2020, primarily due to an increase in the level of material sales. Included in the cost of sales for the nine months ended September 30, 2021 and 2020 was an increase in inventory reserve of $2.1 million and $808,000, respectively, due to excess inventory

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levels in certain products. As a result of the increase in revenue from material sales and royalty and license fees, gross margin for the nine months ended September 30, 2021 increased by $95.7 million as compared to the nine months ended September 30, 2020, with gross margin as a percentage of revenue remaining stable at 80%.

Research and development

Research and development expenses increased to $72.7 million for the nine months ended September 30, 2021, as compared to $61.7 million for the nine months ended September 30, 2020. The increase in research and development expenses was primarily due to higher employee-related compensation expenses and operating costs, including those associated with OVJP technology development, increased contract research, and PPG development activity.

Selling, general and administrative

Selling, general and administrative expenses increased to $57.6 million for the nine months ended September 30, 2021, as compared to $45.1 million for the nine months ended September 30, 2020. The increase in selling, general and administrative expenses was primarily due to higher employee-related compensation expenses, increased pre-production costs associated with the new manufacturing facility in Shannon, Ireland, as well as an increase in depreciation expenses resulting from corporate expansion.

Amortization of acquired technology and other intangible assets

Amortization of acquired technology and other intangible assets was $16.5 million for both nine-month periods ended September 30, 2021 and 2020.

Patent costs

Patent costs increased to $6.0 million for the nine months ended September 30, 2021, as compared to $5.6 million for the nine months ended September 30, 2020. The results in the current year reflected higher internal patent prosecution related costs.

Royalty and license expense

Royalty and license expense decreased to $519,000 for the nine months ended September 30, 2021, as compared to $8.2 million for the nine months ended September 30, 2020. The decrease was due to decreased royalties incurred under our amended license agreement with Princeton, USC and Michigan, resulting from a decrease in qualifying material sales. See Note 9 in Notes to the Consolidated Financial Statements for further discussion.

Interest and other income, net

Interest income, net was $345,000 for the nine months ended September 30, 2021, as compared to $4.4 million for the nine months ended September 30, 2020. The decrease in interest income, net was primarily due to a decrease in bond yields on available-for-sale investments held in the current year over bond yields on available-for-sale investments held in the comparable period in 2020. Other income, net primarily consisted of net exchange gains and losses on foreign currency transactions and rental income. We recorded other income, net of $178,000 for the nine months ended September 30, 2021 as compared to $634,000 for the nine months ended September 30, 2020.

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 19.4% and 17.9% for the nine months ended September 30, 2021 and 2020, respectively, and we recorded income tax expense of $33.4 million and $17.4 million, respectively, for those periods.

Liquidity and Capital Resources

Our principal sources of liquidity are our cash and cash equivalents and our short-term investments. As of September 30, 2021, we had cash and cash equivalents of $535.1 million and short-term investments of $253.8 million, for a total of $788.9 million. This compares to cash and cash equivalents of $630.0 million and short-term investments of $100.0 million, for a total of $730.0 million, as of December 31, 2020.

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Cash provided by operating activities for the nine months ended September 30, 2021 was $134.3 million resulting from $138.3 million of net income and $94.1 million due to changes in our operating assets and liabilities, partially offset by a $98.1 million reduction due to non-cash items including amortization of deferred revenue, amortization of intangibles and stock-based compensation. Changes in our operating assets and liabilities related to an increase in deferred revenue of $160.0 million and an increase in other liabilities of $30.5 million, partially offset by an increase in other assets of $47.1 million, an increase in inventory of $32.0 million, an increase in accounts receivable of $14.0 million and a decrease in accounts payable and accrued expenses of $3.3 million.

Cash provided by operating activities for the nine months ended September 30, 2020 was $75.8 million resulting from $79.5 million of net income and $61.8 million due to changes in our operating assets and liabilities, partially offset by a $65.5 million reduction due to non-cash items including amortization of deferred revenue, amortization of intangibles and stock-based compensation. Changes in our operating assets and liabilities related to an increase in deferred revenue of $144.2 million and an increase in other liabilities of $8.6 million, partially offset by an increase in accounts receivable of $38.9 million, an increase in inventory of $21.0 million, a decrease in accounts payable and accrued expenses of $19.6 million and an increase in other assets of $11.5 million.

Cash used in investing activities was $187.0 million for the nine months ended September 30, 2021, as compared to $10.1 million for the nine months ended September 30, 2020. The increase was due to the timing of maturities and purchases of investments resulting in net purchases of $157.1 million for the nine months ended September 30, 2021, as compared to net sales of $9.1 million for the nine months ended September 30, 2020, and an increase in purchases of intangibles and property, plant and equipment of $10.7 million for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. The increase in property, plant and equipment purchases during 2021 was primarily due to improvements to our Ewing facilities in New Jersey.

Cash used in financing activities was $42.2 million for the nine months ended September 30, 2021, as compared to $34.8 million for the nine months ended September 30, 2020. The increase was due to an increase in the cash payment of dividends in the current year of $7.1 million and an increase in the payment of withholding taxes related to stock-based compensation to employees of $587,000, partially offset by an increase in proceeds from the issuance of common stock of $267,000.

Working capital was $874.9 million as of September 30, 2021, as compared to $759.6 million as of December 31, 2020. The increase was primarily due to an increase in short-term investments, an increase in inventory and an increase in other current assets, partially offset by a decrease in cash and cash equivalents.

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

We believe that potential additional financing sources for us include long-term and short-term borrowings, public and private sales of our equity and debt securities. It should be noted, however, that additional funding may be required in the future for research, development and commercialization of our OLED technologies and materials, to obtain, maintain and enforce patents respecting these technologies and materials, and for working capital and other purposes, the timing and amount of which are difficult to ascertain. There can be no assurance that additional funds will be available to us when needed, on commercially reasonable terms or at all, particularly in the current economic environment.

Critical Accounting Policies 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. The preparation of these Consolidated Financial Statements requires us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses, and other financial information. Actual results may differ significantly from our estimates under other assumptions and conditions.

We believe that our accounting policies related to revenue recognition and deferred revenue, inventories, and income taxes are our “critical accounting policies” as contemplated by the SEC.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2020, for additional discussion of our critical accounting policies.

34

Contractual Obligations

Refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our contractual obligations.

Off-Balance Sheet Arrangements

As of September 30, 2021, we had no off-balance sheet arrangements in the nature of guarantee contracts, retained or contingent interests in assets transferred to unconsolidated entities (or similar arrangements serving as credit, liquidity or market risk support to unconsolidated entities for any such assets), or obligations (including contingent obligations) arising out of variable interests in unconsolidated entities providing financing, liquidity, market risk or credit risk support to us, or that engage in leasing, hedging or research and development services with us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not utilize financial instruments for trading purposes and hold no derivative financial instruments, other financial instruments or derivative commodity instruments that could expose us to significant market risk other than our investments disclosed in “Fair Value Measurements” in Note 4 to the Consolidated Financial Statements included herein. We generally invest in investment grade financial instruments to reduce our exposure related to investments. Our primary market risk exposure with regard to such financial instruments is to changes in interest rates, which would impact interest income earned on investments. However, based upon the conservative nature of our investment portfolio and current experience, we do not believe a decrease in investment yields would have a material negative effect on our interest income.

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this report, are effective to provide reasonable assurance that the information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. However, a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Patent Related Challenges and Oppositions

Each major jurisdiction in the world that issues patents provides both third parties and applicants an opportunity to seek a further review of an issued patent. The process for requesting and considering such reviews is specific to the jurisdiction that issued the patent in question, and generally does not provide for claims of monetary damages or a review of specific claims of infringement. The conclusions made by the reviewing administrative bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

We believe that opposition proceedings are frequently commenced in the ordinary course of business by third parties who may believe that one or more claims in a patent do not comply with the technical or legal requirements of the specific jurisdiction in which the patent was issued. We view these proceedings as reflective of its goal of obtaining the broadest legally permissible patent coverage permitted in each jurisdiction. Once a proceeding is initiated, as a general matter, the issued patent continues to be presumed valid until

35

the jurisdiction’s applicable administrative body issues a final non-appealable decision. Depending 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.

Below is a summary of an active proceeding that has been commenced against an issued patent that is exclusively licensed to us. 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. However, as noted within the description, the following proceeding involves an issued patent that relates to our fundamental phosphorescent OLED technologies and we intend to vigorously defend against claims that, in our opinion, seek to restrict or reduce the scope of the originally issued claim, which may require the expenditure of significant amounts of our resources. 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.

Opposition to European Patent No. 1390962

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

The European Patent Office (EPO) combined the oppositions into a single opposition proceeding, and a hearing on this matter was held in December 2015, wherein the EPO Opposition Division revoked the patent claims for alleged insufficiencies under European Patent Convention Article 83. We believe the EPO's decision is erroneous and appealed the decision. Subsequent to the filing of the appeal, BASF withdrew its opposition to the patent. On appeal, the Appeals Division withdrew the lower Opposition Division’s rejections with respect to a portion of the original subject matter and remanded the matter to the lower Opposition Division for further consideration. The patent, as originally granted, is deemed valid during the pendency of the opposition process.

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

In addition to the above proceeding and now concluded proceedings which have been referenced in prior filings, from time to time, we may have other proceedings that are pending which relate to patents we acquired as part of the Fujifilm patent or BASF OLED patent acquisitions or which relate to technologies that are not currently widely used in the marketplace.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

36

ITEM 6. EXHIBITS

The following is a list of the exhibits filed as part of this report. Where so indicated by footnote, exhibits that were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated parenthetically, together with a reference to the filing indicated by footnote.

Exhibit Number	Description
31.1*	Certifications of Steven V. Abramson, Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
31.2*	Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
32.1**	Certifications of Steven V. Abramson, Chief Executive Officer, as required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C. Section 1350. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
32.2**	Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C. Section 1350. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
101.INS*	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	The cover page of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 formatted in Inline XBRL (included in Item 101.INS)

Explanation of footnotes to listing of exhibits:

*	Filed herewith.
**	Furnished herewith.

37

SIGNATURES

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

	UNIVERSAL DISPLAY CORPORATION
Date: November 4, 2021	By: /s/ Sidney D. Rosenblatt
	Sidney D. Rosenblatt
	Executive Vice President, Chief Financial Officer,
	Treasurer and Secretary

38

EX-31.1

Exhibit 31.1

CERTIFICATIONS REQUIRED BY

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

I, Steven V. Abramson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Display Corporation (the “registrant”) for the quarter ended September 30, 2021;

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

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

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

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

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

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

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

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

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

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

Date:	November 4, 2021	By:	/s/ Steven V. Abramson
			Steven V. Abramson
			President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS REQUIRED BY

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

I, Sidney D. Rosenblatt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Universal Display Corporation (the “registrant”) for the quarter ended September 30, 2021;

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

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

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

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

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

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

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

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

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

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

Date:	November 4, 2021	By:	/s/ Sidney D. Rosenblatt
			Sidney D. Rosenblatt
			Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS REQUIRED BY

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

In connection with the quarterly report of Universal Display Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven V. Abramson, President and Chief Executive Officer of the Company, hereby certify, based on my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 4, 2021	By:	/s/ Steven V. Abramson
			Steven V. Abramson
			President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATIONS REQUIRED BY

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

In connection with the quarterly report of Universal Display Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sidney D. Rosenblatt, Executive Vice President and Chief Financial Officer of the Company, hereby certify, based on my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 4, 2021	By:	/s/ Sidney D. Rosenblatt
			Sidney D. Rosenblatt
			Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Nov. 02, 2021
Cover [Abstract]
Entity Registrant Name	UNIVERSAL DISPLAY CORPORATION
Entity Central Index Key	0001005284
Trading Symbol	OLED
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		47,125,672
Entity Current Reporting Status	Yes
Entity File Number	1-12031
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	23-2372688
Entity Address, Address Line One	375 Phillips Boulevard
Entity Address, City or Town	Ewing
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08618
City Area Code	609
Local Phone Number	671-0980
Title of 12(b) Security	Common Stock, $0.01 par value
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
CURRENT ASSETS:
Cash and cash equivalents	$ 535,157	$ 630,012
Short-term investments	253,786	99,996
Accounts receivable	96,235	82,261
Inventory	121,485	91,591
Other current assets	48,476	20,746
Total current assets	1,055,139	924,606
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $86,962 and $72,493	118,988	102,113
ACQUIRED TECHNOLOGY, net of accumulated amortization of $168,489 and $153,050	54,814	70,253
OTHER INTANGIBLE ASSETS, net of accumulated amortization of $7,206 and $6,155	10,028	10,685
GOODWILL	15,535	15,535
INVESTMENTS	8,500	5,000
DEFERRED INCOME TAXES	32,476	37,695
OTHER ASSETS	133,111	103,341
TOTAL ASSETS	1,428,591	1,269,228
CURRENT LIABILITIES:
Accounts payable	10,939	13,801
Accrued expenses	42,736	41,404
Deferred revenue	123,475	105,215
Other current liabilities	3,111	4,540
Total current liabilities	180,261	164,960
DEFERRED REVENUE	43,458	57,086
RETIREMENT PLAN BENEFIT LIABILITY	80,676	78,527
OTHER LIABILITIES	87,874	55,941
Total liabilities	392,269	356,514
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS' EQUITY:
Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized, 200,000 shares of Series A Nonconvertible Preferred Stock issued and outstanding (liquidation value of $7.50 per share or $1,500)	2	2
Common Stock, par value $0.01 per share, 200,000,000 shares authorized, 49,060,909 and 49,013,476 shares issued, and 47,695,261 and 47,647,828 shares outstanding, at September 30, 2021 and December 31, 2020, respectively	491	490
Additional paid-in capital	646,049	635,595
Retained earnings	463,820	353,930
Accumulated other comprehensive loss	(32,756)	(36,019)
Treasury stock, at cost (1,365,648 shares at September 30, 2021 and December 31, 2020)	(41,284)	(41,284)
Total shareholders’ equity	1,036,322	912,714
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,428,591	$ 1,269,228

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 86,962,000	$ 72,493,000
Finite-Lived Intangible Assets, Accumulated Amortization	168,489,000	153,050,000
Other Finite-Lived Intangible Assets, Accumulated Amortization	$ 7,206,000	$ 6,155,000
SHAREHOLDERS' EQUITY:
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized ( in shares)	5,000,000	5,000,000
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized (in shares)	200,000,000	200,000,000
Common Stock, shares issued (in shares)	49,060,909	49,013,476
Common Stock, shares outstanding (in shares)	47,695,261	47,647,828
Treasury Stock
Treasury stock, shares	1,365,648	1,365,648
Series A Nonconvertible Preferred Stock [Member]
Shareholders' Equity A Nonconvertible Preferred Stock
Preferred Stock, shares issued (in shares)	200,000	200,000
Preferred Stock, shares outstanding (in shares)	200,000	200,000
Preferred Stock, liquidation value per share (in dollars per share)	$ 7.50	$ 7.50
Preferred Stock, liquidation value	$ 1,500	$ 1,500

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
REVENUE:
Total revenue	$ 143,618	$ 117,079	$ 407,278	$ 287,324
COST OF SALES	31,481	23,378	82,748	58,480
Gross margin	112,137	93,701	324,530	228,844
OPERATING EXPENSES:
Research and development	25,327	20,814	72,733	61,708
Selling, general and administrative	20,960	13,579	57,603	45,129
Amortization of acquired technology and other intangible assets	5,505	5,494	16,490	16,474
Patent costs	2,359	2,095	6,003	5,591
Royalty and license expense	258	3,293	519	8,195
Total operating expenses	54,409	45,275	153,348	137,097
OPERATING INCOME	57,728	48,426	171,182	91,747
Interest income, net	137	1,029	345	4,444
Other income, net	(102)	262	178	634
Interest and other income, net	35	1,291	523	5,078
INCOME BEFORE INCOME TAXES	57,763	49,717	171,705	96,825
INCOME TAX EXPENSE	(11,654)	(9,217)	(33,368)	(17,355)
NET INCOME	$ 46,109	$ 40,500	$ 138,337	$ 79,470
NET INCOME PER COMMON SHARE:
BASIC	$ 0.97	$ 0.85	$ 2.91	$ 1.67
DILUTED	$ 0.97	$ 0.85	$ 2.90	$ 1.67
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC	47,291,192	47,227,061	47,286,927	47,182,625
DILUTED	47,362,575	47,260,331	47,355,583	47,212,660
CASH DIVIDENDS DECLARED PER COMMON SHARE	$ 0.20	$ 0.15	$ 0.60	$ 0.45
Material Sales
REVENUE:
Total revenue	$ 75,609	$ 68,709	$ 232,855	$ 167,211
Royalty And License Fees
REVENUE:
Total revenue	63,939	44,550	163,037	110,008
Contract Research Services
REVENUE:
Total revenue	$ 4,070	$ 3,820	$ 11,386	$ 10,105

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]
NET INCOME	$ 46,109	$ 40,500	$ 138,337	$ 79,470
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized (loss) gain on available-for-sale securities, net of tax of $1, $177, $10 and $97, respectively	(3)	(626)	(35)	342
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, net of tax of $334, $181, $1004 and $543, respectively	1,174	639	3,522	1,917
Change in cumulative foreign currency translation adjustment	(155)	1	(224)	(29)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	1,016	14	3,263	2,230
COMPREHENSIVE INCOME	$ 47,125	$ 40,514	$ 141,600	$ 81,700

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement Of Income And Comprehensive Income [Abstract]
Unrealized gain (loss) on available-for-sale securities, tax	$ 1	$ 177	$ 10	$ 97
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, tax	$ 334	$ 181	$ 1,004	$ 543

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]	Series A Nonconvertible Preferred Stock [Member] Preferred Stock [Member]
BALANCE at Dec. 31, 2019	$ 811,449	$ 489	$ 620,236	$ 249,003	$ (16,997)	$ (41,284)	$ 2
BALANCE (in shares) at Dec. 31, 2019		48,852,193				1,365,648	200,000
Net Income Loss	79,470			79,470
Other comprehensive income (loss)	2,230				2,230
Cash dividend	(21,329)			(21,329)
Issuance of common stock to employees	19,534	$ 2	19,532
Issuance of common stock to employees (in shares)		238,996
Shares withheld for employee taxes	(14,293)	$ (1)	(14,292)
Shares withheld for employee taxes (in shares)		(98,882)
Issuance of common stock to Board of Directors and Scientific Advisory Board	1,433		1,433
Issuance of common stock to Board of Directors and Scientific Advisory Board (in shares)		8,906
Issuance of common stock to employees under an ESPP	1,142		1,142
Issuance of common stock to employees under an ESPP (in shares)		7,702
BALANCE at Sep. 30, 2020	$ 879,636	$ 490	628,051	307,144	(14,767)	$ (41,284)	$ 2
BALANCE (in shares) at Sep. 30, 2020	49,008,915	49,008,915				1,365,648	200,000
BALANCE at Jun. 30, 2020	$ 839,770	$ 490	621,585	273,758	(14,781)	$ (41,284)	$ 2
BALANCE (in shares) at Jun. 30, 2020		48,992,532				1,365,648	200,000
Net Income Loss	40,500			40,500
Other comprehensive income (loss)	14				14
Cash dividend	(7,114)			(7,114)
Issuance of common stock to employees	6,805	$ 1	6,804
Issuance of common stock to employees (in shares)		19,733
Shares withheld for employee taxes	(1,128)	$ (1)	(1,127)
Shares withheld for employee taxes (in shares)		(7,199)
Issuance of common stock to Board of Directors and Scientific Advisory Board	425		425
Issuance of common stock to Board of Directors and Scientific Advisory Board (in shares)		1,614
Issuance of common stock to employees under an ESPP	364		364
Issuance of common stock to employees under an ESPP (in shares)		2,235
BALANCE at Sep. 30, 2020	$ 879,636	$ 490	628,051	307,144	(14,767)	$ (41,284)	$ 2
BALANCE (in shares) at Sep. 30, 2020	49,008,915	49,008,915				1,365,648	200,000
BALANCE at Dec. 31, 2020	$ 912,714	$ 490	635,595	353,930	(36,019)	$ (41,284)	$ 2
BALANCE (in shares) at Dec. 31, 2020		49,013,476				1,365,648	200,000
Net Income Loss	138,337			138,337
Other comprehensive income (loss)	3,263				3,263
Cash dividend	(28,447)			(28,447)
Issuance of common stock to employees	22,543	$ 1	22,542
Issuance of common stock to employees (in shares)		62,501
Shares withheld for employee taxes	(14,880)		(14,880)
Shares withheld for employee taxes (in shares)		28,733
Issuance of common stock to Board of Directors and Scientific Advisory Board	1,352		1,352
Issuance of common stock to Board of Directors and Scientific Advisory Board (in shares)		7,157
Issuance of common stock to employees under an ESPP	1,440		1,440
Issuance of common stock to employees under an ESPP (in shares)		6,508
BALANCE at Sep. 30, 2021	1,036,322	$ 491	646,049	463,820	(32,756)	$ (41,284)	$ 2
BALANCE (in shares) at Sep. 30, 2021		49,060,909				1,365,648	200,000
BALANCE at Jun. 30, 2021	991,616	$ 491	638,991	427,188	(33,772)	$ (41,284)	$ 2
BALANCE (in shares) at Jun. 30, 2021		49,054,059				1,365,648	200,000
Net Income Loss	46,109			46,109
Other comprehensive income (loss)	1,016				1,016
Cash dividend	(9,477)			(9,477)
Issuance of common stock to employees	8,131		8,131
Issuance of common stock to employees (in shares)		5,111
Shares withheld for employee taxes	(1,862)		(1,862)
Shares withheld for employee taxes (in shares)		(2,025)
Issuance of common stock to Board of Directors and Scientific Advisory Board	348		348
Issuance of common stock to Board of Directors and Scientific Advisory Board (in shares)		1,361
Issuance of common stock to employees under an ESPP	441		441
Issuance of common stock to employees under an ESPP (in shares)		2,403
BALANCE at Sep. 30, 2021	$ 1,036,322	$ 491	$ 646,049	$ 463,820	$ (32,756)	$ (41,284)	$ 2
BALANCE (in shares) at Sep. 30, 2021		49,060,909				1,365,648	200,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 138,337,000	$ 79,470,000
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue and recognition of unbilled receivables	(165,723,000)	(112,508,000)
Depreciation	14,471,000	11,147,000
Amortization of intangibles	16,490,000	16,474,000
Change in excess inventory reserve	2,058,000	808,000
Amortization of premium and discount on investments, net	(229,000)	(4,293,000)
Stock-based compensation to employees	22,846,000	19,807,000
Stock-based compensation to Board of Directors and Scientific Advisory Board	1,052,000	1,133,000
Deferred income tax expense (benefit)	4,226,000	(2,242,000)
Retirement plan expense	6,676,000	4,242,000
Decrease (increase) in assets:
Accounts receivable	(13,974,000)	(38,898,000)
Inventory	(31,952,000)	(20,953,000)
Other current assets	(13,626,000)	(2,854,000)
Other assets	(33,540,000)	(8,721,000)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(3,311,000)	(19,633,000)
Other current liabilities	1,429,000	(806,000)
Deferred revenue	160,021,000	144,200,000
Other liabilities	31,933,000	9,454,000
Net cash provided by operating activities	134,326,000	75,827,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(29,496,000)	(19,213,000)
Purchases of intangibles	(394,000)	(25,000)
Purchases of investments	(272,340,000)	(604,153,000)
Proceeds from sale and maturity of investments	115,240,000	613,310,000
Net cash used in investing activities	(186,990,000)	(10,081,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	1,136,000	869,000
Payment of withholding taxes related to stock-based compensation to employees	(14,880,000)	(14,293,000)
Cash dividends paid	(28,447,000)	(21,329,000)
Net cash used in financing activities	(42,191,000)	(34,753,000)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(94,855,000)	30,993,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	630,012,000	131,627,000
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 535,157,000	$ 162,620,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Non-Cash Activities - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Other Significant Noncash Transactions [Line Items]
Unrealized (loss) gain on available-for-sale securities	$ (39)	$ 451
Net change in accounts payable and accrued expenses related to purchases of property and equipment	(1,849)	(892)
Common Stock Issued to Board of Directors and Scientific Advisory Board that was Earned and Accrued for in Previous Period [Member]
Other Significant Noncash Transactions [Line Items]
Other significant noncash transaction, value of consideration received	$ 300	$ 300

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BUSINESS

9 Months Ended

Sep. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

BUSINESS

1. BUSINESS:

Universal Display Corporation and its subsidiaries (the Company) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. OLEDs are thin, lightweight and power-efficient solid-state devices that emit light that can be manufactured on both flexible and rigid substrates, making them highly suitable for use in full-color displays and as lighting products. OLED displays are capturing a growing share of the display market, especially in the mobile phone, television, wearable, tablet, notebook and personal computer, augmented reality (AR), virtual reality (VR) and automotive markets. The Company believes this is because OLEDs offer potential advantages over competing display technologies with respect to power efficiency, contrast ratio, viewing angle, video response time, form factor and manufacturing cost. The Company also believes that OLED lighting products have the potential to replace many existing light sources in the future because of their high-power efficiency, excellent color rendering index, low operating temperature and novel form factor. The Company’s technology leadership, intellectual property position, and the Company’s more than 20 years of experience working closely with leading OLED display manufacturers are some of the competitive advantages that should enable the Company to continue to share in the revenues from OLED displays and lighting products as they gain wider acceptance.

The Company’s primary business strategy is to (1) develop new OLED materials and sell existing and any new materials to product manufacturers of products for display applications, such as mobile phones, televisions, wearables, tablets, portable media devices, notebook computers, personal computers and automotive applications, and specialty and general lighting products; and (2) further develop and license the Company’s proprietary OLED technologies to those manufacturers. The Company has established a significant portfolio of proprietary OLED technologies and materials, primarily through internal research and development efforts and acquisitions of patents and patent applications, as well as maintaining long-standing, and establishing new relationships with world-class universities, research institutions and strategic manufacturing partnerships. The Company currently owns, exclusively licenses or has the sole right to sublicense more than 5,000 patents issued and pending worldwide.

The Company manufactures and sells its proprietary OLED materials to customers for evaluation and use in commercial OLED products. The Company also enters into agreements with manufacturers of OLED display and lighting products under which it grants them licenses to practice under the Company’s patents and to use the Company's proprietary know-how. At the same time, the Company works with these and other companies that are evaluating the Company's OLED technologies and materials for possible use in commercial OLED display and lighting products.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Financial Information

In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of September 30, 2021 and results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020. While management believes that the disclosures presented are adequate to make the information not misleading, these unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the Company’s latest year-end Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The results of the Company’s operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for the full year.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Universal Display Corporation and its wholly owned subsidiaries, UDC, Inc., UDC Ireland Limited (UDC Ireland), Universal Display Corporation Hong Kong, Limited, Universal Display Corporation Korea, Y.H., Universal Display Corporation Japan GK, Universal Display Corporation China, Ltd., Adesis, Inc. (Adesis), UDC Ventures LLC, OVJP Corporation (OVJP Corp) and OLED Material Manufacturing Limited (OMM). All intercompany transactions and accounts have been eliminated.

In November 2020, a wholly-owned subsidiary of UDC Ireland, OMM, was formed as an Ireland limited company. Based out of Shannon, Ireland, OMM was formed to increase the Company’s production capacity to meet market demand and diversify the manufacturing base due to evolving industry requirements.

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates made are principally in the areas of revenue recognition including estimates of material unit sales and royalties, the useful life of acquired intangibles, lease liabilities, right-of-use assets, the use and recoverability of inventories, intangibles, investments and income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Inventories

Inventories consist of raw materials, work-in-process and finished goods, including inventory consigned to customers, and are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventory valuation and firm committed purchase order assessments are performed on a quarterly basis and those items that are identified to be obsolete or in excess of forecasted usage are written down to their estimated realizable value. Estimates of realizable value are based upon management’s analyses and assumptions, including, but not limited to, forecasted sales levels by product, expected product lifecycle, product development plans and future demand requirements. A 12-month rolling forecast based on factors, including, but not limited to, production cycles, anticipated product orders, marketing forecasts, backlog, and shipment activities is used in the inventory analysis. If market conditions are less favorable than forecasts or actual demand from customers is lower than estimates, additional inventory write-downs may be required. If demand is higher than expected, inventories that had previously been written down may be sold.

Fair Value of Financial Instruments

The carrying values of accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value in the accompanying Consolidated Financial Statements due to the short-term nature of those instruments. The Company’s other financial instruments, which include cash equivalents, investments, retirement plan benefit liability and other liabilities are carried at fair value.

Minority Equity Investments

The Company accounts for minority equity investments in companies that are not accounted for under the equity method as equity securities without readily determinable fair values. The fair value of these securities is based on original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Under this method, the share of income or loss of such companies is not included in the Consolidated Statements of Income. The carrying value of these investments is included in investments on the Consolidated Balance Sheets.

The Company’s policy is to recognize an impairment in the value of its minority equity investments when clear evidence of an impairment exists. Factors considered in the assessment include a significant adverse change in the regulatory, economic, or technological environment, the completion of new equity financing that may indicate a decrease in value, the failure to complete new equity financing arrangements after seeking to raise additional funds, or the commencement of proceedings under which the assets of the business may be placed in receivership or liquidated to satisfy the claims of debt and equity stakeholders.

Leases

The Company is a lessee in operating leases primarily incurred to facilitate the expansion of manufacturing, research and development, and selling, general and administrative activities. At contract inception, the Company determines if an arrangement is or contains a lease, and if so recognizes a right-of-use asset and lease liability at the lease commencement date. For operating leases, the lease liability is measured at the present value of the unpaid lease payments at the lease commencement date, whereas for finance leases, the lease liability is initially measured at the present value of the unpaid lease payments and subsequently measured at amortized cost using the interest method. Operating lease right-of-use assets are included in other assets on the Consolidated Balance Sheets. The short-term portion of operating lease liabilities is included in other current liabilities on the Consolidated Balance Sheets and the long-term portion is included in other liabilities on the Consolidated Balance Sheets. As of September 30, 2021, the Company had no leases that qualified as financing arrangements.

Key estimates and judgments include how the Company determines the discount rate used to discount the unpaid lease payments to present value and the lease term. The Company monitors for events or changes in circumstances that could potentially require recognizing an impairment loss.

Revenue Recognition and Deferred Revenue

Material sales relate to the Company’s sale of its OLED materials for incorporation into its customers’ commercial OLED products or for their OLED development and evaluation activities. Revenue associated with material sales is generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties. Revenue may be recognized after control of the material passes in the event the transaction price includes variable consideration. For example, a customer may be provided an extended opportunity to stock materials prior to use in mass production and given a general right of return not conditioned on breaches of warranties associated with the specific product. 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 the Company’s OLED technologies are conveyed to the customer through technology license agreements and material supply agreements. The Company believes that the licenses and materials sold under these combined agreements are not distinct from each other for financial reporting purposes and as such, are accounted for as a single performance obligation. Accordingly, total contract consideration is estimated and recognized over the contract term based on material units sold at the estimated per unit fee over the life of the contract. Total contract consideration is allocated to material sales and royalty and licensing fees on the Consolidated Statements of Income based on contract pricing.

Various estimates are relied upon to recognize revenue. The Company estimates total material units to be purchased by its customers over the contract term based on historical trends, industry estimates and its forecast process. Management uses the expected value method to estimate the material per unit fee. Additionally, management estimates the total sales-based royalties based on the estimated net sales revenue of its customers over the contract term.

Contract research services revenue is revenue earned by Adesis by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis. These services range from intermediates for structure-activity relationship studies, reference agents and building blocks for combinatorial synthesis, re-synthesis of key intermediates, specialty organic chemistry needs, and selective toll manufacturing. These services are provided to third-party pharmaceutical and life sciences firms and other technology firms at fixed costs or on an annual contract basis. Revenue is recognized as services are performed with billing schedules and payment terms negotiated on a contract-by-contract basis. Payments received in excess of revenue recognized are recorded as deferred revenue. In other cases, services may be provided and revenue is recognized before the customer is invoiced. In these cases, revenue recognized will exceed amounts billed and the difference, representing amounts which are currently unbillable to the customer pursuant to contractual terms, is recorded as an unbilled receivable.

Technology development and support revenue is revenue earned from development and technology evaluation agreements and commercialization assistance fees, along with, to a minimal extent, government contracts. Relating to the Company’s government contracts, the Company may receive reimbursements by government entities for all or a portion of the research and development costs the Company incurs. Revenues are recognized as services are performed, proportionally as research and development costs are incurred, or as defined milestones are achieved. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

In 2018, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC). This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2018 and lasts through the end of 2022 with an additional two-year extension option. Under this agreement, the Company is being paid a license fee, payable in quarterly installments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets.

At the same time the Company entered into the current commercial license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC. Under the supplemental material purchase agreement, SDC agrees to purchase from the Company a minimum amount of phosphorescent emitter materials for use in the manufacture of licensed products. This minimum commitment is subject to SDC’s requirements for phosphorescent emitter materials and the Company’s ability to meet these requirements over the term of the supplemental agreement.

In 2015, the Company entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display) which were effective as of January 1, 2015 and superseded the existing 2007 commercial supply agreement between the parties. The terms of the agreements were set to expire by the end of 2022. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under the Company's patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The agreements include customary provisions relating to warranties, indemnities, confidentiality, assignability and business terms. 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 to be generated under the patent license agreement. The Company generates revenue under these agreements that are predominantly tied to LG Display’s sales of OLED licensed products. The OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials.

In 2021, the Company entered into amendments of the OLED patent license agreement and the OLED commercial supply agreement with LG Display, which were effective as of January 1, 2021. The amended agreements included a term extension and are set to expire by the end of 2025.

In 2016, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, the Company has granted Tianma non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, the parties extended the terms of both the patent license and material purchase agreements for an additional multi-year-term.

In 2017, the Company entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, the Company has granted BOE non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company supplies phosphorescent OLED materials to BOE for use in its licensed products.

In 2018, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, the Company granted certain of Visionox’s affiliates a non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Visionox for use in its licensed products. On April 22, 2021, the Company announced that it had extended 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, the Company entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, the Company entered into long-term, multi-year agreements with CSOT. Under these agreements, the Company has granted CSOT non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company also supplies phosphorescent OLED materials to CSOT for use in its licensed products.

All material sales transactions that are not variable consideration transactions are billed and due within 90 days and substantially all are transacted in U.S. dollars.

Cost of Sales

Cost of sales consists of labor and material costs associated with the production of materials processed at the Company's manufacturing partners and at the Company's internal manufacturing processing facility. The Company’s portion of cost of sales also includes depreciation of manufacturing equipment, as well as manufacturing overhead costs and inventory adjustments for excess and obsolete inventory.

Research and Development

Expenditures for research and development are charged to expense as incurred.

Patent Costs

Costs associated with patent applications, patent prosecution, patent defense and the maintenance of patents are charged to expense as incurred. Costs to successfully defend a challenge to a patent are capitalized to the extent of an evident increase in the value of the patent. Costs that relate to an unsuccessful outcome are charged to expense.

Amortization of Acquired Technology

Amortization costs primarily relate to technology acquired from BASF and Fujifilm. These acquisitions were completed in the years ended December 31, 2016 and 2012, respectively. Acquisition costs are being amortized over a period of 10 years for both the BASF and Fujifilm patents.

Amortization of Other Intangible Assets

Other intangible assets primarily relate to the Adesis acquisition and are being amortized over a period of 10 to 15 years. See Note 7 for further discussion.

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

The Company’s reporting currency is the U.S. dollar. The functional currency for the UDC Ireland subsidiary is also the U.S. dollar and the functional currency for the OMM subsidiary and each of the Company's Asia-Pacific foreign subsidiaries is its local currency. The Company translates the amounts included in the Consolidated Statements of Income from OMM and its Asia-Pacific foreign subsidiaries into U.S. dollars at weighted-average exchange rates, which the Company believes are representative of the actual exchange rates on the dates of the transactions. The Company's foreign subsidiaries' assets and liabilities are translated into U.S. dollars from the local currency at the actual exchange rates as of the end of each reporting date, and the Company records the resulting foreign exchange translation adjustments in the Consolidated Balance Sheets as a component of accumulated other comprehensive loss. The overall effect of the translation of foreign currency and foreign currency transactions to date has been insignificant.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties, if any, related to unrecognized tax benefits as a component of tax expense.

Share-Based Payment Awards

The Company recognizes in the Consolidated Statements of Income the grant-date fair value of equity-based awards such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units and performance unit awards issued to employees and directors.

The grant-date fair value of stock awards is based on the closing price of the stock on the date of grant. The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of forfeitures. The Company issues new shares upon the respective grant, exercise or vesting of the share-based payment awards, as applicable.

Performance unit awards are subject to either a performance-based or market-based vesting requirement. For performance-based vesting, the grant-date fair value of the award, based on fair value of the Company's common stock, is recognized over the service period based on an assessment of the likelihood that the applicable performance goals will be achieved and compensation expense is periodically adjusted based on actual and expected performance. Compensation expense for performance unit awards with market-based vesting is calculated based on the estimated fair value as of the grant date utilizing a Monte Carlo simulation model and is recognized over the service period on a straight-line basis. 

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CASH, CASH EQUIVALENTS AND INVESTMENTS

9 Months Ended

Sep. 30, 2021

Cash And Cash Equivalents [Abstract]

CASH, CASH EQUIVALENTS AND INVESTMENTS

3. CASH, CASH EQUIVALENTS AND INVESTMENTS:

The Company’s portfolio of fixed income securities consists of term bank certificates of deposit, U.S. Government bonds, corporate bonds and convertible notes. The Company considers all highly liquid debt instruments purchased with an original maturity (maturity at the purchase date) of three months or less to be cash equivalents. The Company classifies its remaining debt security

investments as available-for-sale. These debt securities are carried at fair market value, with unrealized gains and losses reported in shareholders’ equity. Gains or losses on securities sold are based on the specific identification method.

Cash and Cash Equivalents

The following table provides details regarding the Company’s portfolio of cash and cash equivalents (in thousands):

	Amortized		Unrealized					Aggregate Fair
Cash and Cash Equivalents Classification	Cost		Gains		(Losses)			Market Value
September 30, 2021
Cash accounts in banking institutions	$	222,833	$	—	$	—		$	222,833
Money market accounts		17,339		—		—			17,339
U.S. Government bonds		294,988		—		(3	)		294,985
	$	535,160	$	—	$	(3	)	$	535,157
December 31, 2020
Cash accounts in banking institutions	$	163,779	$	—	$	—		$	163,779
Money market accounts		17,261		—		—			17,261
U.S. Government bonds		448,970		6		(4	)		448,972
	$	630,010	$	6	$	(4	)	$	630,012

Short-term Investments

The following table provides details regarding the Company’s portfolio of short-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Short-term Investments Classification	Cost		Gains		(Losses)			Market Value
September 30, 2021
Certificates of deposit	$	480	$	—	$	—		$	480
Corporate bonds		253,279		43		(16	)		253,306
	$	253,759	$	43	$	(16	)	$	253,786
December 31, 2020
U.S. Government bonds	$	99,929	$	67	$	—		$	99,996
	$	99,929	$	67	$	—		$	99,996

Minority Investments and Convertible Notes

The Company’s portfolio of minority investments and convertible notes consist of investments in privately held early-stage companies primarily motivated to gain early access to new technology and are passive in nature in that the Company does not obtain representation on the board of directors of the companies in which it invests. Minority investments and convertible notes are included in investments on the Consolidated Balance Sheets. As of September 30, 2021, the Company had two minority investments with a total carrying value of $8.0 million accounted for as equity securities without readily determinable fair values. As of September 30, 2021, the Company had one convertible note investment with a fair value of $500,000 accounted for as an available-for-sale debt security with a level 3 fair value measurement.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

4. FAIR VALUE MEASUREMENTS:

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2021 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of September 30,  2021		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	312,324	$	312,324	$	—	$	—
Short-term investments		253,786		253,786		—		—
Convertible notes		500		—		—		500

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2020 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of December 31,  2020		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	466,233	$	466,233	$	—	$	—
Short-term investments		99,996		99,996		—		—

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification is determined based on the lowest level input that is significant to the fair value measurement.

Changes in fair value of the debt investments are recorded as unrealized gains and losses in accumulated other comprehensive loss on the Consolidated Balance Sheets and any credit losses on debt investments are recorded as an allowance for credit losses with an offset recognized in other income, net on the Consolidated Statements of Income. There were no credit losses on debt investments as of September 30, 2021 or December 31, 2020.

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INVENTORY

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

INVENTORY

5. INVENTORY:

Inventory consisted of the following (in thousands):

	September 30, 2021		December 31, 2020
Raw materials	$	73,100	$	46,843
Work-in-process		11,411		9,904
Finished goods		36,974		34,844
Inventory	$	121,485	$	91,591

The Company recorded an increase in inventory reserve of $1.0 million and $198,000 for the three months ended September 30, 2021 and 2020, respectively, and $2.1 million and $808,000 for the nine months ended September 30, 2021 and 2020, respectively, due to excess inventory levels in certain products.

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PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2021

Property Plant And Equipment [Abstract]

PROPERTY AND EQUIPMENT

6. PROPERTY AND EQUIPMENT:

Property and equipment, net consist of the following (in thousands):

	September 30, 2021			December 31, 2020
Land	$	2,642		$	2,642
Building and improvements		74,983			53,568
Office and lab equipment		101,344			85,881
Furniture, fixtures and computer related assets		15,826			8,921
Construction-in-progress		11,155			23,594
		205,950			174,606
Less: Accumulated depreciation		(86,962	)		(72,493	)
Property and equipment, net	$	118,988		$	102,113

Depreciation expense was $5.3 million and $3.9 million for the three months ended September 30, 2021 and 2020, respectively, and $14.5 million and $11.1 million for the nine months ended September 30, 2021 and 2020, respectively.

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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2021

Finite Lived Intangible Assets Net [Abstract]

GOODWILL AND INTANGIBLE ASSETS

7. GOODWILL AND INTANGIBLE ASSETS:

The Company monitors the recoverability of goodwill annually or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Purchased intangible assets subject to amortization consist of acquired technology and other intangible assets that include trade names, customer relationships and developed intellectual property (IP) processes.

Acquired Technology

Acquired technology consists of acquired license rights for patents and know-how obtained from PD-LD, Inc., Motorola, BASF SE (BASF) and Fujifilm. These intangible assets consist of the following (in thousands):

	September 30, 2021			December 31, 2020
PD-LD, Inc.	$	1,481		$	1,481
Motorola		15,909			15,909
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		462			462
		223,303			223,303
Less: Accumulated amortization		(168,489	)		(153,050	)
Acquired technology, net	$	54,814		$	70,253

Amortization expense related to acquired technology was $5.1 million for both three-month periods ended September 30, 2021 and 2020, and $15.4 million for both nine-month periods ended September 30, 2021 and 2020. Amortization expense is included in amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $5.1 million for the three months ending December 31, 2021, $15.8 million in the year ending December 31, 2022, $9.7 million in the year ending December 31, 2023, $9.6 million in the years ending December 31, 2024 and 2025 and $5.0 million in total thereafter.

Fujifilm Patent Acquisition

On July 23, 2012, the Company entered into a Patent Sale Agreement with Fujifilm. Under the agreement, Fujifilm sold more than 1,200 OLED-related patents and patent applications in exchange for a cash payment of $105.0 million, plus costs incurred in connection with the purchase. The agreement contains customary representations and warranties and covenants, including respective covenants not to sue by both parties thereto. The agreement permitted the Company to assign all of its rights and obligations under the agreement to its affiliates, and the Company assigned, prior to the consummation of the transactions contemplated by the agreement, its rights and obligations to UDC Ireland, a wholly-owned subsidiary of the Company formed under the laws of the Republic of Ireland. The transactions contemplated by the agreement were consummated on July 26, 2012. The Company recorded the $105.0 million plus $4.5 million of purchase costs as acquired technology, which is being amortized over a period of 10 years.

BASF Patent Acquisition

On June 28, 2016, UDC Ireland entered into and consummated an IP Transfer Agreement with BASF. Under the IP Transfer Agreement, BASF sold to UDC Ireland all of its rights, title and interest to certain of its owned and co-owned intellectual property rights relating to the composition of, development, manufacture and use of OLED materials, including OLED lighting and display stack technology, as well as certain tangible assets. The intellectual property includes knowhow and more than 500 issued and pending patents in the area of phosphorescent materials and technologies. These assets were acquired in exchange for a cash payment of €86.8 million ($95.8 million). In addition, UDC Ireland also took on certain rights and obligations under three joint research and development agreements to which BASF was a party. The IP Transfer Agreement also contains customary representations, warranties and covenants of the parties. UDC Ireland recorded the payment of €86.8 million ($95.8 million) and acquisition costs incurred of $217,000 as acquired technology, which is being amortized over a period of 10 years.

Other Intangible Assets

As a result of the Adesis acquisition in June 2016, the Company recorded $16.8 million of other intangible assets, including $10.5 million assigned to customer relationships with a weighted average life of 11.5 years, $4.8 million of internally developed IP, processes and recipes with a weighted average life of 15 years, and $1.5 million assigned to trade name and trademarks with a weighted average life of 10 years.

At September 30, 2021, these other intangible assets consist of the following (in thousands):

	September 30, 2021
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(4,743	)	$	5,777
Developed IP, processes and recipes		4,820		(1,668	)		3,152
Trade name/Trademarks		1,500		(780	)		720
Other		394		(15	)		379
Total identifiable other intangible assets	$	17,234	$	(7,206	)	$	10,028

Amortization expense related to other intangible assets was $358,000 and $348,000 for the three months ended September 30, 2021 and 2020, respectively, and $1.1 million and $1.0 million for the nine months ended September 30, 2021 and 2020, respectively. Amortization expense is included in amortization of acquired technology and other intangible assets expense line item on the Consolidated Statements of Income and is expected to be $358,000 for the three months ending December 31, 2021, $1.4 million for each of the next four fiscal years (2022 – 2025) and $4.0 million in total thereafter.

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LEASES

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

LEASES

8. LEASES:

The Company has entered into operating leases to facilitate the expansion of its manufacturing, research and development, and selling, general and administrative activities. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when those events are reasonably certain to occur. The interest rate implicit in lease contracts is typically not readily determinable and as such the Company uses the appropriate incremental borrowing rate based on information available at the lease commencement date in determining the present value of the lease payments. Current lease agreements do not contain any residual value guarantees or material restrictive covenants. As of September 30, 2021, the Company did not have any finance leases and no additional operating leases that have not yet commenced.

The following table presents the Company’s operating lease cost and supplemental cash flow information related to the Company’s operating leases (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating lease cost	$	1,163	$	537	$	2,536	$	1,609
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	16,103	$	—	$	26,174	$	—

The increase in right-of-use assets obtained in exchange for lease obligations for the three and nine months ended September 30, 2021 was primarily due to the commencement of the operating lease related to expansion of the Adesis research facilities in Wilmington, Delaware.

The following table presents the Company’s operating right-of-use assets and liabilities (in thousands):

	September 30, 2021		December 31, 2020
Right-of-use assets	$	31,627	$	8,750
Short-term lease liabilities		3,111		1,871
Long-term lease liabilities		28,516		6,879

The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities:

	September 30, 2021
Weighted average remaining lease term (in years)		8.8
Weighted average discount rate		2.8	%

As of September 30, 2021, current operating leases had remaining terms between eleven months and ten years with options to extend the lease terms.

Undiscounted future minimum lease payments as of September 30, 2021, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows (in thousands):

	Maturities of Operating Lease Liabilities
2021 (1)	$	771
2022		4,111
2023		4,032
2024		3,980
2025		4,022
Thereafter		18,656
Total lease payments		35,572
Less: Imputed interest		(3,945	)
Present value of lease payments	$	31,627

(1)Scheduled maturities of lease liabilities represent the period from October 1, 2021 to December 31, 2021.

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RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON UNIVERSITY, UNIVERSITY OF SOUTHERN CALIFORNIA AND THE UNIVERSITY OF MICHIGAN

9 Months Ended

Sep. 30, 2021

Research And Development [Abstract]

RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON UNIVERSITY, UNIVERSITY OF SOUTHERN CALIFORNIA AND THE UNIVERSITY OF MICHIGAN

9. RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON UNIVERSITY, UNIVERSITY OF SOUTHERN CALIFORNIA AND THE UNIVERSITY OF MICHIGAN:

The Company has long-standing relationships with Princeton University (Princeton) and the University of Southern California (USC), dating back to 1994, for the conduct of research relating to the Company’s OLED and other organic thin-film technologies and materials. This research had been performed at Princeton under the direction of Professor Stephen R. Forrest and at USC under the direction of Professor Mark E. Thompson.

Under an Amended License Agreement entered into in 1997 by the Company, Princeton and USC (as amended, the 1997 Amended License Agreement), Princeton and USC granted the Company worldwide, exclusive license rights, with rights to sublicense, to make, have made, use, lease and/or sell products and to practice processes based on patent applications and issued patents arising out of research performed by Princeton and USC for the Company. Under the 1997 Amended License Agreement, the Company pays Princeton royalties of 3% of the net sales price for licensed products it sells or 3% of the revenues the Company receives from its sublicensees for their sale of licensed products. The Company recorded royalty expense in connection with this agreement of $258,000 and $3.3 million for the three months ended September 30, 2021 and 2020, respectively, and $519,000 and $8.2 million for the nine months ended September 30, 2021 and 2020, respectively. The decline in the royalty expense was primarily due to the expiration of patents relating to the licensed products, as specified in the 1997 Amended License Agreement.

In 2006, Professor Forrest transferred from Princeton to the University of Michigan (Michigan) and the Company amended the 1997 Amended License Agreement to include Michigan as a party to that agreement. Also in connection with the transfer, the Company entered into a sponsored research agreement with USC under which the Company continues to fund organic electronics research being conducted by Professors Forrest and Thompson (the 2006 Research Agreement). 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.

The Company makes payments under the 2006 Research Agreement to USC on a quarterly basis as actual expenses are incurred. As of September 30, 2021, the Company was obligated to pay USC up to $4.5 million for work to be performed during the remaining extended term. The Company recorded research and development expense in connection with work performed under the 2006 Research Agreement of $384,000 and $309,000 for the three months ended September 30, 2021 and 2020, respectively, and $1.1 million and $890,000 for the nine months ended September 30, 2021 and 2020, respectively.

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EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS

9 Months Ended

Sep. 30, 2021

Long Term Commitment Excluding Unconditional Purchase Obligation [Abstract]

EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS

10. EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS:

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG Industries, Inc. (PPG) (the New OLED Materials Agreement), which replaced the original OLED Materials Agreement with PPG effective as of October 1, 2011. The term of the New OLED Materials Agreement ran through December 31, 2015 and is automatically renewed for additional one-year terms, unless terminated by the Company by providing prior notice of one year or terminated by PPG by providing prior notice of two years. The agreement was automatically renewed through December 31, 2021. The New OLED Materials Agreement contains provisions that are substantially similar to those of the original OLED Materials Agreement. Under the New OLED Materials Agreement, PPG continues to assist the Company in developing its proprietary OLED materials and supplying the Company with those materials for evaluation purposes and for resale to its customers.

Under the New OLED Materials Agreement, the Company compensates PPG on a cost-plus basis for the services provided during each calendar quarter. The Company is required to pay for some of these services in all cash. Up to 50% of the remaining services are payable, at the Company’s sole discretion, in cash or shares of the Company’s common stock, with the balance payable in cash. The actual number of shares of common stock issuable to PPG is determined based on the average closing price for the Company’s common stock during a specified number of days prior to the end of each calendar half-year period ending on March 31 and September 30. If, however, this average closing price is less than $20.00, the Company is required to compensate PPG in cash. No shares were issued for services to PPG for the three or nine months ended September 30, 2021 or 2020.

The Company is also required to reimburse PPG for raw materials used for research and development. The Company records the purchases of these raw materials as a current asset until such materials are used for research and development efforts.

On February 23, 2021, the Company entered into an amendment to the New OLED Materials Agreement specifying operation and maintenance services that will be provided by PPG affiliate, PPG SCM Ireland Limited, to OMM, at the new manufacturing site in Shannon, Ireland, currently being leased by OMM for the production of OLED materials. Facility improvements and regulatory approvals are expected to be completed in the next 12 months and operations are scheduled to commence by mid-year 2022. As with the initial New OLED Materials Agreement, the Company will compensate PPG on a cost-plus basis for the services provided at the Shannon manufacturing facility.

The Company recorded research and development expense of $789,000 and $821,000 for the three months ended September 30, 2021 and 2020, respectively, and $3.0 million and $2.1 million for the nine months ended September 30, 2021 and 2020, respectively, in relation to the cash portion of the reimbursement of expenses and work performed by PPG, excluding amounts paid for commercial chemicals.

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SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

SHAREHOLDERS' EQUITY

11. SHAREHOLDERS’ EQUITY:

Preferred Stock

The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to 5,000,000 shares of $0.01 par value preferred stock with designations, rights and preferences determined from time-to-time by the Company’s Board of Directors. Accordingly, the Company’s Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights superior to those of shareholders of the Company’s common stock.

In 1995, the Company issued 200,000 shares of Series A Nonconvertible Preferred Stock (Series A) to American Biomimetics Corporation (ABC) pursuant to a certain Technology Transfer Agreement between the Company and ABC. The Series A shares have a liquidation value of $7.50 per share. Series A shareholders, as a single class, have the right to elect two members of the Company’s Board of Directors. This right has never been exercised. Holders of the Series A shares are entitled to one vote per share on matters which shareholders are generally entitled to vote. The Series A shareholders are not entitled to any dividends.

As of September 30, 2021, the Company had issued 200,000 shares of preferred stock, all of which were outstanding.

Common Stock

The Company’s Amended and Restated Articles of Incorporation authorize it to issue up to 200,000,000 shares of $0.01 par value common stock. Each share of the Company’s common stock entitles the holder to one vote on all matters to be voted upon by the shareholders.

As of September 30, 2021, the Company had issued 49,060,909 shares of common stock, of which 47,695,261 were outstanding. During the three and nine months ended September 30, 2021 and 2020, the Company repurchased no shares of common stock.

Scientific Advisory Board Awards

During the nine months ended September 30, 2021 and 2020, the Company granted a total of 1,400 and 1,926 shares, respectively, of fully vested common stock to non-employee members of the Scientific Advisory Board for services performed in 2020 and 2019, respectively. The fair value of shares issued to members of the Scientific Advisory Board was $300,000 for both nine-month periods.

Dividends

During the three months ended September 30, 2021, the Company declared and paid cash dividends of $0.20 per share, or $9.5 million, and during the nine months ended September 30, 2021, the Company declared and paid cash dividends of $0.60 per share, or $28.5 million, on the Company’s outstanding common stock.

On November 1, 2021, the Company’s Board of Directors declared a fourth quarter dividend of $0.20 per share to be paid on December 30, 2021 to all shareholders of record of the Company’s common stock as of the close of business on December 16, 2021. All future dividends will be subject to the approval of the Company’s Board of Directors.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

9 Months Ended

Sep. 30, 2021

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

12. ACCUMULATED OTHER COMPREHENSIVE LOSS:

Amounts related to the changes in accumulated other comprehensive loss were as follows (in thousands):

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2020, net of tax	$	91		$	(36,075	)	$	(35	)	$	(36,019	)
Other comprehensive loss    before reclassification		(35	)		—			(224	)		(259	)
Reclassification to net income (1)		—			3,522			—			3,522		Selling, general and administrative, research and development and cost of sales
Change during period		(35	)		3,522			(224	)		3,263
Balance September 30, 2021, net of tax	$	56		$	(32,553	)	$	(259	)	$	(32,756	)

	Unrealized Gain (Loss) on Available-for-Sale Securities		Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2019, net of tax	$	191	$	(17,167	)	$	(21	)	$	(16,997	)
Other comprehensive gain (loss)    before reclassification		342		—			(29	)		313
Reclassification to net income (1)		—		1,917			—			1,917		Selling, general and administrative, research and development and cost of sales
Change during period		342		1,917			(29	)		2,230
Balance September 30, 2020, net of tax	$	533	$	(15,250	)	$	(50	)	$	(14,767	)

(1)The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $3.5 million and $1.9 million for the nine months ended September 30, 2021 and 2020, respectively.

(2)Refer to Note 14: Supplemental Executive Retirement Plan.

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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

STOCK-BASED COMPENSATION

13. STOCK-BASED COMPENSATION:

Equity Compensation Plan

The Equity Compensation Plan provides for the granting of incentive and nonqualified stock options, shares of common stock, stock appreciation rights and performance units to employees, directors and consultants of the Company. Stock options are exercisable over periods determined by the Company’s Human Capital Committee, but for no longer than 10 years from the grant date. Through September 30, 2021, the Company’s shareholders have approved increases in the number of shares reserved for issuance under the Equity Compensation Plan to 10,500,000, and have extended the term of the plan through 2024. As of September 30, 2021, there were 1,794,738 shares that remained available to be granted under the Equity Compensation Plan.

Restricted Stock Awards and Units

The Company has issued restricted stock awards and units to employees and non-employees with vesting terms of one to six years. The fair value is equal to the market price of the Company’s common stock on the date of grant for awards granted to employees and equal to the market price at the end of the reporting period for unvested non-employee awards or upon the date of vesting for vested non-employee awards. Expense for restricted stock awards and units is amortized ratably over the vesting period for the awards issued to employees and using a graded vesting method for the awards issued to non-employees.

During the nine months ended September 30, 2021, the Company granted 132,473 shares of restricted stock awards and restricted stock units to employees and non-employees, which had a total fair value of $28.3 million on the respective dates of grant, and will vest over three to five years from the date of grant, provided that the grantee is still an employee of the Company or is still providing services to the Company on the applicable vesting date.

For the three months ended September 30, 2021 and 2020, the Company recorded, as compensation charges related to all restricted stock awards and units granted to employees and non-employees, selling, general and administrative expense of $3.8 million and $3.4 million, respectively, research and development expense of $1.3 million and $1.2 million, respectively, and cost of sales of $598,000 and $526,000, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded, as compensation charges related to all restricted stock awards and units granted to employees and non-employees, selling, general and administrative expense of $11.4 million and $10.4 million, respectively, research and development expense of $3.9 million and $3.2 million, respectively, and cost of sales of $1.9 million and $1.4 million, respectively.

In connection with the vesting of restricted stock awards and units during the three months ended September 30, 2021 and 2020, 8,525 and 7,199 shares, respectively, with aggregate fair values of $1.9 million and $1.1 million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows. For the nine months ended September 30, 2021 and 2020, 69,352 and 86,005 shares, respectively, with aggregate fair values of $14.0 million and $12.4 million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

For the three months ended September 30, 2021 and 2020, the Company recorded as compensation charges related to all restricted stock units granted to non-employee members of the Scientific Advisory Board, whose unvested shares are marked to market each reporting period, research and development expense of $48,000 and $123,000, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded as compensation charges related to all restricted stock units granted to non-employee members of the Scientific Advisory Board, whose unvested shares are marked to market each reporting period, research and development expense of $160,000 and $235,000, respectively.

The Company has granted restricted stock units to non-employee members of the Board of Directors with quarterly vesting over a period of approximately one year. The fair value is equal to the market price of the Company's common stock on the date of grant. The restricted stock units are issued and expense is recognized ratably over the vesting period. For the three months September 30, 2021 and 2020, the Company recorded compensation charges for services performed, related to all restricted stock units granted to non-employee members of the Board of Directors, selling, general and administrative expense of $300,000 and $301,000, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded compensation charges for services performed, related to all restricted stock units granted to non-employee members of the Board of Directors, selling, general and administrative expense of $891,000 and $897,000, respectively. In connection with the vesting of the restricted stock, the Company issued to non-employee members of the Board of Directors 4,062 and 4,842 shares, respectively, during the nine months ended September 30, 2021 and 2020.

Performance Unit Awards

Each performance unit award is subject to both a performance-vesting requirement (either performance-based or market-based) and a service-vesting requirement. The performance-based vesting requirement is tied to the Company's cumulative revenue growth compared to the cumulative revenue growth of companies comprising the Nasdaq Electronics Components Index, as measured over a specific performance period. The market-based vesting requirement is tied to the Company's total shareholder return relative to the total shareholder return of companies comprising the Nasdaq Electronics Components Index, as measured over a specific performance period. The maximum number of performance units that may vest based on performance is two times the shares granted. Further, if the Company's total shareholder return is negative, the performance units may not vest at all.

During the nine months ended September 30, 2021, the Company granted 74,086 performance units, of which 39,291 units are subject to performance-based vesting requirements and 34,795 units are subject to market-based vesting requirements, and which will vest over the terms described below. The grant date fair value of the performance unit awards granted was $16.5 million for the nine

months ended September 30, 2021, as determined by the Company’s common stock on date of grant for the units with performance-based vesting and a Monte-Carlo simulation for the units with market-based vesting.

For the three months ended September 30, 2021 and 2020, the Company recorded selling, general and administrative expense of $1.8 million and $1.2 million, respectively, research and development expense of $476,000 and $323,000, respectively, and cost of sales of $292,000 and $196,000, respectively, related to performance units. For the nine months ended September 30, 2021 and 2020, the Company recorded selling, general and administrative expense of $3.8 million and $3.2 million, respectively, research and development expense of $1.0 million and $826,000, respectively, and cost of sales of $624,000 and $491,000, respectively, related to performance units.

In connection with the vesting of performance units during the nine months ended September 30, 2021 and 2020, 3,881 and 12,877 shares, respectively, with an aggregate fair value of $875,000 and $1.9 million, respectively, were withheld in satisfaction of tax withholding obligations and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

Employee Stock Purchase Plan

On April 7, 2009, the Board of Directors of the Company adopted an Employee Stock Purchase Plan (ESPP). The ESPP was approved by the Company’s shareholders and became effective on June 25, 2009. The Company has reserved 1,000,000 shares of common stock for issuance under the ESPP. Unless terminated by the Board of Directors, the ESPP will expire when all reserved shares have been issued.

Eligible employees may elect to contribute to the ESPP through payroll deductions during consecutive three-month purchase periods, the first of which began on July 1, 2009. Each employee who elects to participate will be deemed to have been granted an option to purchase shares of the Company’s common stock on the first day of the purchase period. Unless the employee opts out during the purchase period, the option will automatically be exercised on the last day of the period, which is the purchase date, based on the employee’s accumulated contributions to the ESPP. The purchase price will equal 85% of the lesser of the closing price per share of common stock on the first day of the period or the last business day of the period.

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

During the nine months ended September 30, 2021 and 2020, the Company issued 6,508 and 7,702 shares, respectively, of its common stock under the ESPP, resulting in proceeds of $1.1 million and $869,000, respectively.

For the three months ended September 30, 2021 and 2020, the Company recorded charges of $20,000 and $21,000, respectively, to selling, general and administrative expense, $46,000 and $34,000, respectively, to research and development expense, and $25,000 and $29,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature. For the nine months ended September 30, 2021 and 2020, the Company recorded charges of $78,000 and $81,000, respectively, to selling, general and administrative expense, $140,000 and $107,000, respectively, to research and development expense, and $86,000 and $85,000, respectively, to cost of sales related to the ESPP equal to the amount of the discount and the value of the look-back feature.

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

9 Months Ended

Sep. 30, 2021

Compensation And Retirement Disclosure [Abstract]

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

14. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN:

On March 18, 2010, the Human Capital Committee and the Board of Directors of the Company approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP). The SERP is currently unfunded and includes salary and bonus as part of the plan. The purpose of the SERP is to provide certain of the Company’s key employees with supplemental pension benefits following a cessation of their employment and to encourage their continued employment with the Company. As of September 30, 2021, there were seven participants in the SERP.

The Company records amounts relating to the SERP based on calculations that incorporate various actuarial and other assumptions, including discount rates, rate of compensation increases, retirement dates and life expectancies. The net periodic costs are recognized as employees render the services necessary to earn the SERP benefits.

The components of net periodic pension cost were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Service cost	$	419	$	273	$	1,276	$	819
Interest cost		291		321		874		963
Amortization of prior service cost		275		275		824		824
Amortization of loss		1,234		545		3,702		1,636
Total net periodic benefit cost	$	2,219	$	1,414	$	6,676	$	4,242

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES:

Commitments

Under the 2006 Research Agreement with USC, the Company is obligated to make certain payments to USC based on work performed by USC under that agreement, and by Michigan under its subcontractor agreement with USC. See Note 9 for further explanation.

Under the terms of the 1997 Amended License Agreement, the Company is required to make minimum royalty payments to Princeton. See Note 9 for further explanation.

The Company has agreements with six executive officers and 12 senior level employees which provide for certain cash and other benefits upon termination of employment of the officer or employee in connection with a change in control of the Company. If a covered person’s employment is terminated in connection with the change in control, the person is entitled to a lump-sum cash payment equal to two times (in the case of the executive officers) or either one or two times (in the case of the senior level employees) the sum of the average annual base salary and bonus of the person and immediate vesting of all stock options and other equity awards that may be outstanding at the date of the change in control, among other items.

In order to manage manufacturing lead times and help ensure adequate material supply, the Company entered into the New OLED Materials Agreement (see Note 10) that allows PPG to procure and produce inventory based upon criteria as defined by the Company. These purchase commitments consist of firm, noncancelable and unconditional commitments. In certain instances, this agreement allows the Company the option to reschedule and adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of September 30, 2021 and December 31, 2020, the Company had purchase commitments for inventory of $28.4 million and $13.7 million, respectively.

Patent Related Challenges and Oppositions

Each major jurisdiction in the world that issues patents provides both third parties and applicants an opportunity to seek a further review of an issued patent. The process for requesting and considering such reviews is specific to the jurisdiction that issued the patent in question, and generally does not provide for claims of monetary damages or a review of specific claims of infringement. The conclusions made by the reviewing administrative bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

The Company believes that opposition proceedings are frequently commenced in the ordinary course of business by third parties who may believe that one or more claims in a patent do not comply with the technical or legal requirements of the specific jurisdiction in which the patent was issued. The Company views these proceedings as reflective of its goal of obtaining the broadest legally permissible patent coverage permitted in each jurisdiction. Once a proceeding is initiated, as a general matter, the issued patent continues to be presumed valid until the jurisdiction’s applicable administrative body issues a final non-appealable decision. Depending on the jurisdiction, the outcome of these proceedings could include affirmation, denial or modification of some or all of the originally issued claims. The Company believes that as OLED technology becomes more established and its patent portfolio increases in size, so will the number of these proceedings.

Below is a summary of an active proceeding that has been commenced against an issued patent that is exclusively licensed to the Company. The Company does not believe that the confirmation, loss or modification of the Company’s rights in any individual claim or set of claims that are the subject of the following legal proceeding would have a material impact on the Company’s material sales or licensing business or on the Company’s Consolidated Financial Statements, including its Consolidated Statements of Income, as a whole. However, as noted within the description, the following proceeding involves an issued patent that relates to the Company’s fundamental phosphorescent OLED technologies and the Company intends to vigorously defend against claims that, in the Company’s opinion, seek to restrict or reduce the scope of the originally issued claim, which may require the expenditure of significant amounts of the Company’s

resources. In certain circumstances, when permitted, the Company 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.

Opposition to European Patent No. 1390962

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

The European Patent Office (EPO) combined the oppositions into a single opposition proceeding, and a hearing on this matter was held in December 2015, wherein the EPO Opposition Division revoked the patent claims for alleged insufficiencies under European Patent Convention Article 83. The Company believes the EPO's decision is erroneous and appealed the decision. Subsequent to the filing of the appeal, BASF withdrew its opposition to the patent. On appeal, the Appeals Division withdrew the lower Opposition Division’s rejections with respect to a portion of the original subject matter and remanded the matter to the lower Opposition Division for further consideration. The patent, as originally granted, is deemed valid during the pendency of the opposition process.

At this time, based on its current knowledge, the Company believes that the patent being challenged should be declared valid and that a significant portion of the Company's claims should be upheld. However, the Company cannot make any assurances of this result.

In addition to the above proceeding and now concluded proceedings which have been referenced in prior filings, from time to time, the Company may have other proceedings that are pending which relate to patents the Company acquired as part of the Fujifilm or BASF OLED patent acquisitions or which relate to technologies that are not currently widely used in the marketplace.

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CONCENTRATION OF RISK

9 Months Ended

Sep. 30, 2021

Risks And Uncertainties [Abstract]

CONCENTRATION OF RISK

16. CONCENTRATION OF RISK:

Revenues and accounts receivable from the Company's largest customers were as follows (in thousands):

	% of Total Revenue for the Three Months Ended September 30,		% of Total Revenue for the  Nine Months Ended September 30,		Accounts Receivable as of
Customer	2021	2020	2021	2020	September 30, 2021
A	50%	41%	46%	38%	$	10,129
B	27%	28%	25%	28%	$	23,786
C	7%	14%	14%	17%	$	33,520

Revenues from outside of North America represented approximately 97% of consolidated revenue for both three-month periods ended September 30, 2021 and 2020, and approximately 97% and 96% for the nine months ended September 30, 2021 and 2020, respectively. Revenues by geographic area are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Country	2021		2020		2021		2020
South Korea	$	95,741	$	66,667	$	250,040	$	167,154
China		41,323		43,569		138,135		101,911
Japan		1,911		2,279		5,227		6,263
Other non-U.S. locations		537		663		2,257		1,475
Total non-U.S. locations		139,512		113,178		395,659		276,803
United States		4,106		3,901		11,619		10,521
Total revenue	$	143,618	$	117,079	$	407,278	$	287,324

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

Long-lived assets (net), by geographic area are as follows (in thousands):

	September 30, 2021		December 31, 2020
United States	$	109,461	$	93,230
Other		9,527		8,883
Total long-lived assets	$	118,988	$	102,113

Substantially all chemical materials were purchased from one supplier. See Note 10.

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INCOME TAXES

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

17. INCOME TAXES:

The Company is subject to income taxes in both the United States and foreign jurisdictions. The effective income tax rate was an expense of 20.2% and 18.5% for the three months ended September 30, 2021 and 2020, respectively, and 19.4% and 17.9% for the nine months ended September 30, 2021 and 2020, respectively. The discrepancy between the statutory tax rate and the effective tax rate is primarily due to the benefit of income taxed in foreign jurisdictions partially offset by nondeductible employee compensation and U.S. international tax (GILTI and Subpart F). The Company recorded an income tax expense of $11.7 million and $9.2 million for the three months ended September 30, 2021 and 2020, respectively, and $33.4 million and $17.4 million for the nine months ended September 30, 2021 and 2020, respectively.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the Company's 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 its assessment, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. At this time there is no evidence to release the valuation allowance that has historically been recorded for the New Jersey research and development credit.

On December 27, 2018 the Korean Supreme Court, citing prior cases, held that the applicable law and interpretation of the Korea-U.S. Tax Treaty were clear that only royalties paid with respect to Korean registered patents are Korean source income and subject to Korean withholding tax. Based on this decision, in October 2021, a tax refund request on behalf of Universal Display Corporation was filed with the Korean National Tax Service (KNTS) for over-withheld taxes from 2018 to the second quarter of 2021. The Company has been advised by a leading Korean law firm that there is a more-likely-than-not chance of success. As a result, as of September 30, 2021 and December 31, 2020, the Company has recorded a long-term asset of $49.9 million and $40.1 million, respectively, representing the allocation of withholding to non-Korean patents and a long-term liability of $42.5 million and $32.7 million, respectively, for estimated amounts due to the U.S. Federal government based on the amendment of U.S. tax returns for lower withholding amounts.

With respect to the Korean withholding for the years 2011 through 2017, the Company has decided to continue the U.S.-Korean Mutual Agreement Procedure which was accepted by the KNTS on September 15, 2017. The Company believes that it is more-likely-than-not that a favorable settlement will be reached resulting in a reduction of the Korean withholding taxes previously withheld since 2011. A long-term asset of $36.9 million for estimated refunds due from the Korean government, a long-term payable of $16.2 million for estimated amounts due to the U.S. Federal government based on amendment of prior year U.S. tax returns for the lower withholding amounts, and a reduction of deferred tax assets for foreign tax credits and research and development credits of $20.7 million has been recorded on the September 30, 2021 and December 31, 2020 Consolidated Balance Sheets for this matter.

On October 30, 2018, the KNTS concluded a tax audit with LG Display that included the licensing and royalty payments made to UDC Ireland during the years 2015 through 2017. The KNTS questioned whether UDC Ireland was the beneficial owner of these payments and assessed UDC Ireland a charge of $13.2 million for withholding and interest for the three-year period. UDC Ireland has engaged a leading Korean law firm which believes it is more-likely-than-not that UDC Ireland has beneficial ownership of the underlying intellectual property. Based on this authority, UDC Ireland has paid the assessment which is recorded as a long-term asset as of September 30, 2021 and December 31, 2020. In September 2020, the Korean District Court ruled entirely in the favor of UDC Ireland on the beneficial ownership issue and the ruling was affirmed by the Korean High Court in August 2021. However, the KNTS has decided to appeal the ruling to the Korean Supreme Court.

The Company’s federal income tax returns for the years 2017 to 2020 are open and subject to examination. The State of New Jersey is currently auditing the 2014 to 2017 tax returns of UDC, Inc. The state and foreign tax returns are open for a period of generally three to four years.

The above estimates may change in the future and upon settlement.

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REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2021

Revenue From Contract With Customer [Abstract]

REVENUE RECOGNITION

18. REVENUE RECOGNITION:

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (Topic 606). The standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows from a contract with a customer.

For both three-month periods ended September 30, 2021 and 2020, the Company recorded 97% of its revenue from OLED related sales, and 3% from the providing of services through Adesis, respectively. For the nine months ended September 30, 2021 and 2020, the Company recorded 97% and 96% of its revenue from OLED related sales, respectively, and 3% and 4% from the providing of services through Adesis, respectively.

Contract Balances

The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):

	As of September 30, 2021
Accounts receivable	$	96,235
Short-term unbilled receivables		27,491
Long-term unbilled receivables		—
Short-term deferred revenue		123,475
Long-term deferred revenue		43,458

Short-term and long-term unbilled receivables are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. The deferred revenue balance at September 30, 2021 will be recognized as materials are shipped to customers over the remaining contract periods. As of September 30, 2021, the Company had $11.8 million of backlog associated with committed purchase orders from its customers for phosphorescent emitter material. These orders are anticipated to be fulfilled within the next 90 days.

Significant changes in the unbilled receivables and deferred liabilities balances for the nine months ended September 30, 2021 and 2020, are as follows (in thousands):

	Nine Months Ended September 30, 2021
	Unbilled Receivables			Deferred Revenue
Balance at December 31, 2020	$	10,429		$	(162,301	)
Revenue recognized that was previously included in deferred revenue, net		—			145,535
Increases due to cash received		—			(160,021	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			9,854
Unbilled receivables recorded, net		24,209
Transferred to receivables from unbilled receivables		(7,147	)		—
Net change		17,062			(4,632	)
Balance at September 30, 2021	$	27,491		$	(166,933	)

	Nine Months Ended September 30, 2020
	Unbilled Receivables		Deferred Revenue
Balance at December 31, 2019	$	1,362	$	(144,862	)
Revenue recognized that was previously included in deferred revenue, net		—		97,556
Increases due to cash received		—		(144,200	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		1,458
Unbilled receivables recorded, net		13,494		—
Net change		13,494		(45,186	)
Balance at September 30, 2020	$	14,856	$	(190,048	)

Unbilled receivables increased by $17.1 million during the nine months ended September 30, 2021 primarily due to a contractual amendment with an existing customer that revised the payment terms of royalty consideration in which the minimum royalty payment amount due is known prior to a fiscal period end, but ancillary supporting billing information is delayed, necessitating postponement of the issuance of the invoice until such ancillary information has been confirmed. As such, payments due the Company are recorded as an unbilled receivable as opposed to accounts receivable until the final customer invoice can be generated. There was no impact on the ASC 606 revenue recognition process which requires periodic updating of estimated total contract consideration which is then allocated based on the total material sales anticipated over the life of the individual contracts.

Cumulative catch-up adjustment arising from changes in estimates of transaction price, net increased $9.9 million during the nine months ended September 30, 2021 as compared to $1.5 million during the nine months ended September 30, 2020. The increase in the cumulative catch-up adjustment arising from changes in estimates of transaction price, net was primarily due to a reduction in the

forecast of emitters to be procured over the contract life by one of the Company's customers that resulted from a change in their near-term production needs, as well as improved forecasted royalty consideration resulting from higher levels of current and anticipated customer sales of OLED products.

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NET INCOME PER COMMON SHARE

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

NET INCOME PER COMMON SHARE

19. NET INCOME PER COMMON SHARE:

The Company computes earnings per share in accordance with ASC Topic 260, Earnings per Share, which requires earnings per share (EPS) for each class of stock to be calculated using the two-class method. The two-class method is an allocation of income between the holders of common stock and the Company's participating security holders. Under the two-class method, income for the reporting period is allocated between common shareholders and other security holders based on their respective participation rights in undistributed income. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method.

Basic net income per common share is computed by dividing net income allocated to common shareholders by the weighted-average number of shares of common stock outstanding for the period excluding unvested restricted stock units and performance units. Net income allocated to the holders of the Company's unvested restricted stock awards is calculated based on the shareholders proportionate share of weighted average shares of common stock outstanding on an if-converted basis.

For purposes of determining diluted net income per common share, basic net income per share is further adjusted to include the effect of potential dilutive common shares outstanding, including stock options, restricted stock units and performance units, and the impact of shares to be issued under the Employee Stock Purchase Plan.

The following table is a reconciliation of net income and the shares used in calculating basic and diluted net income per common share for the three and nine months ended September 30, 2021 and 2020 (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Numerator:
Net income	$	46,109		$	40,500		$	138,337		$	79,470
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(255	)		(277	)		(857	)		(613	)
Adjusted net income	$	45,854		$	40,223		$	137,480		$	78,857
Denominator:
Weighted average common shares outstanding – Basic		47,291,192			47,227,061			47,286,927			47,182,625
Effect of dilutive shares:
Common stock equivalents arising from stock options and ESPP		400			339			769			1,263
Restricted stock awards and units and performance units		70,983			32,931			67,887			28,772
Weighted average common shares outstanding – Diluted		47,362,575			47,260,331			47,355,583			47,212,660
Net income per common share:
Basic	$	0.97		$	0.85		$	2.91		$	1.67
Diluted	$	0.97		$	0.85		$	2.90		$	1.67

For both three-month and nine-month periods ended September 30, 2021 and 2020, there were no unvested restricted stock awards, restricted stock units, performance unit awards and stock options excluded from the calculation of diluted EPS as their impact would have been antidilutive.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Accounting

Interim Financial Information

In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of September 30, 2021 and results of operations for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020. While management believes that the disclosures presented are adequate to make the information not misleading, these unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the Company’s latest year-end Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The results of the Company’s operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for the full year.

Principles of Consolidation

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Universal Display Corporation and its wholly owned subsidiaries, UDC, Inc., UDC Ireland Limited (UDC Ireland), Universal Display Corporation Hong Kong, Limited, Universal Display Corporation Korea, Y.H., Universal Display Corporation Japan GK, Universal Display Corporation China, Ltd., Adesis, Inc. (Adesis), UDC Ventures LLC, OVJP Corporation (OVJP Corp) and OLED Material Manufacturing Limited (OMM). All intercompany transactions and accounts have been eliminated.

In November 2020, a wholly-owned subsidiary of UDC Ireland, OMM, was formed as an Ireland limited company. Based out of Shannon, Ireland, OMM was formed to increase the Company’s production capacity to meet market demand and diversify the manufacturing base due to evolving industry requirements.

Management's Use of Estimates

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The estimates made are principally in the areas of revenue recognition including estimates of material unit sales and royalties, the useful life of acquired intangibles, lease liabilities, right-of-use assets, the use and recoverability of inventories, intangibles, investments and income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Inventories

Inventories

Inventories consist of raw materials, work-in-process and finished goods, including inventory consigned to customers, and are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventory valuation and firm committed purchase order assessments are performed on a quarterly basis and those items that are identified to be obsolete or in excess of forecasted usage are written down to their estimated realizable value. Estimates of realizable value are based upon management’s analyses and assumptions, including, but not limited to, forecasted sales levels by product, expected product lifecycle, product development plans and future demand requirements. A 12-month rolling forecast based on factors, including, but not limited to, production cycles, anticipated product orders, marketing forecasts, backlog, and shipment activities is used in the inventory analysis. If market conditions are less favorable than forecasts or actual demand from customers is lower than estimates, additional inventory write-downs may be required. If demand is higher than expected, inventories that had previously been written down may be sold.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying values of accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value in the accompanying Consolidated Financial Statements due to the short-term nature of those instruments. The Company’s other financial instruments, which include cash equivalents, investments, retirement plan benefit liability and other liabilities are carried at fair value.

Minority Equity Investments

Minority Equity Investments

The Company accounts for minority equity investments in companies that are not accounted for under the equity method as equity securities without readily determinable fair values. The fair value of these securities is based on original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Under this method, the share of income or loss of such companies is not included in the Consolidated Statements of Income. The carrying value of these investments is included in investments on the Consolidated Balance Sheets.

The Company’s policy is to recognize an impairment in the value of its minority equity investments when clear evidence of an impairment exists. Factors considered in the assessment include a significant adverse change in the regulatory, economic, or technological environment, the completion of new equity financing that may indicate a decrease in value, the failure to complete new equity financing arrangements after seeking to raise additional funds, or the commencement of proceedings under which the assets of the business may be placed in receivership or liquidated to satisfy the claims of debt and equity stakeholders.

Leases

Leases

The Company is a lessee in operating leases primarily incurred to facilitate the expansion of manufacturing, research and development, and selling, general and administrative activities. At contract inception, the Company determines if an arrangement is or contains a lease, and if so recognizes a right-of-use asset and lease liability at the lease commencement date. For operating leases, the lease liability is measured at the present value of the unpaid lease payments at the lease commencement date, whereas for finance leases, the lease liability is initially measured at the present value of the unpaid lease payments and subsequently measured at amortized cost using the interest method. Operating lease right-of-use assets are included in other assets on the Consolidated Balance Sheets. The short-term portion of operating lease liabilities is included in other current liabilities on the Consolidated Balance Sheets and the long-term portion is included in other liabilities on the Consolidated Balance Sheets. As of September 30, 2021, the Company had no leases that qualified as financing arrangements.

Key estimates and judgments include how the Company determines the discount rate used to discount the unpaid lease payments to present value and the lease term. The Company monitors for events or changes in circumstances that could potentially require recognizing an impairment loss.

Revenue Recognition and Deferred Revenue

Revenue Recognition and Deferred Revenue

Material sales relate to the Company’s sale of its OLED materials for incorporation into its customers’ commercial OLED products or for their OLED development and evaluation activities. Revenue associated with material sales is generally recognized at the time title passes, which is typically at the time of shipment or at the time of delivery, depending upon the contractual agreement between the parties. Revenue may be recognized after control of the material passes in the event the transaction price includes variable consideration. For example, a customer may be provided an extended opportunity to stock materials prior to use in mass production and given a general right of return not conditioned on breaches of warranties associated with the specific product. 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 the Company’s OLED technologies are conveyed to the customer through technology license agreements and material supply agreements. The Company believes that the licenses and materials sold under these combined agreements are not distinct from each other for financial reporting purposes and as such, are accounted for as a single performance obligation. Accordingly, total contract consideration is estimated and recognized over the contract term based on material units sold at the estimated per unit fee over the life of the contract. Total contract consideration is allocated to material sales and royalty and licensing fees on the Consolidated Statements of Income based on contract pricing.

Various estimates are relied upon to recognize revenue. The Company estimates total material units to be purchased by its customers over the contract term based on historical trends, industry estimates and its forecast process. Management uses the expected value method to estimate the material per unit fee. Additionally, management estimates the total sales-based royalties based on the estimated net sales revenue of its customers over the contract term.

Contract research services revenue is revenue earned by Adesis by providing chemical materials synthesis research, development and commercialization for non-OLED applications on a contractual basis. These services range from intermediates for structure-activity relationship studies, reference agents and building blocks for combinatorial synthesis, re-synthesis of key intermediates, specialty organic chemistry needs, and selective toll manufacturing. These services are provided to third-party pharmaceutical and life sciences firms and other technology firms at fixed costs or on an annual contract basis. Revenue is recognized as services are performed with billing schedules and payment terms negotiated on a contract-by-contract basis. Payments received in excess of revenue recognized are recorded as deferred revenue. In other cases, services may be provided and revenue is recognized before the customer is invoiced. In these cases, revenue recognized will exceed amounts billed and the difference, representing amounts which are currently unbillable to the customer pursuant to contractual terms, is recorded as an unbilled receivable.

Technology development and support revenue is revenue earned from development and technology evaluation agreements and commercialization assistance fees, along with, to a minimal extent, government contracts. Relating to the Company’s government contracts, the Company may receive reimbursements by government entities for all or a portion of the research and development costs the Company incurs. Revenues are recognized as services are performed, proportionally as research and development costs are incurred, or as defined milestones are achieved. Technology development and support revenue is included in contract research services on the Consolidated Statements of Income.

In 2018, the Company entered into a commercial patent license agreement with Samsung Display Co., Ltd. (SDC). This agreement, which covers the manufacture and sale of specified OLED display materials, was effective as of January 1, 2018 and lasts through the end of 2022 with an additional two-year extension option. Under this agreement, the Company is being paid a license fee, payable in quarterly installments over the agreement term of five years. The agreement conveys to SDC the non-exclusive right to use certain of the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets.

At the same time the Company entered into the current commercial license agreement with SDC, the Company also entered into a new supplemental material purchase agreement with SDC. Under the supplemental material purchase agreement, SDC agrees to purchase from the Company a minimum amount of phosphorescent emitter materials for use in the manufacture of licensed products. This minimum commitment is subject to SDC’s requirements for phosphorescent emitter materials and the Company’s ability to meet these requirements over the term of the supplemental agreement.

In 2015, the Company entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display) which were effective as of January 1, 2015 and superseded the existing 2007 commercial supply agreement between the parties. The terms of the agreements were set to expire by the end of 2022. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under the Company's patent portfolio. The patent license calls for license fees, prepaid royalties and running royalties on licensed products. The agreements include customary provisions relating to warranties, indemnities, confidentiality, assignability and business terms. 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 to be generated under the patent license agreement. The Company generates revenue under these agreements that are predominantly tied to LG Display’s sales of OLED licensed products. The OLED commercial supply agreement provides for the sale of materials for use by LG Display, which may include phosphorescent emitters and host materials.

In 2021, the Company entered into amendments of the OLED patent license agreement and the OLED commercial supply agreement with LG Display, which were effective as of January 1, 2021. The amended agreements included a term extension and are set to expire by the end of 2025.

In 2016, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, the Company has granted Tianma non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, the parties extended the terms of both the patent license and material purchase agreements for an additional multi-year-term.

In 2017, the Company entered into long-term, multi-year agreements with BOE Technology Group Co., Ltd. (BOE). Under these agreements, the Company has granted BOE non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company supplies phosphorescent OLED materials to BOE for use in its licensed products.

In 2018, the Company entered into long-term, multi-year OLED patent license and material purchase agreements with Visionox Technology, Inc. (Visionox). Under the license agreement, the Company granted certain of Visionox’s affiliates a non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The license agreement calls for license fees and running royalties on licensed products. Additionally, the Company supplies phosphorescent OLED materials to Visionox for use in its licensed products. On April 22, 2021, the Company announced that it had extended 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, the Company entered into an evaluation and commercial supply relationship with Wuhan China Star Optoelectronics Semiconductor Display Technology Co., Ltd. (CSOT). In 2020, the Company entered into long-term, multi-year agreements with CSOT. Under these agreements, the Company has granted CSOT non-exclusive license rights under various patents owned or controlled by the Company to manufacture and sell OLED display products. The Company also supplies phosphorescent OLED materials to CSOT for use in its licensed products.

All material sales transactions that are not variable consideration transactions are billed and due within 90 days and substantially all are transacted in U.S. dollars.

Cost of Sales

Cost of Sales

Cost of sales consists of labor and material costs associated with the production of materials processed at the Company's manufacturing partners and at the Company's internal manufacturing processing facility. The Company’s portion of cost of sales also includes depreciation of manufacturing equipment, as well as manufacturing overhead costs and inventory adjustments for excess and obsolete inventory.

Research and Development

Research and Development

Expenditures for research and development are charged to expense as incurred.

Patent Costs

Patent Costs

Costs associated with patent applications, patent prosecution, patent defense and the maintenance of patents are charged to expense as incurred. Costs to successfully defend a challenge to a patent are capitalized to the extent of an evident increase in the value of the patent. Costs that relate to an unsuccessful outcome are charged to expense.

Amortization of Acquired Technology

Amortization of Acquired Technology

Amortization costs primarily relate to technology acquired from BASF and Fujifilm. These acquisitions were completed in the years ended December 31, 2016 and 2012, respectively. Acquisition costs are being amortized over a period of 10 years for both the BASF and Fujifilm patents.

Amortization of Other Intangible Assets

Amortization of Other Intangible Assets

Other intangible assets primarily relate to the Adesis acquisition and are being amortized over a period of 10 to 15 years. See Note 7 for further discussion.

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

The Company’s reporting currency is the U.S. dollar. The functional currency for the UDC Ireland subsidiary is also the U.S. dollar and the functional currency for the OMM subsidiary and each of the Company's Asia-Pacific foreign subsidiaries is its local currency. The Company translates the amounts included in the Consolidated Statements of Income from OMM and its Asia-Pacific foreign subsidiaries into U.S. dollars at weighted-average exchange rates, which the Company believes are representative of the actual exchange rates on the dates of the transactions. The Company's foreign subsidiaries' assets and liabilities are translated into U.S. dollars from the local currency at the actual exchange rates as of the end of each reporting date, and the Company records the resulting foreign exchange translation adjustments in the Consolidated Balance Sheets as a component of accumulated other comprehensive loss. The overall effect of the translation of foreign currency and foreign currency transactions to date has been insignificant.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties, if any, related to unrecognized tax benefits as a component of tax expense.

Share-Based Payment Awards

Share-Based Payment Awards

The Company recognizes in the Consolidated Statements of Income the grant-date fair value of equity-based awards such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units and performance unit awards issued to employees and directors.

The grant-date fair value of stock awards is based on the closing price of the stock on the date of grant. The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of forfeitures. The Company issues new shares upon the respective grant, exercise or vesting of the share-based payment awards, as applicable.

Performance unit awards are subject to either a performance-based or market-based vesting requirement. For performance-based vesting, the grant-date fair value of the award, based on fair value of the Company's common stock, is recognized over the service period based on an assessment of the likelihood that the applicable performance goals will be achieved and compensation expense is periodically adjusted based on actual and expected performance. Compensation expense for performance unit awards with market-based vesting is calculated based on the estimated fair value as of the grant date utilizing a Monte Carlo simulation model and is recognized over the service period on a straight-line basis. 

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2021

Cash And Cash Equivalents [Abstract]

Schedule of Cash, Cash Equivalents

The following table provides details regarding the Company’s portfolio of cash and cash equivalents (in thousands):

	Amortized		Unrealized					Aggregate Fair
Cash and Cash Equivalents Classification	Cost		Gains		(Losses)			Market Value
September 30, 2021
Cash accounts in banking institutions	$	222,833	$	—	$	—		$	222,833
Money market accounts		17,339		—		—			17,339
U.S. Government bonds		294,988		—		(3	)		294,985
	$	535,160	$	—	$	(3	)	$	535,157
December 31, 2020
Cash accounts in banking institutions	$	163,779	$	—	$	—		$	163,779
Money market accounts		17,261		—		—			17,261
U.S. Government bonds		448,970		6		(4	)		448,972
	$	630,010	$	6	$	(4	)	$	630,012

Schedule of Short-Term Investments

The following table provides details regarding the Company’s portfolio of short-term investments (in thousands):

	Amortized		Unrealized					Aggregate Fair
Short-term Investments Classification	Cost		Gains		(Losses)			Market Value
September 30, 2021
Certificates of deposit	$	480	$	—	$	—		$	480
Corporate bonds		253,279		43		(16	)		253,306
	$	253,759	$	43	$	(16	)	$	253,786
December 31, 2020
U.S. Government bonds	$	99,929	$	67	$	—		$	99,996
	$	99,929	$	67	$	—		$	99,996

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2021 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of September 30,  2021		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	312,324	$	312,324	$	—	$	—
Short-term investments		253,786		253,786		—		—
Convertible notes		500		—		—		500

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2020 (in thousands):

			Fair Value Measurements, Using
	Total Carrying Value as of December 31,  2020		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	466,233	$	466,233	$	—	$	—
Short-term investments		99,996		99,996		—		—

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INVENTORY (Tables)

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consisted of the following (in thousands):

	September 30, 2021		December 31, 2020
Raw materials	$	73,100	$	46,843
Work-in-process		11,411		9,904
Finished goods		36,974		34,844
Inventory	$	121,485	$	91,591

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PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2021

Property Plant And Equipment [Abstract]

Property and Equipment

Property and equipment, net consist of the following (in thousands):

	September 30, 2021			December 31, 2020
Land	$	2,642		$	2,642
Building and improvements		74,983			53,568
Office and lab equipment		101,344			85,881
Furniture, fixtures and computer related assets		15,826			8,921
Construction-in-progress		11,155			23,594
		205,950			174,606
Less: Accumulated depreciation		(86,962	)		(72,493	)
Property and equipment, net	$	118,988		$	102,113

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GOODWILL AND INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2021

Finite Lived Intangible Assets Net [Abstract]

Schedule of Acquired Technology

Acquired technology consists of acquired license rights for patents and know-how obtained from PD-LD, Inc., Motorola, BASF SE (BASF) and Fujifilm. These intangible assets consist of the following (in thousands):

	September 30, 2021			December 31, 2020
PD-LD, Inc.	$	1,481		$	1,481
Motorola		15,909			15,909
BASF		95,989			95,989
Fujifilm		109,462			109,462
Other		462			462
		223,303			223,303
Less: Accumulated amortization		(168,489	)		(153,050	)
Acquired technology, net	$	54,814		$	70,253

Schedule of Other Intangible Assets

At September 30, 2021, these other intangible assets consist of the following (in thousands):

	September 30, 2021
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	10,520	$	(4,743	)	$	5,777
Developed IP, processes and recipes		4,820		(1,668	)		3,152
Trade name/Trademarks		1,500		(780	)		720
Other		394		(15	)		379
Total identifiable other intangible assets	$	17,234	$	(7,206	)	$	10,028

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LEASES (Tables)

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Summary of Operating Lease Cost and Supplemental Cash Flow Information Related to Operating Leases

The following table presents the Company’s operating lease cost and supplemental cash flow information related to the Company’s operating leases (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Operating lease cost	$	1,163	$	537	$	2,536	$	1,609
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$	16,103	$	—	$	26,174	$	—

Schedule Of Operating Lease Right of Use Assets and Liabilities

The following table presents the Company’s operating right-of-use assets and liabilities (in thousands):

	September 30, 2021		December 31, 2020
Right-of-use assets	$	31,627	$	8,750
Short-term lease liabilities		3,111		1,871
Long-term lease liabilities		28,516		6,879

Schedule of Weighted Average Assumptions Used to Compute Right-of-use Assets and Lease Liabilities

The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities:

	September 30, 2021
Weighted average remaining lease term (in years)		8.8
Weighted average discount rate		2.8	%

Schedule of Undiscounted Future Minimum Lease Payments Having Non-cancelable Lease Terms

Undiscounted future minimum lease payments as of September 30, 2021, by year and in the aggregate, having non-cancelable lease terms in excess of one year were as follows (in thousands):

	Maturities of Operating Lease Liabilities
2021 (1)	$	771
2022		4,111
2023		4,032
2024		3,980
2025		4,022
Thereafter		18,656
Total lease payments		35,572
Less: Imputed interest		(3,945	)
Present value of lease payments	$	31,627

(1)Scheduled maturities of lease liabilities represent the period from October 1, 2021 to December 31, 2021.

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

9 Months Ended

Sep. 30, 2021

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Loss

Amounts related to the changes in accumulated other comprehensive loss were as follows (in thousands):

	Unrealized Gain (Loss) on Available-for-Sale Securities			Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2020, net of tax	$	91		$	(36,075	)	$	(35	)	$	(36,019	)
Other comprehensive loss    before reclassification		(35	)		—			(224	)		(259	)
Reclassification to net income (1)		—			3,522			—			3,522		Selling, general and administrative, research and development and cost of sales
Change during period		(35	)		3,522			(224	)		3,263
Balance September 30, 2021, net of tax	$	56		$	(32,553	)	$	(259	)	$	(32,756	)

	Unrealized Gain (Loss) on Available-for-Sale Securities		Net Unrealized Gain (Loss) on Retirement Plan (2)			Change in Cumulative Foreign Currency Translation Adjustment			Total			Affected Line Items in the Consolidated Statements of Income
Balance December 31, 2019, net of tax	$	191	$	(17,167	)	$	(21	)	$	(16,997	)
Other comprehensive gain (loss)    before reclassification		342		—			(29	)		313
Reclassification to net income (1)		—		1,917			—			1,917		Selling, general and administrative, research and development and cost of sales
Change during period		342		1,917			(29	)		2,230
Balance September 30, 2020, net of tax	$	533	$	(15,250	)	$	(50	)	$	(14,767	)

(1)The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $3.5 million and $1.9 million for the nine months ended September 30, 2021 and 2020, respectively.

(2)Refer to Note 14: Supplemental Executive Retirement Plan.

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Tables)

9 Months Ended

Sep. 30, 2021

Compensation And Retirement Disclosure [Abstract]

Components of Net Periodic Pension Cost

The components of net periodic pension cost were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Service cost	$	419	$	273	$	1,276	$	819
Interest cost		291		321		874		963
Amortization of prior service cost		275		275		824		824
Amortization of loss		1,234		545		3,702		1,636
Total net periodic benefit cost	$	2,219	$	1,414	$	6,676	$	4,242

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CONCENTRATION OF RISK (Tables)

9 Months Ended

Sep. 30, 2021

Risks And Uncertainties [Abstract]

Revenues and Accounts Receivable From Our Largest Customers

Revenues and accounts receivable from the Company's largest customers were as follows (in thousands):

	% of Total Revenue for the Three Months Ended September 30,		% of Total Revenue for the  Nine Months Ended September 30,		Accounts Receivable as of
Customer	2021	2020	2021	2020	September 30, 2021
A	50%	41%	46%	38%	$	10,129
B	27%	28%	25%	28%	$	23,786
C	7%	14%	14%	17%	$	33,520

Revenues by Geographic Area

Revenues by geographic area are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Country	2021		2020		2021		2020
South Korea	$	95,741	$	66,667	$	250,040	$	167,154
China		41,323		43,569		138,135		101,911
Japan		1,911		2,279		5,227		6,263
Other non-U.S. locations		537		663		2,257		1,475
Total non-U.S. locations		139,512		113,178		395,659		276,803
United States		4,106		3,901		11,619		10,521
Total revenue	$	143,618	$	117,079	$	407,278	$	287,324

Long-Lived Assets (Net) by Geographic Area

Long-lived assets (net), by geographic area are as follows (in thousands):

	September 30, 2021		December 31, 2020
United States	$	109,461	$	93,230
Other		9,527		8,883
Total long-lived assets	$	118,988	$	102,113

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REVENUE RECOGNITION (Tables)

9 Months Ended

Sep. 30, 2021

Revenue From Contract With Customer [Abstract]

Schedule of Assets and Liabilities Associated with Contracts from Customers

The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):

	As of September 30, 2021
Accounts receivable	$	96,235
Short-term unbilled receivables		27,491
Long-term unbilled receivables		—
Short-term deferred revenue		123,475
Long-term deferred revenue		43,458

Summary of Significant Changes in Unbilled Receivables and Deferred Liabilities Balances

Significant changes in the unbilled receivables and deferred liabilities balances for the nine months ended September 30, 2021 and 2020, are as follows (in thousands):

	Nine Months Ended September 30, 2021
	Unbilled Receivables			Deferred Revenue
Balance at December 31, 2020	$	10,429		$	(162,301	)
Revenue recognized that was previously included in deferred revenue, net		—			145,535
Increases due to cash received		—			(160,021	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—			9,854
Unbilled receivables recorded, net		24,209
Transferred to receivables from unbilled receivables		(7,147	)		—
Net change		17,062			(4,632	)
Balance at September 30, 2021	$	27,491		$	(166,933	)

	Nine Months Ended September 30, 2020
	Unbilled Receivables		Deferred Revenue
Balance at December 31, 2019	$	1,362	$	(144,862	)
Revenue recognized that was previously included in deferred revenue, net		—		97,556
Increases due to cash received		—		(144,200	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price, net		—		1,458
Unbilled receivables recorded, net		13,494		—
Net change		13,494		(45,186	)
Balance at September 30, 2020	$	14,856	$	(190,048	)

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NET INCOME PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The following table is a reconciliation of net income and the shares used in calculating basic and diluted net income per common share for the three and nine months ended September 30, 2021 and 2020 (in thousands, except share and per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Numerator:
Net income	$	46,109		$	40,500		$	138,337		$	79,470
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders		(255	)		(277	)		(857	)		(613	)
Adjusted net income	$	45,854		$	40,223		$	137,480		$	78,857
Denominator:
Weighted average common shares outstanding – Basic		47,291,192			47,227,061			47,286,927			47,182,625
Effect of dilutive shares:
Common stock equivalents arising from stock options and ESPP		400			339			769			1,263
Restricted stock awards and units and performance units		70,983			32,931			67,887			28,772
Weighted average common shares outstanding – Diluted		47,362,575			47,260,331			47,355,583			47,212,660
Net income per common share:
Basic	$	0.97		$	0.85		$	2.91		$	1.67
Diluted	$	0.97		$	0.85		$	2.90		$	1.67

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BUSINESS - Additional Information (Details)	Sep. 30, 2021 Patent
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of patents issued and pending application	5,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details)			9 Months Ended
	Apr. 22, 2021	Jul. 23, 2012	Sep. 30, 2021
Summary Of Significant Accounting Policies [Line Items]
Recognized income tax positions measured at likelihood of realization description			Recognized income tax positions are measured at the largest amount of which the likelihood of realization is greater than 50%.
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Recognized income tax positions measured at percentage of likelihood of realization			50.00%
Patents [Member] | FUJIFILM [Member]
Summary Of Significant Accounting Policies [Line Items]
OLED patents useful life		10 years	10 years
Patents [Member] | BASF [Member]
Summary Of Significant Accounting Policies [Line Items]
OLED patents useful life			10 years
Other Intangible Assets [Member] | Adesis, Inc. [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization period of acquired intangible assets (in years)			10 years
Other Intangible Assets [Member] | Adesis, Inc. [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization period of acquired intangible assets (in years)			15 years
Visionox Hefei Technology Co. Ltd [Member]
Summary Of Significant Accounting Policies [Line Items]
Additional agreement duration	5 years

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Schedule of Cash, Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	$ 535,160	$ 630,010
Cash Equivalents, Gross Unrealized Gains		6
Cash Equivalents, Gross Unrealized Losses	3	4
Cash and Cash Equivalents, Fair Value Disclosure	535,157	630,012
Cash Accounts in Banking Institutions [Member]
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	222,833	163,779
Cash and Cash Equivalents, Fair Value Disclosure	222,833	163,779
Money Market Accounts [Member]
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	17,339	17,261
Cash and Cash Equivalents, Fair Value Disclosure	17,339	17,261
U.S. Government Bonds [Member]
Cash And Cash Equivalents [Line Items]
Cash Equivalents, at Carrying Value	294,988	448,970
Cash Equivalents, Gross Unrealized Gains		6
Cash Equivalents, Gross Unrealized Losses	3	4
Cash and Cash Equivalents, Fair Value Disclosure	$ 294,985	$ 448,972

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Schedule of Short-Term Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	$ 253,759	$ 99,929
Available-for-sale Securities, Gross Unrealized Gains	43	67
Available-for-sale Securities, Gross Unrealized Losses	(16)
Available-for-sale Securities, Fair Value Disclosure	253,786	99,996
Certificates of Deposit [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	480
Available-for-sale Securities, Fair Value Disclosure	480
Corporate Bonds [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis	253,279
Available-for-sale Securities, Gross Unrealized Gains	43
Available-for-sale Securities, Gross Unrealized Losses	(16)
Available-for-sale Securities, Fair Value Disclosure	$ 253,306
U.S. Government Bonds [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-sale Debt Securities, Amortized Cost Basis		99,929
Available-for-sale Securities, Gross Unrealized Gains		67
Available-for-sale Securities, Fair Value Disclosure		$ 99,996

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CASH, CASH EQUIVALENTS AND INVESTMENTS - Additional Information (Details)	Sep. 30, 2021 USD ($) Investment	Dec. 31, 2020 USD ($)
Cash And Cash Equivalents [Line Items]
Number of Minority Investments | Investment	2
Cost Method Minority Investment Carrying Value	$ 8,000,000.0
Number Of Convertible Note Investments | Investment	1
Available-for-sale Securities, Fair Value Disclosure	$ 253,786,000	$ 99,996,000
Fair Value, Inputs, Level 3 [Member]
Cash And Cash Equivalents [Line Items]
Available-for-sale Securities, Fair Value Disclosure	$ 500,000

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FAIR VALUE MEASUREMENTS - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 535,157	$ 630,012
Short-term investments	253,786	99,996
Fair Value, Measurements, Recurring [Member] | Reported Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	312,324	466,233
Short-term investments	253,786	99,996
Convertible notes	500
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	312,324	466,233
Short-term investments	253,786	$ 99,996
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Convertible notes	$ 500

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FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Fair Value Disclosures [Abstract]
Credit losses on debt investments	$ 0	$ 0

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INVENTORY - Schedule of Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Raw materials	$ 73,100	$ 46,843
Work-in-process	11,411	9,904
Finished goods	36,974	34,844
Inventory	$ 121,485	$ 91,591

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INVENTORY - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Inventory Disclosure [Abstract]
Change in inventory reserve	$ 1,000,000.0	$ 198,000	$ 2,058,000	$ 808,000

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PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 205,950	$ 174,606
Less: Accumulated depreciation	(86,962)	(72,493)
Property and equipment, net	118,988	102,113
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,642	2,642
Building and improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	74,983	53,568
Office and lab equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	101,344	85,881
Furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	15,826	8,921
Construction-in-progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 11,155	$ 23,594

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PROPERTY AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Property Plant And Equipment [Abstract]
Depreciation expense	$ 5,300	$ 3,900	$ 14,471	$ 11,147

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GOODWILL AND INTANGIBLE ASSETS - Schedule of Acquired Technology (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	$ 223,303	$ 223,303
Less: Accumulated amortization	(168,489)	(153,050)
Acquired technology, net	54,814	70,253
PD LD, Inc [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	1,481	1,481
Motorola [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	15,909	15,909
BASF [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	95,989	95,989
FUJIFILM [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	109,462	109,462
Other [Member]
Finite-Lived Intangible Assets [Line Items]
Acquired technology, gross	$ 462	$ 462

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GOODWILL AND INTANGIBLE ASSETS - Acquired Technology - Additional Information (Details) € in Millions				3 Months Ended		9 Months Ended
	Jun. 28, 2016 USD ($) Patent	Jun. 28, 2016 EUR (€) Patent	Jul. 23, 2012 USD ($) Patent	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)
Finite-Lived Intangible Assets [Line Items]
Amortization Of Intangible Assets						$ 16,490,000	$ 16,474,000
Patent Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Amortization Of Intangible Assets				$ 5,100,000	$ 5,100,000	15,400,000	$ 15,400,000
Future amortization expense, 2021				5,100,000		5,100,000
Future amortization expense, 2022				15,800,000		15,800,000
Future amortization expense, 2023				9,700,000		9,700,000
Future amortization expense, 2024				9,600,000		9,600,000
Future amortization expense, 2025				9,600,000		9,600,000
Future amortization expense, thereafter				$ 5,000,000.0		$ 5,000,000.0
Patents [Member] | FUJIFILM [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents acquired (more than) | Patent			1,200
Assigned value of acquired intangible assets			$ 105,000,000.0
Cash paid for OLED patents			$ 4,500,000
OLED patents useful life			10 years			10 years
Patents [Member] | BASF [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents acquired (more than) | Patent	500	500
Assigned value of acquired intangible assets	$ 95,800,000	€ 86.8
Cash paid for OLED patents	$ 217,000
OLED patents useful life						10 years

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GOODWILL AND INTANGIBLE ASSETS - Other Intangible Assets - Additional Information (Details) - Adesis, Inc. [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Finite-Lived Intangible Assets [Line Items]
Other intangible assets acquired			$ 16,800,000
Other intangible assets	$ 17,234,000		17,234,000
Amortization expense related to other intangible assets	358,000	$ 348,000	1,100,000	$ 1,000,000.0
Future amortization expense of other intangible assets, remainder of fiscal year 2021	358,000		358,000
Future amortization expense of other intangible assets, fiscal year 2022	1,400,000		1,400,000
Future amortization expense of other intangible assets, fiscal year 2023	1,400,000		1,400,000
Future amortization expense of other intangible assets, fiscal year 2024	1,400,000		1,400,000
Future amortization expense of other intangible assets, fiscal year 2025	1,400,000		1,400,000
Future amortization expense of other intangible assets, thereafter	4,000,000.0		4,000,000.0
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	10,520,000		$ 10,520,000
Weighted average useful life , intangible assets			11 years 6 months
Internally-developed IP, Processes and Recipes [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	4,820,000		$ 4,820,000
Weighted average useful life , intangible assets			15 years
Trade Name/Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Other intangible assets	$ 1,500,000		$ 1,500,000
Weighted average useful life , intangible assets			10 years

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GOODWILL AND INTANGIBLE ASSETS - Schedule of Other Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Accumulated Amortization	$ (7,206)	$ (6,155)
Net Carrying Amount	10,028	$ 10,685
Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	17,234
Accumulated Amortization	(7,206)
Net Carrying Amount	10,028
Customer Relationships [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	10,520
Accumulated Amortization	(4,743)
Net Carrying Amount	5,777
Developed IP, Processes and Recipes [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	4,820
Accumulated Amortization	(1,668)
Net Carrying Amount	3,152
Trade Name/Trademarks [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,500
Accumulated Amortization	(780)
Net Carrying Amount	720
Other [Member] | Adesis, Inc. [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	394
Accumulated Amortization	(15)
Net Carrying Amount	$ 379

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LEASES- Additional Information (Details)	9 Months Ended
	Sep. 30, 2021
Lessee Lease Description [Line Items]
Operating lease description	Current lease agreements do not contain any residual value guarantees or material restrictive covenants. As of September 30, 2021, the Company did not have any finance leases and no additional operating leases that have not yet commenced.
Minimum [Member]
Lessee Lease Description [Line Items]
Operating leases remaining term	11 months
Operating lease, option to extend	true
Maximum [Member]
Lessee Lease Description [Line Items]
Operating leases remaining term	10 years

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LEASES - Summary of Operating Lease Cost and Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Leases [Abstract]
Operating lease cost	$ 1,163	$ 537	$ 2,536	$ 1,609
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations	$ 16,103		$ 26,174

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LEASES - Schedule Of Operating Lease Right of Use Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Lessee Lease Description [Line Items]
Right-of-use assets	$ 31,627	$ 8,750
Current Liabilities [Member]
Lessee Lease Description [Line Items]
Short-term lease liabilities	3,111	1,871
Non-current Liabilities [Member]
Lessee Lease Description [Line Items]
Long-term lease liabilities	$ 28,516	$ 6,879

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LEASES - Schedule of Weighted Average Assumptions Used to Compute Right-of-use Assets and Lease Liabilities (Details)	Sep. 30, 2021
Leases [Abstract]
Weighted average remaining lease term (in years)	8 years 9 months 18 days
Weighted average discount rate	2.80%

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LEASES - Schedule of Undiscounted Future Minimum Lease Payments Having Non-cancelable Lease Terms (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Lessee Lease Description [Line Items]
2021	$ 771	[1]
2022	4,111
2023	4,032
2024	3,980
2025	4,022
Thereafter	18,656
Total lease payments	35,572
Less: Imputed interest	(3,945)
Present value of lease payments	$ 31,627

[1] Scheduled maturities of lease liabilities represent the period from October 1, 2021 to December 31, 2021.

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RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON UNIVERSITY, UNIVERSITY OF SOUTHERN CALIFORNIA AND THE UNIVERSITY OF MICHIGAN - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty expense	$ 258,000	$ 3,293,000	$ 519,000	$ 8,195,000
1997 Amended License Agreement [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty expense	258,000	3,300,000	$ 519,000	8,200,000
Royalty rate for licensed products sold by the Company (in hundredths)			3.00%
Royalty rate for licensed products sold by the Company's sublicenses (in hundredths)			3.00%
2006 Research Agreement [Member]
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Research agreement, extension term (in years)			2 years
Research agreement, new amendment expiration date			Apr. 30, 2023
Maximum obligation	4,500,000		$ 4,500,000
Research and development expense incurred	$ 384,000	$ 309,000	$ 1,100,000	$ 890,000

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EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Long-term Purchase Commitment [Line Items]
Percent of services payable in cash or shares	50.00%		50.00%
Issuance of common stock in connection with materials and license agreements (in shares)	0	0	0	0
New OLED Materials Agreement and OLED Materials Agreement [Member] | Cash Distribution
Long-term Purchase Commitment [Line Items]
Charges to expense for cash portion of reimbursement of expenses	$ 789,000	$ 821,000	$ 3,000,000.0	$ 2,100,000
New OLED Materials Agreement and OLED Materials Agreement [Member] | Weighted Average
Long-term Purchase Commitment [Line Items]
Minimum average closing price of common stock (in dollars per share)	$ 20.00	$ 20.00	$ 20.00	$ 20.00

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SHAREHOLDERS' EQUITY - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended
	Nov. 01, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Class Of Stock [Line Items]
Preferred Stock, shares authorized ( in shares)		5,000,000		5,000,000		5,000,000
Preferred Stock, par value (in dollars per share)		$ 0.01		$ 0.01		$ 0.01
Common Stock, shares authorized (in shares)		200,000,000		200,000,000		200,000,000
Common Stock, par value (in dollars per share)		$ 0.01		$ 0.01		$ 0.01
Common Stock, shares issued (in shares)		49,060,909		49,060,909		49,013,476
Common Stock, shares outstanding (in shares)		47,695,261		47,695,261		47,647,828
Treasury stock repurchased shares		0	0	0	0
Common stock dividends declared per share		$ 0.20	$ 0.15	$ 0.60	$ 0.45
Common stock dividends paid per share		$ 0.20		$ 0.60
Common stock dividends paid		$ 9.5		$ 28.5
Subsequent Event [Member]
Class Of Stock [Line Items]
Common stock dividends declared per share	$ 0.20
Dividend payable date	Dec. 30, 2021
Dividend record date	Dec. 16, 2021
Series A Nonconvertible Preferred Stock [Member]
Class Of Stock [Line Items]
Preferred Stock, shares issued (in shares)		200,000		200,000		200,000
Preferred Stock, shares outstanding (in shares)		200,000		200,000		200,000
Preferred Stock, liquidation value per share (in dollars per share)		$ 7.50		$ 7.50		$ 7.50

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SHAREHOLDERS' EQUITY - Deferred Compensation Arrangement - Additional Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Non-Employee Members of Scientific Advisory Board [Member]
Deferred Compensation Arrangement with Employees and Non-Employees, Share-Based Payments [Line Items]
Shares issued (in shares)	1,400	1,926
Members of Scientific Advisory Board [Member]
Deferred Compensation Arrangement with Employees and Non-Employees, Share-Based Payments [Line Items]
Fair value of shares issued	$ 300,000	$ 300,000

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE		$ 991,616	$ 839,770	$ 912,714	$ 811,449
Other comprehensive gain (loss) before reclassification				(259)	313
Reclassification to net income	[1]			3,500	1,917	[2]
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		1,016	14	3,263	2,230
BALANCE		1,036,322	879,636	1,036,322	879,636
Unrealized gain (loss) on available-for-sale securities [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE				91	191
Other comprehensive gain (loss) before reclassification				(35)	342
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)				(35)	342
BALANCE		56	533	56	533
Net unrealized gain (loss) on retirement plan [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE	[2]			(36,075)	(17,167)
Reclassification to net income	[1],[2]			3,522
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	[2]			3,522	1,917
BALANCE	[2]	(32,553)	(15,250)	(32,553)	(15,250)
Change in cumulative foreign currency translation adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE				(35)	(21)
Other comprehensive gain (loss) before reclassification				(224)	(29)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)				(224)	(29)
BALANCE		(259)	(50)	(259)	(50)
Accumulated Other Comprehensive Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
BALANCE		(33,772)	(14,781)	(36,019)	(16,997)
Reclassification to net income	[1]			3,522
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)		1,016	14	3,263	2,230
BALANCE		$ (32,756)	$ (14,767)	$ (32,756)	$ (14,767)

[1] The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $3.5 million and $1.9 million for the nine months ended September 30, 2021 and 2020, respectively.

[2] Refer to Note 14: Supplemental Executive Retirement Plan.

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ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Details) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2021	Sep. 30, 2020
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]
Reclassification to net income	[1]	$ 3,500	$ 1,917	[2]

[1] The Company reclassified amortization of prior service cost and actuarial loss for its retirement plan from accumulated other comprehensive loss to net income of $3.5 million and $1.9 million for the nine months ended September 30, 2021 and 2020, respectively.

[2] Refer to Note 14: Supplemental Executive Retirement Plan.

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STOCK-BASED COMPENSATION - Equity Compensation Plan - Additional Information (Details) - Stock Compensation Plan [Member]	9 Months Ended
	Sep. 30, 2021 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	10,500,000
Number of shares available for grant (in shares)	1,794,738
Compensation plan extended term description	extended the term of the plan through 2024
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration term (in years)	10 years

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STOCK-BASED COMPENSATION - Equity Instruments Other Than Options - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of shares withheld for tax withholding obligations	$ 1,862,000	$ 1,128,000	$ 14,880,000	$ 14,293,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			132,473
Total fair value of performance unit awards granted			$ 28,300,000
Shares withheld for tax withholding obligations (in shares)	8,525	7,199	69,352	86,005
Fair value of shares withheld for tax withholding obligations	$ 1,900,000	$ 1,100,000	$ 14,000,000.0	$ 12,400,000
Restricted Stock [Member] | Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	3,800,000	3,400,000	11,400,000	10,400,000
Restricted Stock [Member] | Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	1,300,000	1,200,000	3,900,000	3,200,000
Restricted Stock [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	598,000	526,000	$ 1,900,000	1,400,000
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards and units vesting terms			3 years
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards and units vesting terms			5 years
Restricted Stock Units (RSUs) [Member] | Research and Development Expense [Member] | Non Employee Members of Scientific Advisory Board [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	48,000	123,000	$ 160,000	$ 235,000
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			74,086
Total fair value of performance unit awards granted			$ 16,500,000
Shares withheld for tax withholding obligations (in shares)			3,881	12,877
Fair value of shares withheld for tax withholding obligations			$ 875,000	$ 1,900,000
Performance Shares [Member] | Performance-Based Vesting Requirement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			39,291
Performance Shares [Member] | Market-Based Vesting Requirement [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (shares)			34,795
Performance Shares [Member] | Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	1,800,000	1,200,000	$ 3,800,000	3,200,000
Performance Shares [Member] | Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	476,000	323,000	1,000,000.0	826,000
Performance Shares [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 292,000	$ 196,000	$ 624,000	$ 491,000

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STOCK-BASED COMPENSATION - Board of Directors Compensation - Additional Information (Details) - Director [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Restricted stock awards and units vesting terms			1 year
Fair value of shares issued	$ 300,000	$ 301,000	$ 891,000	$ 897,000
Shares issued (in shares)			4,062	4,842

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STOCK-BASED COMPENSATION - Employee Stock Purchase Plan - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jun. 25, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from common stock issued	$ 441,000	$ 364,000	$ 1,440,000	$ 1,142,000
Employee Stock Purchase Plan (ESPP) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for issuance (in shares)					1,000,000
Purchase period (in months)			three-month
Percentage of market value (in hundredths)			85.00%
Maximum allocation of base compensation (in hundredths)			10.00%
Maximum shares per purchase date (in shares)			12,500
Maximum value per calendar year, per employee			$ 25,000
Common stock issued (in shares)			6,508	7,702
Proceeds from common stock issued			$ 1,100,000	$ 869,000
Employee Stock Purchase Plan (ESPP) [Member] | Selling, General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charges to expense	20,000	21,000	78,000	81,000
Employee Stock Purchase Plan (ESPP) [Member] | Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charges to expense	46,000	34,000	140,000	107,000
Employee Stock Purchase Plan (ESPP) [Member] | Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Charges to expense	$ 25,000	$ 29,000	$ 86,000	$ 85,000

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN - Additional Information (Details)	Sep. 30, 2021 Participant
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of participants	7

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN - Components of Net Periodic Pension Cost (Details) - Supplemental Executive Retirement Plan [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Components of net periodic pension cost [Abstract]
Service cost	$ 419	$ 273	$ 1,276	$ 819
Interest cost	291	321	874	963
Amortization of prior service cost	275	275	824	824
Amortization of loss	1,234	545	3,702	1,636
Total net periodic benefit cost	$ 2,219	$ 1,414	$ 6,676	$ 4,242

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COMMITMENTS AND CONTINGENCIES - Additional Information (Details)	Sep. 30, 2021 USD ($) Multiple Employee ExecutiveOfficer	Dec. 31, 2020 USD ($)
Loss Contingencies [Line Items]
Purchase commitments for inventory | $	$ 28,400,000	$ 13,700,000
Commitment With Executive Officers [Member]
Loss Contingencies [Line Items]
Number of executive officers under agreement | ExecutiveOfficer	6
Number of senior level employees under agreement | Employee	12
Multiple of sum of average annual base salary and bonus agreement terms	2
Commitment With Senior Level Employees [Member] | Minimum [Member]
Loss Contingencies [Line Items]
Multiple of sum of average annual base salary and bonus agreement terms	1
Commitment With Senior Level Employees [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Multiple of sum of average annual base salary and bonus agreement terms	2

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CONCENTRATION OF RISK - Revenues and Accounts Receivable From Our Largest Customers (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Concentration Risk [Line Items]
Accounts Receivable	$ 96,235		$ 96,235		$ 82,261
Major Customer A [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	50.00%	41.00%	46.00%	38.00%
Major Customer A [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 10,129		$ 10,129
Major Customer B [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	27.00%	28.00%	25.00%	28.00%
Major Customer B [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 23,786		$ 23,786
Major Customer C [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
% of Total Revenue	7.00%	14.00%	14.00%	17.00%
Major Customer C [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Accounts Receivable	$ 33,520		$ 33,520

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CONCENTRATION OF RISK - Additional Information (Details) - Supplier	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Concentration Risk [Line Items]
Number of suppliers from which chemical materials were purchased			1
Excluding North America [Member] | Total Revenue [Member] | Customer Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage (less than 1% for contracts with U.S. government agencies)	97.00%	97.00%	97.00%	96.00%

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CONCENTRATION OF RISK - Revenues by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Concentration Risk [Line Items]
Revenues	$ 143,618	$ 117,079	$ 407,278	$ 287,324
South Korea [Member]
Concentration Risk [Line Items]
Revenues	95,741	66,667	250,040	167,154
China [Member]
Concentration Risk [Line Items]
Revenues	41,323	43,569	138,135	101,911
Japan [Member]
Concentration Risk [Line Items]
Revenues	1,911	2,279	5,227	6,263
Other Non-U.S. Locations [Member]
Concentration Risk [Line Items]
Revenues	537	663	2,257	1,475
Total Non-U.S. Locations [Member]
Concentration Risk [Line Items]
Revenues	139,512	113,178	395,659	276,803
United States [Member]
Concentration Risk [Line Items]
Revenues	$ 4,106	$ 3,901	$ 11,619	$ 10,521

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CONCENTRATION OF RISK - Long-Lived Assets (Net) by Geographic Area (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Segment Reporting Information [Line Items]
Total long-lived assets	$ 118,988	$ 102,113
United States [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	109,461	93,230
Other [Member]
Segment Reporting Information [Line Items]
Total long-lived assets	$ 9,527	$ 8,883

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INCOME TAXES - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 30, 2018	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020	Dec. 31, 2018
Income Taxes [Line Items]
Effective income tax rate (benefit) expense, percent		20.20%	18.50%	19.40%	17.90%
Income tax expense (benefit)		$ 11,654	$ 9,217	$ 33,368	$ 17,355
Long-term asset		133,111		$ 133,111		$ 103,341
Withholding and interest for licencing and royalty payments	$ 13,200
Withholding and interest for licencing and royalty payments period	3 years
State and foreign income tax returns subject to examination period minimum (in years)				3 years
State and foreign income tax returns subject to examination period maximum (in years)				4 years
Reduction of Korean Withholding Taxes [Member]
Income Taxes [Line Items]
Reduction of deferred tax asset for foreign tax credits and R&D				$ 20,700		20,700
U.S.Federal Government [Member]
Income Taxes [Line Items]
Estimated settlement amounts due (refunds) from withholding taxes							$ 16,200
Korean Government [Member]
Income Taxes [Line Items]
Estimated settlement amounts due (refunds) from withholding taxes							$ 36,900
Allocation of Withholding to Non-Korean Patents [Member]
Income Taxes [Line Items]
Long-term asset		49,900		49,900		40,100
Allocation of Withholding to Non-Korean Patents [Member] | U.S.Federal Government [Member]
Income Taxes [Line Items]
Estimated settlement amounts due (refunds) from withholding taxes		$ 42,500		$ 42,500		$ 32,700

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REVENUE RECOGNITION - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation Of Revenue [Line Items]
Backlog associated with committed purchase orders from customers	$ 11,800		$ 11,800
Cumulative catch-up adjustment arising from changes in estimates of transaction price, net			9,854	$ 1,458
Unbilled receivables increase			$ 17,062	$ 13,494
Revenue from Contracts with Customers - ASU No. 2014-09 [Member]
Disaggregation Of Revenue [Line Items]
Percentage of revenue recorded from sales of materials	97.00%	97.00%	97.00%	96.00%
Revenue from Contracts with Customers - ASU No. 2014-09 [Member] | Adesis, Inc. [Member]
Disaggregation Of Revenue [Line Items]
Percentage of revenue recorded from provision of services	3.00%	3.00%	3.00%	4.00%

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REVENUE RECOGNITION - Schedule of Assets and Liabilities Associated with Contracts from Customers (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Disaggregation Of Revenue [Line Items]
Accounts receivable	$ 96,235	$ 82,261
Short-term deferred revenue	123,475	105,215
Long-term deferred revenue	43,458	$ 57,086
Other Current Assets [Member]
Disaggregation Of Revenue [Line Items]
Short-term unbilled receivables	27,491
Other Assets [Member]
Disaggregation Of Revenue [Line Items]
Long-term unbilled receivables	$ 0

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REVENUE RECOGNITION - Summary of Significant Changes in Unbilled Receivables and Deferred Liabilities Balances (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Deferred Revenue (Increase) Decrease
Balance	$ (162,301)	$ (144,862)
Revenue recognized that was previously included in deferred revenue	145,535	97,556
Increases due to cash received	(160,021)	(144,200)
Cumulative catch-up adjustment arising from changes in estimates of transaction price, net	9,854	1,458
Net change	(4,632)	(45,186)
Balance	(166,933)	(190,048)
Unbilled Receivables Increase (Decrease)
Balance	10,429	1,362
Unbilled receivables recognized, net	24,209	13,494
Transferred to receivables from unbilled receivables	(7,147)
Net change	17,062	13,494
Balance	$ 27,491	$ 14,856

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NET INCOME PER COMMON SHARE - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Numerator:
Net income	$ 46,109	$ 40,500	$ 138,337	$ 79,470
Adjustment for Basic EPS:
Earnings allocated to unvested shareholders	(255)	(277)	(857)	(613)
Adjusted net income	$ 45,854	$ 40,223	$ 137,480	$ 78,857
Denominator:
Weighted average common shares outstanding – Basic	47,291,192	47,227,061	47,286,927	47,182,625
Effect of dilutive shares:
Common stock equivalents arising from stock options and ESPP	400	339	769	1,263
Restricted stock awards and units and performance units	70,983	32,931	67,887	28,772
Weighted average common shares outstanding – Diluted	47,362,575	47,260,331	47,355,583	47,212,660
Basic	$ 0.97	$ 0.85	$ 2.91	$ 1.67
Diluted	$ 0.97	$ 0.85	$ 2.90	$ 1.67

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NET INCOME PER COMMON SHARE - Additional Information (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share [Abstract]
Antidilutive securities excluded from calculation of diluted EPS	0	0	0	0