visioninnovationreali ty - Universal Display Corporation

Universal Display corporation
v i s i o n
I n n o v a t i o n
Annual Report 2006
r e a l i t y
We started with a
clear and simple vision:
Thin layers of organic
molecules transformed
into light emitting devices
for products ranging from
cell phone displays and
TVs to white lighting.
Through our innovations,
these commercial
opportunities are now
becoming a reality.
The future holds great potential
for Universal Display.
The commercialization of AMOLED
displays using our proprietary
OLED technologies has begun;
and manufacturers are beginning
to transform our OLED innovations
into commercial reality. Our patented
technologies and materials, the
expansion of our research facility,
our innovative team, and our worldwide
partnerships and business alliances
have well-positioned Universal Display
for continued growth.
2006 Financial Highlights
($ Millions)
Net Loss / Cash Used In Operations
Cash, Equivalents & Investments
($ Millions)
($ Millions, at December 31)
Since our inception, we have been focused on developing proprietary
These non-exclusive arrangements are designed to expand the OLED
organic light emitting device (OLED) technologies and materials that
materials infrastructure by developing complementary materials that are
create tremendous value for the display and lighting industries. This
compatible with our core PHOLED materials. By capitalizing on our lead-
vision is now coming to fruition.
ership in PHOLED technology and working together with companies like
New and existing partnerships with some of the largest corporations
these, it is our goal to accelerate growth of the OLED industry.
in the world are beginning to transform our innovations into commer-
We also achieved key milestones on other technology fronts. We made
cial realities. Samsung SDI, one of our technology licensees, became
significant advances in demonstrating the potential of our FOLED®
the first company to invest in a new, half-billion dollar manufacturing
flexible OLED technology, which offers a thinner, lighter weight
plant for active-matrix OLED (AMOLED) displays. Samsung SDI an-
and bendable form factor with a myriad of new potential product
nounced that it would begin shipping commercial AMOLED products
opportunities, including our intelligent universal communicator, a small,
in 2007. Its initial AMOLED product, like the display found in the
lightweight, pen-like communication device with a rollable FOLED
iriver MP3 Player, uses Universal Display’s high-efficiency PHOLED™
display. Several years ago, the U.S. Department of Defense began
phosphorescent OLED technology and red PHOLED material. Konica
funding us to develop prototypes for their use. In 2006, we delivered the
Minolta, a development partner of ours, also reported plans for com-
first high-resolution AMOLED display prototypes built on bendable
mercialization of an OLED product. Using our PHOLED technology
metallic foil under this ongoing program.
and materials in conjunction with their own proprietary technologies,
Konica Minolta also announced a record-breaking white OLED with
a power efficiency of 64 lumens per watt, which is four times the
efficiency of an incandescent light bulb. Earlier last year, AU Optronics
introduced the industry’s first AMOLED display for use in a cell phone
using our PHOLED technology and red PHOLED material. Though the
cell phone product containing this display had a limited product
release, the display itself met with great consumer enthusiasm.
Our proprietary PHOLED technology and materials are proving to be
essential for achieving targets for power consumption, a critical performance metric, for OLED cell phone displays. Higher device efficiencies and
lower heat generation also make our PHOLED technology and materials
important for OLED televisions and next-generation, solid-state white
lighting. We continue to work with a wide variety of OLED manufacturers
to develop products using these technologies and materials.
In 2006, we made significant progress in PHOLED material performance, including gains in lifetime, efficiency and color. We have
also been working to make our PHOLED materials compatible with a
variety of manufacturing technologies. We made significant advances
in P2OLED™ printable, phosphorescent OLEDs as part of an ongoing
joint development program with Seiko Epson. P2OLED materials
that possess the high efficiency of our PHOLED technology have the
potential to be used with ink-jet printing equipment. These materials
may ultimately accelerate the realization of cost-effective, large-area
OLED displays for televisions.
In 2006, we also demonstrated meaningful progress in our WOLED™
white OLED technology, leveraging our high-efficiency PHOLED technology. A new class of WOLED lighting products may offer dramatically
thinner and lighter weight form factors, by comparison to incandescent
bulbs and fluorescent tubes, and significantly reduce energy consumption and use of non-renewable energy resources. To advance
the development of this cutting-edge energy conservation technology,
we received additional funding during the year under several new and
existing U.S. Department of Energy contracts.
In the first part of the year, we completed the two-year expansion
of our facility in Ewing, New Jersey, which includes the construction
of new synthetic chemistry laboratories. We have doubled the size of
this facility to more than 40,000 square feet and have increased the
number of employees working here by 30%. Our people and state-ofthe-art facilities combine to create one of the finest integrated, multidisciplinary OLED research and development enterprises in the world.
Universal Display is in a financial position of strength with $49
million of cash and cash equivalents on hand at year end and no
outstanding debt. Revenues in 2006 grew to almost $12 million as
commercial AMOLED products entered the marketplace. We experienced a significant change in our revenue mix during the year, with
an increasing share of revenues attributable to commercial chemical
sales and license fees (36% in 2006 as compared to 3% in 2005).
As this transition continues to the commercial arena, we look forward
to even greater successes in 2007 and beyond.
During the year, our partnership with PPG Industries, our exclusive
supplier of proprietary PHOLED materials, further strengthened as the
demand for commercial PHOLED materials grew. We also announced
three new strategic relationships with leading OLED materials compa-
Sherwin I. Seligsohn
Steven V. Abramson
nies: Nippon Steel Chemical, Mitsubishi Chemical and Idemitsu Kosan.
Chairman of the Board & Chief Executive Officer
President & Chief Operating Officer
Board of Directors
Scientific Advisory Board
Sherwin I. Seligsohn
Dr. Julie J. Brown
Chairman of the Board
& Chief Executive Officer
Vice President
& Chief Technical Officer
Steven V. Abramson
Dr. Michael Hack
& Chief Operating Officer
Vice President
Strategic Product Development
Sidney D. Rosenblatt
Dr. Peter Foller
Executive Vice President
& Chief Financial Officer
Director of R&D
Optical Products
PPG Industries
Leonard Becker
Dr. Stephen R. Forrest
General Partner
Becker Associates
William Gould Dow Collegiate
Professor of Electrical Engineering & Physics
Vice President for Research
University of Michigan
Elizabeth H. Gemmill, Esq.
Managing Trustee
Warwick Foundation
Dr. Mark E. Thompson
C. Keith Hartley
Professor of Chemistry & Department Chair
Department of Chemistry
University of Southern California
Managing Partner
Hartley Capital Advisors
Lawrence Lacerte
Founder, President & Chief Executive Officer
Exponent Technologies, Inc.
Universal Display Corporation Partnerships and Alliances
AU Optronics
Display Center
Taiwan University
DuPont Displays
Kyung Hee University
L-3 Communications
PPG Industries
Toyota Industries
Research Laboratory
Flexible Display Center
New Jersey Technology Council
Penn State University
Tohoku Pioneer
Mitsubishi Chemical
Princeton University
Samsung SDI
Vitex Systems
Konica Minolta
Palo Alto Research
Seiko Epson
University of Southern California
U.S. Army Research Laboratory
U.S. Display Consortium
Idemitsu Kosan
Nippon Steel Chemical
University of Michigan
U.S. Department of Energy
U.S. Air Force
U.S. Navy Research Laboratory
Corporate Offices
Princeton Crossroads Corporate Center
375 Phillips Boulevard
Ewing, NJ 08618
609.671.0980 [p]
609.671.0995 [f]
Shareholder Contact
Dean L. Ledger
Investor Relations
Executive Vice President
800.599.4426 [p]
Japan Contact
N’s Network Inc.
Akasaka, Minatoku
Tokyo, 107-0052, Japan
81.3.3585.3175 [p]
Taiwan Contact
Dr. Sui-Yuan Lynn
Director of Southern Asia Operations
886.928.108.212 [p]
Corporate Counsel
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Independent Public Accountant
1601 Market Street
Philadelphia, PA 19103
Intellectual Property Counsel
Kenyon & Kenyon
One Broadway
New York, NY 10004
Transfer Agent & Registrar
American Stock Transfer & Trust Co.
40 Wall Street
New York, NY 10005