Universal Display's Lumpy Lucre: Fool by Numbers

On Nov. 6, forward-thinking display and lighting specialist Universal Display (Nasdaq: PANL  ) released third-quarter 2006 earnings for the period ended Sept. 30, 2006.

  • With newly expanded research facilities and additional scientists on staff, operating and net margins dropped even deeper. Gross margins moved in that direction, too, partly as a result of lower sales and partly the result of less contract research and more commercial revenue than last year. Universal Display accounts for contracted research costs under operational R&D expenses, not cost of sales.
  • Share dilution explains almost the entire EPS mitigation. Funny how good dilution can look when you're working with persistent losses...
  • Note the utter lack of long-term debt on the balance sheet. Cash flows and profits remain unpredictable, but the company has been able to raise additional funds with follow-on public offerings to pay off that debt.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$3,900

$3,096.0

$3,372.9

(8.2%)

Net Profit

--

($2,943.3)

($2,979.1)

1.2%

EPS

($0.12)

($0.09)

($0.10)

10%

Diluted Shares

31151.1

28617.6

8.9%



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

91.90%

93.86%

(1.96)

Operating Margin

(113.26%)

(98.07%)

(15.19)

Net Margin

(95.07%)

(88.33%)

(6.74)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$47,086.0

$43,613.7

8%

Accounts Rec.

$3,741.0

$2,282.6

63.9%

Inventory

$30.6

$38.2

(19.9%)



Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$584.2

$699.5

(16.5%)

Long-Term Debt

$0.0

$3,975.0

(100%)



Learn the ways of the balance sheet.

Cash Flow Highlights

Q3 2006

Q3 2005

Change

Cash From Ops.

-$70.3

$1,087.3

N/A

Capital Expenditures

$446.5

$702.7

(36.5%)

Free Cash Flow

-$516.8

$384.7

N/A



Find out why Fools always follow the money.

Related Companies:

  • CambridgeDisplay Technology (Nasdaq: OLED  )
  • Eastman Kodak (NYSE: EK  )
  • Canon (NYSE: CAJ  )
  • Koninklijke Philips (NYSE: PHG  )
  • Dow Chemical (NYSE: DOW  )
  • AU Optronics (NYSE: AUO  )

Related Foolishness:

Universal Display is aMotley Fool Rule Breakerspick. Take afree 30-day trial of our iconoclastic newsletter service to find more of tomorrow's leaders today.

Dow Chemical is an Income Investor selection.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so checkFool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication,Fool contributorAnders Bylundwas a Universal Display shareholder but had no position in any other company mentioned. Fool rules arehere.


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