10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2013

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	(I.R.S. Employer Identification No.)
incorporation or organization)
375 Phillips Boulevard
Ewing, New Jersey	08618
(Address of principal executive offices)	(Zip Code)

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

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 X   No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes X   No

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

Large accelerated filer X	Accelerated filer ___
Non-accelerated filer ___ (Do not check if a smaller reporting company)	Smaller reporting company ___

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

 As of August 2, 2013, the registrant had outstanding 46,224,002 shares of common stock.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets – June 30, 2013 and December 31, 2012	3
Consolidated Statements of Income  – Three months and six months ended June 30, 2013 and 2012	4
Consolidated Statements of Comprehensive Income  – Three months and six months ended June 30, 2013 and 2012	5
Consolidated Statements of Cash Flows – Six months ended June 30, 2013 and 2012	6
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	30
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3. Defaults Upon Senior Securities	34
Item 4. Mine Safety Disclosures	34
Item 5. Other Information	34
Item 6. Exhibits	34

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except for share and per share data)

	June 30, 2013			December 31, 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	80,702		$	85,923
Short-term investments	163,983			158,018
Accounts receivable	14,451			8,657
Inventory	8,673			11,018
Other current assets	6,242			3,929
Total current assets	274,051			267,545
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $21,698 and $20,713	13,904			11,808
ACQUIRED TECHNOLOGY, net of accumulated amortization of $27,351 and $21,868	99,494			104,624
INVESTMENTS	5,781			1,270
OTHER ASSETS	275			277
TOTAL ASSETS	$	393,505		$	385,524
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	10,555		$	7,596
Accrued expenses	7,406			10,394
Deferred revenue	4,189			4,273
Other current liabilities	940			36
Total current liabilities	23,090			22,299
DEFERRED REVENUE	2,778			3,153
RETIREMENT PLAN BENEFIT LIABILITY	10,332			9,837
Total liabilities	36,200			35,289
COMMITMENTS AND CONTINGENCIES (Note 12)
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, 100,000,000 shares authorized, 46,608,503 and 46,561,437 shares issued at June 30, 2013 and December 31, 2012, respectively	466			465
Additional paid-in capital	566,409			564,883
Accumulated deficit	(193,587		)	(204,211		)
Accumulated other comprehensive loss	(5,327		)	(5,702		)
Treasury stock, at cost (401,501 and 205,902 shares at June 30, 2013 and December 31, 2012, respectively)	(10,658		)	(5,202		)
Total shareholders’ equity	357,305			350,235
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	393,505		$	385,524

The accompanying notes are an integral part of these consolidated statements.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except for share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
REVENUE:
Material sales	$	27,137		$	12,848		$	39,889		$	23,377
Royalty and license fees	21,201			15,435			22,500			15,857
Technology development and support revenue	1,021			1,704			1,946			3,373
Total revenue	49,359			29,987			64,335			42,607
OPERATING EXPENSES:
Cost of material sales	8,282			1,611			11,374			2,699
Research and development	7,316			7,236			16,254			13,897
Selling, general and administrative	6,336			5,189			11,507			9,486
Patent costs and amortization of acquired technology	4,522			2,255			9,139			4,123
Royalty and license expense	1,172			786			1,484			1,036
Total operating expenses	27,628			17,077			49,758			31,241
Operating income	21,731			12,910			14,577			11,366
INTEREST INCOME	178			357			388			714
INTEREST EXPENSE	(10		)	(18		)	(18		)	(38		)
INCOME BEFORE INCOME TAX EXPENSE	21,899			13,249			14,947			12,042
INCOME TAX EXPENSE	(6,517		)	(2,285		)	(4,323		)	(2,299		)
NET INCOME	15,382			10,964			10,624			9,743
NET INCOME PER COMMON SHARE:
BASIC	$	0.34		$	0.24		$	0.23		$	0.21
DILUTED	$	0.33		$	0.23		$	0.23		$	0.21
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC	45,859,286			45,953,312			45,841,446			45,871,166
DILUTED	46,496,120			46,857,309			46,523,540			46,896,898

The accompanying notes are an integral part of these consolidated statements.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
NET INCOME	$	15,382	$	10,964	$	10,624	$	9,743
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain (loss) on available-for-sale securities	39		65		36		(39		)
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs	170		149		339		297
TOTAL OTHER COMPREHENSIVE INCOME	209		214		375		258
COMPREHENSIVE INCOME	$	15,591	$	11,178	$	10,999	$	10,001

The accompanying notes are an integral part of these consolidated statements.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Six Months Ended June 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	10,624		$	9,743
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue	(1,835		)	(1,837		)
Depreciation	985			927
Amortization of intangibles	5,483			29
Amortization of premium and discount on investments, net	(219		)	(437		)
Stock-based employee compensation	2,935			1,951
Stock-based compensation to Board of Directors and Scientific Advisory Board	394			437
Retirement plan benefit expense	834			777
(Increase) decrease in assets:
Accounts receivable	(5,794		)	1,147
Inventory	2,345			(4,728		)
Other current assets	(2,313		)	(2,257		)
Other assets	2			10
(Decrease) increase in liabilities:
Accounts payable and accrued expenses	(186		)	1,899
Other current liabilities	904			205
Deferred revenue	1,376			1,335
Net cash provided by operating activities	15,535			9,201
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(2,435		)	(2,054		)
Additions to intangibles	(107		)	(18		)
Purchase of investments	(185,314		)	(177,449		)
Proceeds from sale of investments	175,093			220,552
Net cash (used in) provided by investing activities	(12,763		)	41,031
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock	177			137
Repurchase of common stock	(5,456		)	—
Proceeds from the exercise of common stock options	271			943
Payment of withholding taxes related to stock-based employee compensation	(2,985		)	(3,508		)
Net cash used in financing activities	(7,993		)	(2,428		)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(5,221		)	47,804
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	85,923			111,795
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	80,702		$	159,599
The following non-cash activities occurred:
Unrealized gain (loss) on available-for-sale securities	$	36		$	(39	)
Common stock issued to Board of Directors and Scientific Advisory Board that was earned in a previous period	300			328
Common stock issued to employees that was accrued for in a previous period, net of shares withheld for taxes	282			252
Property, equipment and intangible invoices included in accounts payable	891			—

The accompanying notes are an integral part of these consolidated statements.

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UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BACKGROUND

Universal Display Corporation (the Company) is engaged in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in flat panel display, solid-state lighting and other product applications. The Company’s primary business strategy is to develop and license its proprietary OLED technologies to product manufacturers for use in these applications. In support of this objective, the Company also develops new OLED materials and sells those materials to product manufacturers. Through internal research and development efforts and acquisitions from and relationships with entities such as Princeton University (Princeton), the University of Southern California (USC), the University of Michigan (Michigan), FUJIFILM Corporation (Fujifilm), Motorola Solutions, Inc. (f/k/a Motorola, Inc.) (Motorola) and PPG Industries, Inc. (PPG Industries), the Company has established a significant portfolio of proprietary OLED technologies and materials (see Notes 5, 6 and 7).

2. BASIS OF PRESENTATION

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 June 30, 2013 and results of operations for the three and six months ended June 30, 2013 and 2012, and cash flows for the six months ended June 30, 2013 and 2012. 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 financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  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.

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 for license agreements, the useful life of acquired technology, the valuation of the Company's convertible promissory note investments, income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying values of accounts receivable and accounts payable approximate fair value in the accompanying financial statements due to the short-term nature of those instruments. See Notes 3 and 4 for a discussion of cash equivalents and investments.

Revenue Recognition

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. Material sales are recognized at the time of shipment or at time of delivery, and passage of title, depending upon the contractual agreement between the parties.

The Company has received non-refundable advance license and royalty payments under certain commercial, development and technology evaluation agreements. Certain of the payments under development and technology evaluation agreements are creditable against future amounts payable under commercial license agreements that the parties may subsequently enter into and, as such, are deferred until such commercial license agreements are executed or negotiations have ceased and Company management determines that there is no appreciable likelihood of executing a commercial license agreement with the other party. Revenue would then be recognized over the term of the agreement or the expected useful life of the relevant licensed technology, for perpetual licenses, if there is an effective commercial license agreement or amounts are not creditable against future commercial license fees, or at the time Company management determines that there is no appreciable likelihood of an executable commercial

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license agreement. Amounts deferred are classified as current and non-current based upon current contractual remaining terms; however, based upon on-going relationships with customers, as well as future agreement extensions, amounts classified as current as of June 30, 2013, may not be recognized as revenue over the next twelve months. As of June 30, 2013, $7.0 million was recorded as deferred revenue, of which $1.5 million is creditable against future commercial license agreements that have not yet been executed or deemed effective. For arrangements with extended payment terms where the fee is not fixed and determinable, the Company recognizes revenue when the payment is due and payable. Royalty revenue is recognized when earned and the amount is fixed and determinable.

Technology development and support revenue is revenue earned from government contracts, development and technology evaluation agreements and commercialization assistance fees, which includes reimbursements by government entities for all or a portion of the research and development costs the Company incurs in relation to its government contracts. Revenues are recognized proportionally as research and development costs are incurred, or as defined milestones are achieved.

Currently, the Company's most significant commercial license agreement is with Samsung Display Co., Ltd. (SDC) and covers the manufacture and sale of specified OLED display products. Under this agreement, the Company is being paid a license fee, payable in semi-annual installments over the agreement term of 6.4 years. The installments, which are due in the second and fourth quarter of each year, increase on an annual basis over the term of the agreement. The agreement conveys the non-exclusive right to use the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets. Ratable recognition of revenue is impacted by the agreement's extended increasing payment terms in light of the Company's limited history with similar agreements. As a result revenue is recognized at the lesser of the proportional performance approach (ratable) and the amount of due and payable fees from SDC. Given the increasing contractual payment schedule, license fees under the agreement are recognized as revenue when they become due and payable, which is currently scheduled to be in the second and fourth quarter of each year.

Cost of Material Sales

Cost of material sales represents costs associated with the sale of materials that have been classified as commercial including shipping costs. Commercial materials are materials that have been validated by the Company for use in commercial OLED products.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (FASB) issued amended standards that revised the reporting of reclassifications out of accumulated other comprehensive income and addressed certain matters from standards for reporting of other comprehensive income that were deferred pending additional consideration. The amendment requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, entities are required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, entities are required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail on these amounts. This guidance is effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted this guidance in the first quarter of 2013, and such adoption did not have an impact on the Company’s results of operations or financial position, but did change the Company’s disclosures related to accumulated other comprehensive income. In addition, consistent with its annual financial statements, the Company has elected to present separate statements of income and comprehensive income versus one continuous statement.

3. CASH, CASH EQUIVALENTS AND INVESTMENTS

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company classifies its remaining investments as available-for-sale. These 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.

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Investments at June 30, 2013 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
June 30, 2013 –
Certificates of deposit	$	9,117	$	3	$	(12	)	$	9,108
Commercial paper	2,000		—		—			2,000
Corporate bonds	151,255		38		(9		)	151,284
U.S. government bonds	3,074		—		(2		)	3,072
Convertible notes	4,300		—		—			4,300
	$	169,746	$	41	$	(23	)	$	169,764

Investments at December 31, 2012 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
December 31, 2012 –
Certificates of deposit	$	7,562	$	3	$	(5	)	$	7,560
Commercial paper	2,997		—		—			2,997
Corporate bonds	141,349		9		(25		)	141,333
U.S. government bonds	3,098		—		—			3,098
Convertible notes	4,300		—		—			4,300
	$	159,306	$	12	$	(30	)	$	159,288

On July 13, 2012, the Company entered into a three-year joint development agreement with Plextronics, Inc. (Plextronics), a private company engaged in printed solar, lighting and other electronics-related research and development. Under the joint development agreement, the Company is committed to pay $1.0 million per year to Plextronics for three years.  In addition, the Company invested $4.0 million in Plextronics through the purchase of a convertible promissory note.  The Company also received warrants to purchase shares of preferred stock in connection with the purchase of the convertible note.  The note accrues interest at the rate of 3% per year. The Company modified the note extending its due date beyond the original due date of June 30, 2013.  Depending on certain conditions, the note may either convert automatically, or if other certain conditions are met, the Company has the option to convert the note into shares of Plextronics’ preferred stock at a specified conversion price. The note was classified as a long-term investment at June 30, 2013, and was classified as a short-term investment at December 31, 2012.

On July 17, 2012, the Company invested $300,000 in a private company engaged in plasma processing equipment research and development (the Borrower) through the purchase of a convertible promissory note. The note accrues interest at the rate of 5% per year and is due and payable by August 1, 2015.  The note is included in long-term investments on the consolidated balance sheet.  The Company has the option to convert the note into shares of the Borrower’s preferred stock at a specified conversion price.

All short-term investments held at June 30, 2013 will mature within one year.

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4. FAIR VALUE MEASUREMENTS

The following table provides the assets carried at fair value measured on a recurring basis as of June 30, 2013 (in thousands):

			Fair Value Measurements, Using
	Total carrying value as of June 30, 2013		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	43,998	$	43,998	$	—	$	—
Short-term investments	163,983		163,983		—		—
Long-term investments	5,781		1,481		—		4,300

The following table provides the assets carried at fair value measured on a recurring basis as of December 31, 2012 (in thousands):

			Fair Value Measurements, Using
	Total carrying  value as of December 31, 2012		Quoted prices in active markets  (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	63,863	$	63,863	$	—	$	—
Short-term investments	158,018		154,018		—		4,000
Long-term investments	1,270		970		—		300

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.

The Company's convertible promissory note investments were initially recorded at cost and are classified within investments on the consolidated balance sheets.

These convertible promissory note investments are inherently risky as they lack a ready market for resale, and the note issuer’s success is dependent on product development, market acceptance, operational efficiency, the ability of the investee companies to raise additional funds in financial markets that can be volatile, and other key business factors. The companies the Company has invested in could fail or not be able to raise additional funds when needed. These events could cause the Company's investments to become impaired. In addition, financial market volatility could negatively affect the Company's ability to realize value in the Company's investments through liquidity events, such as mergers and private sales.

The Company determines the fair value of its convertible promissory note investments portfolio quarterly.  The fair value of the Company's convertible promissory note investments is determined through the consideration of whether an investee is experiencing financial difficulty and other factors.  Management performs an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future.  The evaluation requires significant judgment and includes quantitative and qualitative analysis of identified events or circumstances affecting the investee, which may impact the fair value of the investment, such as:

• the investee’s revenue and earnings trends relative to pre-defined milestones and overall business prospects;

• the technological feasibility of the investee’s products and technologies;

• the general market conditions in the investee’s industry or geographic area, including adverse regulatory or economic changes;

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• factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and the rate at which the investee is using its cash; and

• the investee’s receipt of additional funding at a lower valuation.

If the fair value of a convertible promissory note investment is below the Company's carrying value, the asset will be written down to its fair value with a resulting charge to net income. Temporary impairments result in a write down of the investment to its fair value with the charge reported in shareholders’ equity.  There were no impairments of non-marketable convertible promissory note investments as of June 30, 2013.

The following table is a reconciliation of the changes in fair value of the Company’s investments in convertible notes for the three and six months ended June 30, 2013, which had been classified in Level 3 in the fair value hierarchy (in thousands):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Fair value of notes, beginning of period	$	4,300	$	4,300
Investments	—		—
Fair value of notes, end of period	$	4,300	$	4,300

5. RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN

The Company funded OLED technology research at Princeton and, on a subcontractor basis, at USC for 10 years under a Research Agreement executed with Princeton in August 1997 (the 1997 Research Agreement).  The principal investigator conducting work under the 1997 Research Agreement transferred to Michigan in January 2006.  Following this transfer, the 1997 Research Agreement was allowed to expire on July 31, 2007.

As a result of the transfer, the Company entered into a new Sponsored Research Agreement with USC to sponsor OLED technology research at USC and, on a subcontractor basis, Michigan.  This new Sponsored Research Agreement (as amended, the 2006 Research Agreement) was effective as of May 1, 2006 and had an original term of three years.  On May 1, 2009, the Company amended the 2006 Research Agreement to extend the term of the agreement for an additional four years. The 2006 Research Agreement superseded the 1997 Research Agreement with respect to all work being performed at USC and Michigan.  Payments under the 2006 Research Agreement were made to USC on a quarterly basis as actual expenses were incurred.  The Company incurred a total of $5.0 million in research and development expense for work performed under the 2006 Research Agreement during the extended term, which ended on April 30, 2013.

Effective June 1, 2013, the Company amended the 2006 Research Agreement again to extend the term of the agreement for an additional four years.  As of June 30, 2013, the Company was obligated to pay USC up to $8.4 million for work actually performed during the remaining extended term, which expires April 30, 2017.  From June 1, 2013 through June 30, 2013, the Company incurred $49,000 in research and development expense for work performed under the newly amended 2006 Research Agreement.

On October 9, 1997, the Company, Princeton and USC entered into an Amended License Agreement (as amended, the 1997 Amended License Agreement) under which 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 work performed by Princeton and USC under the 1997 Research Agreement.  Under this 1997 Amended License Agreement, the Company is required to pay Princeton royalties for licensed products sold by the Company or its sublicensees.  For licensed products sold by the Company, the Company is required to pay Princeton 3% of the net sales price of these products.  For licensed products sold by the Company’s sublicensees, the Company is required to pay Princeton 3% of the revenues received by the Company from these sublicensees.  These royalty rates are subject to renegotiation for products not reasonably conceivable as arising out of the 1997 Research Agreement if Princeton reasonably determines that the royalty rates payable with respect to these products are not fair and competitive.

The Company is obligated under the 1997 Amended License Agreement to pay to Princeton minimum annual royalties.  The minimum royalty payment is $100,000 per year.  The Company accrued royalty expense in connection with this agreement of $1.2 million and $783,000 for the three months ended June 30, 2013 and 2012, respectively, and $1.5 million and $1.0 million for the six months ended June 30, 2013 and 2012, respectively.

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The Company also is required under the 1997 Amended License Agreement to use commercially reasonable efforts to bring the licensed OLED technology to market.  However, this requirement is deemed satisfied if the Company invests a minimum of $800,000 per year in research, development, commercialization or patenting efforts respecting the patent rights licensed to the Company.

In connection with entering into the 2006 Research Agreement, the Company amended the 1997 Amended License Agreement to include Michigan as a party to that agreement effective as of January 1, 2006.  Under this amendment, Princeton, USC and Michigan have granted the Company a worldwide exclusive license, 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 work performed under the 2006 Research Agreement.  The financial terms of the 1997 Amended License Agreement were not impacted by this amendment.

6. ACQUIRED TECHNOLOGY

In 2000, the Company entered into a license agreement with Motorola whereby Motorola granted the Company perpetual license rights to what are now 74 issued U.S. patents relating to Motorola’s OLED technologies, together with foreign counterparts in various countries. These patents expire in the U.S. between 2014 and 2018.

The Company was required under the license agreement with Motorola to pay Motorola annual royalties on gross revenues received on account of the Company’s sales of OLED products or components, or from its OLED technology licensees, whether or not these revenues related specifically to inventions claimed in the patent rights licensed from Motorola.

On March 9, 2011, the Company purchased these patents from Motorola, including all existing and future claims and causes of action for any infringement of the patents, pursuant to a Patent Purchase Agreement.  The Patent Purchase Agreement effectively terminated the Company’s license agreement with Motorola, including any obligation to make royalty payments to Motorola.

The technology acquired from Motorola had an assigned value of $440,000 as of March 9, 2011, which is being amortized over a period of 7.5 years.

On July 23, 2012, the Company entered into a Patent Sale Agreement (the Agreement) with Fujifilm.  Under the Agreement, Fujifilm sold more than 1,200 OLED-related patents and patent applications to the Company in exchange for a cash payment of $105.0 million.  

The Company recorded the $105.0 million plus $4.1 million of costs as acquired technology which is being amortized over a period of 10 years.  

Total amortization expense associated with acquired technology for the three month periods ended June 30, 2013 and 2012 was $2.7 million and $15,000, respectively, and for the six months ended June 30, 2013 and 2012 was $5.5 million and $29,000, respectively. Amortization expense is included in the patent costs and amortization of acquired technology expense line item on the Consolidated Statements of Operations.

7. EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS

On October 1, 2000, the Company entered into a five-year Development and License Agreement (the Development Agreement) and a seven-year Supply Agreement (the Supply Agreement) with PPG Industries.  Under the Development Agreement, a team of PPG Industries scientists and engineers assisted the Company in developing its proprietary OLED materials and supplied the Company with these materials for evaluation purposes.  Under the Supply Agreement, PPG Industries supplied the Company with its proprietary OLED materials that were intended for resale to customers for commercial purposes.

On July 29, 2005, the Company entered into an OLED Materials Supply and Service Agreement with PPG Industries (the OLED Materials Agreement). The OLED Materials Agreement superseded and replaced in their entireties the Development Agreement and Supply Agreement effective as of January 1, 2006, and extended the term of the Company’s relationship with PPG Industries through December 31, 2009. The term of the OLED Materials Agreement was subsequently extended through December 31, 2014.

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG Industries (the New OLED Materials Agreement), which replaced the original OLED Materials Agreement with PPG Industries effective as of October 1, 2011.  The term of the New OLED Materials Agreement runs through December 31, 2014 and contains provisions that are substantially similar to those of the original OLED Materials Agreement.  Under the New OLED Materials Agreement, PPG Industries continues to assist the Company in developing its proprietary OLED materials and to supply the Company with those materials for evaluation purposes and for resale to its customers.

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Under the New OLED Materials Agreement, the Company compensates PPG Industries 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 Industries 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 Industries in cash.

The Company also reimburses PPG Industries 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.

The Company recorded expense of $1.0 million and $1.1 million for the three months ended June 30, 2013 and 2012, respectively, and $3.3 million and $2.4 million for the six months ended June 30, 2013 and 2012, respectively, in relation to the cash portion of the reimbursement of expenses and work performed by PPG Industries, excluding amounts paid for commercial chemicals. No shares were issued for services to PPG Industries for the three and six months ended June 30, 2013 and 2012, respectively.

8. SHAREHOLDERS’ EQUITY (in thousands, except for share and per share data)

	Series A Nonconvertible							Additional					Accumulated Other								Total
	Preferred Stock			Common Stock				Paid-In		Accumulated			Comprehensive			Treasury Stock					Shareholders’
	Shares	Amount		Shares		Amount		Capital		Deficit			Loss			Shares		Amount			Equity
Balance, January 1, 2013	200,000	$	2	46,561,437		$	465	$	564,883	$	(204,211	)	$	(5,702	)	(205,902	)	$	(5,202	)	$	350,235
Net income	—	—		—		—		—		10,624			—			—		—			10,624
Other comprehensive income	—	—		—		—		—		—			375			—		—			375
Repurchase of common stock	—	—		—		—		—		—			—			(195,599	)	(5,456		)	(5,456		)
Exercise of common stock options, net of tendered shares	—	—		24,020		—		271		—			—			—		—			271
Stock-based employee compensation, net of shares withheld for employee taxes (A)	—	—		(13,882	)	—		328		—			—			—		—			328
Issuance of common stock to Board of Directors and Scientific Advisory Board (B)	—	—		29,153		1		693		—			—			—		—			694
Issuance of common stock under an Employee Stock Purchase Plan	—	—		7,775		—		234		—			—			—		—			234
Balance, June 30, 2013	200,000	$	2	46,608,503		$	466	$	566,409	$	(193,587	)	$	(5,327	)	(401,501	)	$	(10,658	)	$	357,305

(A) Includes $435 (13,356 shares) that was accrued for in a previous period and charged to expense when earned, but issued in 2013, less shares withheld for taxes in the amount of $153 (4,672 shares).

(B) Includes $300 (9,212 shares) that was earned in a previous period and charged to expense when earned, but issued in 2013.

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9. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consists of the following (in thousands):

	Unrealized (loss) gain on available-for-sale securities			Net unrealized loss on retirement plan			Total
Balance January 1, 2013	$	(18	)	$	(5,684	)	$	(5,702	)
Other comprehensive income before reclassification	36			—			36
Amounts reclassified from accumulated other comprehensive income	—			339			339
Net current-period other comprehensive income	36			339			375
Balance June 30, 2013	$	18		$	(5,345	)	$	(5,327	)

Amounts related to the retirement plan reclassified out of accumulated other comprehensive loss and included in net periodic benefit costs (see Note 11) for the three and six months ended June 30, 2013 were as follows (in thousands):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Amortization of prior service cost	$	146	$	292
Amortization of actuarial loss	24		47
Total	$	170	$	339

10. STOCK-BASED COMPENSATION

The Company recognizes in the statements of income the grant-date fair value of stock options and other equity based compensation, such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units, performance unit awards and stock appreciation rights (SARs), issued to employees and directors.

The grant-date fair value of stock options is determined using the Black-Scholes option pricing model.  The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of estimated forfeitures.  The Company relies primarily upon historical experience to estimate expected forfeitures and recognizes compensation expense on a straight-line basis from the date of the grant.  The Company issues new shares upon the respective grant, exercise or vesting of share-based payment awards, as applicable.

Cash-settled SARs awarded in share-based payment transactions are classified as liability awards; accordingly, the Company records these awards as a component of accrued expenses on its consolidated balance sheets.  The fair value of each SAR is estimated using the Black-Scholes option pricing model and is remeasured at each reporting period until the award is settled.  Changes in the fair value of the liability award are recorded as expense or income in the statements of income.

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.

Equity Compensation Plan

In 1995, the Board of Directors of the Company (the “Board”) adopted a stock option plan, which was amended and restated in 2003, 2011, and 2013 and is now called the Equity Compensation Plan. The Equity Compensation Plan provides for the granting of incentive and nonqualified stock options, shares of common stock, SARs, and performance units to employees, directors and consultants of the Company. Stock options are exercisable over periods determined by the Compensation Committee, but for no longer than 10 years from the grant date. Through June 30, 2013, the Company’s shareholders have approved increases in the number of shares reserved for issuance under the Equity Compensation Plan to 8,000,000 and have extended the term of the plan through September 1, 2015.

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Restricted Stock Awards and Restricted Stock Units

During the six months ended June 30, 2013 the Company granted 115,921 shares of restricted stock awards and restricted stock units to employees, which had a total fair value of $3.8 million on the respective dates of grant, and will vest over two to three years from the date of grant, provided that the grantee is still an employee of the Company on the applicable vesting date.

For the three months ended June 30, 2013 and 2012, the Company recorded general and administrative expense of $1.1 million and $755,000 and research and development expense of $417,000 and $339,000, respectively, related to restricted stock awards and restricted stock units.

For the six months ended June 30, 2013 and 2012, the Company recorded general and administrative expense of $1.9 million and $1.3 million and research and development expense of $744,000 and $510,000, respectively, related to restricted stock awards and restricted stock units.

In connection with the vesting of restricted common stock previously issued to employees, for the six months ended June 30, 2013, 94,087 shares of common stock with a fair value of $3.0 million were withheld in satisfaction of tax withholding obligations.

Performance Unit Awards

During the six months ended June 30, 2013 the Company granted 35,776 performance units, of which 17,888 are subject to a performance-based vesting requirement and 17,888 are subject to a market-based vesting requirement and will vest over the terms described above. Total fair value of the performance unit awards granted was $1.4 million on the date of grant.

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 two-year performance period beginning January 1, 2013 and ending December 31, 2014. 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 two-year performance period beginning January 1, 2013 and ending December 31, 2014.

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 above the shares granted.

For the three months ended June 30, 2013, the Company recorded general and administrative expense of $137,000 and research and development expense of $42,000 related to performance units.

For the six months ended June 30, 2013, the Company recorded general and administrative expense of $175,000 and research and development expense of $53,000 related to performance units.

Employee Stock Grants

For the three months ended June 30, 2012, the Company recorded research and development expense of $37,000 related to fully vested shares issued to employees.

For the six months ended June 30, 2012, the Company recorded research and development expense of $68,000 related to fully vested shares issued to employees.

No such grants were made or expenses recorded in 2013.

Stock Appreciation Rights

During 2011, the Company granted 24,000 cash-settled SARs to certain executive officers. The SARs represented the right to receive, for each SAR, a cash payment equal to the amount, if any, by which the fair market value of a share of the common stock of the Company on the vesting date exceeded the base price of the SAR award.  The base price of each SAR award was $34.78 per share.  The SARs vested on the first anniversary of the date of grant, provided that the grantee was still an employee of the Company on the applicable vesting date. During the three months ended March 31, 2012, all SARs were settled, resulting in cash payments of $49,000. The Company recorded $1,000 to general and administrative expense, and $3,000 to research and development expense, for the six months ended June 30, 2012, related to the SARs. No such grants were made in 2013 or 2012.

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Other Compensation

During the six months ended June 30, 2013, the Company issued 10,000 shares of common stock to members of the Board as partial compensation for their service on the Board.  The Company recorded general and administrative expense of $126,000 and $160,000 for the three months ended June 30, 2013 and 2012, respectively, and $264,000 and $320,000 for the six months ended June 30, 2013 and 2012, respectively, related to shares issued to members of the Board.

During the six months ended June 30, 2013, the Company granted 7,370 shares of restricted stock to certain members of its Scientific Advisory Board.  These shares of restricted stock will vest and be issued in equal increments annually over three years from the date of grant, provided that the grantee is still engaged as a consultant of the Company on the applicable vesting date.  The Company recorded research and development expense of $43,000 and $63,000 for the three months ended June 30, 2013 and 2012, respectively, and $129,000 and $116,000 for the six months ended June 30, 2013 and 2012, respectively, related to shares issued to members of its Scientific Advisory Board.

Employee Stock Purchase Plan

On April 7, 2009, the Board 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 sooner terminated by the Board, 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 price per share of common stock on the first day of the period or the last 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 six months ended June 30, 2013 and 2012, the Company issued 7,775 and 4,461 shares of its common stock, respectively, under the ESPP, resulting in proceeds of $177,000 and $137,000, respectively.

For the three months ended June 30, 2013 and 2012, the Company recorded general and administrative expense of $8,000 and $5,000 and research and development expense of $19,000 and $15,000, respectively, related to the ESPP.

For the six months ended June 30, 2013 and 2012, the Company recorded general and administrative expense of $15,000 and $10,000 and research and development expense of $42,000 and $35,000, respectively, related to the ESPP.

The expense recorded equals the amount of the discount and the value of the look-back feature for the shares that were issued under the ESPP.

11.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

On March 18, 2010, the Compensation Committee and the Board approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP), effective as of April 1, 2010.  The purpose of the SERP, which is unfunded, is to provide certain executive officers of the Company with supplemental pension benefits following a cessation of their employment. As of June 30, 2013, there were five participants in the SERP.  The SERP benefit is based on a percentage of the participant’s annual base salary and the number of years of service.

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 for the three months ended June 30, (in thousands):

	2013		2012
Service cost	$	161	$	144
Interest cost	86		96
Amortization of prior service cost	146		146
Amortization of actuarial loss	24		3
Total net periodic benefit cost	$	417	$	389

The components of net periodic pension cost were as follows for the six months ended June 30, (in thousands):

	2013		2012
Service cost	$	323	$	288
Interest cost	172		192
Amortization of prior service cost	292		292
Amortization of actuarial loss	47		5
Total net periodic benefit cost	$	834	$	777

12. COMMITMENTS AND CONTINGENCIES

Commitments

On July 13, 2012, the Company entered into a three-year joint development agreement with Plextronics.  Under the joint development agreement, the Company is committed to pay $1.0 million per year to Plextronics for three years starting on July 13, 2012.

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 5 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 5 for further explanation.

The Company has agreements with six executive officers which provide for certain cash payments and other benefits upon termination of employment of the officer in connection with a change in control of the Company. Each executive is entitled to a lump-sum cash payment equal to two times the sum of the average annual base salary and bonus of the officer 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.

Patent Related Challenges and Oppositions

Each major jurisdiction in the world that grants patents provides third parties with opportunities and access to administrative proceedings whereby they can request for additional review of previously issued patents in the respective jurisdiction. Each jurisdiction provides unique procedures for undertaking such activities, as well as different vehicles to review and appeal the determinations made in connection with such reviews. The conclusions made by the administration bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

Below are summaries of certain proceedings that have been commenced against issued patents that are either exclusively licensed to the Company or which are now assigned to the Company. The Company notes that it currently has more than 3,000 issued patents and pending patent applications, worldwide, which are utilized in the Company's materials supply and device licensing business. The Company does not believe that the confirmation, loss or modification of the Company's rights in any individual claim or set of claim(s) that are the subject of the following legal proceedings 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 operations, as a whole. However, as noted within the descriptions, many of the following legal proceedings involve patents relating to the Company's key phosphorescent OLED technologies and the Company intends to vigorously defend against such claims, which may require the expenditure of significant amounts of the Company's resources. The entries marked with an "*" relate to our UniversalPHOLED phosphorescent OLED technology.

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Opposition to European Patent No. 0946958

On December 8, 2006, Cambridge Display Technology Ltd. (CDT), which was acquired in 2007 by Sumitomo Chemical Company (Sumitomo), filed a Notice of Opposition to European Patent No. 0946958 (EP '958 patent), which relates to the Company's FOLED™ flexible OLED technology. The EP '958 patent, which was issued on March 8, 2006, is a European counterpart patent to U.S. patents 5,844,363, 6,602,540, 6,888,306 and 7,247,073. These patents 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 (the EPO) conducted an Oral Hearing in this matter and on November 26, 2009 issued its written decision to reject the opposition and to maintain the patent as granted. CDT has filed an appeal to the EPO panel decision.

At this time, based on its current knowledge, Company management believes that the EPO panel decision will be upheld on appeal. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1449238*

Between March 8, 2007 and July 27, 2007, three companies filed Notices of Opposition to European Patent No. 1449238 (EP '238 patent). The three companies are Sumation Company Limited (Sumation), a joint venture between Sumitomo and CDT, Merck Patent GmbH, of Darmstadt, Germany, and BASF Aktiengesellschaft, of Mannheim, Germany. The EP '238 patent, which was issued on November 2, 2006, is a European counterpart patent, in part, to U.S. patents 6,830,828; 6,902,830; 7,001,536; 7,291,406; 7,537,844; and 7,883,787; and to pending U.S. patent application 13/009,001, filed on January 19, 2011, and 13/205,290, filed on August 9, 2011 (hereinafter the “U.S. '828 Patent Family”). 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 EPO combined all three oppositions into a single opposition proceeding. The EPO conducted an Oral Hearing in this matter and at the conclusion of the Oral Hearing, the EPO panel announced its decision to maintain the patent with claims directed to OLEDs comprising phosphorescent organometallic iridium compounds. The official minutes from the Oral Hearing and written decision were published on January 13, 2012.

All the parties filed notices of appeal to the EPO's panel decision and submitted their initial papers in support of their respective requests for appellate review. An Oral hearing has been scheduled by the EPO in the second half of 2013.

At this time, based on its current knowledge, Company management believes that the EPO will uphold the Company's positions on appeal. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1394870*

On April 20, 2010, five European companies filed Notices of Opposition to European Patent No. 1394870 (the EP '870 patent). The EP '870 patent, which was issued on July 22, 2009, is a European counterpart patent, in part, to U.S. patents 6,303,238; 6,579,632; 6,872,477; 7,279,235; 7,279,237; 7,488,542; 7,563,519; and 7,901,795; and to pending U.S. patent application 13/035,051, filed on February 25, 2011 (hereinafter the “U.S. '238 Patent Family”). 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 five companies are Merck Patent GmbH; BASF Schweitz AG of Basel, Switzerland; Osram GmbH of Munich, Germany; Siemens Aktiengesellschaft of Munich, Germany; and Koninklijke Philips Electronics N.V., of Eindhoven, The Netherlands.

The EPO combined the oppositions into a single opposition proceeding. The matter has been briefed and the Company is waiting for the EPO to provide notice of the date of the Oral Hearing. The Company is also waiting to see whether any of the other parties in the opposition file additional documents to which the Company might respond.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of the Company's claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Japan for Japan Patent Nos. 4357781 and 4358168*

On May 24, 2010, the Company received two Notices of Invalidation Trials against Japan Patent Nos. 4357781 (the JP '781 patent) and 4358168 (the JP '168 patent), which were both issued on August 14, 2009. The requests for these two additional Invalidation Trials were filed by Semiconductor Energy Laboratory Co., Ltd. (SEL) of Kanagawa, Japan. The JP '781 and '168 patents are also

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Japanese counterpart patents, in part, to the above-noted U.S. '828 Patent Family and EP '238 Patent. 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.

On March 31, 2011, the Company learned that the Japanese Patent Office ("JPO") had issued decisions finding all claims in the JP '781 and JP '168 patents invalid. Company management believed that the JPO's decisions invalidating these claims were erroneous, and the Company filed appeals for both cases to the Japanese IP High Court.

Both parties filed appeal briefs in this matter with the Japanese IP High Court. The Japanese IP High Court held hearings for this matter on November 22, 2011, March 5, 2012, and June 18, 2012. On November 7, 2012, the Company was notified by the Company's Japanese counsel that the Japanese IP High Court had reversed the JPO's finding of invalidity and remanded the case back to the JPO for further consideration.

In a decision reported to the Company on April 15, 2013, all claims in the Company's JP '781 and JP '168 patents were upheld as valid by the JPO. The Company's opponent filed an appeal and submitted their appeal briefs. The Company's responses are currently under preparation.

At this time, based on its current knowledge, Company management believes that the claims on the patents should be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trial in Korea for Patent No. KR-0998059

On March 10, 2011, the Company received informal notice from its Korean patent counsel of a Request for an Invalidation Trial from the Korean Intellectual Property Office (KIPO) for its Korean Patent No. 10-0998059 (the KR '059 patent), which was issued on November 26, 2010. The Request was filed by a certain individual petitioner, but the Company still does not know which company, if any, was ultimately responsible for filing this Request. The KR '059 patent is a Korean counterpart patent to the OVJP, Organic Vapor Jet Printing, family of U.S. patents originating from U.S. patent 7,431,968.

An oral hearing relating to this matter was held on December 18, 2012, after numerous supporting briefs were filed by both parties. On March 5, 2013, the Company was notified that a favorable decision had been rendered in which the Company's patent was held valid. The opponent did not appeal this decision. The case is now closed.

Invalidation Trial in Japan for Japan Patent No. 4511024*

On June 16, 2011, the Company learned that a Request for an Invalidation Trial was filed in Japan for its Japanese Patent No. JP-4511024 (the JP '024 patent), which issued on May 14, 2010. The Request was filed by SEL, the same opponent as in the above-noted Japanese Invalidation Trials for the JP '781 and '168 patents. The JP '024 patent is a counterpart patent, in part, to the U.S. '238 Patent Family, which relate to the EP '870 patent, which is subject to one of the above-noted European oppositions; which relate to the Company's UniversalPHOLED phosphorescent OLED technology. 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.

On May 10, 2012, after a scheduled hearing, the Company learned that the JPO issued a decision upholding the validity of certain claimed inventions in the JP '024 Patent but invalidating the broadest claims in the patent. Company management believes the JPO's decision was erroneous with respect to the broadest claims.

The Company filed a Notice of Appeal with the Japanese IP High Court on September 5, 2012. A Technical Hearing was held on May 30, 2013 after the parties filed a number of supporting briefs. It is expected that the Japanese IP High Court will render a decision in the second half of 2013.

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

Opposition to European Patent No. 1252803*

On July 12 and 13, 2011, Sumitomo, Merck Patent GmbH and BASF SE, of Ludwigshaven, Germany filed oppositions to the Company's European Patent No. 1252803 (the EP '803 patent). The EP '803 patent, which was issued on October 13, 2010, is a European counterpart patent, in part, to the U.S. '828 Patent Family. 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.

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The EPO combined the oppositions into a single opposition proceeding. On December 7, 2012 the EPO rendered a decision at an Oral Hearing wherein it upheld the broadest claim of the granted patent. All three opponents filed an appeal and have submitted their appeal briefs. The Company's responses are currently under preparation.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of the Company's claims will be further upheld on appeal. However, Company management cannot make any assurances of this result.

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 (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 EPO combined the oppositions into a single opposition proceeding. The Company's response to the opponents' opposition briefs was timely filed on June 28, 2012.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of the Company's claims will be upheld. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1933395*

On February 24 and 27, 2012, Sumitomo, Merck Patent GmbH and BASF SE filed oppositions to the Company's European Patent No. 1933395 (the EP '395 patent). The EP '395 patent is a counterpart patent to the above-noted JP '168 patent and, in part, to the U.S. '828 Patent Family. This patent is exclusively licensed to the Company by Princeton, and the Company is required to pay all legal costs and fees associated with this proceeding.

The Company's response to the opponents' opposition briefs was timely filed on September 27, 2012. An Oral Hearing has been scheduled by the EPO in the second half of 2013.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of the Company's claims will be upheld. However, Company management cannot make any assurances of this result.

13. CONCENTRATION OF RISK

Included in technology development and support revenue in the accompanying statements of operations is $232,000 and $1.2 million for the three months ended June 30, 2013 and 2012, respectively, and $861,000 and $2.4 million for the six months ended June 30, 2013 and 2012, respectively, of revenue which was derived from contracts with United States government agencies.  Revenues derived from contracts with United States government agencies represented less than 1% and 4% of the consolidated revenue for the three months ended June 30, 2013 and 2012, respectively, and 1% and 6% of the consolidated revenue for the six months ended June 30, 2013 and 2012, respectively.

Revenues for the three months ended June 30, 2013 and 2012, and accounts receivable as of June 30, 2013, from our largest non-government customers were as follows:

	% of Total Revenue		Accounts Receivable (in thousands)
Customer	2013	2012	June 30, 2013
A	73%	75%	$9,605
B	19%	6%	2,263

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Revenues for the six months ended June 30, 2013 and 2012, were as follows:

	% of Total Revenue
Customer	2013	2012
A	65%	65%
B	20%	8%

Revenues from outside of North America represented 99% and 96% of consolidated revenue for the three months ended June 30, 2013 and 2012, respectively. Revenues by geographic area are as follows (in thousands):

Country	2013		2012
United States	$	329	$	1,284
South Korea	38,458		23,560
Japan	10,485		4,137
Taiwan	52		732
Other	35		274
All foreign locations	49,030		28,703
Total revenue	$	49,359	$	29,987

Revenues from outside of North America represented 98% and 94% of consolidated revenue for the six months ended June 30, 2013 and 2012, respectively. Revenues by geographic area are as follows (in thousands):

Country	2013		2012
United States	$	1,084	$	2,558
South Korea	47,802		30,953
Japan	15,097		6,703
Taiwan	218		1,989
Other	134		404
All foreign locations	63,251		40,049
Total revenue	$	64,335	$	42,607

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

Long-lived assets (net) by geographic area at June 30, 2013 and December 31, 2012 are as follows (in thousands):

	June 30, 2013		December 31, 2012
United States	$	13,630	$	11,512
Other	274		296
Total long-lived assets	$	13,904	$	11,808

All chemical materials were purchased from one supplier. See Note 7.

14. INCOME TAXES

In July 2012, Samsung Mobile Display Co., Ltd (SMD) merged with SDC. Following the merger, all agreements between the Company and SMD were assigned to SDC, and SDC will honor all pre-existing agreements made between the Company and SMD.

The Company is subject to income taxes in both United States and foreign jurisdictions. For the three and six months ended June 30, 2013, income tax expense of $6.5 million and $4.3 million, respectively, was recorded based on the Company's estimated annual effective tax rate for 2013 applied to the Company's income before income taxes. For both the three and six months ended

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June 30, 2012, income tax expense of $2.3 million were recorded. The Company's estimated effective tax rate is primarily related to foreign taxes withheld on royalty and license fees paid to the Company. SDC has been required to withhold tax upon payment of royalty and license fees to the Company at a rate of 16.5%. Any potential foreign tax credits to be received by the Company for these amounts on its United States tax returns are currently offset by a full valuation allowance as noted below.

Based on previous earnings history, a current evaluation of expected future taxable income and other evidence, the Company determined it is not more likely than not that certain deferred tax assets will be realized. Therefore, the Company has continued to establish a full valuation allowance for significantly all its net deferred tax assets.

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 continue to generate taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. The Company considers the scheduled reversal of deferred tax liabilities, historic earnings, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, 2013, a full valuation allowance continued to be established for significantly all of the Company's net deferred tax assets because the Company incurred substantial consolidated operating losses from inception through 2010, as well as continuing losses in certain jurisdictions, and based on the aforementioned factors, the Company has assessed that the net deferred tax assets do not meet the criteria for realization. In future periods, if the Company determines it is more likely than not that net deferred tax assets will be realized, the related valuation allowance would be reduced and an income tax benefit would be recorded.

15.NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period excluding unvested restricted stock awards, restricted stock units and performance units.  Diluted net income per common share reflects the potential dilution from the exercise or conversion of securities into common stock, the effect of unvested restricted stock awards, restricted stock units and performance units, and the impact of shares to be issued under the ESPP.

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 months ended June 30, 2013 and 2012 (in thousands, except for share and per share data):

	2013		2012
Numerator:
Net income	$	15,382	$	10,964
Denominator:
Weighted average common shares outstanding - Basic	45,859,286		45,953,312
Effect of dilutive shares:
Common stock equivalents arising from stock options, warrants and ESPP	498,802		663,419
Restricted stock awards and units and performance units	138,032		240,578
Weighted average common shares outstanding - Diluted	46,496,120		46,857,309
Net income per common share:
Basic	$	0.34	$	0.24
Diluted	$	0.33	$	0.23

For the three months ended June 30, 2013 and 2012, the combined effects of unvested restricted stock awards and restricted stock units of 242,891 and 48,366, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive, or for performance units, as the units would not be issued if the end of the reporting period was the end of the performance period.

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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 six months ended June 30, 2013 and 2012 (in thousands, except for share and per share data):

	2013		2012
Numerator:
Net income	$	10,624	$	9,743
Denominator:
Weighted average common shares outstanding - Basic	45,841,446		45,871,166
Effect of dilutive shares:
Common stock equivalents arising from stock options, warrants and ESPP	503,908		726,359
Restricted stock awards and units and performance units	178,186		299,373
Weighted average common shares outstanding - Diluted	46,523,540		46,896,898
Net income per common share:
Basic	$	0.23	$	0.21
Diluted	$	0.23	$	0.21

For the six months ended June 30, 2013 and 2012, the combined effects of unvested restricted stock awards, restricted stock units and performance units of 227,088 and 189,552, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive, or for performance units, as the units would not be issued if the end of the reporting period was the end of the performance period.

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 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 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 section entitled (Risk Factors) in our Annual Report on Form 10-K for the year ended December 31, 2012, as supplemented by disclosures, if any, 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, or OLED, technologies for use in flat panel display, solid-state lighting and other applications. Since 1994, we have been exclusively engaged, and expect to continue to be exclusively engaged, in funding and performing research and development activities relating to OLED technologies and materials, and attempting to commercialize these technologies and materials. We derive our revenue from the following:

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• intellectual property and technology licensing;

• sales of OLED materials for evaluation, development and commercial manufacturing; and

• technology development and support, including government contract work and support provided to third parties for commercialization of their OLED products.

While we have made significant progress over the past few years developing and commercializing our family of OLED technologies (including our PHOLED, TOLED, FOLED technologies) and materials, we have incurred significant losses since our inception, resulting in an accumulated deficit of $193.6 million as of June 30, 2013.

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.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

We had operating income of $21.7 million for the three months ended June 30, 2013, compared to operating income of $12.9 million for the three months ended June 30, 2012. The increase in operating income was due to the following:

• an increase in revenue of $19.4 million, which includes increases in both material sales and royalty and license fees, offset by

• an increase in operating expenses of $10.6 million, which includes a $6.7 million increase in the cost of material sales, a $2.3 million increase in patent costs and amortization of acquired technology and a $1.1 million increase in selling, general and administrative expenses, all of which are described in detail below.

We had net income of $15.4 million (or $0.34 per basic and $0.33 per diluted share) for the three months ended June 30, 2013, compared to net income of $11.0 million (or $0.24 per basic and $0.23 per diluted share) for the three months ended June 30, 2012.

Our revenues were $49.4 million for the three months ended June 30, 2013, compared to $30.0 million for the three months ended June 30, 2012.  The increase in our overall revenue was primarily due to increases in both material sales and royalty and license fees. The increase includes a $17.6 million increase in commercial material sales and an increase in royalty and license fees of $5.8 million related to the receipt and therefore recognition of $20.0 million of royalty and license fees received under our patent license agreement with SDC, offset by a $3.3 million decrease in development chemical sales due to changes in sales mix.

Material sales increased to $27.1 million for the three months ended June 30, 2013, compared to $12.8 million for the same period in 2012. Material sales relate to the sale of our OLED materials for our customers' evaluation, manufacture and development activities, and for incorporation into their commercial OLED products.   The increase in material sales resulted primarily from increased commercial chemical sales due to the overall expanded adoption of our technology and materials in the marketplace by display manufacturers, particularly from SDC.

Material sales included sales of both phosphorescent emitter and host materials.  Phosphorescent emitter sales were 66% of our total material sales for the three months ended June 30, 2013, compared to 85% of our total material sales for the three months ended June 30, 2012.  Host material sales were 34% of our total material sales for the three months ended June 30, 2013, compared to 15% of our total material sales for the three months ended June 30, 2012.

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Phosphorescent emitter sales increased by approximately $7.0 million due to an increase in commercial phosphorescent emitter sales, offset by a decrease in development phosphorescent emitter sales. Commercial green emitter sales increased by approximately $11.6 million due to expanded use of our green emitter in customer products. Commercial red emitter sales decreased by approximately $1.6 million mainly due to a reduction in the number of grams sold as we believe our customers utilized our materials more efficiently, as well as a decrease in the average price per gram of red emitter based on the cumulative volume of purchases.

Host material sales increased by $7.4 million due to an increase in the number of grams sold, which was offset by a decrease in the average price per gram sold. Host material sales are mainly related to the use of commercial host materials with our green emitter materials. We believe we can participate in the host materials business due to our long experience in developing emitter materials, which are used together with host materials in the emissive layer of an OLED.  However, our customers are not required to purchase our host materials in order to utilize our phosphorescent emitter materials, and the host material sales business is more competitive than the phosphorescent emitter material sales business.  Thus, our long-term prospects for host material sales are uncertain.

We cannot accurately predict how long our phosphorescent emitter material sales or host material sales to particular customers will continue, as our customers frequently update and alter their product offerings in response to market demands. Continued sales of our OLED materials to these customers will depend on several factors, including pricing, availability, continued technical improvement and competitive product offerings.

Royalty and license fees increased to $21.2 million for the three months ended June 30, 2013, compared to $15.4 million for the three months ended June 30, 2012. The increase was mainly related to the receipt and therefore recognition of $20.0 million of royalty and license fee payments under our patent license agreement with SDC, compared to $15.0 million in the prior period. The increase was also related to an increase in license fees attributable to material sales to certain customers, which increased during the three months ended June 30, 2013, as compared to the three months ended June 30, 2012.

In August 2011, we entered into a patent license agreement with SDC which runs through December 31, 2017. The patent license agreement with SDC covers the manufacture and sale of specified OLED display products.  Under the agreement, SDC has agreed to pay us a fixed license fee, payable in semi-annual installments over the agreement term.  These installments, which are due in the second and fourth quarter of each annual period, increase on an annual basis over the term of the license agreement.  Based upon the extended payment arrangement, such amounts are not considered fixed and determinable for revenue recognition purposes until such time the installments become due and payable. As a result, license fees under our new agreement with SDC will be recognized as they become due and payable, which is currently scheduled to be in the second and fourth quarter of each year; therefore our quarterly license fees, will fluctuate accordingly, depending on the timing of such payments.

At the same time we entered into the current patent license agreement with SDC, we also entered into a new supplemental material purchase agreement with SDC.  Under the current supplemental material purchase agreement, SDC agrees to purchase from us a minimum dollar amount of phosphorescent emitter materials for use in the manufacture of licensed products.  This minimum purchase 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.  The minimum purchase amounts increase on an annual basis over the term of the supplemental agreement.  These amounts were determined through negotiation based on a number of factors, including, without limitation, estimates of SDC’s OLED business growth as a percentage of published OLED market forecasts and SDC’s projected minimum usage of red and green phosphorescent emitter materials over the term of the agreement.

Technology development and support revenue decreased to $1.0 million for the three months ended June 30, 2013, compared to $1.7 million for the same period in 2012 due to fewer outstanding contracts in the current period when compared to the prior period.

Cost of material sales increased to $8.3 million for the three months ended June 30, 2013, compared to $1.6 million for the three months ended June 30, 2012, partially due to the aforementioned increase in material sales. Cost of material sales includes the cost of producing materials that have been classified as commercial and shipping costs for such materials, but excludes the cost of producing certain materials, which have already been included in research and development expense. Commercial materials are materials that have been validated by us for use in commercial OLED products.

During the three months ended June 30, 2012, cost of materials related to our green emitter material sales excluded costs that had been previously included in research and development expenses; however, during the three months ended June 30, 2013, cost of materials related to our green emitter material sales included all costs to produce the materials sold.

Depending on the amounts, timing and stage of materials being classified as commercial, we expect cost of materials sales to fluctuate from quarter to quarter. As a result of these fluctuations, and due to increased sales of commercial materials, cost of

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material sales increased for the three months ended June 30, 2013, compared to the same period in 2012. For the three months ended June 30, 2013 and 2012, costs associated with $25.7 million and $8.1 million, respectively, of material sales relating to commercial materials were included in cost of material sales.

We incurred research and development expenses of $7.3 million for the three months ended June 30, 2013, compared to $7.2 million for the three months ended June 30, 2012.   Significant changes in activity in research and development expenses were as follows:

• increased costs of $520,000 associated with sponsored research and development contracts, offset by

• decreased subcontract costs of $207,000, decreased costs of $135,000 related to the timing of costs incurred for raw materials and other lab related costs used for research and development and decreased costs of $110,000 related to outsourced research and development efforts.

Selling, general and administrative expenses were $6.3 million for the three months ended June 30, 2013, compared to $5.2 million for the three months ended June 30, 2012. The increase was primarily due to increased costs associated with bonus and stock-based compensation for certain executive officers as well as increased salaries and salary-related expenses associated with new employees.

Patent costs and amortization of acquired technology increased to $4.5 million for the three months ended June 30, 2013, compared to $2.3 million for the three months ended June 30, 2012. The increase was mainly due to increased amortization costs of $2.2 million related to amortization expense associated with technology acquired in July 2012 (see Note 6 in Notes to Consolidated Financial Statements for further discussion). In addition, we have increased our number of patents, including those of the newly acquired technology, and the increase reflects the additional maintenance costs of these new patents.

Royalty and license expense increased to $1.2 million for the three months ended June 30, 2013, compared to $786,000 for the three months ended June 30, 2012. The increase was mainly due to increased royalties incurred under our amended license agreement with Princeton, USC, and Michigan, resulting from higher material sales and increased royalty and license fees. See Note 5 in Notes to Consolidated Financial Statements for further discussion.

Interest income decreased to $178,000 for the three months ended June 30, 2013, compared to $357,000 for the three months ended June 30, 2012. The decrease was mainly attributable to interest earned on lower average cash and investment balances as a result of the purchase of acquired technology in July 2012 (see Note 6 in Notes to Consolidated Financial Statements for further discussion).

We recorded income tax expense of $6.5 million and $2.3 million for the three months ended June 30, 2013 and 2012, respectively. See "Provision for Income Tax" below for additional information.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

We had operating income of $14.6 million for the six months ended June 30, 2013, compared to operating income of $11.4 million for the six months ended June 30, 2012. The increase in operating income was due to the following:

• an increase in revenue of $21.7 million, which includes increases in both material sales and royalty and license fees, offset by

• an increase in operating expenses of $18.5 million, which includes a $8.7 million increase in the cost of material sales, a $5.0 million increase in patent costs and amortization of acquired technology, a $2.4 million increase in research and development costs and a $2.0 million increase in selling, general and administrative costs, described in detail below.

We had net income of $10.6 million (or $0.23 per basic and diluted share) for the six months ended June 30, 2013, compared to net income of $9.7 million (or $0.21 per basic and diluted share) for the six months ended June 30, 2012.

Our revenues were $64.3 million for the six months ended June 30, 2013, compared to $42.6 million for the six months ended June 30, 2012.  The increase in our overall revenue was primarily due to increases in both material sales and royalty and license fees, which included a $20.6 million increase in commercial material sales as well as an increase in royalty and license fees of $6.6 million, offset by a $4.1 million decrease in development chemical sales due to changes in sales mix.

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Material sales increased to $39.9 million for the six months ended June 30, 2013, compared to $23.4 million for the same period in 2012. Material sales relate to the sale of our OLED materials for our customers' evaluation, manufacture and development activities, and for incorporation into their commercial OLED products.   The increase in material sales resulted primarily from increased commercial chemical sales due to the overall expanded adoption of our technology and materials in the marketplace by display manufacturers, particularly from SDC.

Material sales included sales of both phosphorescent emitter and host materials.  Phosphorescent emitter sales were 67% of our total material sales for the six months ended June 30, 2013, compared to 83% of our total material sales for the six months ended June 30, 2012.  Host material sales were 33% of our total material sales for the six months ended June 30, 2013, compared to 17% of our total material sales for the six months ended June 30, 2012.

Phosphorescent emitter sales increased by approximately $7.5 million due to an increase in commercial phosphorescent emitter sales, offset by a decrease in development phosphorescent emitter sales. Commercial green emitter sales increased by approximately $14.7 million due to expanded use of our green emitter in customer products. Commercial red emitter sales decreased by approximately $3.5 million mainly due to a reduction in the number of grams sold as we believe our customers utilized our materials more efficiently, as well as a decrease in the average price per gram of red emitter based on the cumulative volume of purchases.

Host material sales increased by $9.1 million, due to an increase in the number of grams sold, which was offset by a decrease in the average price per gram sold. Host material sales are mainly related to the use of commercial host materials with our green emitter materials. We believe we can participate in the host materials business due to our long experience in developing emitter materials, which are used together with host materials in the emissive layer of an OLED.  However, our customers are not required to purchase our host materials in order to utilize our phosphorescent emitter materials, and the host material sales business is more competitive than the phosphorescent emitter material sales business.  Thus, our long-term prospects for host material sales are uncertain.

We cannot accurately predict how long our phosphorescent emitter material sales or host material sales to particular customers will continue, as our customers frequently update and alter their product offerings in response to market demands. Continued sales of our OLED materials to these customers will depend on several factors, including pricing, availability, continued technical improvement and competitive product offerings.

Royalty and license fees increased to $22.5 million for the six months ended June 30, 2013, compared to $15.9 million for the six months ended June 30, 2012. The increase was mainly related to the receipt and therefore recognition of $20.0 million of royalty and license fee payments under our patent license agreement with SDC, compared to $15.0 million in the prior period. The increase was also related to an increase in license fees attributable to material sales to certain customers, which increased during the six months ended June 30, 2013, as compared to the six months ended June 30, 2012.

In August 2011, we entered into a patent license agreement with SDC which runs through December 31, 2017. The patent license agreement with SDC covers the manufacture and sale of specified OLED display products.  Under the agreement, SDC has agreed to pay us a fixed license fee, payable in semi-annual installments over the agreement term.  These installments, which are due in the second and fourth quarter of each annual period, increase on an annual basis over the term of the license agreement.  Based upon the extended payment arrangement, such amounts are not considered fixed and determinable for revenue recognition purposes until such time the installments become due and payable. As a result, license fees under our new agreement with SDC will be recognized as they become due and payable, which is currently scheduled to be in the second and fourth quarter of each year; therefore our quarterly license fees, will fluctuate accordingly, depending on the timing of such payments.

At the same time we entered into the current patent license agreement with SDC, we also entered into a new supplemental material purchase agreement with SDC.  Under the current supplemental material purchase agreement, SDC agrees to purchase from us a minimum dollar amount of phosphorescent emitter materials for use in the manufacture of licensed products.  This minimum purchase 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.  The minimum purchase amounts increase on an annual basis over the term of the supplemental agreement.  These amounts were determined through negotiation based on a number of factors, including, without limitation, estimates of SDC’s OLED business growth as a percentage of published OLED market forecasts and SDC’s projected minimum usage of red and green phosphorescent emitter materials over the term of the agreement.

Technology development and support revenue decreased to $1.9 million for the six months ended June 30, 2013, compared to $3.4 million for the same period in 2012 due to fewer outstanding contracts in the current period when compared to the prior period.

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Cost of material sales increased to $11.4 million for the six months ended June 30, 2013, compared to $2.7 million for the six months ended June 30, 2012, partially due to the aforementioned increase in material sales. Cost of material sales includes the cost of producing materials that have been classified as commercial and shipping costs for such materials, but excludes the cost of producing certain materials, which have already been included in research and development expense. Commercial materials are materials that have been validated by us for use in commercial OLED products.

During the six months ended June 30, 2012, costs of materials related to a majority of our green emitter material sales excluded costs that had been previously included in research and development expenses; however, during the six months ended June 30, 2013, costs of materials related to our green emitter material sales included all costs to produce the materials sold.

Depending on the amounts, timing and stage of materials being classified as commercial, as well as changes in the market price of certain raw materials, we expect cost of materials sales to fluctuate from quarter to quarter. As a result of these fluctuations and raw material cost increases, and due to increased sales of commercial materials, cost of material sales increased for the six months ended June 30, 2013, compared to the same period in 2012. For the six months ended June 30, 2013 and 2012, costs associated with $36.2 million and $15.6 million, respectively, of material sales relating to commercial materials were included in cost of material sales.

We incurred research and development expenses of $16.3 million for the six months ended June 30, 2013, compared to $13.9 million for the six months ended June 30, 2012.   The overall increase was primarily due to:

• increased costs of $952,000 associated with sponsored research and development contracts;

• increased costs of $947,000 incurred under our agreement with PPG Industries, which represents the cost of scaling up of a new red emitter material developed to commercial status, as well as to supply us with those materials for evaluation purposes; and

• increased costs of $866,000 due to increased employee costs related to bonus compensation, as well as salaries and salary related expenses for new employees; offset by

• decreased subcontract costs of $469,000.

Selling, general and administrative expenses were $11.5 million for the six months ended June 30, 2013, compared to $9.5 million for the six months ended June 30, 2012. The increase was primarily due to increased costs associated with bonus and stock-based compensation for certain executive officers as well as increased salaries and salary-related expenses associated with new employees.

Patent costs and amortization of acquired technology increased to $9.1 million for the six months ended June 30, 2013, compared to $4.1 million for the six months ended June 30, 2012. The increase was mainly due to increased amortization costs of $5.5 million due to the amortization expense associated with technology acquired in July 2012 (see Note 6 in Notes to Consolidated Financial Statements for further discussion).

Royalty and license expense increased to $1.5 million for the six months ended June 30, 2013, compared to $1.0 million for the six months ended June 30, 2012. The increase was mainly due to increased royalties incurred under our amended license agreement with Princeton, USC, and Michigan, resulting from higher material sales and increased royalty and license fees. See Note 5 in Notes to Consolidated Financial Statements for further discussion.

Interest income decreased to $388,000 for the six months ended June 30, 2013, compared to $714,000 for the six months ended June 30, 2012. The decrease was mainly attributable to interest earned on lower average cash and investment balances as a result of the purchase of acquired technology in July 2012 (see Note 6 in Notes to Consolidated Financial Statements for further discussion).

We recorded income tax expense of $4.3 million and $2.3 million for the six months ended June 30, 2013 and 2012, respectively. See "Provision for Income Tax" below for additional information.

Provision for Income Tax

The effective income tax rate was 29.8% and 28.9% for the three and six months ended June 30, 2013, respectively. For the three and six months ended June 30, 2013, income tax expense of $6.5 million and $4.3 million, respectively, was recorded based on the Company's estimated annual effective tax rate for 2013 applied to the Company's income before income taxes. For both the

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three and six months ended June 30, 2012, income taxes of $2.3 million were recorded. Our estimated effective tax rate is primarily related to foreign taxes on South Korean royalty and license fee income.

Based on previous earnings history, a current evaluation of expected future taxable income and other evidence, we determined it is not more likely than not that certain deferred tax assets will be realized. Therefore we have established a full valuation allowance for significantly all of our net deferred tax assets.

The ultimate realization of deferred tax assets is dependent upon the continued generation of taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. We consider the scheduled reversal of deferred tax liabilities, historic earnings, projected future taxable income, and tax planning strategies in making this assessment. Our level of future profitability could cause us to conclude that all or a portion of our deferred tax assets will be realizable. We continue to assess our current and projected taxable income in the jurisdictions in which we operate on a quarterly basis and provided that we sustain actual profitability and can demonstrate sustained forecasted profitability and/or upon the implementation of certain tax planning strategies, we could release all or a portion of our deferred tax valuation allowance to reflect the realizability of our deferred tax assets and would begin to provide for income taxes at a rate equal to our combined federal, state and foreign effective rates, at that time.

Currently, a full valuation allowance continues to be established for significantly all our net deferred tax assets because we incurred substantial consolidated operating losses from inception through 2010, as well as continuing losses in certain jurisdictions, and based on the aforementioned factors, we have assessed that the net deferred tax assets did not meet the criteria for realization as of June 30, 2013.

At this time, the amount and timing of any future release of the deferred tax valuation allowance and resulting future effective tax rates cannot be determined, but could be material to both our financial position and results of operations and may occur in the near term if expected operating trends continue.

Liquidity and Capital Resources

As of June 30, 2013, we had cash and cash equivalents of $80.7 million and short-term investments of $164.0 million, for a total of $244.7 million. This compares to cash and cash equivalents of $85.9 million and short-term investments of $158.0 million, for a total of $243.9 million, as of December 31, 2012.

Cash provided by operating activities was $15.5 million for the six months ended June 30, 2013, compared to cash provided by operating activities of $9.2 million for the same period in 2012. The increase in cash provided by operating activities was primarily due to the following:

• an increase in pretax net income of approximately $7.6 million, which excludes the impact of non-cash items; and

• the impact of the timing of inventory purchases of $7.1 million; offset by

• the impact of the timing of receipts of accounts receivable of $6.9 million; and

• the timing of payments of accounts payable and accrued expenses of $2.1 million.

Cash used in investing activities was $12.8 million for the six months ended June 30, 2013, compared to cash provided by investing activities of $41.0 million for the same period in 2012. The increase in cash used in investing activities was mainly due to the timing of maturities of investments, offset by the timing of purchases of investments and equipment.

Cash used in financing activities was $8.0 million for the six months ended June 30, 2013, compared to cash used of $2.4 million for the same period in 2012. The increase in cash used in financing activities was primarily due to repurchases of common stock of $5.5 million, as well as a decrease in the proceeds from the exercise of stock options of $672,000. This was offset by a decrease in the payment of taxes related to stock-based employee compensation of $523,000.

Working capital was $251.0 million as of June 30, 2013, compared to $245.2 million as of December 31, 2012 mainly due to the increase in short-term investments of $6.0 million, accounts receivable of $5.8 million and other current assets of $2.3 million. This was offset by a decrease in cash and cash equivalents of $5.2 million primarily from increases in cash used in investing and financing activities as well as a decrease in inventory of $2.3 million resulting from increased material sales.  

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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.

It should be noted 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. 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 and the receipt of cash upon the exercise of outstanding stock options. 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

We have various share-based compensation awards under the Equity Compensation Plan, which include stock options, restricted stock awards, restricted stock units and performance-based units. On March 7 and 8, 2013, the Board, upon the recommendation of the Compensation Committee of the Board, granted restricted stock units and performance units under the Equity Compensation Plan to its executive officers. See Note 10 in the Notes to Consolidated Financial Statements in Item 1. Financial Statements for further detail.

Refer to our Annual Report on Form 10-K for the year ended December 31, 2012, for additional discussion of our critical accounting policies.

Contractual Obligations

Effective June 1, 2013, the Company amended its Research Agreement with the University of Southern California (USC) to extend the term of the agreement for an additional four years.  As of June 30, 2013, the Company was obligated to pay USC up to $8.4 million for work actually performed during the remaining extended term, which expires April 30, 2017.  

Refer to our Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of our other contractual obligations.

Off-Balance Sheet Arrangements

Refer to our Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of off-balance sheet arrangements.  As of June 30, 2013, we had no off-balance sheet arrangements.

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 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 June 30, 2013. 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

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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 three months ended June 30, 2013 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 grants patents provides third parties with opportunities and access to administrative proceedings whereby they can request for additional review of previously issued patents in the respective jurisdiction. Each jurisdiction provides unique procedures for undertaking such activities, as well as different vehicles to review and appeal the determinations made in connection with such reviews. The conclusions made by the administration bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

Below are summaries of certain proceedings that have been commenced against issued patents that are either exclusively licensed to us or which are now assigned to us. We note that we currently have more than 3,000 issued patents and pending patent applications, worldwide, which are utilized in our materials supply and device licensing business. We do not believe that the confirmation, loss or modification of our rights in any individual claim or set of claim(s) that are the subject of the following legal proceedings would have a material impact on our material sales or licensing business or on our consolidated financial statements, including our consolidated statements of operations, as a whole. However, as noted within the descriptions, many of the following legal proceedings involve patents relating to our key phosphorescent OLED technologies and we intend to vigorously defend against such claims, which may require the expenditure of significant amounts of our resources. The entries marked with an "*" relate to our UniversalPHOLED phosphorescent OLED technology.

Opposition to European Patent No. 0946958

On December 8, 2006, Cambridge Display Technology Ltd. (CDT), which was acquired in 2007 by Sumitomo Chemical Company (Sumitomo), filed a Notice of Opposition to European Patent No. 0946958 (EP '958 patent), which relates to our FOLED™ flexible OLED technology. The EP '958 patent, which was issued on March 8, 2006, is a European counterpart patent to U.S. patents 5,844,363, 6,602,540, 6,888,306 and 7,247,073. These patents 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 (the EPO) conducted an Oral Hearing in this matter and on November 26, 2009 issued its written decision to reject the opposition and to maintain the patent as granted. CDT has filed an appeal to the EPO panel decision.

At this time, based on our current knowledge, we believe that the EPO panel decision will be upheld on appeal. However, we cannot make any assurances of this result.

Opposition to European Patent No. 1449238*

Between March 8, 2007 and July 27, 2007, three companies filed Notices of Opposition to European Patent No. 1449238 (EP '238 patent). The three companies are Sumation Company Limited (Sumation), a joint venture between Sumitomo and CDT, Merck Patent GmbH, of Darmstadt, Germany, and BASF Aktiengesellschaft, of Mannheim, Germany. The EP '238 patent, which was issued on November 2, 2006, is a European counterpart patent, in part, to U.S. patents 6,830,828; 6,902,830; 7,001,536; 7,291,406; 7,537,844; and 7,883,787; and to pending U.S. patent application 13/009,001, filed on January 19, 2011, and 13/205,290, filed on August 9, 2011 (hereinafter the “U.S. '828 Patent Family”). They are exclusively licensed to us by Princeton, and we are required to pay all legal costs and fees associated with this proceeding.

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The EPO combined all three oppositions into a single opposition proceeding. The EPO conducted an Oral Hearing in this matter and at the conclusion of the Oral Hearing, the EPO panel announced its decision to maintain the patent with claims directed to OLEDs comprising phosphorescent organometallic iridium compounds. The official minutes from the Oral Hearing and written decision were published on January 13, 2012.

All the parties filed notices of appeal to the EPO's panel decision and submitted their initial papers in support of their respective requests for appellate review. An Oral hearing has been scheduled by the EPO in the second half of 2013.

At this time, based on our current knowledge, we believe that the EPO will uphold our positions on appeal. However, we cannot make any assurances of this result.

Opposition to European Patent No. 1394870*

On April 20, 2010, five European companies filed Notices of Opposition to European Patent No. 1394870 (the EP '870 patent). The EP '870 patent, which was issued on July 22, 2009, is a European counterpart patent, in part, to U.S. patents 6,303,238; 6,579,632; 6,872,477; 7,279,235; 7,279,237; 7,488,542; 7,563,519; and 7,901,795; and to pending U.S. patent application 13/035,051, filed on February 25, 2011 (hereinafter the “U.S. '238 Patent Family”). They are exclusively licensed to us by Princeton, and we are required to pay all legal costs and fees associated with this proceeding.

The five companies are Merck Patent GmbH; BASF Schweitz AG of Basel, Switzerland; Osram GmbH of Munich, Germany; Siemens Aktiengesellschaft of Munich, Germany; and Koninklijke Philips Electronics N.V., of Eindhoven, The Netherlands.

The EPO combined the oppositions into a single opposition proceeding. The matter has been briefed and we are waiting for the EPO to provide notice of the date of the Oral Hearing. We are also waiting to see whether any of the other parties in the opposition file additional documents to which we might respond.

At this time, based on our current knowledge, we believe there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of our claims will be upheld. However, we cannot make any assurances of this result.

Invalidation Trials in Japan for Japan Patent Nos. 4357781 and 4358168*

On May 24, 2010, we received two Notices of Invalidation Trials against Japan Patent Nos. 4357781 (the JP '781 patent) and 4358168 (the JP '168 patent), which were both issued on August 14, 2009. The requests for these two additional Invalidation Trials were filed by Semiconductor Energy Laboratory Co., Ltd. (SEL). The JP '781 and '168 patents are also Japanese counterpart patents, in part, to the above-noted U.S. '828 Patent Family and EP '238 Patent. They are exclusively licensed to us by Princeton, and we are required to pay all legal costs and fees associated with this proceeding.

On March 31, 2011, we learned that the Japanese Patent Office ("JPO") had issued decisions finding all claims in the JP '781 and JP '168 patents invalid. We believed that the JPO's decisions invalidating these claims were erroneous, and we filed appeals for both cases to the Japanese IP High Court.

Both parties filed appeal briefs in this matter with the Japanese IP High Court. The Japanese IP High Court held hearings for this matter on November 22, 2011, March 5, 2012, and June 18, 2012. On November 7, 2012, we were notified by our Japanese counsel that the Japanese IP High Court had reversed the JPO's finding of invalidity and remanded the case back to the JPO for further consideration.

In a decision reported to us on April 15, 2013, all claims in our JP '781 and JP '168 patents were upheld as valid by the JPO. Our opponent filed an appeal and submitted their appeal briefs. Our responses are currently under preparation.

At this time, based on our current knowledge, we believe that the claims on the patents should be upheld. However, we cannot make any assurances of this result.

Invalidation Trial in Korea for Patent No. KR-0998059

On March 10, 2011, we received informal notice from our Korean patent counsel of a Request for an Invalidation Trial from the Korean Intellectual Property Office (KIPO) for its Korean Patent No. 10-0998059 (the KR '059 patent), which was issued on November 26, 2010. The Request was filed by a certain individual petitioner, but we still do not know which company, if any,

32

was ultimately responsible for filing this Request. The KR '059 patent is a Korean counterpart patent to the OVJP, Organic Vapor Jet Printing, family of U.S. patents originating from U.S. patent 7,431,968.

An oral hearing relating to this matter was held on December 18, 2012, after numerous supporting briefs were filed by both parties. On March 5, 2013, we were notified that a favorable decision had been rendered in which our patent was held valid. The opponent did not appeal this decision. The case is now closed.

Invalidation Trial in Japan for Japan Patent No. 4511024*

On June 16, 2011, we learned that a Request for an Invalidation Trial was filed in Japan for our Japanese Patent No. JP-4511024 (the JP '024 patent), which issued on May 14, 2010. The Request was filed by SEL, the same opponent as in the above-noted Japanese Invalidation Trials for the JP '781 and '168 patents. The JP '024 patent is a counterpart patent, in part, to the U.S. '238 Patent Family, which relate to the EP '870 patent, which is subject to one of the above-noted European oppositions; which relate to our UniversalPHOLED phosphorescent OLED technology. They are exclusively licensed to us by Princeton, and we are required to pay all legal costs and fees associated with this proceeding.

On May 10, 2012, after a scheduled hearing, we learned that the JPO issued a decision upholding the validity of certain claimed inventions in the JP '024 Patent but invalidating the broadest claims in the patent. We believe the JPO's decision was erroneous with respect to the broadest claims.

We filed a Notice of Appeal with the Japanese IP High Court on September 5, 2012. A Technical Hearing was held on May 30, 2013 after the parties filed a number of supporting briefs. It is expected that the Japanese IP High Court will render a decision in the second half of 2013.

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

Opposition to European Patent No. 1252803*

On July 12 and 13, 2011, Sumitomo, Merck Patent GmbH and BASF SE, of Ludwigshaven, Germany filed oppositions to our European Patent No. 1252803 (the EP '803 patent). The EP '803 patent, which was issued on October 13, 2010, is a European counterpart patent, in part, to the U.S. '828 Patent Family. They are exclusively licensed to us by Princeton, and we are required to pay all legal costs and fees associated with this proceeding.

The EPO combined the oppositions into a single opposition proceeding. On December 7, 2012 the EPO rendered a decision at an Oral Hearing wherein it upheld the broadest claim of the granted patent. All three opponents filed an appeal and have submitted their appeal briefs. Our responses are currently under preparation.

At this time, based on our current knowledge, we believe there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of our claims will be further upheld on appeal. However, we cannot make any assurances of this result.

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 (EP '962 patent), which relates to our 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 EPO combined the oppositions into a single opposition proceeding. Our response to the opponents' opposition briefs was timely filed on June 28, 2012.

At this time, based on our current knowledge, we believe there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of our claims will be upheld. However, we cannot make any assurances of this result.

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Opposition to European Patent No. 1933395*

On February 24 and 27, 2012, Sumitomo, Merck Patent GmbH and BASF SE filed oppositions to our European Patent No. 1933395 (the EP '395 patent). The EP '395 patent is a counterpart patent to the above-noted JP '168 patent, and, in part, to the U.S. '828 Patent Family. This patent is exclusively licensed to us by Princeton, and we are required to pay all legal costs and fees associated with this proceeding.

Our response to the opponents' opposition briefs was timely filed on September 27, 2012. An Oral Hearing has been scheduled by the EPO in the second half of 2013.

At this time, based on our current knowledge, we believe there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of our claims will be upheld. However, we cannot make any assurances of this result.

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, 2012.

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

Share Repurchases

During the quarter ended December 31, 2012, we announced that the Board of Directors had approved a program to repurchase up to $50 million of our outstanding shares of our common stock from time to time over the next twelve months (the Repurchase Program). The amount and timing of repurchases will depend on a number of factors, including the price, availability of shares of the Company's common stock, trading volume and general market conditions. The repurchases may be made on the open market, in block trades or otherwise. The Repurchase Program may be suspended or discontinued at any time.

There were no shares repurchased during the three months ended June 30, 2013.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following is a list of the exhibits included as part of this report.  Where so indicated by footnote, exhibits that were previously included 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.

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Exhibit
Number	Description
10.1	Amended and Restated Articles of Incorporation of Universal Display Corporation
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*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith.
**	Furnished herewith.

Note: Any of the exhibits listed in the foregoing index not included with this report may be obtained, without charge, by writing to Mr. Sidney D. Rosenblatt, Corporate Secretary, Universal Display Corporation, 375 Phillips Boulevard, Ewing, New Jersey 08618.

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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: August 8, 2013	By:	/s/ Sidney D. Rosenblatt
		Sidney D. Rosenblatt
		Executive Vice President and Chief Financial Officer

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EX-10.1

(Amended as of June 2012)

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

UNIVERSAL DISPLAY CORPORATION

(formerly known as Enzymatics, Inc.)

The Amended and Restated Articles of Incorporation of Universal Display Corporation (the “Corporation”), are as follows:

1.The name of the Corporation is Universal Display Corporation.

2.The location and post office address of the registered office of the Corporation in this Commonwealth is CT Corporation System, 1515 Market Street, Suite 1210, Philadelphia, Pennsylvania 19102.

3.The Corporation is incorporated under the Business Corporation Law of the Commonwealth of Pennsylvania for the following purpose or purposes:

to have unlimited power to engage in and to do all lawful acts concerning any or all lawful business for which corporations may be incorporated under the Business Corporation Law.

4.The term for which the Corporation is to exist is perpetual.

5.The aggregate number of shares which the Corporation shall have authority to issue shall be 105,000,000 shares: (a) 100,000,000 shares of Common Stock, $.01 par value per share (“Common Stock”); (b) 4,800,000 shares of Preferred Stock, $.01 par value per share (“Preferred Stock”) (exclusive of the shares of Series A Preferred Stock); and (c) 200,000 shares of Series A Nonconvertible Preferred Stock, $.01 par value per share.

The designations, preferences, qualifications, privileges, limitations, restrictions and the special or relative rights of each share of Common Stock, and the express grant of authority to the Board of Directors to fix by resolution the designations, preferences, qualifications, privileges, limitations, restrictions and the special or relative rights in respect of each share of Preferred Stock which are not fixed by these Articles of Incorporation, are as follows:

A.Common Stock.

Subject to the rights of the holders of Preferred Stock, and subject to any other provisions of these Amended and Restated Articles of Incorporation, as amended from time to time, holders of Common Stock shall be entitles to receive such dividends and other distributions in cash, stock or property of the Corporation as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefore. At every meeting or action by consent in writing of the shareholders every holder of Common Stock shall be entitles to one (1) vote in person or by proxy for each share of Common Stock standing in his or her name on the transfer books of the Corporation. Shareholders shall not have the right to cumulate votes in the election of directors. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of each series of Preferred Stock shall be entitled to receive, out of the net assets of the Corporation, an amount for each share equal to the amount fixed and determined by the Board of Directors in any resolution or resolutions providing for the insurance of any particular series of Preferred Stock before any of the assets of the Corporation shall be distributed or paid over to the holders of Common Stock. After payment in full of any such amounts to the holders of any Preferred Stock entitled thereto, the remaining assets and funds of the Corporation shall be divided among and paid ratably to the holders of Common Stock.

B.Preferred Stock.

The Board of Directors is hereby authorized from time to time to provide by resolution for the issuance of shares of Preferred Stock in one or more series not exceeding the aggregate number of shares of Preferred Stock authorized by these Amended and Restated Articles of Incorporation, as amended from time to time; and to determine with respect to each such series the voting powers, if any (which voting powers if granted may be full or limited), designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions appertaining thereto, including without limiting the generality of the foregoing, the voting rights appertaining to shares of Preferred Stock of any series (which may be one vote per share or a fraction or multiple of a vote per share, and which may be applicable generally or only upon the

happening and continuance of stated events or conditions), the rate of dividend to which holders of Preferred Stock of any series may be entitled (which may be cumulative or noncumulative), the rights of holders of Preferred Stock of any series in the event of liquidation, dissolution or winding up of the affairs of the Corporation, and the rights (if any) of holders of Preferred Stock of any series to convert or exchange such shares of Preferred Stock of such series for shares of any other class of capital stock (including the determination of the price or prices or the rate or rates applicable to such rights to convert or exchange and the adjustment thereof, the time or times during which the right to convert or exchange shall be applicable and the time or times during which a particular price or rate shall be applicable).

Before the Corporation shall issue any shares of Preferred Stock of any series, a certificate, setting forth a copy of the resolution or resolutions of the Board of Directors, fixing the voting powers, designations, preferences, the relative, participating, option or other rights, if any, and the qualifications, limitations and restrictions, if any, appertaining to the shares of Preferred Stock of such series, and the number of shares of Preferred Stock of such series authorized by the Board of Directors to be issued, shall be filed in the manner prescribed by the laws of the Commonwealth of Pennsylvania.

C.Series A Nonconvertible Preferred Stock.

The following is a statement of designations and preferences relating to Two Hundred Thousand (200,000) shares of the Corporation's authorized Preferred Stock which shall be designated as “Series A Nonconvertible Preferred Stock” (the “Series A Preferred Stock”); such Series A Preferred Stock to have such voting rights, designations, preferences, qualifications, privileges, limitations, restrictions, options, conversion rights and other special or relative rights as may be hereinafter set forth:

(1)No Dividend Provisions. Holders of Series A Preferred Stock shall not be entitled to receive dividends.

(2)Rights on Liquidation; Dissolution; Winding-Up.

(a)In the event of any liquidation, dissolution or winding-up of the affairs of the Corporation (collectively, a “Liquidation”), whether voluntary or involuntary, and after payment of the Corporation's debts and liabilities, before any payment of cash or distribution of other property shall be made to the holders of the Common Stock or any other class or series of shares ranking on Liquidation junior to the Series A Preferred Stock, the holders of Series A Preferred Stock shall be entitled to receive out of the assets of the Corporation legally available for distribution to its shareholders, an amount per share (rounded to the nearest $0.01) equal to $7.50 per share (the “Liquidation Preference”).

(b)If upon the occurrence of any Liquidation, the assets and funds thus distributed among holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the preferential amounts described in subsection 2(a) above, then the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among holders of the Series A Preferred Stock in proportion to the amount of such Series A Preferred Stock owned by each such holder.

(c)If upon the occurrence of any Liquidation, the assets and funds thus distributed among holders of Series A Preferred Stock shall be sufficient to permit the full payment of the Liquidation Preference to the holders of Series A Preferred Stock, such holders shall be entitled to no further participation in the distribution of the assets of the Corporation.

(3)Merger; Consolidation; etc. The Corporation shall give notice to each holder of Series A Preferred Stock at least twenty (20) days prior to the effective date of (i) any consolidation or merger of the Corporation with or into any other corporation or corporations (other than a merger or consolidation in which the holders of Series A Preferred Stock receive securities of the surviving corporation having substantially similar rights to the Series A Preferred Stock and in which the shareholders of the Corporation immediately prior to the transaction will be the holders of at least a majority of the voting securities of the surviving corporation immediately after the transaction); (ii) a sale, conveyance or disposition of all or substantially all of the assets of the Corporation; or (iii) the effectuation by the Corporation of a transaction or series of related transactions in which more than 50% of the voting power of the Corporation is disposed of. The holders of a majority of the Series A Preferred Stock shall be entitled, by electing prior to the effective date of any of the foregoing types of transactions, to require the Corporation to treat any such transaction as if it were a Liquidation and to cause the proceeds of such transaction, or any property deliverable from such transaction to be distributed among the holders of Series A Preferred Stock as if such transaction were a Liquidation.

(4)Voting Provisions. Except as expressly provided herein or as otherwise required by law, the holders of Series A Preferred Stock will vote together with the holders of Common Stock, and not as a separate class, on all matters, with each holder of Series A Preferred Stock entitles to one vote per share.

(5)Protective Provisions. So long as any shares of Series A Preferred Stock shall remain outstanding, the Corporation shall not, without the affirmative vote of the holders of at least a majority of the shares of Series A Preferred Stock at the time outstanding, voting as a single class (i) alter or change the rights, preferences or privileges of the shares of the Series A Preferred Stock so as to affect adversely the shares of the Series A Preferred Stock, (ii) increase the authorized number of shares of the Series A Preferred Stock, or (iii) do any act or thing which would result in taxation of the holders of shares of Series A Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as amended (or any other comparable provision) or (iv) increase the liquidation value of the Series A Preferred Stock.

(6)No Conversion. The Series A Preferred Stock shall not be convertible into other shares of the capital stock of the Corporation.

(7)Board Seats. The holders of the Series A Preferred Stock shall have the right to nominate, in the manner prescribed in the Corporation's bylaws, two (2) of the candidates for election as director of the Corporation. The holders of the Series A Preferred Stock, voting as a separate series, shall be entitled to elect any candidates so nominated. The holders of the Common Stock, voting as a separate class, shall be entitled to elect that number of directors as shall equal the total number of director positions as the Board of Directors of the Corporation shall consist of from time to time, less the number of directors, if any, nominated and elected by the holders of the Series A Preferred Stock. At any meeting (or in a written consent in lieu thereof) held for the purpose of electing directors, the presence in person or by proxy (or the written consent) of the holders of a majority of the shares of the Series A Preferred Stock then outstanding shall constitute a quorum of the Series A Preferred Stock for the election of directors to be elected solely by the holders of the Series A Preferred Stock. A vacancy in any directorship elected by the holders of the Series A Preferred Stock shall be filled only by vote or written consent of the holders of the Series A Preferred Stock. A vacancy in any directorship elected by the holders of the Common Stock shall be filled only by vote or written consent of the holders of the Common Stock.

D.Any or all classes and series of shares, or any part thereof, may be certificated or uncertificated, as provided under Pennsylvania law, and this Paragraph 5 shall not be interpreted to limit the authority of the Board of Directors to issue some or all of any of the classes or series of shares of the Corporation without certificates. To the extent certificates for shares are issued, such certificates shall be in the form as set forth in the Corporation's bylaws. In the case of shares issued without certificates, the Corporation will, or cause its transfer agent to, within a reasonable time after such issuance, send the holders of such shares a written statement containing the information required to be set forth on certificates by the Corporation's bylaws, by these Articles of Incorporation, or otherwise by applicable law or regulation.

6.Section 1715 of the Pennsylvania Business Corporation Law of 1988, as amended (the “BCL”) and subchapters E, F, G and H of Chapter 25 of the BCL shall not be applicable to this Corporation.

7.Except as provided in Section 5.C(7) of these Amended and Restated Articles of Incorporation, each director of the Corporation shall be elected by a vote of the majority of the votes cast with respect to that director at any meeting for the election of directors at which a quorum is present, in accordance with Section 2-5(d) of the Amended and Restated Bylaws of the Corporation; provided, that if the number of nominees exceeds the number of directors to be elected, the directors shall be elected by the vote of a plurality of the votes cast and entitled to vote on the election of directors in person or by proxy at any such meeting. For purposes of this Section 7, a vote of the majority of the votes cast means that the number of shares voted 'for' a director must exceed 50% of the votes cast with respect to that director.

8.Henceforth, these Amended and Restated Articles of Incorporation shall become the Corporation's Articles of Incorporation and shall supersede the original Articles of Incorporation of this Corporation and all amendments thereto.

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 June 30, 2013;

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: August 8, 2013	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 June 30, 2013;

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: August 8, 2013	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 June 30, 2013, 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: August 8, 2013	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 June 30, 2013, 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: August 8, 2013	By:	/s/ Sidney D. Rosenblatt
		Sidney D. Rosenblatt
		Executive Vice President and Chief Financial Officer

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

6 Months Ended

Jun. 30, 2013

Compensation and Retirement Disclosure [Abstract]

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

On March 18, 2010, the Compensation Committee and the Board approved and adopted the Universal Display Corporation Supplemental Executive Retirement Plan (SERP), effective as of April 1, 2010.  The purpose of the SERP, which is unfunded, is to provide certain executive officers of the Company with supplemental pension benefits following a cessation of their employment. As of June 30, 2013, there were five participants in the SERP.  The SERP benefit is based on a percentage of the participant’s annual base salary and the number of years of service.

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 for the three months ended June 30, (in thousands):

	2013		2012
Service cost	$	161	$	144
Interest cost	86		96
Amortization of prior service cost	146		146
Amortization of actuarial loss	24		3
Total net periodic benefit cost	$	417	$	389

The components of net periodic pension cost were as follows for the six months ended June 30, (in thousands):

	2013		2012
Service cost	$	323	$	288
Interest cost	172		192
Amortization of prior service cost	292		292
Amortization of actuarial loss	47		5
Total net periodic benefit cost	$	834	$	777

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CONSLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
REVENUE:
Material sales	$ 27,137	$ 12,848	$ 39,889	$ 23,377
Royalty and license fees	21,201	15,435	22,500	15,857
Technology development and support revenue	1,021	1,704	1,946	3,373
Total revenue	49,359	29,987	64,335	42,607
OPERATING EXPENSES:
Cost of material sales	8,282	1,611	11,374	2,699
Research and development	7,316	7,236	16,254	13,897
Selling, general and administrative	6,336	5,189	11,507	9,486
Patent costs and amortization of acquired technology	4,522	2,255	9,139	4,123
Royalty and license expense	1,172	786	1,484	1,036
Total operating expenses	27,628	17,077	49,758	31,241
Operating income	21,731	12,910	14,577	11,366
INTEREST INCOME	178	357	388	714
INTEREST EXPENSE	(10)	(18)	(18)	(38)
INCOME BEFORE INCOME TAX EXPENSE	21,899	13,249	14,947	12,042
INCOME TAX EXPENSE	(6,517)	(2,285)	(4,323)	(2,299)
NET INCOME	$ 15,382	$ 10,964	$ 10,624	$ 9,743
NET INCOME PER COMMON SHARE:
BASIC (in dollars per share)	$ 0.34	$ 0.24	$ 0.23	$ 0.21
DILUTED (in dollars per share)	$ 0.33	$ 0.23	$ 0.23	$ 0.21
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE:
BASIC (in shares)	45,859,286	45,953,312	45,841,446	45,871,166
DILUTED (in shares)	46,496,120	46,857,309	46,523,540	46,896,898

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The following table provides the assets carried at fair value measured on a recurring basis as of June 30, 2013 (in thousands):

			Fair Value Measurements, Using
	Total carrying value as of June 30, 2013		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	43,998	$	43,998	$	—	$	—
Short-term investments	163,983		163,983		—		—
Long-term investments	5,781		1,481		—		4,300

The following table provides the assets carried at fair value measured on a recurring basis as of December 31, 2012 (in thousands):

			Fair Value Measurements, Using
	Total carrying  value as of December 31, 2012		Quoted prices in active markets  (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	63,863	$	63,863	$	—	$	—
Short-term investments	158,018		154,018		—		4,000
Long-term investments	1,270		970		—		300

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.

The Company's convertible promissory note investments were initially recorded at cost and are classified within investments on the consolidated balance sheets.

These convertible promissory note investments are inherently risky as they lack a ready market for resale, and the note issuer’s success is dependent on product development, market acceptance, operational efficiency, the ability of the investee companies to raise additional funds in financial markets that can be volatile, and other key business factors. The companies the Company has invested in could fail or not be able to raise additional funds when needed. These events could cause the Company's investments to become impaired. In addition, financial market volatility could negatively affect the Company's ability to realize value in the Company's investments through liquidity events, such as mergers and private sales.

The Company determines the fair value of its convertible promissory note investments portfolio quarterly.  The fair value of the Company's convertible promissory note investments is determined through the consideration of whether an investee is experiencing financial difficulty and other factors.  Management performs an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future.  The evaluation requires significant judgment and includes quantitative and qualitative analysis of identified events or circumstances affecting the investee, which may impact the fair value of the investment, such as:

• the investee’s revenue and earnings trends relative to pre-defined milestones and overall business prospects;

• the technological feasibility of the investee’s products and technologies;

• the general market conditions in the investee’s industry or geographic area, including adverse regulatory or economic changes;

• factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and the rate at which the investee is using its cash; and

• the investee’s receipt of additional funding at a lower valuation.

If the fair value of a convertible promissory note investment is below the Company's carrying value, the asset will be written down to its fair value with a resulting charge to net income. Temporary impairments result in a write down of the investment to its fair value with the charge reported in shareholders’ equity.  There were no impairments of non-marketable convertible promissory note investments as of June 30, 2013.

The following table is a reconciliation of the changes in fair value of the Company’s investments in convertible notes for the three and six months ended June 30, 2013, which had been classified in Level 3 in the fair value hierarchy (in thousands):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Fair value of notes, beginning of period	$	4,300	$	4,300
Investments	—		—
Fair value of notes, end of period	$	4,300	$	4,300

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2013

Cash, Cash Equivalents, and Short-term Investments [Abstract]

Investments

Investments at June 30, 2013 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
June 30, 2013 –
Certificates of deposit	$	9,117	$	3	$	(12	)	$	9,108
Commercial paper	2,000		—		—			2,000
Corporate bonds	151,255		38		(9		)	151,284
U.S. government bonds	3,074		—		(2		)	3,072
Convertible notes	4,300		—		—			4,300
	$	169,746	$	41	$	(23	)	$	169,764

Investments at December 31, 2012 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
December 31, 2012 –
Certificates of deposit	$	7,562	$	3	$	(5	)	$	7,560
Commercial paper	2,997		—		—			2,997
Corporate bonds	141,349		9		(25		)	141,333
U.S. government bonds	3,098		—		—			3,098
Convertible notes	4,300		—		—			4,300
	$	159,306	$	12	$	(30	)	$	159,288

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Commitments

On July 13, 2012, the Company entered into a three-year joint development agreement with Plextronics.  Under the joint development agreement, the Company is committed to pay $1.0 million per year to Plextronics for three years starting on July 13, 2012.

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 5 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 5 for further explanation.

The Company has agreements with six executive officers which provide for certain cash payments and other benefits upon termination of employment of the officer in connection with a change in control of the Company. Each executive is entitled to a lump-sum cash payment equal to two times the sum of the average annual base salary and bonus of the officer 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.

Patent Related Challenges and Oppositions

Each major jurisdiction in the world that grants patents provides third parties with opportunities and access to administrative proceedings whereby they can request for additional review of previously issued patents in the respective jurisdiction. Each jurisdiction provides unique procedures for undertaking such activities, as well as different vehicles to review and appeal the determinations made in connection with such reviews. The conclusions made by the administration bodies tend to be appealable and generally are limited in scope and applicability to the specific claims and jurisdiction in question.

Below are summaries of certain proceedings that have been commenced against issued patents that are either exclusively licensed to the Company or which are now assigned to the Company. The Company notes that it currently has more than 3,000 issued patents and pending patent applications, worldwide, which are utilized in the Company's materials supply and device licensing business. The Company does not believe that the confirmation, loss or modification of the Company's rights in any individual claim or set of claim(s) that are the subject of the following legal proceedings 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 operations, as a whole. However, as noted within the descriptions, many of the following legal proceedings involve patents relating to the Company's key phosphorescent OLED technologies and the Company intends to vigorously defend against such claims, which may require the expenditure of significant amounts of the Company's resources. The entries marked with an "*" relate to our UniversalPHOLED phosphorescent OLED technology.

Opposition to European Patent No. 0946958

On December 8, 2006, Cambridge Display Technology Ltd. (CDT), which was acquired in 2007 by Sumitomo Chemical Company (Sumitomo), filed a Notice of Opposition to European Patent No. 0946958 (EP '958 patent), which relates to the Company's FOLED™ flexible OLED technology. The EP '958 patent, which was issued on March 8, 2006, is a European counterpart patent to U.S. patents 5,844,363, 6,602,540, 6,888,306 and 7,247,073. These patents 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 (the EPO) conducted an Oral Hearing in this matter and on November 26, 2009 issued its written decision to reject the opposition and to maintain the patent as granted. CDT has filed an appeal to the EPO panel decision.

At this time, based on its current knowledge, Company management believes that the EPO panel decision will be upheld on appeal. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1449238*

Between March 8, 2007 and July 27, 2007, three companies filed Notices of Opposition to European Patent No. 1449238 (EP '238 patent). The three companies are Sumation Company Limited (Sumation), a joint venture between Sumitomo and CDT, Merck Patent GmbH, of Darmstadt, Germany, and BASF Aktiengesellschaft, of Mannheim, Germany. The EP '238 patent, which was issued on November 2, 2006, is a European counterpart patent, in part, to U.S. patents 6,830,828; 6,902,830; 7,001,536; 7,291,406; 7,537,844; and 7,883,787; and to pending U.S. patent application 13/009,001, filed on January 19, 2011, and 13/205,290, filed on August 9, 2011 (hereinafter the “U.S. '828 Patent Family”). 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 EPO combined all three oppositions into a single opposition proceeding. The EPO conducted an Oral Hearing in this matter and at the conclusion of the Oral Hearing, the EPO panel announced its decision to maintain the patent with claims directed to OLEDs comprising phosphorescent organometallic iridium compounds. The official minutes from the Oral Hearing and written decision were published on January 13, 2012.

All the parties filed notices of appeal to the EPO's panel decision and submitted their initial papers in support of their respective requests for appellate review. An Oral hearing has been scheduled by the EPO in the second half of 2013.

At this time, based on its current knowledge, Company management believes that the EPO will uphold the Company's positions on appeal. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1394870*

On April 20, 2010, five European companies filed Notices of Opposition to European Patent No. 1394870 (the EP '870 patent). The EP '870 patent, which was issued on July 22, 2009, is a European counterpart patent, in part, to U.S. patents 6,303,238; 6,579,632; 6,872,477; 7,279,235; 7,279,237; 7,488,542; 7,563,519; and 7,901,795; and to pending U.S. patent application 13/035,051, filed on February 25, 2011 (hereinafter the “U.S. '238 Patent Family”). 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 five companies are Merck Patent GmbH; BASF Schweitz AG of Basel, Switzerland; Osram GmbH of Munich, Germany; Siemens Aktiengesellschaft of Munich, Germany; and Koninklijke Philips Electronics N.V., of Eindhoven, The Netherlands.

The EPO combined the oppositions into a single opposition proceeding. The matter has been briefed and the Company is waiting for the EPO to provide notice of the date of the Oral Hearing. The Company is also waiting to see whether any of the other parties in the opposition file additional documents to which the Company might respond.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of the Company's claims will be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trials in Japan for Japan Patent Nos. 4357781 and 4358168*

On May 24, 2010, the Company received two Notices of Invalidation Trials against Japan Patent Nos. 4357781 (the JP '781 patent) and 4358168 (the JP '168 patent), which were both issued on August 14, 2009. The requests for these two additional Invalidation Trials were filed by Semiconductor Energy Laboratory Co., Ltd. (SEL) of Kanagawa, Japan. The JP '781 and '168 patents are also Japanese counterpart patents, in part, to the above-noted U.S. '828 Patent Family and EP '238 Patent. 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.

On March 31, 2011, the Company learned that the Japanese Patent Office ("JPO") had issued decisions finding all claims in the JP '781 and JP '168 patents invalid. Company management believed that the JPO's decisions invalidating these claims were erroneous, and the Company filed appeals for both cases to the Japanese IP High Court.

Both parties filed appeal briefs in this matter with the Japanese IP High Court. The Japanese IP High Court held hearings for this matter on November 22, 2011, March 5, 2012, and June 18, 2012. On November 7, 2012, the Company was notified by the Company's Japanese counsel that the Japanese IP High Court had reversed the JPO's finding of invalidity and remanded the case back to the JPO for further consideration.

In a decision reported to the Company on April 15, 2013, all claims in the Company's JP '781 and JP '168 patents were upheld as valid by the JPO. The Company's opponent filed an appeal and submitted their appeal briefs. The Company's responses are currently under preparation.

At this time, based on its current knowledge, Company management believes that the claims on the patents should be upheld. However, Company management cannot make any assurances of this result.

Invalidation Trial in Korea for Patent No. KR-0998059

On March 10, 2011, the Company received informal notice from its Korean patent counsel of a Request for an Invalidation Trial from the Korean Intellectual Property Office (KIPO) for its Korean Patent No. 10-0998059 (the KR '059 patent), which was issued on November 26, 2010. The Request was filed by a certain individual petitioner, but the Company still does not know which company, if any, was ultimately responsible for filing this Request. The KR '059 patent is a Korean counterpart patent to the OVJP, Organic Vapor Jet Printing, family of U.S. patents originating from U.S. patent 7,431,968.

An oral hearing relating to this matter was held on December 18, 2012, after numerous supporting briefs were filed by both parties. On March 5, 2013, the Company was notified that a favorable decision had been rendered in which the Company's patent was held valid. The opponent did not appeal this decision. The case is now closed.

Invalidation Trial in Japan for Japan Patent No. 4511024*

On June 16, 2011, the Company learned that a Request for an Invalidation Trial was filed in Japan for its Japanese Patent No. JP-4511024 (the JP '024 patent), which issued on May 14, 2010. The Request was filed by SEL, the same opponent as in the above-noted Japanese Invalidation Trials for the JP '781 and '168 patents. The JP '024 patent is a counterpart patent, in part, to the U.S. '238 Patent Family, which relate to the EP '870 patent, which is subject to one of the above-noted European oppositions; which relate to the Company's UniversalPHOLED phosphorescent OLED technology. 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.

On May 10, 2012, after a scheduled hearing, the Company learned that the JPO issued a decision upholding the validity of certain claimed inventions in the JP '024 Patent but invalidating the broadest claims in the patent. Company management believes the JPO's decision was erroneous with respect to the broadest claims.

The Company filed a Notice of Appeal with the Japanese IP High Court on September 5, 2012. A Technical Hearing was held on May 30, 2013 after the parties filed a number of supporting briefs. It is expected that the Japanese IP High Court will render a decision in the second half of 2013.

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

Opposition to European Patent No. 1252803*

On July 12 and 13, 2011, Sumitomo, Merck Patent GmbH and BASF SE, of Ludwigshaven, Germany filed oppositions to the Company's European Patent No. 1252803 (the EP '803 patent). The EP '803 patent, which was issued on October 13, 2010, is a European counterpart patent, in part, to the U.S. '828 Patent Family. 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 EPO combined the oppositions into a single opposition proceeding. On December 7, 2012 the EPO rendered a decision at an Oral Hearing wherein it upheld the broadest claim of the granted patent. All three opponents filed an appeal and have submitted their appeal briefs. The Company's responses are currently under preparation.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of the Company's claims will be further upheld on appeal. However, Company management cannot make any assurances of this result.

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 (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 EPO combined the oppositions into a single opposition proceeding. The Company's response to the opponents' opposition briefs was timely filed on June 28, 2012.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid, and that all or a significant portion of the Company's claims will be upheld. However, Company management cannot make any assurances of this result.

Opposition to European Patent No. 1933395*

On February 24 and 27, 2012, Sumitomo, Merck Patent GmbH and BASF SE filed oppositions to the Company's European Patent No. 1933395 (the EP '395 patent). The EP '395 patent is a counterpart patent to the above-noted JP '168 patent and, in part, to the U.S. '828 Patent Family. This patent is exclusively licensed to the Company by Princeton, and the Company is required to pay all legal costs and fees associated with this proceeding.

The Company's response to the opponents' opposition briefs was timely filed on September 27, 2012. An Oral Hearing has been scheduled by the EPO in the second half of 2013.

At this time, based on its current knowledge, Company management believes there is a substantial likelihood that the patent being challenged will be declared valid and that all or a significant portion of the Company's claims will be upheld. However, Company management cannot make any assurances of this result.

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STOCK-BASED COMPENSATION - Equity Compensation Plan (Details) (USD $)	6 Months Ended	3 Months Ended	6 Months Ended		3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended				0 Months Ended	6 Months Ended	0 Months Ended	6 Months Ended	0 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended			12 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013 Board of Directors [Member]	Jun. 30, 2013 Board of Directors [Member]	Jun. 30, 2013 Employees and Non Employee Members of Scientific Advisory Board [Member]	Jun. 30, 2012 General and Administrative Expense [Member] Board of Directors [Member]	Jun. 30, 2012 General and Administrative Expense [Member] Board of Directors [Member]	Jun. 30, 2013 Research and Development Expense [Member] Employees and Non Employee Members of Scientific Advisory Board [Member]	Jun. 30, 2012 Research and Development Expense [Member] Employees and Non Employee Members of Scientific Advisory Board [Member]	Jun. 30, 2013 Research and Development Expense [Member] Employees and Non Employee Members of Scientific Advisory Board [Member]	Jun. 30, 2012 Research and Development Expense [Member] Employees and Non Employee Members of Scientific Advisory Board [Member]	Jun. 30, 2013 Restricted Stock Awards and Restricted Stock Units [Member]	Jun. 30, 2013 Restricted Stock Awards and Restricted Stock Units [Member] General and Administrative Expense [Member]	Jun. 30, 2012 Restricted Stock Awards and Restricted Stock Units [Member] General and Administrative Expense [Member]	Jun. 30, 2013 Restricted Stock Awards and Restricted Stock Units [Member] General and Administrative Expense [Member]	Jun. 30, 2012 Restricted Stock Awards and Restricted Stock Units [Member] General and Administrative Expense [Member]	Jun. 30, 2013 Restricted Stock Awards and Restricted Stock Units [Member] Research and Development Expense [Member]	Jun. 30, 2012 Restricted Stock Awards and Restricted Stock Units [Member] Research and Development Expense [Member]	Jun. 30, 2013 Restricted Stock Awards and Restricted Stock Units [Member] Research and Development Expense [Member]	Jun. 30, 2012 Restricted Stock Awards and Restricted Stock Units [Member] Research and Development Expense [Member]	Jun. 30, 2013 Restricted Stock Awards and Restricted Stock Units [Member] Minimum [Member]	Jun. 30, 2013 Restricted Stock Awards and Restricted Stock Units [Member] Maximum [Member]	Mar. 07, 2013 Performance Shares [Member]	Jun. 30, 2013 Performance Shares [Member]	Mar. 07, 2013 Performance Shares [Member] Performance Vesting [Member]	Jun. 30, 2013 Performance Shares [Member] Performance Vesting [Member]	Mar. 07, 2013 Performance Shares [Member] Market-based Vesting [Member]	Jun. 30, 2013 Performance Shares [Member] Market-based Vesting [Member]	Jun. 30, 2013 Performance Shares [Member] General and Administrative Expense [Member]	Jun. 30, 2013 Performance Shares [Member] General and Administrative Expense [Member]	Jun. 30, 2013 Performance Shares [Member] Research and Development Expense [Member]	Jun. 30, 2013 Performance Shares [Member] Research and Development Expense [Member]	Jun. 30, 2012 Common Stock [Member] Research and Development Expense [Member]	Jun. 30, 2012 Common Stock [Member] Research and Development Expense [Member]	Jun. 30, 2013 Stock Appreciation Rights (SARs) [Member]	Jun. 30, 2012 Stock Appreciation Rights (SARs) [Member]	Dec. 31, 2012 Stock Appreciation Rights (SARs) [Member]	Dec. 31, 2011 Stock Appreciation Rights (SARs) [Member]	Jun. 30, 2012 Stock Appreciation Rights (SARs) [Member] General and Administrative Expense [Member]	Jun. 30, 2012 Stock Appreciation Rights (SARs) [Member] Research and Development Expense [Member]	Jun. 30, 2013 Equity Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration term (in years)																																								10 years
Number of shares authorized (in shares)																																								8,000,000
Granted (in shares)											115,921
Fair value of options granted											$ 3,800,000
Vesting period from date of grant (in years)																				2 years	3 years
Compensation expense												1,100,000	755,000	1,900,000	1,300,000	417,000	339,000	744,000	510,000									137,000	175,000	42,000	53,000	37,000	68,000					1,000	3,000
Shares of common stock withheld to satisfy tax obligations											94,087
Fair value of shares of common stock withheld to satisfy tax obligations	3,000,000
Performance period over which performance units are measured																								2 years		2 years
Maximum number of performance units that may vest as a multiple of target level shares																						2
Number of performance units granted during period																							35,776		17,888		17,888							0		0	24,000
Total fair value of performance units granted during the period																							1,400,000
Base price of each SAR award (usd per share)																																					$ 34.78
Cash payments as a result of settlement of SARs																																			49,000
Number of shares of common stock issued during the period			10,000	7,370
Fair value of shares issued during the period		126,000	264,000		160,000	320,000
Vesting period of restricted stock				3 years
Compensation expense							$ 43,000	$ 63,000	$ 129,000	$ 116,000

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive loss consists of the following (in thousands):

	Unrealized (loss) gain on available-for-sale securities			Net unrealized loss on retirement plan			Total
Balance January 1, 2013	$	(18	)	$	(5,684	)	$	(5,702	)
Other comprehensive income before reclassification	36			—			36
Amounts reclassified from accumulated other comprehensive income	—			339			339
Net current-period other comprehensive income	36			339			375
Balance June 30, 2013	$	18		$	(5,345	)	$	(5,327	)

Components of net periodic pension cost

Amounts related to the retirement plan reclassified out of accumulated other comprehensive loss and included in net periodic benefit costs (see Note 11) for the three and six months ended June 30, 2013 were as follows (in thousands):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Amortization of prior service cost	$	146	$	292
Amortization of actuarial loss	24		47
Total	$	170	$	339

The components of net periodic pension cost were as follows for the three months ended June 30, (in thousands):

	2013		2012
Service cost	$	161	$	144
Interest cost	86		96
Amortization of prior service cost	146		146
Amortization of actuarial loss	24		3
Total net periodic benefit cost	$	417	$	389

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SHAREHOLDERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Shareholders equity

	Series A Nonconvertible							Additional					Accumulated Other								Total
	Preferred Stock			Common Stock				Paid-In		Accumulated			Comprehensive			Treasury Stock					Shareholders’
	Shares	Amount		Shares		Amount		Capital		Deficit			Loss			Shares		Amount			Equity
Balance, January 1, 2013	200,000	$	2	46,561,437		$	465	$	564,883	$	(204,211	)	$	(5,702	)	(205,902	)	$	(5,202	)	$	350,235
Net income	—	—		—		—		—		10,624			—			—		—			10,624
Other comprehensive income	—	—		—		—		—		—			375			—		—			375
Repurchase of common stock	—	—		—		—		—		—			—			(195,599	)	(5,456		)	(5,456		)
Exercise of common stock options, net of tendered shares	—	—		24,020		—		271		—			—			—		—			271
Stock-based employee compensation, net of shares withheld for employee taxes (A)	—	—		(13,882	)	—		328		—			—			—		—			328
Issuance of common stock to Board of Directors and Scientific Advisory Board (B)	—	—		29,153		1		693		—			—			—		—			694
Issuance of common stock under an Employee Stock Purchase Plan	—	—		7,775		—		234		—			—			—		—			234
Balance, June 30, 2013	200,000	$	2	46,608,503		$	466	$	566,409	$	(193,587	)	$	(5,327	)	(401,501	)	$	(10,658	)	$	357,305

(A) Includes $435 (13,356 shares) that was accrued for in a previous period and charged to expense when earned, but issued in 2013, less shares withheld for taxes in the amount of $153 (4,672 shares).

(B) Includes $300 (9,212 shares) that was earned in a previous period and charged to expense when earned, but issued in 2013.

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NET INCOME (LOSS) PER COMMON SHARE (Details) (Stock Options, Restricted Stock Awards, and Restricted Stock Units [Member])	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Stock Options, Restricted Stock Awards, and Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount	242,891	48,366	227,088	189,552

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ACQUIRED TECHNOLOGY (Details) (USD $)	6 Months Ended				0 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Motorola [Member] Licensing agreement [Member] patent	Mar. 09, 2011 Motorola [Member] Licensing agreement [Member]	Jul. 23, 2012 FUJIFILM [Member] Patents [Member] patent	Jun. 30, 2013 FUJIFILM [Member] Patents [Member]	Jun. 30, 2012 FUJIFILM [Member] Patents [Member]	Jun. 30, 2013 FUJIFILM [Member] Patents [Member]	Jun. 30, 2012 FUJIFILM [Member] Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Number of patents under license agreement			74
Assigned value of acquired intangible assets				$ 440,000
Amortization period of acquired intangible assets (in years)			7 years 6 months
Number of patents acquired (more than 1,200)					1,200
Cost of acquired intangibles					105,000,000
Cash paid for OLED patents					4,100,000
OLED patents useful life					10 years
Amortization of intangibles	$ 5,483,000	$ 29,000				$ 2,700,000	$ 15,000	$ 5,500,000	$ 29,000

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Details) (Supplemental Executive Retirement Plan [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 participant	Jun. 30, 2012	Jun. 30, 2013 participant	Jun. 30, 2012
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Number of participants	5		5
Components of net periodic pension cost [Abstract]
Service cost	$ 161	$ 144	$ 323	$ 288
Interest cost	86	96	172	192
Amortization of prior service cost	146	146	292	292
Amortization of actuarial loss	24	3	47	5
Total net periodic benefit cost	$ 417	$ 389	$ 834	$ 777

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CASH, CASH EQUIVALENTS AND INVESTMENTS (Details) (USD $)				0 Months Ended											0 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jul. 13, 2012	Jul. 13, 2012 Plextronics, Inc. [Member]	Jun. 30, 2013 Certificates of deposit [Member]	Dec. 31, 2012 Certificates of deposit [Member]	Jun. 30, 2013 Commercial Paper [Member]	Dec. 31, 2012 Commercial Paper [Member]	Jun. 30, 2013 Corporate bonds [Member]	Dec. 31, 2012 Corporate bonds [Member]	Jun. 30, 2013 U.S. government bonds [Member]	Dec. 31, 2012 U.S. government bonds [Member]	Jun. 30, 2013 Convertible notes [Member]	Dec. 31, 2012 Convertible notes [Member]	Jul. 13, 2012 Convertible notes [Member] Plextronics, Inc. [Member]	Jul. 17, 2012 Convertible notes [Member] Private company [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 169,746,000	$ 159,306,000			$ 9,117,000	$ 7,562,000	$ 2,000,000	$ 2,997,000	$ 151,255,000	$ 141,349,000	$ 3,074,000	$ 3,098,000	$ 4,300,000	$ 4,300,000	$ 4,000,000	$ 300,000
Unrealized Gains	41,000	12,000			3,000	3,000			38,000	9,000
Unrealized Losses	(23,000)	(30,000)			(12,000)	(5,000)			(9,000)	(25,000)	(2,000)
Aggregate Fair Market Value	169,764,000	159,288,000			9,108,000	7,560,000	2,000,000	2,997,000	151,284,000	141,333,000	3,072,000	3,098,000	4,300,000	4,300,000
Joint development, term of agreement (in years)				3 years
Joint development agreement, annual commitment			$ 1,000,000.0	$ 1,000,000
Convertible promissory note stated interest rate															3.00%	5.00%

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CONCENTRATION OF RISK - Revenues by Geographic Area (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenues by geographic area [Line Items]
United States	$ 329	$ 1,284	$ 1,084	$ 2,558
Revenue	49,359	29,987	64,335	42,607
All foreign locations	49,030	28,703	63,251	40,049
South Korea [Member]
Revenues by geographic area [Line Items]
Revenue	38,458	23,560	47,802	30,953
Japan [Member]
Revenues by geographic area [Line Items]
Revenue	10,485	4,137	15,097	6,703
Taiwan [Member]
Revenues by geographic area [Line Items]
Revenue	52	732	218	1,989
Other foreign locations [Member]
Revenues by geographic area [Line Items]
Revenue	$ 35	$ 274	$ 134	$ 404
Geographic Concentration Risk [Member] | Total Revenue [Member]
Revenues by geographic area [Line Items]
Concentration Risk, Percentage	99.00%	96.00%	98.00%	94.00%

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Assets and liabilities carried at fair value measured on a recurring basis

The following table provides the assets carried at fair value measured on a recurring basis as of June 30, 2013 (in thousands):

			Fair Value Measurements, Using
	Total carrying value as of June 30, 2013		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	43,998	$	43,998	$	—	$	—
Short-term investments	163,983		163,983		—		—
Long-term investments	5,781		1,481		—		4,300

The following table provides the assets carried at fair value measured on a recurring basis as of December 31, 2012 (in thousands):

			Fair Value Measurements, Using
	Total carrying  value as of December 31, 2012		Quoted prices in active markets  (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash equivalents	$	63,863	$	63,863	$	—	$	—
Short-term investments	158,018		154,018		—		4,000
Long-term investments	1,270		970		—		300

Convertible Notes, unobservable input reconciliation

The following table is a reconciliation of the changes in fair value of the Company’s investments in convertible notes for the three and six months ended June 30, 2013, which had been classified in Level 3 in the fair value hierarchy (in thousands):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Fair value of notes, beginning of period	$	4,300	$	4,300
Investments	—		—
Fair value of notes, end of period	$	4,300	$	4,300

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 10,624	$ 9,743
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred revenue	(1,835)	(1,837)
Depreciation	985	927
Amortization of intangibles	5,483	29
Amortization of premium and discount on investments, net	(219)	(437)
Stock-based employee compensation	2,935	1,951
Stock-based compensation to Board of Directors and Scientific Advisory Board	394	437
Retirement plan benefit expense	834	777
(Increase) decrease in assets:
Accounts receivable	(5,794)	1,147
Inventory	2,345	(4,728)
Other current assets	(2,313)	(2,257)
Other assets	2	10
(Decrease) increase in liabilities:
Accounts payable and accrued expenses	(186)	1,899
Other current liabilities	904	205
Deferred revenue	1,376	1,335
Net cash provided by operating activities	15,535	9,201
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(2,435)	(2,054)
Additions to intangibles	(107)	(18)
Purchase of investments	(185,314)	(177,449)
Proceeds from sale of investments	175,093	220,552
Net cash (used in) provided by investing activities	(12,763)	41,031
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock	177	137
Repurchase of common stock	(5,456)	0
Proceeds from the exercise of common stock options and warrants	271	943
Payment of withholding taxes related to stock-based employee compensation	(2,985)	(3,508)
Net cash used in financing activities	(7,993)	(2,428)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(5,221)	47,804
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	85,923	111,795
CASH AND CASH EQUIVALENTS, END OF PERIOD	80,702
The following non-cash activities occurred:
Unrealized gain (loss) on available-for-sale securities	36	(39)
Common stock issued to Board of Directors and Scientific Advisory Board that was earned in a previous period	300	328
Common stock issued to employees that was accrued for in a previous period, net of shares withheld for taxes	282	252
Property, equipment and intangible invoices included in accounts payable	$ 891	$ 0

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

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 June 30, 2013 and results of operations for the three and six months ended June 30, 2013 and 2012, and cash flows for the six months ended June 30, 2013 and 2012. 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 financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  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.

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 for license agreements, the useful life of acquired technology, the valuation of the Company's convertible promissory note investments, income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying values of accounts receivable and accounts payable approximate fair value in the accompanying financial statements due to the short-term nature of those instruments. See Notes 3 and 4 for a discussion of cash equivalents and investments.

Revenue Recognition

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. Material sales are recognized at the time of shipment or at time of delivery, and passage of title, depending upon the contractual agreement between the parties.

The Company has received non-refundable advance license and royalty payments under certain commercial, development and technology evaluation agreements. Certain of the payments under development and technology evaluation agreements are creditable against future amounts payable under commercial license agreements that the parties may subsequently enter into and, as such, are deferred until such commercial license agreements are executed or negotiations have ceased and Company management determines that there is no appreciable likelihood of executing a commercial license agreement with the other party. Revenue would then be recognized over the term of the agreement or the expected useful life of the relevant licensed technology, for perpetual licenses, if there is an effective commercial license agreement or amounts are not creditable against future commercial license fees, or at the time Company management determines that there is no appreciable likelihood of an executable commercial license agreement. Amounts deferred are classified as current and non-current based upon current contractual remaining terms; however, based upon on-going relationships with customers, as well as future agreement extensions, amounts classified as current as of June 30, 2013, may not be recognized as revenue over the next twelve months. As of June 30, 2013, $7.0 million was recorded as deferred revenue, of which $1.5 million is creditable against future commercial license agreements that have not yet been executed or deemed effective. For arrangements with extended payment terms where the fee is not fixed and determinable, the Company recognizes revenue when the payment is due and payable. Royalty revenue is recognized when earned and the amount is fixed and determinable.

Technology development and support revenue is revenue earned from government contracts, development and technology evaluation agreements and commercialization assistance fees, which includes reimbursements by government entities for all or a portion of the research and development costs the Company incurs in relation to its government contracts. Revenues are recognized proportionally as research and development costs are incurred, or as defined milestones are achieved.

Currently, the Company's most significant commercial license agreement is with Samsung Display Co., Ltd. (SDC) and covers the manufacture and sale of specified OLED display products. Under this agreement, the Company is being paid a license fee, payable in semi-annual installments over the agreement term of 6.4 years. The installments, which are due in the second and fourth quarter of each year, increase on an annual basis over the term of the agreement. The agreement conveys the non-exclusive right to use the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets. Ratable recognition of revenue is impacted by the agreement's extended increasing payment terms in light of the Company's limited history with similar agreements. As a result revenue is recognized at the lesser of the proportional performance approach (ratable) and the amount of due and payable fees from SDC. Given the increasing contractual payment schedule, license fees under the agreement are recognized as revenue when they become due and payable, which is currently scheduled to be in the second and fourth quarter of each year.

Cost of Material Sales

Cost of material sales represents costs associated with the sale of materials that have been classified as commercial including shipping costs. Commercial materials are materials that have been validated by the Company for use in commercial OLED products.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (FASB) issued amended standards that revised the reporting of reclassifications out of accumulated other comprehensive income and addressed certain matters from standards for reporting of other comprehensive income that were deferred pending additional consideration. The amendment requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, entities are required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, entities are required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail on these amounts. This guidance is effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted this guidance in the first quarter of 2013, and such adoption did not have an impact on the Company’s results of operations or financial position, but did change the Company’s disclosures related to accumulated other comprehensive income. In addition, consistent with its annual financial statements, the Company has elected to present separate statements of income and comprehensive income versus one continuous statement.

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RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN

6 Months Ended

Jun. 30, 2013

Research and Development [Abstract]

RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN

RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN

The Company funded OLED technology research at Princeton and, on a subcontractor basis, at USC for 10 years under a Research Agreement executed with Princeton in August 1997 (the 1997 Research Agreement).  The principal investigator conducting work under the 1997 Research Agreement transferred to Michigan in January 2006.  Following this transfer, the 1997 Research Agreement was allowed to expire on July 31, 2007.

As a result of the transfer, the Company entered into a new Sponsored Research Agreement with USC to sponsor OLED technology research at USC and, on a subcontractor basis, Michigan.  This new Sponsored Research Agreement (as amended, the 2006 Research Agreement) was effective as of May 1, 2006 and had an original term of three years.  On May 1, 2009, the Company amended the 2006 Research Agreement to extend the term of the agreement for an additional four years. The 2006 Research Agreement superseded the 1997 Research Agreement with respect to all work being performed at USC and Michigan.  Payments under the 2006 Research Agreement were made to USC on a quarterly basis as actual expenses were incurred.  The Company incurred a total of $5.0 million in research and development expense for work performed under the 2006 Research Agreement during the extended term, which ended on April 30, 2013.

Effective June 1, 2013, the Company amended the 2006 Research Agreement again to extend the term of the agreement for an additional four years.  As of June 30, 2013, the Company was obligated to pay USC up to $8.4 million for work actually performed during the remaining extended term, which expires April 30, 2017.  From June 1, 2013 through June 30, 2013, the Company incurred $49,000 in research and development expense for work performed under the newly amended 2006 Research Agreement.

On October 9, 1997, the Company, Princeton and USC entered into an Amended License Agreement (as amended, the 1997 Amended License Agreement) under which 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 work performed by Princeton and USC under the 1997 Research Agreement.  Under this 1997 Amended License Agreement, the Company is required to pay Princeton royalties for licensed products sold by the Company or its sublicensees.  For licensed products sold by the Company, the Company is required to pay Princeton 3% of the net sales price of these products.  For licensed products sold by the Company’s sublicensees, the Company is required to pay Princeton 3% of the revenues received by the Company from these sublicensees.  These royalty rates are subject to renegotiation for products not reasonably conceivable as arising out of the 1997 Research Agreement if Princeton reasonably determines that the royalty rates payable with respect to these products are not fair and competitive.

The Company is obligated under the 1997 Amended License Agreement to pay to Princeton minimum annual royalties.  The minimum royalty payment is $100,000 per year.  The Company accrued royalty expense in connection with this agreement of $1.2 million and $783,000 for the three months ended June 30, 2013 and 2012, respectively, and $1.5 million and $1.0 million for the six months ended June 30, 2013 and 2012, respectively.

The Company also is required under the 1997 Amended License Agreement to use commercially reasonable efforts to bring the licensed OLED technology to market.  However, this requirement is deemed satisfied if the Company invests a minimum of $800,000 per year in research, development, commercialization or patenting efforts respecting the patent rights licensed to the Company.

In connection with entering into the 2006 Research Agreement, the Company amended the 1997 Amended License Agreement to include Michigan as a party to that agreement effective as of January 1, 2006.  Under this amendment, Princeton, USC and Michigan have granted the Company a worldwide exclusive license, 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 work performed under the 2006 Research Agreement.  The financial terms of the 1997 Amended License Agreement were not impacted by this amendment.

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CASH, CASH EQUIVALENTS AND INVESTMENTS

6 Months Ended

Jun. 30, 2013

Cash, Cash Equivalents, and Short-term Investments [Abstract]

CASH, CASH EQUIVALENTS AND INVESTMENTS

CASH, CASH EQUIVALENTS AND INVESTMENTS

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company classifies its remaining investments as available-for-sale. These 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.

Investments at June 30, 2013 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
June 30, 2013 –
Certificates of deposit	$	9,117	$	3	$	(12	)	$	9,108
Commercial paper	2,000		—		—			2,000
Corporate bonds	151,255		38		(9		)	151,284
U.S. government bonds	3,074		—		(2		)	3,072
Convertible notes	4,300		—		—			4,300
	$	169,746	$	41	$	(23	)	$	169,764

Investments at December 31, 2012 consisted of the following (in thousands):

	Amortized		Unrealized					Aggregate Fair
Investment Classification	Cost		Gains		(Losses)			Market Value
December 31, 2012 –
Certificates of deposit	$	7,562	$	3	$	(5	)	$	7,560
Commercial paper	2,997		—		—			2,997
Corporate bonds	141,349		9		(25		)	141,333
U.S. government bonds	3,098		—		—			3,098
Convertible notes	4,300		—		—			4,300
	$	159,306	$	12	$	(30	)	$	159,288

On July 13, 2012, the Company entered into a three-year joint development agreement with Plextronics, Inc. (Plextronics), a private company engaged in printed solar, lighting and other electronics-related research and development. Under the joint development agreement, the Company is committed to pay $1.0 million per year to Plextronics for three years.  In addition, the Company invested $4.0 million in Plextronics through the purchase of a convertible promissory note.  The Company also received warrants to purchase shares of preferred stock in connection with the purchase of the convertible note.  The note accrues interest at the rate of 3% per year. The Company modified the note extending its due date beyond the original due date of June 30, 2013.  Depending on certain conditions, the note may either convert automatically, or if other certain conditions are met, the Company has the option to convert the note into shares of Plextronics’ preferred stock at a specified conversion price. The note was classified as a long-term investment at June 30, 2013, and was classified as a short-term investment at December 31, 2012.

On July 17, 2012, the Company invested $300,000 in a private company engaged in plasma processing equipment research and development (the Borrower) through the purchase of a convertible promissory note. The note accrues interest at the rate of 5% per year and is due and payable by August 1, 2015.  The note is included in long-term investments on the consolidated balance sheet.  The Company has the option to convert the note into shares of the Borrower’s preferred stock at a specified conversion price.

All short-term investments held at June 30, 2013 will mature within one year.

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	0 Months Ended				5 Months Ended
	Jul. 13, 2012	Jul. 13, 2011 company	May 24, 2010 notice_of_invalidation	Apr. 20, 2010 company	Jul. 27, 2007 company	Jun. 30, 2013 patent
Loss Contingencies [Line Items]
Joint development agreement, commitment period	3 years
Joint development agreement, annual commitment	$ 1,000,000.0
Number of issued patetends and pending patent applications (more than 3,000)						3,000
Number of companies filings notices of opposition to patent		3		5	3
Number of Notices of Invalidation Trials			2
Commitment with executive officers [Member]
Loss Contingencies [Line Items]
Number of executive officers under agreement						6
Agreement terms, multiple of sum of average annual base salary and bonus						2

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SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Tables)

6 Months Ended

Jun. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Components of net periodic pension cost

Amounts related to the retirement plan reclassified out of accumulated other comprehensive loss and included in net periodic benefit costs (see Note 11) for the three and six months ended June 30, 2013 were as follows (in thousands):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Amortization of prior service cost	$	146	$	292
Amortization of actuarial loss	24		47
Total	$	170	$	339

The components of net periodic pension cost were as follows for the three months ended June 30, (in thousands):

	2013		2012
Service cost	$	161	$	144
Interest cost	86		96
Amortization of prior service cost	146		146
Amortization of actuarial loss	24		3
Total net periodic benefit cost	$	417	$	389

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FAIR VALUE MEASUREMENTS (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Assets carried at fair value measured on a recuring basis [Abstract]
Impairment of non-marketable convertible debt	$ 0
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value of notes, beginning of period		4,300,000
Fair value of notes, end of period	4,300,000	4,300,000
Notes Receivable [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Investments	0
Carrying Value [Member]
Assets carried at fair value measured on a recuring basis [Abstract]
Cash equivalents	43,998,000	63,863,000
Short-term investments	163,983,000	158,018,000
Long-term investments	5,781,000	1,270,000
Fair Value [Member] | Quoted prices in active markets (Level 1) [Member]
Assets carried at fair value measured on a recuring basis [Abstract]
Cash equivalents	43,998,000	63,863,000
Short-term investments	163,983,000	154,018,000
Long-term investments	1,481,000	970,000
Fair Value [Member] | Significant other observable inputs (Level 2) [Member]
Assets carried at fair value measured on a recuring basis [Abstract]
Cash equivalents	0	0
Short-term investments	0	0
Long-term investments	0	0
Fair Value [Member] | Significant unobservable inputs (Level 3) [Member]
Assets carried at fair value measured on a recuring basis [Abstract]
Cash equivalents	0	0
Short-term investments	0	4,000,000
Long-term investments	$ 4,300,000	$ 300,000

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		3 Months Ended		3 Months Ended		3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Unrealized loss on available-for-sale securities [Member]	Dec. 31, 2012 Unrealized loss on available-for-sale securities [Member]	Jun. 30, 2013 Net unrealized loss on retirement plan [Member]	Dec. 31, 2012 Net unrealized loss on retirement plan [Member]	Jun. 30, 2013 Net unrealized loss on retirement plan [Member] Reclassification out of AOCI [Member]	Jun. 30, 2013 Net unrealized loss on retirement plan [Member] Reclassification out of AOCI [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance January 1, 2013			$ (5,702)			$ (18)		$ (5,684)
Other comprehensive income before reclassification	36				36		0
Amounts reclassified from accumulated other comprehensive income	339				0		339
TOTAL OTHER COMPREHENSIVE INCOME	209	214	375	258	36		339
Balance June 30, 2013	(5,327)		(5,327)		18	(18)	(5,345)	(5,684)
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, Net of Tax [Abstract]
Amortization of prior service cost									146	292
Amortization of actuarial loss									24	47
Total									$ 170	$ 339

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INCOME TAXES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Tax Disclosure [Abstract]
Income tax benefit	$ 6.5	$ 2.3	$ 4.3	$ 2.3
Withholding tax rate for royalty payments			16.50%

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Property and Equipment, accumulated depreciation	$ 21,698,000	$ 20,713,000
Acquired Technology, accumulated amortization	27,351,000	21,868,000
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized (in shares)	5,000,000	5,000,000
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	$ 1,500,000	$ 1,500,000
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized (in shares)	100,000,000	100,000,000
Common Stock, shares issued (in shares)	46,608,503	46,561,437
Treasury Stock, shares	401,501	205,902

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SHAREHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

SHAREHOLDERS EQUITY

SHAREHOLDERS’ EQUITY (in thousands, except for share and per share data)

	Series A Nonconvertible							Additional					Accumulated Other								Total
	Preferred Stock			Common Stock				Paid-In		Accumulated			Comprehensive			Treasury Stock					Shareholders’
	Shares	Amount		Shares		Amount		Capital		Deficit			Loss			Shares		Amount			Equity
Balance, January 1, 2013	200,000	$	2	46,561,437		$	465	$	564,883	$	(204,211	)	$	(5,702	)	(205,902	)	$	(5,202	)	$	350,235
Net income	—	—		—		—		—		10,624			—			—		—			10,624
Other comprehensive income	—	—		—		—		—		—			375			—		—			375
Repurchase of common stock	—	—		—		—		—		—			—			(195,599	)	(5,456		)	(5,456		)
Exercise of common stock options, net of tendered shares	—	—		24,020		—		271		—			—			—		—			271
Stock-based employee compensation, net of shares withheld for employee taxes (A)	—	—		(13,882	)	—		328		—			—			—		—			328
Issuance of common stock to Board of Directors and Scientific Advisory Board (B)	—	—		29,153		1		693		—			—			—		—			694
Issuance of common stock under an Employee Stock Purchase Plan	—	—		7,775		—		234		—			—			—		—			234
Balance, June 30, 2013	200,000	$	2	46,608,503		$	466	$	566,409	$	(193,587	)	$	(5,327	)	(401,501	)	$	(10,658	)	$	357,305

(A) Includes $435 (13,356 shares) that was accrued for in a previous period and charged to expense when earned, but issued in 2013, less shares withheld for taxes in the amount of $153 (4,672 shares).

(B) Includes $300 (9,212 shares) that was earned in a previous period and charged to expense when earned, but issued in 2013.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement of Other Comprehensive Income [Abstract]
Net income	$ 15,382	$ 10,964	$ 10,624	$ 9,743
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain (loss) on available-for-sale securities	39	65	36	(39)
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs	170	149	339	297
TOTAL OTHER COMPREHENSIVE INCOME	209	214	375	258
COMPREHENSIVE INCOME	$ 15,591	$ 11,178	$ 10,999	$ 10,001

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
CURRENT ASSETS:
Cash and cash equivalents	$ 80,702	$ 85,923
Short-term investments	163,983	158,018
Accounts receivable	14,451	8,657
Inventory	8,673	11,018
Other current assets	6,242	3,929
Total current assets	274,051	267,545
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $21,698 and $20,713	13,904	11,808
ACQUIRED TECHNOLOGY, net of accumulated amortization of $27,351 and $21,868	99,494	104,624
INVESTMENTS	5,781	1,270
OTHER ASSETS	275	277
TOTAL ASSETS	393,505	385,524
CURRENT LIABILITIES:
Accounts payable	10,555	7,596
Accrued expenses	7,406	10,394
Deferred revenue	4,189	4,273
Other current liabilities	940	36
Total current liabilities	23,090	22,299
DEFERRED REVENUE	2,778	3,153
RETIREMENT PLAN BENEFIT LIABILITY	10,332	9,837
Total liabilities	36,200	35,289
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, 100,000,000 shares authorized, 46,608,503 and 46,561,437 shares issued at June 30, 2013 and December 31, 2012, respectively	466	465
Additional paid-in capital	566,409	564,883
Accumulated deficit	(193,587)	(204,211)
Accumulated other comprehensive loss	(5,327)	(5,702)
Treasury stock, at cost (401,501 and 205,902 shares at June 30, 2013 and December 31, 2012, respectively)	(10,658)	(5,202)
Total shareholders’ equity	357,305	350,235
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 393,505	$ 385,524

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CONCENTRATION OF RISK (Tables)

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2013

Risks and Uncertainties [Abstract]

Revenues and accounts receivable from our largest non-government customers

Revenues for the three months ended June 30, 2013 and 2012, and accounts receivable as of June 30, 2013, from our largest non-government customers were as follows:

	% of Total Revenue		Accounts Receivable (in thousands)
Customer	2013	2012	June 30, 2013
A	73%	75%	$9,605
B	19%	6%	2,263

Revenues for the six months ended June 30, 2013 and 2012, were as follows:

	% of Total Revenue
Customer	2013	2012
A	65%	65%
B	20%	8%

Revenues by geographic area

Revenues from outside of North America represented 99% and 96% of consolidated revenue for the three months ended June 30, 2013 and 2012, respectively. Revenues by geographic area are as follows (in thousands):

Country	2013		2012
United States	$	329	$	1,284
South Korea	38,458		23,560
Japan	10,485		4,137
Taiwan	52		732
Other	35		274
All foreign locations	49,030		28,703
Total revenue	$	49,359	$	29,987

Revenues from outside of North America represented 98% and 94% of consolidated revenue for the six months ended June 30, 2013 and 2012, respectively. Revenues by geographic area are as follows (in thousands):

Country	2013		2012
United States	$	1,084	$	2,558
South Korea	47,802		30,953
Japan	15,097		6,703
Taiwan	218		1,989
Other	134		404
All foreign locations	63,251		40,049
Total revenue	$	64,335	$	42,607

Long lived assets by geographic area

Long-lived assets (net) by geographic area at June 30, 2013 and December 31, 2012 are as follows (in thousands):

	June 30, 2013		December 31, 2012
United States	$	13,630	$	11,512
Other	274		296
Total long-lived assets	$	13,904	$	11,808

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BASIS OF PRESENTATION Revenue Recognition (Policies)

6 Months Ended

Jun. 30, 2013

Revenue Disclosure [Abstract]

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

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. Material sales are recognized at the time of shipment or at time of delivery, and passage of title, depending upon the contractual agreement between the parties.

The Company has received non-refundable advance license and royalty payments under certain commercial, development and technology evaluation agreements. Certain of the payments under development and technology evaluation agreements are creditable against future amounts payable under commercial license agreements that the parties may subsequently enter into and, as such, are deferred until such commercial license agreements are executed or negotiations have ceased and Company management determines that there is no appreciable likelihood of executing a commercial license agreement with the other party. Revenue would then be recognized over the term of the agreement or the expected useful life of the relevant licensed technology, for perpetual licenses, if there is an effective commercial license agreement or amounts are not creditable against future commercial license fees, or at the time Company management determines that there is no appreciable likelihood of an executable commercial license agreement. Amounts deferred are classified as current and non-current based upon current contractual remaining terms; however, based upon on-going relationships with customers, as well as future agreement extensions, amounts classified as current as of June 30, 2013, may not be recognized as revenue over the next twelve months. As of June 30, 2013, $7.0 million was recorded as deferred revenue, of which $1.5 million is creditable against future commercial license agreements that have not yet been executed or deemed effective. For arrangements with extended payment terms where the fee is not fixed and determinable, the Company recognizes revenue when the payment is due and payable. Royalty revenue is recognized when earned and the amount is fixed and determinable.

Technology development and support revenue is revenue earned from government contracts, development and technology evaluation agreements and commercialization assistance fees, which includes reimbursements by government entities for all or a portion of the research and development costs the Company incurs in relation to its government contracts. Revenues are recognized proportionally as research and development costs are incurred, or as defined milestones are achieved.

Currently, the Company's most significant commercial license agreement is with Samsung Display Co., Ltd. (SDC) and covers the manufacture and sale of specified OLED display products. Under this agreement, the Company is being paid a license fee, payable in semi-annual installments over the agreement term of 6.4 years. The installments, which are due in the second and fourth quarter of each year, increase on an annual basis over the term of the agreement. The agreement conveys the non-exclusive right to use the Company's intellectual property assets for a limited period of time that is less than the estimated life of the assets. Ratable recognition of revenue is impacted by the agreement's extended increasing payment terms in light of the Company's limited history with similar agreements. As a result revenue is recognized at the lesser of the proportional performance approach (ratable) and the amount of due and payable fees from SDC. Given the increasing contractual payment schedule, license fees under the agreement are recognized as revenue when they become due and payable, which is currently scheduled to be in the second and fourth quarter of each year.

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CONCENTRATION OF RISK - Long Lived Assets by Geographic Area (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Segment Reporting Information [Line Items]
Long-lived assets	$ 13,904	$ 11,808
United States [Member]
Segment Reporting Information [Line Items]
Long-lived assets	13,630	11,512
Other [Member]
Segment Reporting Information [Line Items]
Long-lived assets	$ 274	$ 296

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STOCK-BASED COMPENSATION - Employee Stock Purchase Plan (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Proceeds from common stock issued			$ 234
General and Administrative Expense [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Charges to expense	8	5	15	10
Research and Development Expense [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Charges to expense	19	15	42	35
Employee Stock Purchase Plan (ESPP) [Member]
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Reserved for issuance (in shares)	1,000,000		1,000,000
Purchase period (in months)			three
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
Common stock issued (in shares)			7,775	4,461
Proceeds from common stock issued			$ 177	$ 137

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EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Long-term Purchase Commitment [Line Items]
Specified form of payment for the balance payable in cash or shares of the Company's common stock	50.00%		50.00%
Development Agreement [Member]
Long-term Purchase Commitment [Line Items]
Time period (in years)			5 years
Supply Agreement [Member]
Long-term Purchase Commitment [Line Items]
Time period (in years)			7 years
New OLED Materials Agreement and OLED Materials Agreement [Member]
Long-term Purchase Commitment [Line Items]
Minimum average closing price of common stock (in dollars per share)					$ 20.00
Charges to expense for cash portion of reimbursement of expenses	$ 1.0	$ 1.1	$ 3.3	$ 2.4
Shares issued for services to PPG			0	0

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SHAREHOLDERS' EQUITY (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended					6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013		Jun. 30, 2012	Jun. 30, 2013 Series A Preferred Stock [Member]	Dec. 31, 2012 Series A Preferred Stock [Member]	Jun. 30, 2013 Common Stock [Member]		Jun. 30, 2013 Additional Paid-in Capital [Member]		Jun. 30, 2013 Accumulated Deficit [Member]	Jun. 30, 2013 Accumulated Other Comprehensive Income (Loss) [Member]	Jun. 30, 2013 Treasury Stock [Member]
Increase (Decrease) in Shareholders' Equity [Roll Forward]
BALANCE (in shares)						200,000	200,000	46,561,437						205,902,000
BALANCE			$ 350,235			$ 2	$ 2	$ 465		$ 564,883		$ (204,211)	$ (5,702)	$ (5,202)
Net income	15,382	10,964	10,624		9,743							10,624
Other comprehensive income	209	214	375		258								375
Repurchase of common stock (in shares)														(195,599,000)
Repurchase of common stock			(5,456)											(5,456)
Exercise of common stock options, net of tendered shares (in shares)								24,020
Exercise of common stock options, net of tendered shares			271					0		271
Stock-based employee compensation, net of shares withheld for employee taxes (in shares)								(13,882)	[1]
Stock-based employee compensation, net of shares withheld for employee taxes			328	[1]				0	[1]	328	[1]
Issuance of common stock to Board of Directors and Scientific Advisory Board (in shares)								29,153	[2]
Issuance of common stock to Board of Directors and Scientific Advisory Board			694	[2]				1	[2]	693	[2]
Issuance of common stock under an Employee Stock Purchase Plan (in shares)								7,775
Issuance of common stock under an Employee Stock Purchase Plan			234					0		234
BALANCE (in shares)						200,000	200,000	46,608,503						401,501,000
BALANCE	357,305		357,305			2	2	466		566,409		(193,587)	(5,327)	(10,658)
Shares issued to employees, earned in prior period			435
Shares issued to employees, earned in prior period (in shares)			13,356
Shares withheld for employees' tax withholding obligations, earned in prior period			153
Shares withheld for employees' tax withholding obligations, earned in prior period (in shares)			4,672
Shares issued to Board of Directors and Scientific Advisory Board, earned in prior period			$ 300
Shares issued to Board of Directors and Scientific Advisory Board, earned in prior period (in shares)			9,212

[1] Includes $435 (13,356 shares) that was accrued for in a previous period and charged to expense when earned, but issued in 2013, less shares withheld for taxes in the amount of $153 (4,672 shares).

[2] Includes $300 (9,212 shares) that was earned in a previous period and charged to expense when earned, but issued in 2013.

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EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS

EQUITY AND CASH COMPENSATION UNDER THE PPG INDUSTRIES AGREEMENTS

On October 1, 2000, the Company entered into a five-year Development and License Agreement (the Development Agreement) and a seven-year Supply Agreement (the Supply Agreement) with PPG Industries.  Under the Development Agreement, a team of PPG Industries scientists and engineers assisted the Company in developing its proprietary OLED materials and supplied the Company with these materials for evaluation purposes.  Under the Supply Agreement, PPG Industries supplied the Company with its proprietary OLED materials that were intended for resale to customers for commercial purposes.

On July 29, 2005, the Company entered into an OLED Materials Supply and Service Agreement with PPG Industries (the OLED Materials Agreement). The OLED Materials Agreement superseded and replaced in their entireties the Development Agreement and Supply Agreement effective as of January 1, 2006, and extended the term of the Company’s relationship with PPG Industries through December 31, 2009. The term of the OLED Materials Agreement was subsequently extended through December 31, 2014.

On September 22, 2011, the Company entered into an Amended and Restated OLED Materials Supply and Service Agreement with PPG Industries (the New OLED Materials Agreement), which replaced the original OLED Materials Agreement with PPG Industries effective as of October 1, 2011.  The term of the New OLED Materials Agreement runs through December 31, 2014 and contains provisions that are substantially similar to those of the original OLED Materials Agreement.  Under the New OLED Materials Agreement, PPG Industries continues to assist the Company in developing its proprietary OLED materials and to supply the Company with those materials for evaluation purposes and for resale to its customers.

Under the New OLED Materials Agreement, the Company compensates PPG Industries 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 Industries 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 Industries in cash.

The Company also reimburses PPG Industries 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.

The Company recorded expense of $1.0 million and $1.1 million for the three months ended June 30, 2013 and 2012, respectively, and $3.3 million and $2.4 million for the six months ended June 30, 2013 and 2012, respectively, in relation to the cash portion of the reimbursement of expenses and work performed by PPG Industries, excluding amounts paid for commercial chemicals. No shares were issued for services to PPG Industries for the three and six months ended June 30, 2013 and 2012, respectively.

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BASIS OF PRESENTATION Revenue Recognition (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013
Deferred Revenue Arrangement [Line Items]
Deferred Revenue	$ 7
Deferred revenue under license agreements not yet executed or deemed effective	$ 2

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CONCENTRATION OF RISK - Revenues and Accounts Receivable (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Concentration Risk [Line Items]
Revenue	$ 49,359	$ 29,987	$ 64,335	$ 42,607
Accounts receivable	14,451		14,451		8,657
Total Revenue [Member] | Customer Concentration Risk [Member] | Major Customer A [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	73.00%	75.00%	65.00%	65.00%
Total Revenue [Member] | Customer Concentration Risk [Member] | Major Customer B [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	19.00%	6.00%	20.00%	8.00%
Total Revenue [Member] | Government Contracts Concentration Risk [Member]
Concentration Risk [Line Items]
Revenue	232	1,200		2,400
Concentration Risk, Percentage	1.00%	4.00%	1.00%	6.00%
Total Revenue [Member] | Geographic Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration Risk, Percentage	99.00%	96.00%	98.00%	94.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Major Customer A [Member]
Concentration Risk [Line Items]
Accounts receivable	9,605		9,605
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Major Customer B [Member]
Concentration Risk [Line Items]
Accounts receivable	$ 2,263		$ 2,263

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

The Company recognizes in the statements of income the grant-date fair value of stock options and other equity based compensation, such as shares issued under employee stock purchase plans, restricted stock awards, restricted stock units, performance unit awards and stock appreciation rights (SARs), issued to employees and directors.

The grant-date fair value of stock options is determined using the Black-Scholes option pricing model.  The fair value of share-based awards is recognized as compensation expense on a straight-line basis over the requisite service period, net of estimated forfeitures.  The Company relies primarily upon historical experience to estimate expected forfeitures and recognizes compensation expense on a straight-line basis from the date of the grant.  The Company issues new shares upon the respective grant, exercise or vesting of share-based payment awards, as applicable.

Cash-settled SARs awarded in share-based payment transactions are classified as liability awards; accordingly, the Company records these awards as a component of accrued expenses on its consolidated balance sheets.  The fair value of each SAR is estimated using the Black-Scholes option pricing model and is remeasured at each reporting period until the award is settled.  Changes in the fair value of the liability award are recorded as expense or income in the statements of income.

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.

Equity Compensation Plan

In 1995, the Board of Directors of the Company (the “Board”) adopted a stock option plan, which was amended and restated in 2003, 2011, and 2013 and is now called the Equity Compensation Plan. The Equity Compensation Plan provides for the granting of incentive and nonqualified stock options, shares of common stock, SARs, and performance units to employees, directors and consultants of the Company. Stock options are exercisable over periods determined by the Compensation Committee, but for no longer than 10 years from the grant date. Through June 30, 2013, the Company’s shareholders have approved increases in the number of shares reserved for issuance under the Equity Compensation Plan to 8,000,000 and have extended the term of the plan through September 1, 2015.

Restricted Stock Awards and Restricted Stock Units

During the six months ended June 30, 2013 the Company granted 115,921 shares of restricted stock awards and restricted stock units to employees, which had a total fair value of $3.8 million on the respective dates of grant, and will vest over two to three years from the date of grant, provided that the grantee is still an employee of the Company on the applicable vesting date.

For the three months ended June 30, 2013 and 2012, the Company recorded general and administrative expense of $1.1 million and $755,000 and research and development expense of $417,000 and $339,000, respectively, related to restricted stock awards and restricted stock units.

For the six months ended June 30, 2013 and 2012, the Company recorded general and administrative expense of $1.9 million and $1.3 million and research and development expense of $744,000 and $510,000, respectively, related to restricted stock awards and restricted stock units.

In connection with the vesting of restricted common stock previously issued to employees, for the six months ended June 30, 2013, 94,087 shares of common stock with a fair value of $3.0 million were withheld in satisfaction of tax withholding obligations.

Performance Unit Awards

During the six months ended June 30, 2013 the Company granted 35,776 performance units, of which 17,888 are subject to a performance-based vesting requirement and 17,888 are subject to a market-based vesting requirement and will vest over the terms described above. Total fair value of the performance unit awards granted was $1.4 million on the date of grant.

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 two-year performance period beginning January 1, 2013 and ending December 31, 2014. 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 two-year performance period beginning January 1, 2013 and ending December 31, 2014.

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 above the shares granted.

For the three months ended June 30, 2013, the Company recorded general and administrative expense of $137,000 and research and development expense of $42,000 related to performance units.

For the six months ended June 30, 2013, the Company recorded general and administrative expense of $175,000 and research and development expense of $53,000 related to performance units.

Employee Stock Grants

For the three months ended June 30, 2012, the Company recorded research and development expense of $37,000 related to fully vested shares issued to employees.

For the six months ended June 30, 2012, the Company recorded research and development expense of $68,000 related to fully vested shares issued to employees.

No such grants were made or expenses recorded in 2013.

Stock Appreciation Rights

During 2011, the Company granted 24,000 cash-settled SARs to certain executive officers. The SARs represented the right to receive, for each SAR, a cash payment equal to the amount, if any, by which the fair market value of a share of the common stock of the Company on the vesting date exceeded the base price of the SAR award.  The base price of each SAR award was $34.78 per share.  The SARs vested on the first anniversary of the date of grant, provided that the grantee was still an employee of the Company on the applicable vesting date. During the three months ended March 31, 2012, all SARs were settled, resulting in cash payments of $49,000. The Company recorded $1,000 to general and administrative expense, and $3,000 to research and development expense, for the six months ended June 30, 2012, related to the SARs. No such grants were made in 2013 or 2012.

Other Compensation

During the six months ended June 30, 2013, the Company issued 10,000 shares of common stock to members of the Board as partial compensation for their service on the Board.  The Company recorded general and administrative expense of $126,000 and $160,000 for the three months ended June 30, 2013 and 2012, respectively, and $264,000 and $320,000 for the six months ended June 30, 2013 and 2012, respectively, related to shares issued to members of the Board.

During the six months ended June 30, 2013, the Company granted 7,370 shares of restricted stock to certain members of its Scientific Advisory Board.  These shares of restricted stock will vest and be issued in equal increments annually over three years from the date of grant, provided that the grantee is still engaged as a consultant of the Company on the applicable vesting date.  The Company recorded research and development expense of $43,000 and $63,000 for the three months ended June 30, 2013 and 2012, respectively, and $129,000 and $116,000 for the six months ended June 30, 2013 and 2012, respectively, related to shares issued to members of its Scientific Advisory Board.

Employee Stock Purchase Plan

On April 7, 2009, the Board 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 sooner terminated by the Board, 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 price per share of common stock on the first day of the period or the last 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 six months ended June 30, 2013 and 2012, the Company issued 7,775 and 4,461 shares of its common stock, respectively, under the ESPP, resulting in proceeds of $177,000 and $137,000, respectively.

For the three months ended June 30, 2013 and 2012, the Company recorded general and administrative expense of $8,000 and $5,000 and research and development expense of $19,000 and $15,000, respectively, related to the ESPP.

For the six months ended June 30, 2013 and 2012, the Company recorded general and administrative expense of $15,000 and $10,000 and research and development expense of $42,000 and $35,000, respectively, related to the ESPP.

The expense recorded equals the amount of the discount and the value of the look-back feature for the shares that were issued under the ESPP.

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ACQUIRED TECHNOLOGY

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

ACQUIRED TECHNOLOGY

ACQUIRED TECHNOLOGY

In 2000, the Company entered into a license agreement with Motorola whereby Motorola granted the Company perpetual license rights to what are now 74 issued U.S. patents relating to Motorola’s OLED technologies, together with foreign counterparts in various countries. These patents expire in the U.S. between 2014 and 2018.

The Company was required under the license agreement with Motorola to pay Motorola annual royalties on gross revenues received on account of the Company’s sales of OLED products or components, or from its OLED technology licensees, whether or not these revenues related specifically to inventions claimed in the patent rights licensed from Motorola.

On March 9, 2011, the Company purchased these patents from Motorola, including all existing and future claims and causes of action for any infringement of the patents, pursuant to a Patent Purchase Agreement.  The Patent Purchase Agreement effectively terminated the Company’s license agreement with Motorola, including any obligation to make royalty payments to Motorola.

The technology acquired from Motorola had an assigned value of $440,000 as of March 9, 2011, which is being amortized over a period of 7.5 years.

On July 23, 2012, the Company entered into a Patent Sale Agreement (the Agreement) with Fujifilm.  Under the Agreement, Fujifilm sold more than 1,200 OLED-related patents and patent applications to the Company in exchange for a cash payment of $105.0 million.  

The Company recorded the $105.0 million plus $4.1 million of costs as acquired technology which is being amortized over a period of 10 years.  

Total amortization expense associated with acquired technology for the three month periods ended June 30, 2013 and 2012 was $2.7 million and $15,000, respectively, and for the six months ended June 30, 2013 and 2012 was $5.5 million and $29,000, respectively. Amortization expense is included in the patent costs and amortization of acquired technology expense line item on the Consolidated Statements of Operations.

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BACKGROUND

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BACKGROUND

BACKGROUND

Universal Display Corporation (the Company) is engaged in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in flat panel display, solid-state lighting and other product applications. The Company’s primary business strategy is to develop and license its proprietary OLED technologies to product manufacturers for use in these applications. In support of this objective, the Company also develops new OLED materials and sells those materials to product manufacturers. Through internal research and development efforts and acquisitions from and relationships with entities such as Princeton University (Princeton), the University of Southern California (USC), the University of Michigan (Michigan), FUJIFILM Corporation (Fujifilm), Motorola Solutions, Inc. (f/k/a Motorola, Inc.) (Motorola) and PPG Industries, Inc. (PPG Industries), the Company has established a significant portfolio of proprietary OLED technologies and materials (see Notes 5, 6 and 7).

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NET INCOME PER COMMON SHARE NET INCOME (LOSS) PER COMMON SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income	$ 15,382	$ 10,964	$ 10,624	$ 9,743
Weighted Average Number of Shares Outstanding, Basic	45,859,286	45,953,312	45,841,446	45,871,166
Incremental Common Shares Attributable to Call Options and Warrants	498,802	663,419	503,908	726,359
Incremental Common Shares Attributable to Nonvested Shares with Forfeitable Dividends	138,032	240,578	178,186	299,373
DILUTED (in shares)	46,496,120	46,857,309	46,523,540	46,896,898
Earnings Per Share, Basic	$ 0.34	$ 0.24	$ 0.23	$ 0.21
Earnings Per Share, Diluted	$ 0.33	$ 0.23	$ 0.23	$ 0.21

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RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON, USC AND MICHIGAN (Details) (USD $)	120 Months Ended	36 Months Ended	0 Months Ended	50 Months Ended	3 Months Ended		6 Months Ended
	Jul. 31, 2007 1997 Research Agreement [Member]	Apr. 30, 2009 2006 Research Agreement - Original Term [Member]	May 01, 2009 2006 Research Agreement - Extended Term [Member]	Jun. 30, 2013 2006 Research Agreement - Extended Term [Member]	Jun. 30, 2013 1997 Amended License Agreement [Member]	Jun. 30, 2012 1997 Amended License Agreement [Member]	Jun. 30, 2013 1997 Amended License Agreement [Member]	Jun. 30, 2012 1997 Amended License Agreement [Member]
Research and Development Arrangement, Contract to perform for Others [Line Items]
Term of agreement (in years)	10 years	3 years	4 years
Research and development expense incurred		$ 5,000,000		$ 49,000
Maximum obligation				8,400,000
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%
Minimum royalty payment per year							100,000
Royalty and license expense					1,200,000	783,000	1,500,000	1,000,000
Minimum investment per year							$ 800,000

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CONCENTRATION OF RISK

6 Months Ended

Jun. 30, 2013

Risks and Uncertainties [Abstract]

CONCENTRATION OF RISK

CONCENTRATION OF RISK

Included in technology development and support revenue in the accompanying statements of operations is $232,000 and $1.2 million for the three months ended June 30, 2013 and 2012, respectively, and $861,000 and $2.4 million for the six months ended June 30, 2013 and 2012, respectively, of revenue which was derived from contracts with United States government agencies.  Revenues derived from contracts with United States government agencies represented less than 1% and 4% of the consolidated revenue for the three months ended June 30, 2013 and 2012, respectively, and 1% and 6% of the consolidated revenue for the six months ended June 30, 2013 and 2012, respectively.

Revenues for the three months ended June 30, 2013 and 2012, and accounts receivable as of June 30, 2013, from our largest non-government customers were as follows:

	% of Total Revenue		Accounts Receivable (in thousands)
Customer	2013	2012	June 30, 2013
A	73%	75%	$9,605
B	19%	6%	2,263

Revenues for the six months ended June 30, 2013 and 2012, were as follows:

	% of Total Revenue
Customer	2013	2012
A	65%	65%
B	20%	8%

Revenues from outside of North America represented 99% and 96% of consolidated revenue for the three months ended June 30, 2013 and 2012, respectively. Revenues by geographic area are as follows (in thousands):

Country	2013		2012
United States	$	329	$	1,284
South Korea	38,458		23,560
Japan	10,485		4,137
Taiwan	52		732
Other	35		274
All foreign locations	49,030		28,703
Total revenue	$	49,359	$	29,987

Revenues from outside of North America represented 98% and 94% of consolidated revenue for the six months ended June 30, 2013 and 2012, respectively. Revenues by geographic area are as follows (in thousands):

Country	2013		2012
United States	$	1,084	$	2,558
South Korea	47,802		30,953
Japan	15,097		6,703
Taiwan	218		1,989
Other	134		404
All foreign locations	63,251		40,049
Total revenue	$	64,335	$	42,607

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

Long-lived assets (net) by geographic area at June 30, 2013 and December 31, 2012 are as follows (in thousands):

	June 30, 2013		December 31, 2012
United States	$	13,630	$	11,512
Other	274		296
Total long-lived assets	$	13,904	$	11,808

All chemical materials were purchased from one supplier. See Note 7.

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ACCUMULATED OTHER COMPREHENSIVE LOSS

6 Months Ended

Jun. 30, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consists of the following (in thousands):

	Unrealized (loss) gain on available-for-sale securities			Net unrealized loss on retirement plan			Total
Balance January 1, 2013	$	(18	)	$	(5,684	)	$	(5,702	)
Other comprehensive income before reclassification	36			—			36
Amounts reclassified from accumulated other comprehensive income	—			339			339
Net current-period other comprehensive income	36			339			375
Balance June 30, 2013	$	18		$	(5,345	)	$	(5,327	)

Amounts related to the retirement plan reclassified out of accumulated other comprehensive loss and included in net periodic benefit costs (see Note 11) for the three and six months ended June 30, 2013 were as follows (in thousands):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Amortization of prior service cost	$	146	$	292
Amortization of actuarial loss	24		47
Total	$	170	$	339

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Management's Use of Estimates

Management’s Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 for license agreements, the useful life of acquired technology, the valuation of the Company's convertible promissory note investments, income taxes including realization of deferred tax assets, stock-based compensation and retirement benefit plan liabilities. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying values of accounts receivable and accounts payable approximate fair value in the accompanying financial statements due to the short-term nature of those instruments. See Notes 3 and 4 for a discussion of cash equivalents and investments.

Cost of Material Sales

Cost of Material Sales

Cost of material sales represents costs associated with the sale of materials that have been classified as commercial including shipping costs.

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INCOME TAXES

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

In July 2012, Samsung Mobile Display Co., Ltd (SMD) merged with SDC. Following the merger, all agreements between the Company and SMD were assigned to SDC, and SDC will honor all pre-existing agreements made between the Company and SMD.

The Company is subject to income taxes in both United States and foreign jurisdictions. For the three and six months ended June 30, 2013, income tax expense of $6.5 million and $4.3 million, respectively, was recorded based on the Company's estimated annual effective tax rate for 2013 applied to the Company's income before income taxes. For both the three and six months ended June 30, 2012, income tax expense of $2.3 million were recorded. The Company's estimated effective tax rate is primarily related to foreign taxes withheld on royalty and license fees paid to the Company. SDC has been required to withhold tax upon payment of royalty and license fees to the Company at a rate of 16.5%. Any potential foreign tax credits to be received by the Company for these amounts on its United States tax returns are currently offset by a full valuation allowance as noted below.

Based on previous earnings history, a current evaluation of expected future taxable income and other evidence, the Company determined it is not more likely than not that certain deferred tax assets will be realized. Therefore, the Company has continued to establish a full valuation allowance for significantly all its net deferred tax assets.

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 continue to generate taxable income to obtain benefit from the reversal of temporary differences, net operating loss carryforwards and tax credits. The Company considers the scheduled reversal of deferred tax liabilities, historic earnings, projected future taxable income, and tax planning strategies in making this assessment. As of June 30, 2013, a full valuation allowance continued to be established for significantly all of the Company's net deferred tax assets because the Company incurred substantial consolidated operating losses from inception through 2010, as well as continuing losses in certain jurisdictions, and based on the aforementioned factors, the Company has assessed that the net deferred tax assets do not meet the criteria for realization. In future periods, if the Company determines it is more likely than not that net deferred tax assets will be realized, the related valuation allowance would be reduced and an income tax benefit would be recorded.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 02, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	UNIVERSAL DISPLAY CORP \PA\
Entity Central Index Key	0001005284
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		46,224,002

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NET INCOME (LOSS) PER COMMON SHARE

3 Months Ended

6 Months Ended

Jun. 30, 2013

Jun. 30, 2013

Earnings Per Share [Abstract]

NET INCOME (LOSS) PER COMMON 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 months ended June 30, 2013 and 2012 (in thousands, except for share and per share data):

	2013		2012
Numerator:
Net income	$	15,382	$	10,964
Denominator:
Weighted average common shares outstanding - Basic	45,859,286		45,953,312
Effect of dilutive shares:
Common stock equivalents arising from stock options, warrants and ESPP	498,802		663,419
Restricted stock awards and units and performance units	138,032		240,578
Weighted average common shares outstanding - Diluted	46,496,120		46,857,309
Net income per common share:
Basic	$	0.34	$	0.24
Diluted	$	0.33	$	0.23

For the three months ended June 30, 2013 and 2012, the combined effects of unvested restricted stock awards and restricted stock units of 242,891 and 48,366, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive

NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period excluding unvested restricted stock awards, restricted stock units and performance units.  Diluted net income per common share reflects the potential dilution from the exercise or conversion of securities into common stock, the effect of unvested restricted stock awards, restricted stock units and performance units, and the impact of shares to be issued under the ESPP.

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 months ended June 30, 2013 and 2012 (in thousands, except for share and per share data):

	2013		2012
Numerator:
Net income	$	15,382	$	10,964
Denominator:
Weighted average common shares outstanding - Basic	45,859,286		45,953,312
Effect of dilutive shares:
Common stock equivalents arising from stock options, warrants and ESPP	498,802		663,419
Restricted stock awards and units and performance units	138,032		240,578
Weighted average common shares outstanding - Diluted	46,496,120		46,857,309
Net income per common share:
Basic	$	0.34	$	0.24
Diluted	$	0.33	$	0.23

For the three months ended June 30, 2013 and 2012, the combined effects of unvested restricted stock awards and restricted stock units of 242,891 and 48,366, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive, or for performance units, as the units would not be issued if the end of the reporting period was the end of the performance period.

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 six months ended June 30, 2013 and 2012 (in thousands, except for share and per share data):

	2013		2012
Numerator:
Net income	$	10,624	$	9,743
Denominator:
Weighted average common shares outstanding - Basic	45,841,446		45,871,166
Effect of dilutive shares:
Common stock equivalents arising from stock options, warrants and ESPP	503,908		726,359
Restricted stock awards and units and performance units	178,186		299,373
Weighted average common shares outstanding - Diluted	46,523,540		46,896,898
Net income per common share:
Basic	$	0.23	$	0.21
Diluted	$	0.23	$	0.21

For the six months ended June 30, 2013 and 2012, the combined effects of unvested restricted stock awards, restricted stock units and performance units of 227,088 and 189,552, respectively, were excluded from the calculation of diluted EPS as their impact would have been antidilutive, or for performance units, as the units would not be issued if the end of the reporting period was the end of the performance period.