Pennsylvania
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23-2372688
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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375 Phillips Boulevard, Ewing, New Jersey
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08618
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
X
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Accelerated filer
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Non-accelerated filer
(Do not check if a smaller reporting company)
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Smaller reporting company
____
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PART I – FINANCIAL INFORMATION
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ITEM 1.
|
FINANCIAL STATEMENTS
|
|
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Three Months Ended June 30,
|
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Six Months Ended June 30,
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||||||||||||
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2015
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2014
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2015
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2014
|
||||||||
REVENUE:
|
|
|
|
|
|
|
|
|
||||||||
Material sales
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$
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24,324
|
|
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$
|
35,926
|
|
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$
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51,142
|
|
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$
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71,252
|
|
Royalty and license fees
|
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33,733
|
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28,064
|
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38,108
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29,843
|
|
||||
Technology development and support revenue
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|
35
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|
|
137
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65
|
|
|
870
|
|
||||
Total revenue
|
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58,092
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64,127
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89,315
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101,965
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||||
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||||||||
OPERATING EXPENSES:
|
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||||||||
Cost of material sales
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39,086
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11,951
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47,667
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21,848
|
|
||||
Research and development
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10,647
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10,544
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20,566
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20,700
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|
||||
Selling, general and administrative
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6,705
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6,545
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12,905
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|
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12,975
|
|
||||
Patent costs and amortization of acquired technology
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4,462
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4,748
|
|
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8,429
|
|
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8,721
|
|
||||
Royalty and license expense
|
|
1,673
|
|
|
1,501
|
|
|
2,458
|
|
|
2,257
|
|
||||
Total operating expenses
|
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62,573
|
|
|
35,289
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|
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92,025
|
|
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66,501
|
|
||||
Operating (loss) income
|
|
(4,481
|
)
|
|
28,838
|
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(2,710
|
)
|
|
35,464
|
|
||||
INTEREST INCOME
|
|
188
|
|
|
193
|
|
|
361
|
|
|
411
|
|
||||
INTEREST EXPENSE
|
|
(12
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)
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(21
|
)
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(24
|
)
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(37
|
)
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||||
(LOSS) INCOME BEFORE INCOME TAXES
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(4,305
|
)
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|
29,010
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(2,373
|
)
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35,838
|
|
||||
INCOME TAX EXPENSE
|
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(7,466
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)
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(8,588
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)
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(8,084
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)
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(11,395
|
)
|
||||
NET (LOSS) INCOME
|
|
$
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(11,771
|
)
|
|
$
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20,422
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|
|
$
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(10,457
|
)
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$
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24,443
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||||||||
NET (LOSS) INCOME PER COMMON SHARE:
|
|
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||||||||
BASIC
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|
$
|
(0.25
|
)
|
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$
|
0.44
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.53
|
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DILUTED
|
|
$
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(0.25
|
)
|
|
$
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0.44
|
|
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$
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(0.23
|
)
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$
|
0.52
|
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||||||||
WEIGHTED AVERAGE SHARES USED IN COMPUTING NET (LOSS) INCOME PER COMMON SHARE:
|
|
|
|
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||||||||
BASIC
|
|
46,388,218
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|
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46,266,142
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|
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45,840,599
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|
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46,222,146
|
|
||||
DILUTED
|
|
46,388,218
|
|
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46,614,726
|
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45,840,599
|
|
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46,632,982
|
|
|
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Three Months Ended June 30,
|
|
Six Months Ended June 30,
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||||||||||||
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2015
|
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2014
|
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2015
|
|
2014
|
||||||||
NET (LOSS) INCOME
|
|
$
|
(11,771
|
)
|
|
$
|
20,422
|
|
|
$
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(10,457
|
)
|
|
$
|
24,443
|
|
|
|
|
|
|
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||||||||
OTHER COMPREHENSIVE INCOME, NET OF TAX:
|
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|
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||||||||
Unrealized gain on available-for-sale securities, net of tax of $11, $6, $4 and $21, respectively
|
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19
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|
|
25
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|
|
4
|
|
|
37
|
|
||||
Employee benefit plan:
|
|
|
|
|
|
|
|
|
||||||||
Amortization of prior service cost and actuarial loss for retirement plan included in net periodic pension costs, net of tax of $157, $52, $258 and $108, respectively
|
|
279
|
|
|
142
|
|
|
420
|
|
|
184
|
|
||||
Net change for employee benefit plan
|
|
279
|
|
|
142
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|
420
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|
|
184
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|
||||
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||||||||
TOTAL OTHER COMPREHENSIVE INCOME
|
|
298
|
|
|
167
|
|
|
424
|
|
|
221
|
|
||||
|
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|
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|
||||||||
COMPREHENSIVE (LOSS) INCOME
|
|
$
|
(11,473
|
)
|
|
$
|
20,589
|
|
|
$
|
(10,033
|
)
|
|
$
|
24,664
|
|
|
|
Series A
Nonconvertible
|
|
Common Stock
|
|
Additional
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury Stock
|
|
Total
Shareholders’
Equity
|
|||||||||||||||||||||||
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Preferred Stock
|
|
|
Paid-in
|
|
|
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|
||||||||||||||||||||||||||||
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Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Capital
|
|
|
|
Shares
|
|
Amount
|
|
||||||||||||||||||||
BALANCE, DECEMBER 31, 2014
|
|
200,000
|
|
|
$
|
2
|
|
|
47,061,826
|
|
|
$
|
471
|
|
|
$
|
581,114
|
|
|
$
|
(88,305
|
)
|
|
$
|
(4,382
|
)
|
|
1,357,863
|
|
|
$
|
(40,158
|
)
|
|
$
|
448,742
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,457
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,457
|
)
|
|||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
424
|
|
|
—
|
|
|
—
|
|
|
424
|
|
|||||||
Exercise of common stock options
|
|
—
|
|
|
—
|
|
|
191,640
|
|
|
2
|
|
|
1,370
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,372
|
|
|||||||
Issuance of common stock to employees
|
|
—
|
|
|
—
|
|
|
292,575
|
|
|
3
|
|
|
4,956
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,959
|
|
|||||||
Shares withheld for employee taxes
|
|
|
|
|
|
(123,492
|
)
|
|
(1
|
)
|
|
(5,279
|
)
|
|
|
|
|
|
|
|
|
|
(5,280
|
)
|
|||||||||||||
Issuance of common stock to Board of Directors and Scientific Advisory Board
|
|
—
|
|
|
—
|
|
|
29,351
|
|
|
—
|
|
|
959
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
959
|
|
|||||||
Issuance of common stock to employees under an ESPP
|
|
—
|
|
|
—
|
|
|
5,819
|
|
|
—
|
|
|
218
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
218
|
|
|||||||
BALANCE, JUNE 30, 2015
|
|
200,000
|
|
|
$
|
2
|
|
|
47,457,719
|
|
|
$
|
475
|
|
|
$
|
583,338
|
|
|
$
|
(98,762
|
)
|
|
$
|
(3,958
|
)
|
|
1,357,863
|
|
|
$
|
(40,158
|
)
|
|
$
|
440,937
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2015
|
|
2014
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net (loss) income
|
|
$
|
(10,457
|
)
|
|
$
|
24,443
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
||||
Amortization of deferred revenue
|
|
(4,893
|
)
|
|
(1,669
|
)
|
||
Depreciation
|
|
1,439
|
|
|
937
|
|
||
Amortization of intangibles
|
|
5,500
|
|
|
5,498
|
|
||
Inventory write-down
|
|
33,000
|
|
|
—
|
|
||
Amortization of premium and discount on investments, net
|
|
(285
|
)
|
|
(269
|
)
|
||
Stock-based compensation to employees
|
|
4,039
|
|
|
3,526
|
|
||
Stock-based compensation to Board of Directors and Scientific Advisory Board
|
|
659
|
|
|
463
|
|
||
Deferred income tax benefit
|
|
3,984
|
|
|
6,833
|
|
||
Retirement plan benefit expense
|
|
1,512
|
|
|
838
|
|
||
Decrease (increase) in assets:
|
|
|
|
|
||||
Accounts receivable
|
|
4,697
|
|
|
(4,843
|
)
|
||
Inventory
|
|
(12,860
|
)
|
|
(10,069
|
)
|
||
Other current assets
|
|
(417
|
)
|
|
(6,451
|
)
|
||
Other assets
|
|
80
|
|
|
(252
|
)
|
||
Increase (decrease) in liabilities:
|
|
|
|
|
||||
Accounts payable and accrued expenses
|
|
826
|
|
|
1,914
|
|
||
Other current liabilities
|
|
(58
|
)
|
|
417
|
|
||
Deferred revenue
|
|
48,412
|
|
|
3,692
|
|
||
Net cash provided by operating activities
|
|
75,178
|
|
|
25,008
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(3,146
|
)
|
|
(2,951
|
)
|
||
Purchases of investments
|
|
(267,520
|
)
|
|
(183,688
|
)
|
||
Proceeds from sale of investments
|
|
263,058
|
|
|
175,603
|
|
||
Net cash used in investing activities
|
|
(7,608
|
)
|
|
(11,036
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Proceeds from issuance of common stock under ESPP
|
|
171
|
|
|
162
|
|
||
Repurchase of common stock
|
|
—
|
|
|
(7,000
|
)
|
||
Proceeds from the exercise of common stock options
|
|
1,372
|
|
|
664
|
|
||
Payment of withholding taxes related to stock-based compensation to employees
|
|
(5,280
|
)
|
|
(2,830
|
)
|
||
Net cash used in financing activities
|
|
(3,737
|
)
|
|
(9,004
|
)
|
||
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
63,833
|
|
|
4,968
|
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
45,418
|
|
|
70,586
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
109,251
|
|
|
$
|
75,554
|
|
The following non-cash activities occurred:
|
|
|
|
|
||||
Unrealized loss on available-for-sale securities
|
|
$
|
8
|
|
|
$
|
58
|
|
Common stock issued to Board of Directors and Scientific Advisory Board that was earned and accrued for in a previous period
|
|
300
|
|
|
323
|
|
||
Common stock issued to employees that was earned and accrued for in a previous period
|
|
967
|
|
|
746
|
|
||
Net change in accounts payable and accrued expenses related to purchases of property and equipment
|
|
(725
|
)
|
|
64
|
|
1.
|
BUSINESS:
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
|
3.
|
CASH, CASH EQUIVALENTS AND INVESTMENTS:
|
|
|
Amortized
|
|
Unrealized
|
|
Aggregate Fair
|
||||||||||
Investment Classification
|
|
Cost
|
|
Gains
|
|
(Losses)
|
|
Market Value
|
||||||||
June 30, 2015
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
|
$
|
11,535
|
|
|
$
|
14
|
|
|
$
|
(5
|
)
|
|
$
|
11,544
|
|
Corporate bonds
|
|
233,923
|
|
|
7
|
|
|
(56
|
)
|
|
233,874
|
|
||||
U.S. Government bonds
|
|
5,460
|
|
|
—
|
|
|
(4
|
)
|
|
5,456
|
|
||||
|
|
$
|
250,918
|
|
|
$
|
21
|
|
|
$
|
(65
|
)
|
|
$
|
250,874
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
|
$
|
11,373
|
|
|
$
|
4
|
|
|
$
|
(13
|
)
|
|
$
|
11,364
|
|
Corporate bonds
|
|
228,799
|
|
|
14
|
|
|
(41
|
)
|
|
228,772
|
|
||||
U.S. Government bonds
|
|
5,999
|
|
|
—
|
|
|
—
|
|
|
5,999
|
|
||||
|
|
$
|
246,171
|
|
|
$
|
18
|
|
|
$
|
(54
|
)
|
|
$
|
246,135
|
|
4.
|
INVENTORIES:
|
|
|
June 30,
2015 |
|
December 31,
2014 |
||||
Raw materials
|
|
$
|
7,053
|
|
|
$
|
7,696
|
|
Work-in-process
|
|
1,888
|
|
|
4,419
|
|
||
Finished goods
|
|
8,028
|
|
|
24,994
|
|
||
Inventories
|
|
$
|
16,969
|
|
|
$
|
37,109
|
|
5.
|
FAIR VALUE MEASUREMENTS:
|
|
|
|
|
Fair Value Measurements, Using
|
||||||||||||
|
|
Total carrying value as of June 30, 2015
|
|
Quoted prices in active markets (Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Cash equivalents
|
|
$
|
39,086
|
|
|
$
|
39,086
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
|
246,986
|
|
|
246,986
|
|
|
—
|
|
|
—
|
|
||||
Long-term investments
|
|
3,888
|
|
|
3,888
|
|
|
—
|
|
|
—
|
|
|
|
|
|
Fair Value Measurements, Using
|
||||||||||||
|
|
Total carrying value as of December 31, 2014
|
|
Quoted prices in active markets (Level 1)
|
|
Significant other observable inputs
(Level 2)
|
|
Significant unobservable inputs
(Level 3)
|
||||||||
Cash equivalents
|
|
$
|
970
|
|
|
$
|
970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
|
243,088
|
|
|
243,088
|
|
|
—
|
|
|
—
|
|
||||
Long-term investments
|
|
3,047
|
|
|
3,047
|
|
|
—
|
|
|
—
|
|
6.
|
RESEARCH AND LICENSE AGREEMENTS WITH PRINCETON UNIVERSITY, UNIVERSITY OF SOUTHERN CALIFORNIA AND THE UNIVERSITY OF MICHIGAN:
|
7.
|
ACQUIRED TECHNOLOGY:
|
|
|
June 30, 2015
|
||
|
|
|||
PD-LD, Inc.
|
|
$
|
1,481
|
|
Motorola
|
|
15,909
|
|
|
Fujifilm
|
|
109,462
|
|
|
|
|
126,852
|
|
|
Less: Accumulated amortization
|
|
(49,338
|
)
|
|
Acquired technology, net
|
|
$
|
77,514
|
|
8.
|
EQUITY AND CASH COMPENSATION UNDER THE PPG AGREEMENTS:
|
9.
|
SHAREHOLDERS’ EQUITY:
|
10.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS:
|
|
|
Unrealized gain (loss) on marketable securities
|
|
Net unrealized loss on retirement plan
(2)
|
|
Total
|
|
Affected line items in the consolidated statements of operations
|
||||||
Balance December 31, 2014, net of tax
|
|
$
|
(28
|
)
|
|
$
|
(4,354
|
)
|
|
$
|
(4,382
|
)
|
|
|
Other comprehensive income before reclassification
|
|
4
|
|
|
—
|
|
|
4
|
|
|
|
|||
Reclassification to net income
(1)
|
|
—
|
|
|
420
|
|
|
420
|
|
|
Selling, general and administrative and research and development
|
|||
Change during period
|
|
4
|
|
|
420
|
|
|
424
|
|
|
|
|||
Balance June 30, 2015, net of tax
|
|
$
|
(24
|
)
|
|
$
|
(3,934
|
)
|
|
$
|
(3,958
|
)
|
|
|
|
|
Unrealized gain (loss) on marketable securities
|
|
Net unrealized loss on retirement plan
(2)
|
|
Total
|
|
Affected line items in the consolidated statements of operations
|
||||||
Balance December 31, 2013, net of tax
|
|
$
|
(24
|
)
|
|
$
|
(4,344
|
)
|
|
$
|
(4,368
|
)
|
|
|
Other comprehensive loss before reclassification
|
|
37
|
|
|
—
|
|
|
37
|
|
|
|
|||
Reclassification to net loss
(1)
|
|
—
|
|
|
184
|
|
|
184
|
|
|
Selling, general and administrative and research and development
|
|||
Change during period
|
|
37
|
|
|
184
|
|
|
221
|
|
|
|
|||
Balance June 30, 2014, net of tax
|
|
$
|
13
|
|
|
$
|
(4,160
|
)
|
|
$
|
(4,147
|
)
|
|
|
11.
|
STOCK-BASED COMPENSATION:
|
12.
|
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN:
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Service cost
|
|
$
|
319
|
|
|
$
|
167
|
|
|
$
|
548
|
|
|
$
|
334
|
|
Interest cost
|
|
166
|
|
|
106
|
|
|
286
|
|
|
212
|
|
||||
Amortization of prior service cost
|
|
436
|
|
|
146
|
|
|
678
|
|
|
292
|
|
||||
Total net periodic benefit cost
|
|
$
|
921
|
|
|
$
|
419
|
|
|
$
|
1,512
|
|
|
$
|
838
|
|
13.
|
COMMITMENTS AND CONTINGENCIES:
|
14.
|
CONCENTRATION OF RISK:
|
|
|
% of Revenues for the three months ended June 30,
|
|
% of Revenues for the six months ended June 30,
|
|
Accounts Receivable as of
|
||||||
Customer
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
June 30, 2015
|
||
A
|
|
74%
|
|
62%
|
|
63%
|
|
52%
|
|
$
|
7,770
|
|
B
|
|
18%
|
|
14%
|
|
21%
|
|
18%
|
|
$
|
6,905
|
|
C
|
|
3%
|
|
16%
|
|
8%
|
|
22%
|
|
$
|
923
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Country
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
South Korea
|
|
53,842
|
|
|
49,262
|
|
|
76,064
|
|
|
72,218
|
|
||||
Japan
|
|
2,866
|
|
|
10,903
|
|
|
10,626
|
|
|
24,961
|
|
||||
Other non-U.S. locations
|
|
867
|
|
|
3,798
|
|
|
1,883
|
|
|
4,456
|
|
||||
Total non-U.S. locations
|
|
$
|
57,575
|
|
|
$
|
63,963
|
|
|
$
|
88,573
|
|
|
$
|
101,635
|
|
United States
|
|
517
|
|
|
164
|
|
|
742
|
|
|
330
|
|
||||
Total revenue
|
|
$
|
58,092
|
|
|
$
|
64,127
|
|
|
$
|
89,315
|
|
|
$
|
101,965
|
|
|
|
June 30, 2015
|
|
December 31, 2014
|
||||
United States
|
|
$
|
20,788
|
|
|
$
|
19,763
|
|
Other
|
|
117
|
|
|
159
|
|
||
Total long-lived assets
|
|
$
|
20,905
|
|
|
$
|
19,922
|
|
15.
|
INCOME TAXES:
|
16.
|
NET (LOSS) INCOME PER COMMON SHARE:
|
|
|
Three Months Ended June 30,
|
|
Six Months ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(11,771
|
)
|
|
$
|
20,422
|
|
|
$
|
(10,457
|
)
|
|
$
|
24,443
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – Basic
|
|
46,388,218
|
|
|
46,266,142
|
|
|
45,840,599
|
|
|
46,222,146
|
|
||||
Effect of dilutive shares:
|
|
|
|
|
|
|
|
|
||||||||
Common stock equivalents arising from stock options and ESPP
|
|
—
|
|
|
249,618
|
|
|
—
|
|
|
262,434
|
|
||||
Restricted stock awards and units and performance units
|
|
—
|
|
|
98,966
|
|
|
—
|
|
|
148,402
|
|
||||
Weighted average common shares outstanding – Diluted
|
|
46,388,218
|
|
|
46,614,726
|
|
|
45,840,599
|
|
|
46,632,982
|
|
||||
Net (loss) income per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
(0.25
|
)
|
|
$
|
0.44
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.53
|
|
Diluted
|
|
$
|
(0.25
|
)
|
|
$
|
0.44
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.52
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
sales of OLED materials for evaluation, development and commercial manufacturing;
|
•
|
intellectual property and technology licensing; and
|
•
|
technology development and support, including government contract work and support provided to third parties for commercialization of their OLED products.
|
•
|
the timing, cost and volume of sales of our OLED materials;
|
•
|
the timing of our receipt of license fees and royalties, as well as fees for future technology development and evaluation;
|
•
|
the timing and magnitude of expenditures we may incur in connection with our ongoing research and development and patent-related activities; and
|
•
|
the timing and financial consequences of our formation of new business relationships and alliances.
|
(unaudited, in thousands, except share and per share data)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||||||
GAAP Results:
|
|
|
|
|
|
|
|
|
||||||||
Cost of material sales
|
|
$
|
39,086
|
|
|
$
|
11,951
|
|
|
$
|
47,667
|
|
|
$
|
21,848
|
|
Operating expenses
|
|
62,573
|
|
|
35,289
|
|
|
92,025
|
|
|
66,501
|
|
||||
Operating (loss) income
|
|
(4,481
|
)
|
|
28,838
|
|
|
(2,710
|
)
|
|
35,464
|
|
||||
(Loss) income before income taxes
|
|
(4,305
|
)
|
|
29,010
|
|
|
2,373
|
|
|
35,838
|
|
||||
Net (loss) income
|
|
(11,771
|
)
|
|
20,422
|
|
|
(10,457
|
)
|
|
24,443
|
|
||||
Net (loss) income per common share, basic
|
|
$
|
(0.25
|
)
|
|
$
|
0.44
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.53
|
|
Net (loss) income per common share, diluted
|
|
$
|
(0.25
|
)
|
|
$
|
0.44
|
|
|
$
|
(0.23
|
)
|
|
$
|
0.52
|
|
Non-GAAP Reconciling Items:
|
|
|
|
|
|
|
|
|
||||||||
Inventory write-down
|
|
$
|
33,000
|
|
|
$
|
—
|
|
|
$
|
33,000
|
|
|
$
|
—
|
|
Tax impact of inventory write-down
|
|
(1,860
|
)
|
|
—
|
|
|
(1,860
|
)
|
|
—
|
|
||||
Non-GAAP Measures
|
|
|
|
|
|
|
|
|
||||||||
Cost of material sales
|
|
$
|
6,086
|
|
|
$
|
11,951
|
|
|
$
|
14,667
|
|
|
$
|
21,848
|
|
Operating expenses
|
|
29,573
|
|
|
35,289
|
|
|
59,025
|
|
|
66,501
|
|
||||
Operating income
|
|
28,519
|
|
|
28,838
|
|
|
30,290
|
|
|
35,464
|
|
||||
Income before income taxes
|
|
28,695
|
|
|
29,010
|
|
|
30,627
|
|
|
35,838
|
|
||||
Net income*
|
|
19,369
|
|
|
20,422
|
|
|
20,683
|
|
|
24,443
|
|
||||
Net income per common share, basic**
|
|
$
|
0.42
|
|
|
$
|
0.44
|
|
|
$
|
0.45
|
|
|
$
|
0.53
|
|
Net income per common share, diluted***
|
|
$
|
0.41
|
|
|
$
|
0.44
|
|
|
$
|
0.45
|
|
|
$
|
0.52
|
|
•
|
an increase in operating expenses of
$27.3 million
, which includes a
$27.1 million
increase in the cost of material sales due to a
$33.0
million write-down of inventory; and
|
•
|
a
decrease
in revenue of
$6.0 million
, which reflects a decrease in material sales, partially offset by an increase in royalty and license fees.
|
|
|
Three Months Ended June 30,
|
|
(Decrease) Increase
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
REVENUE:
|
|
|
|
|
|
|
|
|
|||||||
Material sales
|
|
$
|
24,324
|
|
|
$
|
35,926
|
|
|
$
|
(11,602
|
)
|
|
(32
|
)%
|
Royalty and license fees
|
|
33,733
|
|
|
28,064
|
|
|
5,669
|
|
|
20
|
%
|
|||
Technology development and support revenue
|
|
35
|
|
|
137
|
|
|
(102
|
)
|
|
(74
|
)%
|
|||
Total revenue
|
|
$
|
58,092
|
|
|
$
|
64,127
|
|
|
$
|
(6,035
|
)
|
|
(9
|
)%
|
|
|
Three Months Ended June 30,
|
|
(Decrease)
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Material Sales:
|
|
|
|
|
|
|
|
|
|||||||
Commercial material sales
|
|
$
|
21,788
|
|
|
$
|
32,579
|
|
|
$
|
(10,791
|
)
|
|
(33
|
)%
|
Developmental material sales
|
|
2,536
|
|
|
3,347
|
|
|
(811
|
)
|
|
(24
|
)%
|
|||
Total material sales
|
|
$
|
24,324
|
|
|
$
|
35,926
|
|
|
$
|
(11,602
|
)
|
|
(32
|
)%
|
|
|
Three Months Ended June 30,
|
|
Increase (Decrease)
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Material Sales:
|
|
|
|
|
|
|
|
|
|||||||
Phosphorescent emitter sales
|
|
$
|
22,152
|
|
|
$
|
22,026
|
|
|
$
|
126
|
|
|
1
|
%
|
Host material sales
|
|
2,172
|
|
|
13,900
|
|
|
(11,728
|
)
|
|
(84
|
)%
|
|||
Total material sales
|
|
$
|
24,324
|
|
|
$
|
35,926
|
|
|
$
|
(11,602
|
)
|
|
(32
|
)%
|
|
|
Three Months Ended June 30,
|
|
Increase
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Royalty and license fees
|
|
$
|
33,733
|
|
|
$
|
28,064
|
|
|
$
|
5,669
|
|
|
20
|
%
|
|
|
Three Months Ended June 30,
|
|
(Decrease)
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Technology development and support revenue
|
|
$
|
35
|
|
|
$
|
137
|
|
|
$
|
(102
|
)
|
|
(74
|
)%
|
|
|
Three Months Ended June 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Commercial material sales
|
|
$
|
21,788
|
|
|
$
|
32,579
|
|
Cost of commercial material sales
|
|
38,565
|
|
|
11,951
|
|
||
% of commercial material sales
|
|
177
|
%
|
|
37
|
%
|
•
|
an increase in operating expenses of
$25.5 million
, which primarily includes a
$25.8 million
increase in the cost of material sales due to a
$33.0
million write-down of inventory; and
|
•
|
an decrease in revenue of
$12.7 million
, which reflects a decrease in material sales, partially offset by an increase royalty and license fees.
|
•
|
the decrease in operating income of
$38.2 million
, primarily from the
$33.0
million write-down of inventory; offset by
|
•
|
a decrease in income tax expense of
$3.3 million
.
|
|
|
Six Months ended June 30,
|
|
(Decrease) Increase
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
REVENUE:
|
|
|
|
|
|
|
|
|
|||||||
Material sales
|
|
$
|
51,142
|
|
|
$
|
71,252
|
|
|
$
|
(20,110
|
)
|
|
(28
|
)%
|
Royalty and license fees
|
|
38,108
|
|
|
29,843
|
|
|
8,265
|
|
|
28
|
%
|
|||
Technology development and support revenue
|
|
65
|
|
|
870
|
|
|
(805
|
)
|
|
(93
|
)%
|
|||
Total revenue
|
|
$
|
89,315
|
|
|
$
|
101,965
|
|
|
$
|
(12,650
|
)
|
|
(12
|
)%
|
|
|
Six Months ended June 30,
|
|
(Decrease)
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Material Sales:
|
|
|
|
|
|
|
|
|
|||||||
Commercial material sales
|
|
$
|
47,418
|
|
|
$
|
66,076
|
|
|
$
|
(18,658
|
)
|
|
(28
|
)%
|
Developmental material sales
|
|
3,724
|
|
|
5,176
|
|
|
(1,452
|
)
|
|
(28
|
)%
|
|||
Total material sales
|
|
$
|
51,142
|
|
|
$
|
71,252
|
|
|
$
|
(20,110
|
)
|
|
(28
|
)%
|
|
|
Six Months ended June 30,
|
|
(Decrease)
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Material Sales:
|
|
|
|
|
|
|
|
|
|||||||
Phosphorescent emitter sales
|
|
$
|
43,547
|
|
|
$
|
44,594
|
|
|
$
|
(1,047
|
)
|
|
(2
|
)%
|
Host material sales
|
|
7,595
|
|
|
26,658
|
|
|
(19,063
|
)
|
|
(72
|
)%
|
|||
Total material sales
|
|
$
|
51,142
|
|
|
$
|
71,252
|
|
|
$
|
(20,110
|
)
|
|
(28
|
)%
|
|
|
Six Months ended June 30,
|
|
Increase
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Royalty and license fees
|
|
$
|
38,108
|
|
|
$
|
29,843
|
|
|
$
|
8,265
|
|
|
28
|
%
|
|
|
Six Months ended June 30,
|
|
(Decrease)
|
|||||||||||
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
Technology development and support revenue
|
|
$
|
65
|
|
|
$
|
870
|
|
|
$
|
(805
|
)
|
|
(93
|
)%
|
|
|
Six Months ended June 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Commercial material sales
|
|
$
|
47,418
|
|
|
$
|
66,076
|
|
Cost of commercial material sales
|
|
47,086
|
|
|
21,848
|
|
||
% of commercial material sales
|
|
99
|
%
|
|
33
|
%
|
•
|
the receipt of $45.0 million from customers for prepaid royalty and license fees recognized as deferred revenue; and
|
•
|
the impact of the timing of accounts receivable collections of
$9.5 million
; primarily offset by
|
•
|
the impact of the timing of net inventory purchases of
$2.8 million
.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II – OTHER INFORMATION
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
Total Number of Shares Purchased
|
|
Weighted Average Price Paid per Share
|
|||
April 1 - April 30
|
|
5,588
|
|
|
$
|
48.94
|
|
May 1 - May 31
|
|
—
|
|
|
—
|
|
|
June 1 - June 30
|
|
291
|
|
|
50.55
|
|
|
Total
|
|
5,879
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number |
|
Description
|
10.1*
|
|
Equity Retention Agreement between the Registrant and Steven V. Abramson, dated as of April 7, 2015.
|
10.2*
|
|
Equity Retention Agreement between the Registrant and Sidney D. Rosenblatt, dated as of April 7, 2015.
|
31.1*
|
|
Certifications of Steven V. Abramson, Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
|
31.2*
|
|
Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a)
|
32.1**
|
|
Certifications of Steven V. Abramson, Chief Executive Officer, as required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C. Section 1350. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
|
32.2**
|
|
Certifications of Sidney D. Rosenblatt, Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b), and by 18 U.S.C. Section 1350. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
|
Filed herewith.
|
**
|
|
Furnished herewith.
|
|
UNIVERSAL DISPLAY CORPORATION
|
|
|
|
|
Date: August 6, 2015
|
By: /s/ Sidney D. Rosenblatt
|
|
|
Sidney D. Rosenblatt
|
|
|
Executive Vice President, Chief Financial Officer,
|
|
|
Treasurer and Secretary
|
|
|
|
|
|
|
|
•
|
Devote substantial time and attention to promotion and development of the Company at a time that is important for the future success of the Company;
|
•
|
Maintain a significant long-term ownership interest in the Company;
|
•
|
Continue in employment in order to ensure continuity of leadership and vision for the Company; and thereby
|
•
|
Increase shareholder value.
|
Vesting Date
|
Vested Shares
|
First Anniversary of Date of Grant
|
50,000
|
Second Anniversary of Date of Grant
|
50,000
|
Third Anniversary of Date of Grant
|
50,000
|
Fourth Anniversary of Date of Grant
|
50,000
|
Fifth Anniversary of Date of Grant
|
50,000
|
•
|
Devote substantial time and attention to promotion and development of the Company at a time that is important for the future success of the Company;
|
•
|
Maintain a significant long-term ownership interest in the Company;
|
•
|
Continue in employment in order to ensure continuity of leadership and vision for the Company; and thereby
|
•
|
Increase shareholder value.
|
Vesting Date
|
Vested Shares
|
First Anniversary of Date of Grant
|
50,000
|
Second Anniversary of Date of Grant
|
50,000
|
Third Anniversary of Date of Grant
|
50,000
|
Fourth Anniversary of Date of Grant
|
50,000
|
Fifth Anniversary of Date of Grant
|
50,000
|
Date:
|
August 6, 2015
|
By:
|
/s/ Steven V. Abramson
|
|
|
|
Steven V. Abramson
|
|
|
|
President and Chief Executive Officer
|
Date:
|
August 6, 2015
|
By:
|
/s/ Sidney D. Rosenblatt
|
|
|
|
Sidney D. Rosenblatt
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Date:
|
August 6, 2015
|
By:
|
/s/ Steven V. Abramson
|
|
|
|
Steven V. Abramson
|
|
|
|
President and Chief Executive Officer
|
Date:
|
August 6, 2015
|
By:
|
/s/ Sidney D. Rosenblatt
|
|
|
|
Sidney D. Rosenblatt
|
|
|
|
Executive Vice President and Chief Financial Officer
|