UNIVERSAL DISPLAY CORP \PA\

Previous wording

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

Current wording

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

Previous wording

In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display). The terms of these agreements have been extended through the end of 2025. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under our patent portfolio. The OLED commercial supply agreement provides for the sales of materials for use by LG Display, which may include phosphorescent emitters and host materials. The agreements provide for certain other minimum obligations relating to the volume of material sales anticipated over the life of the agreements as well as minimum royalty revenue.

Current wording

In 2015, we entered into an OLED patent license agreement and an OLED commercial supply agreement with LG Display Co., Ltd. (LG Display). In 2026, we and LG Display entered into new agreements that extended the terms of these agreements at least through the end of 2030. The patent license agreement provides LG Display a non-exclusive, royalty bearing portfolio license to make and sell OLED displays under their patent portfolio. The patent license calls for minimum annual license fees and additional incremental license fees based on LG Display’s volume of sale of licensed products. The OLED commercial supply agreement provides for the sale of dopant and host materials for use by LG Display.

Previous wording

In 2016, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Micro-electronics Co., Ltd. (Tianma). Under the license agreement, we have granted Tianma non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. Additionally, we supply phosphorescent OLED materials to Tianma for use in its licensed products. In 2021, we mutually agreed to extend the terms of both the patent license and material purchase agreements for an additional multi-year term.

Current wording

In 2025, we entered into long-term, multi-year OLED patent license and material purchase agreements with Tianma Microelectronics Co., Ltd. (Tianma). Under the agreements, we have granted Tianma non-exclusive license rights under various patents owned or controlled by us to manufacture and sell OLED display products. Additionally, we supply phosphorescent OLED materials to Tianma for use in its licensed products.

Previous wording

In June 2020, we formed a wholly-owned subsidiary, OVJP Corporation (OVJP Corp), operating in California, in order to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology. In December 2024, we announced that the OVJP Corp facility in California would be closing and OVJP operations would be relocated to our newly formed Singapore subsidiary, Universal Vapor Jet Corporation Pte. Ltd. (UVJC), as well as continued operations in our Tech and Innovation Center in New Jersey. While we continue to focus on the long-term opportunity in the large-area display market for OVJP, the industry’s current focus is on the growing demand for IT capacity. Our UVJC subsidiary plans to assess additional market opportunities where this technology may be transformative. As a result of the closure of the OVJP Corp location in California, we recorded $602,000 of restructuring costs for the nine months ended September 30, 2025. We recorded no restructuring costs during the three months ended September 30, 2025.

Current wording

In June 2020, we formed a wholly-owned subsidiary, OVJP Corporation (OVJP Corp), operating in California, in order to advance the commercialization of our proprietary Organic Vapor Jet Printing (OVJP) technology, which we now refer to as Universal Vapor Jet Printing (UVJP). In December 2024, we announced that the OVJP Corp facility in California would be closing and UVJP operations would be relocated to our newly formed Singapore subsidiary, Universal Vapor Jet Corporation Pte. Ltd. (UVJC), as well as continued operations in our Tech and Innovation Center in New Jersey. While we continue to focus on the long-term opportunity in the large-area display market for UVJP, the industry’s current focus is on the growing demand for IT capacity. Our UVJC subsidiary continues to assess additional market opportunities where this technology may be transformative.

Previous wording

In February 2021, we announced the establishment of a new manufacturing site in Shannon, Ireland and an agreement between UDC Ireland Limited and PPG for the production of our OLED materials. We purchased the site during September 2023. When fully operational, the new facility is expected to double our production capacity and allow for the diversification of our manufacturing base for phosphorescent emitters. The first phase of facility improvements has been completed and operations commenced in June 2022.

Current wording

In February 2021, we announced the establishment of a new manufacturing site in Shannon, Ireland and an agreement between UDC Ireland Limited and PPG for the production of our OLED materials. The Shannon manufacturing facility became operational in June 2022 and we purchased the site during September 2023. The Shannon manufacturing facility provides incremental manufacturing capacity to meet our expanding production needs, and allows for the geographical diversification of our manufacturing base for the world-wide distribution of our materials.

Previous wording

Our total material sales were $257.4 million for the nine months ended September 30, 2025, as compared to $272.2 million for the nine months ended September 30, 2024, a decrease of 5% with a commensurate decrease in unit material volume of 4%. The decrease in material sales was primarily due to lower unit material volume and changes in customer mix.

Current wording

Our total material sales were $83.7 million for the three months ended March 31, 2026, as compared to $86.2 million for the three months ended March 31, 2025, a decrease of 3% with a commensurate decrease in unit material volume of 4%. The decrease in material sales was primarily due to changes in customer mix and lower unit material volume.

Previous wording

Green emitter sales for the three months ended September 30, 2025, which include our yellow-green emitters, were $64.6 million as compared to $62.6 million for the three months ended September 30, 2024, with unit material volumes increasing by 4%.

Current wording

Green emitter sales for the three months ended March 31, 2026, which include our yellow-green emitters, were $64.0 million as compared to $63.5 million for the three months ended March 31, 2025, with unit material volumes decreasing by 2%.

Previous wording

Red emitter sales for the three months ended September 30, 2025 were $16.8 million as compared to $20.1 million for the three months ended September 30, 2024, with unit material volumes decreasing by 12%.

Current wording

Red emitter sales for the three months ended March 31, 2026 were $19.7 million as compared to $21.5 million for the three months ended March 31, 2025, with unit material volumes decreasing by 9%.

Previous wording

Revenue from royalty and license fees was $53.3 million for the three months ended September 30, 2025 as compared to $74.6 million for the three months ended September 30, 2024, a decrease of 29%. The decrease in royalty and license fees for the three months ended September 30, 2025 was primarily the result of changes in customer mix and a $9.5 million reduction in revenue due to an out of period adjustment. The out of period adjustment was due to a correction of an error that originated during the third quarter of 2023. We have evaluated the impacts of this error, both quantitatively and qualitatively, and have concluded that the error was not material to the

Current wording

Revenue from royalty and license fees was $54.2 million for the three months ended March 31, 2026 as compared to $73.6 million for the three months ended March 31, 2025, a decrease of 26%. The decrease in royalty and license fees for the three months ended March 31, 2026 was primarily the result of changes in customer mix and lower unit material volume. While customer mix can vary quarter to quarter, we expect the customer mix in subsequent periods of 2026 to have a more favorable impact on royalty and license fees as compared to the first quarter of the year.

Previous wording

The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was an increase of $1.3 million for the three months ended September 30, 2025 as compared to a net increase of $5.3 million for the three months ended September 30, 2024. For the three months ended September 30, 2025 and 2024, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of our customers over the remaining lives of their contracts.

Current wording

The cumulative catch-up adjustment recorded to revenue arising from changes in estimates of transaction price, net was a reduction of $12,000 for the three months ended March 31, 2026 as compared to a net increase of $2.0 million for the three months ended March 31, 2025. For the three months ended March 31, 2025, the adjustment resulted from an increase in the average price per gram that was primarily due to the decrease in anticipated demand by several of our customers over the remaining lives of their contracts.

Previous wording

Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries. Contract research services revenue was $17.7 million for the nine months ended September 30, 2025 as compared to $10.8 million for the nine months ended September 30, 2024, an increase of 63%. The increase in contract research services revenue was primarily due to increased specialty manufacturing customer demand at our subsidiary, Adesis, during the nine months ended September 30, 2025.

Current wording

Contract research services revenue was $4.3 million for the three months ended March 31, 2026 as compared to $6.6 million for the three months ended March 31, 2025, a decrease of 35%. The decrease in contract research services revenue was primarily due to decreased specialty manufacturing customer demand at our subsidiary, Adesis, during the three months ended March 31, 2026. Revenue from contract research services consists of revenue earned by Adesis, which provides support services on a contractual basis to third-party customers in the pharma, biotech, catalysis and other industries.

Previous wording

Cost of sales for the three months ended September 30, 2025 decreased by $321,000 as compared to the three months ended September 30, 2024. As a result of the decrease in revenue from royalty and licenses fees, gross margin for the three months ended September 30, 2025 decreased by $21.7 million as compared to the three months ended September 30, 2024, with gross margin as a percentage of revenue decreasing to 75% from 78%.

Current wording

Cost of sales for the three months ended March 31, 2026 decreased by $2.0 million as compared to the three months ended March 31, 2025, primarily due to Adesis' cost of sales and lower sales volume, partially offset by product mix. As a result of the decrease in revenue from royalty and license fees, gross margin for the three months ended March 31, 2026 decreased by $22.1 million as compared to the three months ended March 31, 2025, with gross margin as a percentage of revenue decreasing to 75% from 77%.

Previous wording

Selling, general and administrative expenses increased to $18.0 million for the three months ended September 30, 2025, as compared to $15.7 million for the three months ended September 30, 2024. The increase in selling, general and administrative expenses was primarily due to an increase in salaries and stock-based compensation expenses.

Current wording

Selling, general and administrative expenses increased to $20.0 million for the three months ended March 31, 2026, as compared to $17.0 million for the three months ended March 31, 2025. The increase in selling, general and administrative expenses was primarily due to an increase in employee-related expenses.

Previous wording

Patent costs decreased to $1.9 million for the three months ended September 30, 2025, as compared to $2.4 million for the three months ended September 30, 2024.

Current wording

Patent costs increased to $2.4 million for the three months ended March 31, 2026, as compared to $1.9 million for the three months ended March 31, 2025.

Previous wording

Interest income, net was $10.0 million for the three months ended September 30, 2025, as compared to $10.6 million for the three months ended September 30, 2024. Other income, net primarily consisted of net exchange gains and losses on foreign currency transactions, net investment gains and losses, and rental income. We recorded other income, net of $952,000 for the three months ended September 30, 2025 as compared to $3.8 million for the three months ended September 30, 2024. The decrease in other income, net was primarily due to a $3.0 million investment gain on our marketable equity securities portfolio, partially offset by a $1.9 million foreign exchange loss during the three months ended September 30, 2025 as compared to a $3.2 million foreign exchange gain during the three months ended September 30, 2024. Net exchange gains and losses on foreign currency are primarily caused by the fluctuation in the Korean Won to the U.S. Dollar exchange rate and resulting remeasurement of a Korean Won-denominated withholding tax receivable.

Current wording

Interest income, net was $8.7 million for the three months ended March 31, 2026, as compared to $10.1 million for the three months ended March 31, 2025. The decrease in interest income, net was primarily due to a decrease in bond yields on available-for-sale investments held in the current quarter over bond yields on available-for-sale investments held in the comparable quarter in 2025. Other (loss) income, net primarily consisted of net exchange gains and losses on foreign currency transactions, net investment gains and losses, and rental income. We recorded other loss, net of $6.2 million for the three months ended March 31, 2026 as compared to other income, net of $378,000 for the three months ended March 31, 2025. The decrease in other (loss) income, net was primarily due to a $3.0 million foreign exchange loss, a $2.7 million investment loss on our marketable equity securities portfolio and a $415,000 impairment loss on our minority equity investment portfolio during the three months ended March 31, 2026 as compared to a $14,000 investment loss on our marketable equity securities portfolio and no foreign exchange loss during the three months ended March 31, 2025. Net exchange gains and losses on foreign currency are primarily caused by the fluctuation in the Korean Won to the U.S. Dollar exchange rate and resulting remeasurement of a Korean Won-denominated withholding tax receivable.

Previous wording

We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was 18.7% and 17.9% for the three months ended September 30, 2025 and 2024, respectively, and we recorded income tax expense of $10.1 million and $14.5 million, respectively, for those periods.

Current wording

We are subject to income taxes in the United States and foreign jurisdictions. The effective income tax rate was 20.7% and 19.6% for the three months ended March 31, 2026 and 2025, respectively, and we recorded income tax expense of $9.4 million and $15.7 million, respectively, for those periods. The increase in the effective tax rate during the three months ended March 31, 2026 was primarily due to a decrease in research and development tax credits.

Previous wording

Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of September 30, 2025, we had cash and cash equivalents of $121.6 million, short-term investments of $481.4 million, and long-term U.S. Government bonds investments of $397.4 million for a total of $1.0 billion. This compares to cash and cash equivalents of $99.0 million, short-term investments of $393.7 million, and long-term U.S. Government bond investments of $435.5 million for a total of $928.2 million as of December 31, 2024.

Current wording

Our principal sources of liquidity are our cash and cash equivalents and short-term investments. As of March 31, 2026, we had cash and cash equivalents of $159.4 million, short-term investments of $357.1 million, and long-term U.S. Government bonds investments of $395.0 million for a total of $911.5 million. This compares to cash and cash equivalents of $138.4 million, short-term investments of $464.0 million, and long-term U.S. Government bond investments of $353.0 million for a total of $955.4 million as of December 31, 2025.

Previous wording

Cash provided by operating activities for the nine months ended September 30, 2025 was $179.7 million resulting from $175.7 million of net income and $53.1 million from non-cash items including stock-based compensation, depreciation and amortization of intangibles, partially offset by a $49.1 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to an increase in other assets of $49.3 million, an increase in inventory of $29.7 million, a decrease in deferred revenue of $8.7 million and a decrease in other liabilities of $1.1 million, partially offset by a decrease in accounts receivable of $39.4 million and an increase in accounts payable of $304,000. The increase in other assets during the nine months ended September 30, 2025 was primarily due to an increase in unbilled receivables from certain customers. The decrease in accounts receivable during the nine months ended September 30, 2025 was primarily due to the timing of material shipments as well as license fee payments from certain customers. The increase in inventory during the nine months ended September 30, 2025 was primarily due to purchases of certain strategic raw materials.

Current wording

Cash provided by operating activities for the three months ended March 31, 2026 was $108.9 million resulting from $35.9 million of net income, $23.6 million from non-cash items including depreciation, stock-based compensation and amortization of intangibles and a $49.4 million increase due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to a decrease in other assets of $39.3 million, a decrease in accounts receivable of $26.3 million, an increase in other liabilities of $6.6 million, partially offset by a decrease in accounts payable and accrued expenses of $15.3 million, an increase in inventory of $7.3 million and a decrease in deferred revenue of $188,000. The decrease in other current assets during the three months ended March 31, 2026 was primarily due a receipt of $39.0 million of taxes receivable from the United States Treasury during January 2026. The decrease in accounts receivable during the three months ended March 31, 2026 was primarily due to the timing of material shipments as well as license fee payments from certain customers.

Previous wording

Cash provided by operating activities for the nine months ended September 30, 2024 was $219.0 million resulting from $176.1 million of net income, $39.5 million from non-cash items including stock-based compensation, depreciation and amortization of intangibles, and $3.4 million due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to a decrease in accounts receivable of $52.2 million and an increase in accounts payable and accrued expenses of $9.4 million, partially offset by an increase in other assets of $43.7 million, a decrease in deferred revenue of $10.0 million, a decrease in other liabilities of $4.3 million and an increase in inventory of $163,000.

Current wording

Cash provided by operating activities for the three months ended March 31, 2025 was $30.6 million resulting from $64.4 million of net income and $14.1 million from non-cash items including stock-based compensation, depreciation and amortization of intangibles, partially offset by a $47.9 million reduction due to changes in our operating assets and liabilities. Changes in our operating assets and liabilities related to an increase in accounts receivable of $25.9 million, an increase in inventory of $14.4 million, a decrease in accounts payable and accrued expenses of $13.4 million, a decrease in deferred revenue of $8.5 million and an increase in other assets of $2.2 million, partially offset by an increase in other liabilities of $16.5 million.

Previous wording

Cash used in investing activities was $85.0 million for the nine months ended September 30, 2025, as compared to $167.1 million for the nine months ended September 30, 2024. The decrease in cash used in investing activities was due to timing of maturities and purchases of investments resulting in net purchases of $44.6 million for the nine months ended September 30, 2025, as compared to $137.1 million for the nine months ended September 30, 2024, partially offset by an increase in purchases of property, plant and equipment of $10.4 million. The increase in property, plant and equipment purchases during the nine months ended September 30, 2025 was primarily due to the continued expansion of the manufacturing facility in Shannon, Ireland and improvements to our research and development facility in Ewing, New Jersey.

Current wording

Cash provided by investing activities was $9.9 million for the three months ended March 31, 2026, as compared to $58.2 million for the three months ended March 31, 2025. The decrease in cash provided by investing activities was due to timing of maturities and purchases of investments resulting in net sales and maturities of $58.5 million for the three months ended March 31, 2026, as compared to $71.2 million for the three months ended March 31, 2025, partially offset by an increase in purchases of intangibles and property and equipment of $35.6 million. The increase in the purchases of intangibles during the three months ended March 31, 2026 was primarily due to the acquisition of the Merck KGaA patent portfolio in January 2026.

Previous wording

Cash used in financing activities was $72.1 million for the nine months ended September 30, 2025, as compared to $64.3 million for the nine months ended September 30, 2024. The increase was due to an increase in the cash payment of dividends in the current year of $6.4 million, an increase in the payment of withholding taxes related to stock-based compensation to employees of $1.2 million and a decrease in the proceeds from issuance of common stock of $159,000.

Current wording

Cash used in financing activities was $97.7 million for the three months ended March 31, 2026, as compared to $30.2 million for the three months ended March 31, 2025. The increase was due to an increase in the repurchases of common stock of $67.1 million, an increase in the cash payment of dividends in the current year of $2.0 million and a decrease in the proceeds from issuance of common stock of $1,000, partially offset by a decrease in the payment of withholding taxes related to stock-based compensation to employees of $1.6 million.

Previous wording

Working capital was $928.7 million as of September 30, 2025, as compared to $774.4 million as of December 31, 2024. The increase was primarily due to increases in short-term investments, other current assets, inventory, and cash and cash equivalents, partially offset by a decrease in accounts receivable.

Current wording

Working capital was $834.5 million as of March 31, 2026, as compared to $979.0 million as of December 31, 2025. The decrease was primarily due to decreases in short-term investments, other current assets, and accounts receivable, partially offset by an increase in cash and cash equivalents.

Previous wording

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

Current wording

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 and public and private sales of our equity and debt securities. 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.