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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 31, 2023

UNIVERSAL DISPLAY CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Pennsylvania

1-12031

23-2372688

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

250 Phillips Boulevard,

Ewing, NJ

08618

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (609) 671-0980

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value

 

OLED

 

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

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

 


 

Item 2.02 Results of Operations and Financial Condition.

On November 2, 2023, Universal Display Corporation (the "Company") issued a press release regarding its financial results for the quarter ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report.

The information set forth under this “Item 2.02. Results of Operations and Financial Condition” (including the exhibit) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing made by the Company pursuant to the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On October 31, 2023, the board of directors of the Company adopted the UDC, Inc. Nonqualified Deferred Compensation Plan (the “DCP”), which shall be effective as of January 1, 2024.

The DCP will allow a select group of key management and highly compensated employees to defer receiving certain of their salary and cash incentive compensation. The DCP enables participants to defer a percentage or dollar amount of their salary and cash incentive compensation, subject to any minimums or maximums established by the Company and certain restrictions. Participants select from various investment options available under the DCP to invest their elective deferrals. There are no guaranteed returns for any of the investment options or for any participants in the DCP. Distributions under the DCP will be paid based on a pre-determined payment schedule upon termination of service for any reason (including death) and a change of control.

The Company has reserved the right under the DCP to make discretionary contributions to participant accounts from time to time. The participants’ elective deferrals are 100% vested immediately, with any discretionary contributions by the Company to vest based on a schedule determined at the time of contribution, subject to acceleration in certain circumstances. Should a participant’s employment with the Company be terminated for cause, no benefits of any kind will be due or payable under the DCP from the Company’s contributions.

The Company pays all of the administrative costs of the DCP. Any assets of the Company set aside with respect to the DCP are subject to the claims of the Company’s general creditors in the event of bankruptcy or other insolvency. No assets are placed into an account in the name of any participant. An account in the DCP will not give a participant any interest in the Company’s assets or the assets of any of its affiliates, or a right to payment other than as provided in the DCP. Participants in the DCP are general unsecured creditors of the Company with respect to amounts payable under the DCP.

This summary description of the DCP is qualified in its entirety by reference to the actual terms of the DCP, which is attached as exhibit 10.1 and incorporated by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit

Number

Description

10.1

 

UDC, Inc. Nonqualified Deferred Compensation Plan

 

99.1

 

Press Release by the Registrant, dated November 2, 2023, furnished pursuant to Item 2.02 of Form 8-K.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 


SIGNATURES

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

 

UNIVERSAL DISPLAY CORPORATION

Date: November 2, 2023

By:

/s/ Brian Millard

Brian Millard

Vice President, Chief Financial Officer and Treasurer

 


Exhibit 10.1

UDC, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

 

RECITALS

 

This Nonqualified Deferred Compensation Plan (the “Plan”) is adopted by UDC, Inc., a New Jersey corporation (the “Company”), for the benefit of the Eligible Employees of the Company. The purpose of the Plan is to offer selected Eligible Employees who contribute significantly to the future business success of the Company an opportunity to elect to defer a portion of their Base Salary and/or Bonus Compensation and to provide a deferred compensation vehicle to which the Company may credit discretionary amounts pursuant to the terms of the Plan for retention and reward.

 

The Plan is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly-compensated Employees, and as such, is intended to be exempt from the provisions of Parts 2, 3, and 4 of Title I of the Employee Retirement Income Security Act of 1974 by operation of Sections 201(2), 301(a)(3) and 401(a)(1) thereof. The Plan will be administered, operated and construed in accordance with this intention.

 

The Plan is intended to comply in form and operation with all applicable law, including, to the extent applicable, the requirements of Internal Revenue Code Section 409A and will be administered, operated and construed in accordance with this intention.

 

Accordingly, this Plan is effective as of January 1, 2024.

 

ARTICLE 1

Definitions

 

The words and phrases defined in this Article shall have the meaning set out in the definition, unless the context in which the word or phrase appears reasonably requires a broader, narrower or different meaning.

 

1.1
“Account” shall mean all bookkeeping accounts pertaining to a Participant which are maintained by the Plan Administrator or Plan recordkeeper to reflect the Company’s obligation to the Participant under the Plan, including a Deferral Account, a Company Contribution Account (if any) and a Scheduled Withdrawal Account (if any). The Plan Administrator or Plan recordkeeper shall establish additional subaccounts that the Plan Administrator considers necessary to reflect the entire interest of the Participant under the Plan.

 

1.2
“Affiliate” shall mean any business entity other than the Company that is a member of a controlled group of corporations, within the meaning of Section 414(b) of the Code, of which such Company is a member; any other trade or business (whether or not incorporated) under common control, within the meaning of Section 414(c) of the Internal Revenue Code.

 

1.3
“Base Salary” shall mean a Participant’s base annual salary excluding incentive and discretionary bonuses, commissions, and other non-regular forms of compensation, before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans sponsored by the Company.

 

1.4
“Beneficiary” or “Beneficiaries” shall mean the person or persons (which may include a trust) designated by a Participant in accordance with the Plan, that are entitled to receive benefits under the Plan upon the death of a Participant.

 

1.5
“Beneficiary Designation Form” shall mean the form established from time to time by the Plan Administrator that a Participant completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

 

1.6
“Bonus Compensation” shall mean non-stock based amounts paid to a Participant by the Company in the form of discretionary or incentive compensation or any other non-stock bonus designated by the Company before reductions for contributions to or deferrals under any pension, deferred compensation or benefit plans sponsored by the Company.

 

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1.7
“Cause” shall mean conduct by a Participant determined by the Company to be: (a) gross negligence or willful malfeasance in the performance of his or her duties; (b) actions or omissions that harm the Company and are undertaken or omitted knowingly or are criminal or fraudulent or involve material dishonesty or moral turpitude; (c) being indicted in a court of law for any felony or for a crime involving misuse or misappropriation of Company funds; or (d) breach of fiduciary duty to the Company.

 

1.8
“Change in Control” shall mean and shall include a change in ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, within the meaning of Internal Revenue Code Section 409A and as described in Treasury Regulation §§1.409A- 3(i)(5)(v), (vi) and (vii).

 

1.9
“Claimant” shall mean a Participant or a Beneficiary who believes that he or she is entitled to a benefit under this Plan or being denied a benefit to which he or she is entitled hereunder.

 

1.10
“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended, or any successor statue, and the Treasury Regulations and other authoritative guidance issued thereunder.

 

1.11
“Company” shall mean UDC, Inc., and its successors and assigns, unless otherwise provided in this Plan, or any other corporation or business organization which, with the consent of UDC, Inc., or its successors or assigns, assumes the Company’s obligations under this Plan, or any Affiliate which UDC, Inc. or its successors or assigns designates to become a party to the Plan and such Affiliate adopts the Plan.

 

1.12
“Company Contribution” shall mean the deferred compensation amounts credited on behalf of a Participant by the Company to the Participant’s Account, as described in Section 5.1.

 

1.13
“Company Contribution Account” shall mean a subaccount of a Participant’s Account consisting of: (a) the sum of the Company Contribution amounts (if any) for any Plan Year, plus (b) Deemed Investment gains or losses credited or debited thereon, less (c) any distributions made to the Participant or his or her Beneficiary that relate to the Participant’s Company Contribution Account, and tax withholding amounts deducted (if any) from said Account.

 

1.14
“Deemed Investment” shall mean the notional conversion of the balance held in a Participant’s Account(s) into shares or units of the Deemed Investment Options that are used as measuring devices for determining the value of a Participant’s Account(s).

 

1.15
“Deemed Investment Options” shall mean the hypothetical securities or other investments described under Section 6.1 from which the Plan Administrator may select to be used as measuring devices to determine the Deemed Investment gains or losses of a Participant’s Account(s). A Participant shall have no real or beneficial ownership in the security or other investment represented by the Deemed Investment Options.

 

1.16
“Deferral Account” shall mean a subaccount of a Participant’s Account consisting of: (a) the sum of a Participant’s Deferral Amounts for any Plan Year or Performance Period that may be allocated, in whole or in part, by a Participant pursuant to his or her Deferral Election to the Deferral Account, plus (b) Deemed Investment gains or losses credited or debited thereon, less (c) any distributions made to the Participant or his or her Beneficiary that relate to the Participant’s Deferral Account, and tax withholding amounts deducted (if any) from said Account.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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1.17
“Deferral Amount” shall mean that portion of a Participant’s Base Salary and/or Bonus Compensation that a Participant elects to defer for any Plan Year or Performance Period.
1.18
“Deferral Election” shall mean an election by an Eligible Employee on an Election Form approved by the Plan Administrator (in a paper or electronic format) to defer his or her Deferral Amount(s) in accordance with the provisions of Article 3.
1.19
“Effective Date” shall mean January 1, 2024.

 

1.20
“Election Form” shall mean the form or forms established from time to time by the Plan Administrator (in a paper or electronic format) on which the Participant makes certain designations as required under the terms of this Plan.

 

1.21
“Eligibility Date” shall mean the date designated by the Plan Administrator on which an Eligible Employee shall become eligible to participate in the Plan.

 

1.22
“Eligible Employee” shall mean an Employee who is selected by the Company to participate in the Plan. Participation in the Plan is limited to a select group of the Company’s key management or highly compensated employees.

 

1.23
“Employee” shall mean an individual who provides services to the Company in the capacity of a common law Employee of the Company.
1.24
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

1.25
“Participant” shall mean an Eligible Employee of the Company who is designated as eligible to participate in this Plan in accordance with the provisions of Article 2.

 

1.26
“Participation Agreement” shall mean an agreement between a Participant and the Company, on a form determined by the Plan Administrator, in which the Participant agrees to certain terms and conditions of the Participant’s participation in the Plan.

 

1.27
“Performance Period” shall mean, with respect to any Bonus Compensation, the period of time over which such Bonus Compensation is earned.

 

1.28
“Plan” shall mean this Nonqualified Deferred Compensation Plan, as evidenced by this written instrument, Participation Agreements, Election Forms, and any other forms as may be required by the Plan Administrator, as amended from time to time. For purposes of Section 409A, the portion of the amounts deferred by a Participant and Deemed Investment gains or losses credited or debited thereon, shall be considered an elective account balance plan as defined in Treasury Regulations §1.409A-1(c)(2)(i)(A), or as otherwise provided by the Code; the portion of the amounts deferred as Company Contributions together with Deemed Investment gains or losses credited or debited thereon, shall be considered a nonelective account balance plan as defined in Treasury Regulations §1.409A-1(c)(2)(i)(B), or as otherwise provided in the Code.

 

1.29
“Plan Administrator” shall mean the Company or its designee. The Plan Administrator shall appoint delegates and service providers as it, in its sole discretion, deems necessary to properly administer the Plan, and may from time to time consult with legal counsel. No person who is a Plan Administrator shall participate in an action on a matter which applies solely to that person.

 

1.30
“Plan Year” shall mean a twelve (12) month period beginning January 1 of each calendar year and continuing through December 31 of such calendar year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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1.31
“Rule of 70” shall mean a Participant’s age plus Years of Service equals seventy (70).
1.32
“Scheduled Withdrawal Account” shall mean a subaccount of a Participant’s Account consisting of:
(a)
the sum of a Participant’s Deferral Amounts for any Plan Year or Performance Period that may be allocated, in whole or in part, by the Participant pursuant to his or her Deferral Election to a Scheduled Withdrawal Account, plus
(b)
Deemed Investment gains or losses credited or debited thereon less (c) any distributions made to the Participant or his or her Beneficiary, and tax withholding amounts that relate to the Participant’s Scheduled Withdrawal Account, and tax withholding amounts deducted (if any) from said Account.

 

1.33
“Section 409A” shall mean Code Section 409A and the Treasury Regulations or other authoritative guidance issued thereunder.

 

1.34
“Separation from Service” or “Separates from Service” shall mean an anticipated permanent reduction in the level of bona fide services to be performed by the Participant to twenty percent (20%) or less of the average level of bona fide services performed by the Participant over the immediately preceding 36-month period (or the full period during which the Participant performed services for the Company, if that is less than 36 months). Whether a Participant has had a Separation from Service shall be determined pursuant to Section 409A.

 

1.35
“Specified Time” shall mean, with respect to a Participant’s Scheduled Withdrawal Account, the date on which the Scheduled Withdrawal Account shall be paid to the Participant.

 

1.36
“Treasury Regulation” or “Treasury Regulations” shall mean regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, as they may be amended from time to time.

 

1.37
“Unforeseeable Emergency” shall mean: (a) a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependents (as defined in Code Section 152 (without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)); (b) loss of the Participant’s property due to casualty; or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The Plan Administrator will determine whether a Participant incurs an Unforeseeable Emergency based on the relevant facts and circumstances and in accordance with Treasury Regulations §1.409A-3(i)(3).

 

1.38
“Valuation Date” shall mean the date a Participant’s Account is to be valued for purposes of providing benefits under the terms of the Plan. The Valuation Date shall be the event date triggering payment of the Account under the terms of the Plan, or such date as close to the payment date as is administratively feasible. The Valuation Date shall be interpreted as each day at the close of business of the New York Stock Exchange (currently 4:00 p.m. Eastern Time), on days that the New York Stock Exchange is open for trading or any other day on which there is sufficient trading in securities of the applicable fund to materially affect the unit value of the fund and the corresponding unit value of the Participant's Deemed Investment Option(s).

 

1.39
“Year of Service” shall mean a twelve (12) month period during which a Participant is employed on a full-time basis by the Company, inclusive of any approved leaves of absence, beginning on the Participant’s date of hire.

 

ARTICLE 2

Eligibility and Participation

 

2.1
Requirements for Participation. Every Eligible Employee selected by the Company to participate in the Plan as of the Effective Date shall be eligible to become a Participant on the Effective Date. Before the beginning of each Plan Year, or such other times as determined by the Company, the Company shall select those Employees who shall be Eligible Employees for such Plan Year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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2.2
Election to Participate; Benefits of Participation. Each Eligible Employee may become a Participant in the Plan by executing and submitting to the Plan Administrator, a Participation Agreement, a Deferral Election, and any other Election Form within the time period specified by the Plan Administrator and Section 409A. If an Eligible Employee fails to meet all requirements contained in this Section 2.2 within the period required, that Eligible Employee shall not be entitled to participate in the Plan during such Plan Year. In addition, the Plan Administrator may establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary or desirable.
2.3
Re-employment. The re-employment of a former Participant by the Company shall not entitle such individual to become a Participant hereunder. Such individual shall not become a Participant until and if the individual is again designated as an Eligible Employee in accordance with Section 2.1. If a Participant who has experienced a Separation from Service is receiving installment distributions and is re-employed by the Company, distributions due to the Participant shall not be suspended.

 

2.4
Ceasing to be an Eligible Employee. The Plan Administrator may remove an Eligible Employee from further active participation in the Plan at its discretion. If this occurs, the Participant shall not have additional amounts credited to the Company Contribution Account, and shall be prevented from making Participant Deferral Elections for subsequent Plan Years or Performance Periods. Any existing Deferral Election shall continue in effect for the remainder of the Plan Year or Performance Period and may only be cancelled in accordance with Section 3.4(b) hereof.

 

2.5
Termination of Participation. A Participant will cease to be a Participant as of the date on which his or her entire Account balance has been distributed or forfeited.

 

ARTICLE 3

Employee Elective Deferrals

 

3.1
Minimum and Maximum Deferral Limits. For each Plan Year and/or Performance Period (as applicable), a Participant shall specify the percentage or dollar amount of Base Salary and/or Bonus Compensation to be deferred subject to the minimums or maximums (if any) established by the Plan Administrator and communicated to the Participant on the Participant Election Form.

 

3.2
Deferral Elections – First Year of Eligibility.

 

(a)
Application. This Section 3.2 applies to each Eligible Employee who first becomes eligible to participate in the Plan. The Plan Administrator shall determine (in accordance with Treasury Regulation §1.409A-2(a)(7)(ii)) the date upon which a Participant who ceased being eligible to participate in the Plan, can again become eligible to participate in the Plan.

 

(b)
Deferral Election. An Eligible Employee described in Section 3.2(a) may elect to defer receipt of Base Salary earned during such Plan Year and/or his or her Bonus Compensation earned during a Performance Period by filing a Deferral Election with the Plan Administrator in accordance with the following rules:

 

(i)
Timing; Irrevocability. The Deferral Election must be filed with the Plan Administrator by, and shall become irrevocable as of, the thirtieth (30th) day following the Participant’s Eligibility Date (or such earlier date as specified by the Plan Administrator).

 

(ii)
Base Salary. The Deferral Election shall only apply to Base Salary earned during such calendar year beginning with the first payroll period that begins immediately after the date the Deferral Election becomes irrevocable. Base Salary payable after the last day of a calendar year solely for services performed during the final payroll period, described in Section 3401(b) of the Code, containing December 31 of such year shall be treated as earned during the subsequent calendar year.

 

 

 

 

 

 

 

 

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(iii)
Bonus Compensation. Where a Deferral Election is filed in the first year of eligibility but after the commencement of the Performance Period, then, except as otherwise provided in Section 3.3 below, the Deferral Election shall only apply to that portion of Bonus Compensation earned for such Performance Period equal to the total amount of the Bonus Compensation earned during such Performance Period multiplied by a fraction, the numerator of which is the number of days beginning on the day immediately after the date that the Deferral Election becomes irrevocable and ending on the last day of the Performance Period, and the denominator of which is the total number of days in the Performance Period.

 

3.3
Annual Deferral Elections. Unless Section 3.2 applies, each Eligible Employee may elect to defer receipt of Base Salary for a Plan Year or his or her Bonus Compensation for a Performance Period, by filing a Deferral Election with the Plan Administrator in accordance with the following rules:

 

(a)
Base Salary. The Deferral Election with respect to Base Salary must be filed with the Plan Administrator by, and shall become irrevocable following, December 31 (or such earlier date as specified by the Plan Administrator on the Deferral Election) of the calendar year next preceding the calendar year for which such amounts would otherwise be earned.

 

(b)
Bonus Compensation. The Deferral Election with respect to Bonus Compensation must be filed with the Plan Administrator by, and shall become irrevocable following, December 31 (or such earlier date as specified by the Plan Administrator on the Deferral Election) of the calendar year next preceding the first day of the Performance Period for which such Bonus Compensation would otherwise be earned. If the Company has a fiscal year other than the calendar year, Bonus Compensation relating to services in the fiscal year of the Company, of which no amount is paid or payable during the fiscal year, may be deferred at the Participant’s election if the Deferral Election is made not later than the close of the Company’s fiscal year next preceding the first fiscal year in which the Participant performs any services for which such Bonus Compensation is payable. Any Deferral Election with respect to Bonus Compensation that constitutes “performance-based compensation” under Treasury Regulation §1.409A-1(e)(1), must be filed with the Plan Administrator by, and shall become irrevocable as of, the date that is six (6) months before the end of the applicable Performance Period (or such earlier date as specified by the Plan Administrator on the Deferral Election), provided that in no event may such Deferral Election be filed after such Bonus Compensation has become “readily ascertainable” within the meaning of Section 409A.

 

3.4
Duration and Cancellation of Deferral Elections.

 

(a)
Duration. Once irrevocable, a Deferral Election shall only be effective for the Plan Year or Performance Period with respect to which such election was timely filed with the Plan Administrator. Except as provided in Section 3.4(b), a Deferral Election, once irrevocable, cannot be cancelled or altered during a Plan Year or Performance Period.

 

(b)
Cancellation. The Plan Administrator must cancel a Participant's Deferral Election due to an Unforeseeable Emergency distribution. If a Participant’s Deferral Election is cancelled with respect to a particular calendar year or Performance Period, he or she may complete a new Deferral Election for a subsequent Plan Year or Performance Period, only in accordance with Section 3.3.

 

3.5
Withholding and Crediting of Deferral Amounts. For each Plan Year, the Base Salary portion of the Deferral Amount shall be withheld from each regularly scheduled payroll in approximately equal amounts (or as otherwise specified by the Plan Administrator), as adjusted from time to time for increases and decreases in Base Salary (if the Participant’s Deferral Election is expressed as a percentage). The Bonus Compensation portion of the Deferral Amount shall be withheld as soon as administratively feasible following the time the Bonus Compensation otherwise would be paid to the Participant, whether or not this occurs during the Plan Year or Performance Period as the case may be. A Participant’s Deferral Amounts shall be credited to his or her Deferral Account and/or to a Scheduled Withdrawal Account as soon as administratively feasible following the time such amounts would otherwise have been paid to the Participant.

 

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ARTICLE 4

Account Allocation and Distribution Elections

 

4.1
Establishment of Account(s). The Plan Administrator shall establish and maintain a Deferral Account, a Company Contribution Account and Scheduled Withdrawal Accounts for each Plan Year, as applicable, in the name of each Participant.

 

4.2
Account Allocation. Concurrent with any Deferral Election, a Participant may make an irrevocable election to allocate all or a portion of his or her elected Deferral Amount to a Plan Year Deferral Account and/or a Plan Year Scheduled Withdrawal Account. To the extent that a Participant does not designate the Account to which Deferral Amounts will be allocated for a Plan Year, or such designation is ambiguous or does not comply with the terms of the Plan, such Deferral Amounts shall be allocated and credited to the Participant’s Deferral Account. Company Contributions shall not be allocated to a Scheduled Withdrawal Account, and instead shall be allocated to a Plan Year Company Contribution Account.

 

4.3
Scheduled Withdrawal Account Elections. If a Participant elects to allocate Deferral Amounts for a Plan Year into a Scheduled Withdrawal Account in accordance with Section 4.2, the Participant shall make an election as to the year in which payment will be paid from that Scheduled Withdrawal Account (the “Specified Time”). A Participant may elect to receive a distribution of a Scheduled Withdrawal Account no sooner than March 1st of the third (3rd) Plan Year following the Plan Year of the deferral. (For example: If a Participant elects to allocate 2024 Deferral Amounts into a Scheduled Withdrawal Account, the earliest date these Deferral Amounts could be distributed would be March 1, 2027). A Participant must also elect whether a Scheduled Withdrawal Account will be paid in a lump sum or in annual installments of up to five (5) years. To the extent that the designations are ambiguous or do not comply with the terms of this Section, then that Scheduled Withdrawal Account shall be paid at the earliest permissible date in accordance with this Section and/or in a lump sum.

 

4.4
Other Distribution Elections. Within thirty (30) days following a Participant’s Eligibility Date, a Participant must elect whether to be paid in a lump sum or up to ten (10) annual installments for Separation from Service and death, and will make this election for Separation from Service during each subsequent annual enrollment thereafter, no later than December 31st of the preceding Plan Year. To the extent that a Participant does not designate the form of payment or such designation is ambiguous or does not comply with the terms of the Plan, the Participant will be deemed to have elected to be paid in a lump sum.

 

ARTICLE 5

Company Contributions

 

5.1
Company Contributions. Each Plan Year, the Company may make Company Contributions to the Plan on behalf of a Participant in such amount as the Company shall determine in its sole discretion. The Company is under no obligation to make a Company Contribution for a Plan Year, and Company Contributions, if made, need not be uniform among Participants.

 

ARTICLE 6

Deemed Investment Gains or Losses

 

6.1
Deemed Investment Options. The Plan Administrator will determine the available Deemed Investment Options for purposes of crediting or debiting the Deemed Investment gains or losses to the Account. The Plan Administrator may discontinue, substitute, or add Deemed Investment Options in its sole discretion on a prospective basis. Any discontinuance, substitution, or addition of a Deemed Investment Option will take effect as soon as administratively practicable. The Deemed Investment Options are to be used for measurement purposes only, and the Plan Administrator’s selection of any such Deemed Investment Option, the allocation of such Deemed Investment Options to the Account, the calculation of additional amounts, and the crediting or debiting of such amounts to the Account shall not be considered or construed in any manner as an actual investment of the Account. The Plan Administrator will not be responsible in any manner to any Participant, Beneficiary or other person for any damages, losses, liabilities, costs or expenses of any kind arising in connection with any designation or elimination of a Deemed Investment Option. Without limiting the foregoing, the Account shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Plan Administrator. A Participant (or Beneficiary) shall at all times remain an unsecured creditor of the Company. Any liability or obligation of the Company to any Participant, former Participant, or Beneficiary with respect to a right to payment shall be based solely upon contractual obligations created by this Plan.

 

 

 

 

 

 

 

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6.2
Participant’s Allocation of Deemed Investment Options. Each Participant shall have the right to direct the Plan Administrator as to how the Participant’s Deferral Amounts and Company Contributions shall be deemed to be invested among the Deemed Investment Options offered under the Plan, subject to any rule, policy, practice or procedure adopted by the Plan Administrator. As of each Valuation Date, the Participant’s Account(s) will be credited or debited to reflect the performance of the Deemed Investment Options elected by the Participant. If a Deemed Investment Option selected by a Participant sustains a loss, the Participant’s Account(s) shall be reduced to reflect such loss. If the Participant fails to elect a Deemed Investment Option the Deemed Investment shall be based on an investment as may be established by the Plan Administrator.

 

6.3
Participant Responsibilities. Each Participant is solely responsible for any and all consequences of his or her investment directions made pursuant to this Article 6. Neither the Company, any of its directors, officers or employees, nor the Plan Administrator has any responsibility to any Participant or other person for any damages, losses, liabilities, costs or expenses of any kind arising in connection with any investment direction made by a Participant pursuant to this Article 6.

 

6.4
No Required Investment of Company Assets. Notwithstanding anything contained herein to the contrary, the Company reserves the right to invest its assets, including any assets that may have been set aside for the purpose of funding the benefits to be provided under the Plan, at its own discretion, and such assets shall remain the property of the Company, or may be held in a trust, as the case may be, subject to the claims of the general creditors of the Company, and no Participant shall have any right to any portion of such assets other than as an unsecured general creditor of the Company.

 

ARTICLE 7

Vesting / Forfeitures / Taxes

 

7.1
Deferral Amounts. A Participant shall at all times be one hundred percent (100%) vested in his or her Deferral Amounts and Deemed Investment gains or losses credited or debited thereon.

 

7.2
Company Contributions. Unless otherwise described in a Participant’s Participation Agreement, Company Contributions shall be tracked separately for each Plan Year and shall become one hundred percent (100%) vested on December 31st of the fourth (4th) Plan Year following the Plan Year such contribution was credited to the Plan regardless of the Plan Year to which the contribution was attributable. For example: Company Contributions credited in 2025 based on a Participant’s 2024 performance will become one hundred percent (100%) vested on December 31, 2029; Company Contributions credited in 2026 based on a Participant’s 2025 performance will become one hundred percent (100%) vested on December 31, 2030; and so on.

 

7.3
Acceleration of Vesting. Notwithstanding the foregoing vesting schedule, a Participant’s Company Contribution Account shall become one hundred percent (100%) vested upon the earlier of the following events to occur while the Participant is employed by the Company: (a) meeting the Rule of 70; (b) death; (c) a Change in Control; or (d) as otherwise approved by the Company as permitted under all applicable law and regulation.

 

7.4
Forfeiture of Account. Notwithstanding any other provision to the contrary herein, in the event a Participant’s employment is terminated for Cause, no benefits of any kind will be due or payable by the Company under the terms of this Plan from the Company Contribution Account, and all rights of the Participant, his or her designated Beneficiary, executors, or administrators, or any other person, to receive payments thereof shall be forfeited. Additionally, a Participant will forfeit any portion of an Account that is unvested upon his or her Separation from Service.

 

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7.5
Taxes and Withholding. Deferral Amounts, Company Contributions, and Deemed Investment gains and/or losses on each are subject to the Federal Insurance Contribution Act (FICA) and the Federal Unemployment Tax Act (FUTA) to the extent provided under applicable Code provisions, and benefits payable under the Plan are subject to all applicable federal, state, city, income, employment or other taxes as may be required to be withheld or paid. The Participant, however, shall be solely responsible for the payment of all tax liabilities relating to any such benefits.

 

ARTICLE 8

Payment of Account(s)

 

8.1
Payments in General.

 

(a)
Payment Events.

 

(i)
A Participant (or, in the event of the death of the Participant, the Participant’s Beneficiary) shall be entitled to a benefit equal to the Participant’s vested Account(s) balance upon the earliest to occur of Separation from Service or death.

 

(ii)
Unless the vested balance of a Participant’s Scheduled Withdrawal Account has been paid earlier in accordance with this Article 8, the Participant shall be entitled to a benefit equal to such vested balance at the Specified Time.

 

(b)
Source of Payments. The Company will pay, from its general assets, the portion of any benefit payable pursuant to this Article 8 that is attributable to a Participant’s Account, and all costs, charges and expenses relating thereto.

 

(c)
Calculation of Installment Payments. If a Participant is to receive installment payments, the payment of each installment, except for the first installment, shall be made on the anniversary of the first installment until all required installments have been paid. The amount of each installment shall be determined by dividing the value of a Participant’s Account(s) as of the event date (or on the anniversary of the event for subsequent installments) by the number of payments remaining to be paid. (By way of example, if the Participant elects to receive payments in annual installments over a period of five (5) years, the first payment shall equal 1/5 of the Account balance. The following year, the payment shall be 1/4 of the remaining Account balance. The final installment payment shall be equal to the balance of the Account(s), calculated as of the applicable anniversary date.) Any unpaid Account balance shall continue to be credited or debited with Deemed Investments gains or losses pursuant to Article 6, in which case any Deemed Investment gains or losses shall be reflected in the actual payments.

 

(d)
Subsequent Deferral Elections. Upon the Company’s approval, a Participant may delay the time of a payment or change the form of payment as expressly provided under this Section 8.1(d) and Section 409A (hereinafter, a “Subsequent Deferral Election”). Notwithstanding the foregoing, a Subsequent Deferral Election cannot accelerate any payment. A Subsequent Deferral Election which delays payment or changes the form of payment is permitted only if all of the following requirements are met:

 

(i)
The Subsequent Deferral Election does not take effect until at least twelve (12) months after the date on which the Subsequent Deferral Election is made and approved by the Plan Administrator;

 

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(ii)
If the Subsequent Deferral Election relates to a payment based on Separation from Service or at a Specified Time, the Subsequent Deferral Election must result in payment being deferred for a period of not less than five (5) years from the date the first amount was scheduled to be paid;

 

(iii)
If the Subsequent Deferral Election relates to a payment at a Specified Time, the Participant must make the Subsequent Deferral Election not less than twelve (12) months before the date the first amount was scheduled to be paid.

 

For purposes of applying this Section 8.1(d), installment payments shall be treated as a “single payment.” Any election made pursuant to this Section shall be made on such Election Forms or electronic media as is required by the Plan Administrator, in accordance with the rules established by the Plan Administrator and shall comply with all requirements of Section 409A.

 

8.2
Separation from Service. In the event of a Participant’s Separation from Service (other than for death), the Participant shall be paid his or her vested Account balance, calculated as of the date of Separation from Service, in the form of payment elected by the Participant in accordance with Section 4.4. Notwithstanding the foregoing, if a Participant’s vested Account balance at the due date of the first installment is one hundred thousand dollars ($100,000.00) or less, payment of the vested Account balance shall be made instead in a lump sum, and no installments shall be available under the Plan. Payment shall be made or commence within ninety (90) days following the Participant’s Separation from Service, with subsequent installments, if any, paid annually thereafter and calculated in accordance with Section 8.1(c). In the event of a Participant’s death after installments have commenced but before receiving all installments owed under the Plan, the Company shall continue to pay any remaining installments to the Participant’s Beneficiary in accordance with the schedule the installments would have been paid to the Participant had the Participant survived.

 

8.3
Death. In the event of a Participant’s death while employed by the Company, the Participant’s Beneficiary shall be paid the Participant’s vested Account balance, calculated as of the date of the Participant’s death, in the form of payment elected by the Participant in accordance with Section 4.4. Notwithstanding the foregoing, if a Participant’s vested Account balance at the due date of the first installment is one hundred thousand dollars ($100,000.00) or less, payment of the vested Account balance shall be made instead in a lump sum, and no installments shall be available under the Plan. Payment shall be made or commence within ninety (90) days following the date of the Participant’s death, with subsequent installments, if any, paid annually thereafter and calculated in accordance with Section 8.1(c).

 

8.4
Payment at a Specified Time. A Participant shall be paid the vested balance of a Scheduled Withdrawal Account in the form elected pursuant to Section 4.3, commencing within ninety (90) days following the Specified Time elected by the Participant. Notwithstanding anything contained herein to the contrary, should a Participant experience Separation from Service or death prior to an elected Specified Time, any Account balances subject to a Participant’s Scheduled Withdrawal Account(s) that have not yet begun to be paid shall not be paid under the election as to time and form of the Participant’s Scheduled Withdrawal Account, but instead shall be paid, in time and form, in accordance with the event that triggers the distribution and as permitted under Section 409A. Any Scheduled Withdrawal Accounts already in payout at the time of an intervening payment event will continue to be paid in accordance with the Participant’s Deferral Election for that Scheduled Withdrawal Account.

 

8.5
Payment due to an Unforeseeable Emergency. A Participant shall have the right to request, on a form provided by the Plan Administrator, a payment of all or a portion of his or her vested Account balance, in a lump sum payment due to an Unforeseeable Emergency. The Plan Administrator shall have the sole discretion to determine, in accordance with the standards under Section 409A, whether to grant such a request and the amount to be paid pursuant to such request.

 

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(a)
Determination of Unforeseeable Emergency. Whether a Participant is faced with an Unforeseeable Emergency permitting a lump sum payment is to be determined based on the relevant facts and circumstances of each case, but, in any case, a payment on account of an Unforeseeable Emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the Plan. Payments because of an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the payment).

 

(b)
Payment of Account. Payment shall be made within thirty (30) days following the determination by the Plan Administrator that a payment will be permitted under this Section 8.5.

 

8.6
Permissible Payment Accelerations. Except as specifically permitted herein or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated hereunder by the Company (without any direct or indirect election on the part of any Participant), in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) and any subsequent guidance issued by the United States Treasury Department. Accordingly, payments may be accelerated, in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) in the following circumstances: (a) in limited cashouts (but not in excess of the limit under Code Section 402(g)(1)(B)); (b) to pay employment-related taxes; or (c) to pay any taxes that may become due at any time that the Plan fails to meet the requirements of Section 409A (but in no case shall such payments exceed the amount to be included in income as a result of the failure to comply with the requirements of Section 409A).

 

8.7
Specified Employee of a Public Company. If a Participant is considered a “specified employee” of a public company, pursuant to Code Section 409A(a)(2)(B)(i), then solely to the extent necessary to avoid penalties under Section 409A, payments to be made as a result of a Separation from Service under this Article may not commence earlier than six (6) months after the Participant’s Separation from Service. In the event a distribution is delayed pursuant to this paragraph, any amounts otherwise payable during the six months shall be accumulated and paid in a lump sum on the first day of the seventh month following Separation from Service.

 

8.8
Rights of Participant and Beneficiary.

 

(a)
Creditor Status of Participant and Beneficiary. The Plan constitutes the unfunded, unsecured promise of the Company to make payments to a Participant or Beneficiary in the future and shall be a liability solely against the general assets of the Company. The Company shall not be required to segregate, set aside or escrow any amounts for the benefit of a Participant or Beneficiary. A Participant and Beneficiary shall have the status of a general unsecured creditor of the Company and may look only to the Company and its general assets for payment of benefits under the Plan.

 

(b)
Rights with Respect to a Trust. Any trust and any assets held thereby to assist the Company in meeting their obligations under the Plan shall in no way be deemed to controvert the provisions of this Section.

 

(c)
Investments. In its sole discretion, the Company may acquire insurance policies, annuities or other financial vehicles for the purpose of providing future assets of the Company to meet its anticipated liabilities under the Plan. Such policies, annuities or other investments shall at all times be and remain unrestricted general property and assets of the Company. A Participant and his or her designated Beneficiary shall have no rights, other than as general creditors, with respect to such policies, annuities or other acquired assets. In the event that the Company purchases an insurance policy or policies insuring the life of a Participant or Employee, to allow the Company to recover or meet the cost of providing benefits, in whole or in part, hereunder, no Participant or Beneficiary shall have any rights whatsoever in said policy or the proceeds therefrom. The Company shall be the primary owner and beneficiary of any such insurance policy or property and shall possess and may exercise all incidents of ownership therein. No insurance policy with regard to any director, “highly compensated employee,” or “highly compensated individual,” as defined in Code Section 101(j) shall be acquired before satisfying the Code Section 101(j) “Notice and Consent” requirements.

 

 

 

 

 

 

 

 

 

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8.9
Discharge of Obligations. The payment to a Participant or his or her Beneficiary of the Account balance in full shall discharge all obligations of the Company to such Participant or Beneficiary under the Plan.

 

ARTICLE 9

Beneficiary Designation

 

9.1
Designation of Beneficiaries.

 

(a)
Each Participant may designate any Beneficiary or Beneficiaries (who may be named contingently or successively) to receive any benefits payable under the Plan upon the Participant’s death, and the designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke all prior designations by the same Participant, shall be in the form prescribed by the Company, and shall be effective only when signed by the Participant and filed with the Company during the Participant’s lifetime.

 

(b)
In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the Company shall pay the benefit payment to the Participant’s spouse, if then living, and if the spouse is not then living to the Participant’s then living descendants, if any, per stirpes, and if there are no living descendants, to the Participant’s estate. In determining the existence or identity of anyone entitled to a benefit payment, the Company may rely conclusively upon information supplied by the Participant’s personal representative, executor, or administrator.

 

(c)
A Participant’s designation of a Beneficiary will not be revoked or changed automatically by any future marriage or divorce. Should the Participant wish to change the designated Beneficiary in the event of a future marriage or divorce, the Participant will have to do so by means of filing a new designation.

 

(d)
If a question arises as to the existence or identity of anyone entitled to receive a death benefit payment under the Plan, or if a dispute arises with respect to any death benefit payment under the Plan, the Company may distribute the payment to the Participant’s estate without liability for any tax or other consequences, or may take any other action which the Company deems to be appropriate.

 

9.2
Information to be furnished by Participants and Beneficiaries; Inability to Locate Participants or Beneficiaries. Any communication, statement or notice addressed to a Participant or to a Beneficiary at his or her last post office address as shown on the Company’s records shall be binding on the Participant or Beneficiary for all purposes of the Plan. The Company shall not be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to such last known address.

 

9.3
Facility of Payment. If the Plan Administrator determines in its discretion that a benefit is to be paid to a minor, to a person legally declared incompetent, or to a person legally deemed incapable of handling the disposition of that person’s property, the Plan Administrator may direct payment of such benefit to the guardian, legal representative or person having care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to payment of the benefit. Any distribution of a benefit shall be a distribution for the account of the Participant and the Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such distribution amount.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ARTICLE 10

Plan Amendment

 

10.1
Right to Amend. The Company may amend the Plan at any time and in any manner, except that no amendment may adversely affect a benefit to which a Participant or the Beneficiary of a deceased Participant is entitled under the Plan as of the later of the adoption date or effective date of the amendment without written consent of the Participant or Beneficiary.

 

10.2
Amendment to Ensure Proper Characterization of the Plan. Notwithstanding the provisions of Section 10.1, the Plan may be amended by the Company at any time, retroactively if required, if found necessary, in the opinion of the Company, in order to ensure that the Plan is characterized as a “top-hat” plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA sections 201(2), 301(a)(3), and 401(a)(1), to conform the Plan to the provisions of Section 409A and to conform the Plan to the requirements of any other applicable law (including but not limited to ERISA and the Code). No such amendment shall be considered prejudicial to any interest of a Participant or a Beneficiary hereunder.

 

ARTICLE 11

Plan Termination

 

11.1
Company’s Right to Suspend Plan. The Company reserves the right to suspend the operation of the Plan for a fixed or indeterminate period of time, in its sole discretion. In the event of a suspension of the Plan, during the period of the suspension, the Company shall continue all aspects of the Plan other than crediting of Company Contributions, and Deferral Amounts shall be suspended effective with the first day of the Plan Year following the date the Plan is suspended. Payments of distributions will continue to be made during the period of the suspension in accordance with Article 8.

 

11.2
Plan Termination and Liquidation under Section 409A. Notwithstanding anything to the contrary in Section 11.1, any acceleration of the payment of benefits due to Plan termination and liquidation shall comply with the following subparagraphs, but only as permitted in accordance with Section 409A and Treasury Regulation §1.409A-3(j)(4)(ix). The Company may distribute all Participants’ vested Account balances, determined as of the date of the termination of the Plan, subject to the terms below:

 

(a)
Upon the Company’s termination of this and all other arrangements that would be aggregated with this Plan pursuant to Treasury Regulation §1.409A-1(c) if a Participant participated in such arrangements (“Similar Arrangements”), provided that: (i) the termination does not occur proximate to a downturn in the financial health of the Company; (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination; and (iii) the Company does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Plan;

 

(b)
Upon the Company’s dissolution taxed under Code Section 331, or with approval of a bankruptcy court, provided that the amounts deferred under the Plan are included in the Participant’s gross income in the latest of: (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable; or

 

(c)
Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all the Company’s Similar Arrangements are terminated so the Participant and all participants in the Similar Arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the Plan. Notwithstanding the foregoing, the Company may terminate and liquidate the Plan pursuant to and in accordance with this Section 11.2(c) only if it obtains the prior written consent of a majority of the Participants who have Account balances under the Plan at the time the termination and liquidation of the Plan is approved by the Plan Administrator.

 

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ARTICLE 12

Plan Administration

 

12.1
Plan Administrator Duties. The Plan Administrator shall be responsible for the management, operation, and administration of the Plan. When making a determination or calculation, the Plan Administrator shall be entitled to rely on information furnished by the Company, the Participants, or Beneficiaries. No provision of this Plan shall be construed as imposing on the Plan Administrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or other law.

 

12.2
Plan Administrator Authority. The Plan Administrator shall enforce this Plan in accordance with its terms, shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

 

(a)
To construe and interpret the terms and provisions of this Plan and to reconcile any inconsistency, in its sole and absolute discretion;

 

(b)
To compute and certify the amount payable to a Participant and his or her Beneficiaries; to determine the time and manner in which such benefits are paid; and to determine the amount of any withholding taxes to be deducted;

 

(c)
To maintain all records that may be necessary for the administration of this Plan;

 

(d)
To provide for the disclosure of all information and the filing or provision of all reports and statements to a Participant, Beneficiaries, and governmental agencies as shall be required by law;

 

(e)
To make and publish such rules for the regulation of this Plan and procedures for the administration of this Plan so long as such rules or procedures are not inconsistent with the terms hereof;

 

(f)
To administer this Plan’s claims procedures;

 

(g)
To approve the forms and procedures for use under this Plan; and

 

(h)
To employ such persons or organizations, including without limitation, actuaries, attorneys, accountants, independent fiduciaries, recordkeepers and administrative consultants, to render advice or perform services with respect to the responsibilities of the Plan Administrator under the Plan.

 

12.3
Binding Effect of Decision. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation, and application of this Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Plan.

 

12.4
Compensation and Expenses. The Plan Administrator shall serve without compensation for services rendered hereunder. The Plan Administrator is authorized at the expense of the Company to employ such legal counsel and/or Plan recordkeeper as it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in connection with the administration of this Plan shall be paid by the Company.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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12.5
Compliance with Section 409A.

 

(a)
Notwithstanding anything contained herein to the contrary, the interpretation and distribution of Participants’ benefits under the Plan shall be made in a manner and at such times as to comply with all applicable provisions of Section 409A and the regulations and guidance promulgated thereunder, or an exception or exclusion therefrom to avoid the imposition of any accelerated or additional taxes. Any defined terms shall be construed consistent with Section 409A and any terms not specifically defined shall have the meaning set forth in Section 409A.

 

(b)
The intent of this Section is to ensure that the Participants are not subject to any tax liability or interest penalty, by reason of the application of Code Section 409A(a)(1) as a result of any failure to comply with all the requirements of Section 409A, and this Section shall be interpreted in light of, and consistent with, such requirements. This Section shall apply to distributions under the Plan, but only to the extent required in order to avoid taxation of, or interest penalties on, a Participant under Section 409A. These rules shall also be deemed modified or supplemented by such other rules as may be necessary, from time to time, to comply with Section 409A.

 

ARTICLE 13

Claims Procedures

 

13.1
Claims Procedure. This Article is based on Department of Labor Regulation Section 2560.503-1. If any provision of this Article conflicts with the requirements of those regulations, the requirements of those regulations will prevail. A Claimant who has not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits within twelve (12) months following the date on which the event that caused the claim to arise occurred, as follows:

 

(a)
Initiation - Written Claim. The Claimant initiates a timely claim by submitting a written request for the benefits to the Plan Administrator. The Plan Administrator will, upon written request of a Claimant, make available copies of all forms and instructions necessary to file a claim for benefits or advise the Claimant where such forms and instructions may be obtained.

 

(b)
Timing of Company Response. The Plan Administrator shall respond to such Claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the Claimant in writing prior to the end of the initial 90-day period that an additional period is required. Any notice of extension must set forth the special circumstances requiring an extension of time and the date by which the Plan Administrator expects to render its decision.

 

(c)
Notice of Decision. If the Plan Administrator denies the claim, in whole or in part, the Plan Administrator shall notify the Claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:

 

(i)
The specific reasons for the denial;
(ii)
A reference to the specific provisions of the Plan on which the denial is based;
(iii)
A description of any additional information or material necessary for the Claimant to perfect the claim and an explanation of why it is needed;
(iv)
An explanation of the Plan's review procedures and the time limits applicable to such procedures; and
(v)
A statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

 

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13.2
Review Procedure. If the Plan Administrator denies the claim, in whole or in part, the Claimant shall have the opportunity for a full and fair review of the claim and the adverse benefit determination as follows:

 

(a)
Initiation - Written Request. To initiate the review, the Claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

 

(b)
Additional Submissions - Information Access. The Claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the Claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits.

 

(c)
Considerations on Review. In considering the review, the Plan Administrator shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

(d)
Timing of Company Response. The Plan Administrator shall respond in writing to such Claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the Claimant in writing, prior to the end of the initial 60-day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

 

(e)
Notice of Decision. If the Plan Administrator’s decision following review of the claim is to approve the denial, in whole or in part, the Plan Administrator shall notify the Claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:

 

(i)
The specific reasons for the denial;
(ii)
A reference to the specific provisions of the Plan on which the denial is based;
(iii)
A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant's claim for benefits; and
(iv)
A statement of the Claimant's right to bring a civil action under ERISA Section 502(a).

 

13.3
Calculation of Time Periods. For purposes of the time periods specified in this Article, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim. If a period of time is extended due to a Claimant's failure to submit all information necessary, the period for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds.

 

13.4
Exhaustion of Remedies. A Claimant must follow the claims review procedures under this Plan and exhaust his or her administrative remedies before taking any further action with respect to a claim for benefits.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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13.5
Failure of Plan to Follow Procedures. If the Plan fails to establish or follow the claims procedures required by this Article, a Claimant shall be deemed to have exhausted the administrative remedies available under the Plan and shall be entitled to immediately pursue any available remedy under ERISA Section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. The Claimant may request a written explanation of the violation from the Plan, and the Plan must provide such explanation within ten (10) days, including a specific description of its bases, if any, for asserting that the violation should not cause the administrative remedies to be deemed exhausted. If a court rejects the Claimant’s request for immediate review on the basis that the Plan met the standards for the exception, the claim shall be considered as re-filed on appeal upon the Plan’s receipt of the decision of the court. Within a reasonable time after the receipt of the decision, the Plan shall provide the Claimant with notice of the resubmission.
13.6
Arbitration. If a Claimant continues to dispute the benefit denial based upon completed performance of the Plan or the meaning and effect of the terms and conditions thereof, then the Claimant must submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Company and the Claimant. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination. Where a dispute arises as to the Company’s discharge of a Participant for Cause, such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

 

ARTICLE 14

Miscellaneous

 

14.1
Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

 

14.2
Nonassignability. Neither any Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony, or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency, or be transferable to a spouse as a result of a property settlement or otherwise. If any Participant, Beneficiary, or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate, or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary, or successor in interest in such manner as the Plan Administrator shall direct.

 

14.3
Recoupment. All amounts payable under the Plan attributable to Bonus Compensation and Company Contributions, including any Deemed Investment gains thereon, are subject to the terms of any applicable clawback policies approved by the Company, as in effect from time to time, whether approved before or after the Effective Date and, to the extent permitted by applicable law, such amounts payable under the Plan are subject to offset in the event that a Participant has an outstanding clawback, recoupment or forfeiture obligation to the Company under the terms of any applicable clawback policy. In the event of a clawback, recoupment or forfeiture event under an applicable clawback policy, the amount required to be clawed back, recouped or forfeited pursuant to such policy shall be deemed not to have been earned under the terms of the Plan, and the Company shall be entitled to recover from the Participant the amount specified under the policy to be clawed back, recouped or forfeited.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17


 

14.4
Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Company and an Eligible Employee. Nothing in this Plan shall be deemed to give an Eligible Employee the right to be retained in the service of the Company as an Employee or otherwise or to interfere with the right of the Company to discipline or discharge the Eligible Employee at any time.
14.5
Governing Law. The Plan shall be administered, construed and governed in all respects under and by the laws of the State of New Jersey, without reference to the principles of conflicts of law (except and to the extent preempted by applicable federal law).

 

14.6
Notice. Any notice, consent or demand required or permitted to be given under the provisions of this Plan shall be in writing and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed, it shall be sent by United States certified mail, postage prepaid, addressed to the addressee’s last known address as shown on the records of the Company. The date of such mailing shall be deemed the date of notice consent or demand. Any person may change the address to which notice is to be sent by giving notice of the change of address in the manner aforesaid.

 

14.7
Coordination with Other Benefits. The benefits provided for a Participant or a Participant’s Beneficiary under this Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Company. This Plan shall supplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided herein.

 

14.8
Unclaimed Benefits. In the case of a benefit payable on behalf of such Participant, if the Plan Administrator is unable to locate the Participant or Beneficiary to whom such benefit is payable after reasonable efforts have been undertaken by the Plan Administrator to locate such party(ies), such Plan benefit may be forfeited to the Company upon the Plan Administrator’s determination. Notwithstanding the foregoing, if, subsequent to any such forfeiture, the Participant or Beneficiary to whom such Plan benefit is payable makes a valid claim for such Plan benefit, such forfeited Plan benefit shall be paid by the Plan Administrator to the Participant or Beneficiary, without interest, from the date it would have otherwise been paid.

 

18


 

Exhibit 99.1

img89583785_0.jpg 

Press Release

 

 

 

Universal Display Contact:

 

 

 

 

Darice Liu

 

 

 

 

investor@oled.com

 

 

 

 

media@oled.com

 

 

 

 

+1 609-964-5123

 

 

 

Universal Display Corporation Announces Third Quarter 2023 Financial Results

 

 

EWING, N.J. – November 2, 2023 – Universal Display Corporation (Nasdaq: OLED), enabling energy-efficient displays and lighting with its UniversalPHOLED® technology and materials, today reported financial results for the third quarter ended September 30, 2023.

 

“As we approach the end of 2023, our performance for the year remains on course. Looking ahead, we believe that multiple market verticals are driving the OLED industry’s long-term growth path,” said Brian Millard, Vice President and Chief Financial Officer of Universal Display Corporation. “A significant shift in the world of technology is occurring with the introduction of conformable, foldable and rollable consumer electronics, and OLEDs are fueling this form factor revolution. In addition to the expected commencement of a new OLED IT adoption cycle in 2024, we are also seeing the emergence of OLEDs in the automotive market, especially with electric vehicles. As OLED activity continues to expand across the consumer display and lighting landscapes, we remain steadfast in our commitment to advancing our robust OLED materials and technology leadership.”

 

Financial Highlights for the Third Quarter of 2023

 


 

Total revenue in the third quarter of 2023 was $141.1 million as compared to $160.6 million in the third quarter of 2022.
Revenue from material sales was $92.5 million in the third quarter of 2023 as compared to $84.2 million in the third quarter of 2022. This increase was primarily due to greater sales volumes of our emitter material as well as improved product mix weighted towards increased demand for our new generation of emitter products.
Revenue from royalty and license fees was $45.9 million in the third quarter of 2023 as compared to $71.5 million in the third quarter of 2022. The decrease in royalty and license fees was primarily the result of changes in customer mix, a decrease in the cumulative catch-up adjustments between periods, as well as higher estimated future demand for several of our customers over the remaining lives of their contracts.
Cost of material sales was $31.6 million in the third quarter of 2023 as compared to $34.1 million in the third quarter of 2022. This decrease was primarily due to a reduction in contract manufacturing support costs, a reduction in the underutilization charges of the manufacturing facility in Shannon, Ireland and changes in product mix, offset by an increase in the level of material sales and inventory reserve.
Total gross margin was 76% in the third quarter of 2023 as compared to 77% in the third quarter of 2022.
Operating income was $48.4 million in the third quarter of 2023 as compared to $68.5 million in the third quarter of 2022.
The effective income tax rate was an expense of 4.4% and 23.7% for the three months ended September 30, 2023 and 2022, respectively. The reduction in the effective income tax rate was primarily due to the change in IRS regulations, issued in July 2023, that permit withholding taxes to be credited against U.S. taxable income for the tax years 2022 and 2023.

 


 

Net income was $51.5 million or $1.08 per diluted share in the third quarter of 2023 as compared to $53.5 million or $1.12 per diluted share in the third quarter of 2022.

Revenue Comparison

($ in thousands)

 

Three Months Ended September 30,

 

 

 

2023

 

 

2022

 

Material sales

 

$

92,492

 

 

$

84,182

 

Royalty and license fees

 

 

45,915

 

 

 

71,450

 

Contract research services

 

 

2,670

 

 

 

4,924

 

Total revenue

 

$

141,077

 

 

$

160,556

 

 

Cost of Materials Comparison

($ in thousands)

 

Three Months Ended September 30,

 

 

 

2023

 

 

2022

 

Material sales

 

$

92,492

 

 

$

84,182

 

Cost of material sales

 

 

31,639

 

 

 

34,057

 

Gross margin on material sales

 

 

60,853

 

 

 

50,125

 

Gross margin as a % of material sales

 

 

66

%

 

 

60

%

 

Financial Highlights for the First Nine Months of 2023

Total revenue in the first nine months of 2023 was $418.1 million as compared to $447.6 million in the first nine months of 2022.
Revenue from material sales was $239.8 million in the first nine months of 2023 as compared to $242.7 million in the first nine months of 2022. The decline in material sales was primarily due to reduced demand for our emitter material during the first quarter of 2023, partially offset by the introduction of blue emitter and host sales.
Revenue from royalty and license fees was $165.5 million in the first nine months of 2023 as compared to $191.5 million in the first nine months of 2022. The decrease in royalty and license fees was primarily the result of higher estimated future demand for several of our customers over the remaining lives of their contracts, as well as a net $12.2 million reduction in revenue due to the difference in cumulative catch-up adjustments between periods, the majority of which was recorded to royalty and license fees. The cumulative catch-up adjustments in the first nine months of 2023 totaled $5.1 million compared to $17.3 million during the first nine months of 2022.

 


 

Cost of material sales was $89.7 million in the first nine months of 2023 as compared to $89.0 million in the first nine months of 2022. Cost of material sales increased primarily due to underutilization of the manufacturing facility in Shannon, Ireland and changes in product mix, offset by a decrease in manufacturing costs and a decrease in the level of material sales.
Total gross margin was 76% in the first nine months of 2023 as compared to 78% in the first nine months of 2022. Increased Shannon facility costs of $6.1 million and the inventory provision of $6.6 million in 2023 contributed to the 2% decrease in total gross margin between periods.
Operating income was $152.4 million in the first nine months of 2023 as compared to $184.0 million in the first nine months of 2022.
Net income was $141.0 million or $2.95 per diluted share in the first nine months of 2023 compared to $144.9 million or $3.04 per diluted share in the first nine months of 2022.

 

Revenue Comparison

($ in thousands)

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Material sales

 

$

239,789

 

 

$

242,742

 

Royalty and license fees

 

 

165,524

 

 

 

191,530

 

Contract research services

 

 

12,796

 

 

 

13,315

 

Total revenue

 

$

418,109

 

 

$

447,587

 

 

Cost of Materials Comparison

($ in thousands)

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Material sales

 

$

239,789

 

 

$

242,742

 

Cost of material sales

 

 

89,697

 

 

 

88,999

 

Gross margin on material sales

 

 

150,092

 

 

 

153,743

 

Gross margin as a % of material sales

 

 

63

%

 

 

63

%

 

2023 Revised Guidance

The Company has revised its previous revenue guidance and now believes that 2023 revenue will be in the range of $565 million to $590 million.

 

 


 

Dividend

The Company also announced a fourth quarter cash dividend of $0.35 per share on the Company’s common stock. The dividend is payable on December 29, 2023 to all shareholders of record as of the close of business on December 15, 2023.

 

Conference Call Information

In conjunction with this release, Universal Display will host a conference call on Thursday, November 2, 2023 at 5:00 p.m. Eastern Time. The live webcast of the conference call can be accessed under the events page of the Company's Investor Relations website at ir.oled.com. Those wishing to participate in the live call should dial 1-877-524-8416 (toll-free) or 1-412-902-1028. Please dial in 5-10 minutes prior to the scheduled conference call time. An online archive of the webcast will be available within two hours of the conclusion of the call.

 

About Universal Display Corporation

Universal Display Corporation (Nasdaq: OLED) is a leader in the research, development and commercialization of organic light emitting diode (OLED) technologies and materials for use in display and solid-state lighting applications. Founded in 1994 and with subsidiaries and offices around the world, the Company currently owns, exclusively licenses or has the sole right to sublicense more than 6,000 patents issued and pending worldwide. Universal Display licenses its proprietary technologies, including its breakthrough high-efficiency UniversalPHOLED® phosphorescent OLED technology that can enable the development of energy-efficient and eco-friendly displays and solid-state lighting. The Company also develops and offers high-quality, state-of-the-art UniversalPHOLED materials that are recognized as key ingredients in the fabrication of OLEDs with peak performance. In addition, Universal Display delivers innovative and customized solutions to its clients and partners through technology transfer, collaborative

 


 

technology development and on-site training. To learn more about Universal Display Corporation, please visit https://oled.com/.

Universal Display Corporation and the Universal Display Corporation logo are trademarks or registered trademarks of Universal Display Corporation. All other company, brand or product names may be trademarks or registered trademarks.

 

# # #

 

All statements in this document that are not historical, such as those relating to the projected adoption, development and advancement of the Company’s technologies, and the Company’s expected results, as well as the growth of the OLED market and the Company’s opportunities in that market, are forward-looking financial statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements in this document, as they reflect Universal Display Corporation’s current views with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. These risks and uncertainties are discussed in greater detail in Universal Display Corporation’s periodic reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, including, in particular, the section entitled “Risk Factors” in Universal Display Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022. Universal Display Corporation disclaims any obligation to update any forward-looking statement contained in this document.

 

Follow Universal Display Corporation

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(OLED-C)

 


 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

 

 

 

September 30, 2023

 

 

December 31, 2022

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

79,323

 

 

$

93,430

 

Short-term investments

 

 

412,350

 

 

 

484,345

 

Accounts receivable

 

 

122,192

 

 

 

92,664

 

Inventory

 

 

181,406

 

 

 

183,220

 

Other current assets

 

 

83,444

 

 

 

45,791

 

Total current assets

 

 

878,715

 

 

 

899,450

 

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $137,020 and $117,118

 

 

174,638

 

 

 

143,445

 

ACQUIRED TECHNOLOGY, net of accumulated amortization of $182,657 and $189,671

 

 

94,518

 

 

 

38,382

 

OTHER INTANGIBLE ASSETS, net of accumulated amortization of $10,055 and $8,989

 

 

7,233

 

 

 

8,247

 

GOODWILL

 

 

15,535

 

 

 

15,535

 

INVESTMENTS

 

 

301,193

 

 

 

259,861

 

DEFERRED INCOME TAXES

 

 

49,637

 

 

 

58,161

 

OTHER ASSETS

 

 

101,447

 

 

 

109,739

 

TOTAL ASSETS

 

$

1,622,916

 

 

$

1,532,820

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

20,624

 

 

$

9,519

 

Accrued expenses

 

 

38,500

 

 

 

51,002

 

Deferred revenue

 

 

66,828

 

 

 

45,599

 

Other current liabilities

 

 

5,391

 

 

 

29,577

 

Total current liabilities

 

 

131,343

 

 

 

135,697

 

DEFERRED REVENUE

 

 

8,859

 

 

 

18,279

 

RETIREMENT PLAN BENEFIT LIABILITY

 

 

61,165

 

 

 

59,790

 

OTHER LIABILITIES

 

 

39,183

 

 

 

43,685

 

Total liabilities

 

 

240,550

 

 

 

257,451

 

SHAREHOLDERS’ EQUITY:

 

 

 

 

 

 

Preferred Stock, par value $0.01 per share, 5,000,000 shares authorized, 200,000
   shares of Series A Nonconvertible Preferred Stock issued and outstanding
   (liquidation value of $7.50 per share or $1,500)

 

 

2

 

 

 

2

 

Common Stock, par value $0.01 per share, 200,000,000 shares authorized, 48,720,530
   and 49,136,030 shares issued, and 47,354,882 and 47,770,382 shares outstanding, at
   September 30, 2023 and December 31, 2022, respectively

 

 

487

 

 

491

 

Additional paid-in capital

 

 

693,899

 

 

 

681,335

 

Retained earnings

 

 

744,227

 

 

 

653,277

 

Accumulated other comprehensive loss

 

 

(14,965

)

 

 

(18,452

)

Treasury stock, at cost (1,365,648 shares at September 30, 2023 and December 31, 2022)

 

 

(41,284

)

 

 

(41,284

)

Total shareholders’ equity

 

 

1,382,366

 

 

 

1,275,369

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,622,916

 

 

$

1,532,820

 

 

 


 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(in thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

 

Material sales

 

$

92,492

 

 

$

84,182

 

 

$

239,789

 

 

$

242,742

 

Royalty and license fees

 

 

45,915

 

 

 

71,450

 

 

 

165,524

 

 

 

191,530

 

Contract research services

 

 

2,670

 

 

 

4,924

 

 

 

12,796

 

 

 

13,315

 

Total revenue

 

 

141,077

 

 

 

160,556

 

 

 

418,109

 

 

 

447,587

 

COST OF SALES

 

 

34,248

 

 

 

37,396

 

 

 

99,357

 

 

 

97,798

 

Gross margin

 

 

106,829

 

 

 

123,160

 

 

 

318,752

 

 

 

349,789

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

33,099

 

 

 

30,414

 

 

 

96,840

 

 

 

85,156

 

Selling, general and administrative

 

 

18,084

 

 

 

18,442

 

 

 

50,557

 

 

 

59,373

 

Amortization of acquired technology and other intangible assets

 

 

4,557

 

 

 

3,562

 

 

 

11,442

 

 

 

14,562

 

Patent costs

 

 

2,572

 

 

 

2,018

 

 

 

7,056

 

 

 

6,075

 

Royalty and license expense

 

 

81

 

 

 

261

 

 

 

414

 

 

 

596

 

Total operating expenses

 

 

58,393

 

 

 

54,697

 

 

 

166,309

 

 

 

165,762

 

OPERATING INCOME

 

 

48,436

 

 

 

68,463

 

 

 

152,443

 

 

 

184,027

 

Interest income, net

 

 

7,136

 

 

 

2,432

 

 

 

20,301

 

 

 

4,306

 

Other loss, net

 

 

(1,693

)

 

 

(804

)

 

 

(3,180

)

 

 

(749

)

Interest and other income, net

 

 

5,443

 

 

 

1,628

 

 

 

17,121

 

 

 

3,557

 

INCOME BEFORE INCOME TAXES

 

 

53,879

 

 

 

70,091

 

 

 

169,564

 

 

 

187,584

 

INCOME TAX EXPENSE

 

 

(2,363

)

 

 

(16,636

)

 

 

(28,531

)

 

 

(42,657

)

NET INCOME

 

$

51,516

 

 

$

53,455

 

 

$

141,033

 

 

$

144,927

 

NET INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

$

1.08

 

 

$

1.12

 

 

$

2.95

 

 

$

3.04

 

DILUTED

 

$

1.08

 

 

$

1.12

 

 

$

2.95

 

 

$

3.04

 

WEIGHTED AVERAGE SHARES USED IN COMPUTING NET
   INCOME PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

 

 

47,570,099

 

 

 

47,396,495

 

 

 

47,555,734

 

 

 

47,386,426

 

DILUTED

 

 

47,632,431

 

 

 

47,466,934

 

 

 

47,609,692

 

 

 

47,455,893

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.35

 

 

$

0.30

 

 

$

1.05

 

 

$

0.90

 

 

 

 

 


 

UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

141,033

 

 

$

144,927

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

20,128

 

 

 

17,982

 

Amortization of intangibles

 

 

11,442

 

 

 

14,562

 

Amortization of premium and discount on investments, net

 

 

(9,436

)

 

 

(3,469

)

Stock-based compensation to employees

 

 

17,359

 

 

 

22,528

 

Stock-based compensation to Board of Directors and Scientific Advisory Board

 

 

1,264

 

 

 

1,121

 

Deferred income tax expense (benefit)

 

 

7,556

 

 

 

(7,876

)

Retirement plan expense, net of benefit payments

 

 

2,347

 

 

 

3,998

 

Decrease (increase) in assets:

 

 

 

 

 

 

Accounts receivable

 

 

(29,528

)

 

 

29,446

 

Inventory

 

 

1,814

 

 

 

(46,034

)

Other current assets

 

 

(37,653

)

 

 

(9,057

)

Other assets

 

 

8,292

 

 

 

2,282

 

Increase (decrease) in liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

(32

)

 

 

7,217

 

Other current liabilities

 

 

(24,186

)

 

 

(543

)

Deferred revenue

 

 

11,809

 

 

 

(63,066

)

Other liabilities

 

 

(4,502

)

 

 

10,156

 

Net cash provided by operating activities

 

 

117,707

 

 

 

124,174

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(52,208

)

 

 

(31,119

)

Purchases of intangibles

 

 

(66,563

)

 

 

(4,761

)

Purchases of investments

 

 

(303,004

)

 

 

(464,766

)

Proceeds from sale and maturity of investments

 

 

346,407

 

 

 

302,872

 

Net cash used in investing activities

 

 

(75,368

)

 

 

(197,774

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

1,532

 

 

 

1,247

 

Payment of withholding taxes related to stock-based compensation to employees

 

 

(7,895

)

 

 

(9,150

)

Cash dividends paid

 

 

(50,083

)

 

 

(42,740

)

Net cash used in financing activities

 

 

(56,446

)

 

 

(50,643

)

DECREASE IN CASH AND CASH EQUIVALENTS

 

 

(14,107

)

 

 

(124,243

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

93,430

 

 

 

311,993

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

79,323

 

 

$

187,750

 

Supplemental disclosures:

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

$

3,304

 

 

$

(9,711

)

Common stock issued to Board of Directors and Scientific Advisory Board that was
   earned and accrued for in a previous period

 

 

300

 

 

 

300

 

Net change in accounts payable and accrued expenses related to purchases of property
   and equipment

 

 

887

 

 

 

4,256

 

Cash paid for income tax

 

 

81,132

 

 

 

42,227

 

 

 


v3.23.3
Document And Entity Information
Oct. 31, 2023
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Oct. 31, 2023
Entity Registrant Name UNIVERSAL DISPLAY CORPORATION
Entity Central Index Key 0001005284
Entity Emerging Growth Company false
Title of 12(b) Security Common Stock, $0.01 par value
Trading Symbol OLED
Security Exchange Name NASDAQ
Entity File Number 1-12031
Entity Incorporation, State or Country Code PA
Entity Tax Identification Number 23-2372688
Entity Address, Address Line One 250 Phillips Boulevard
Entity Address, City or Town Ewing
Entity Address, State or Province NJ
Entity Address, Postal Zip Code 08618
City Area Code 609
Local Phone Number 671-0980
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false

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