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Universal Display Corporation (NASDAQ:PANL)

Company Conference Presentation

May 29, 2013, 15:30 PM ET

Executives

Sidney D. Rosenblatt - EVP and CFO

Analysts

Robert Stone - Cowen & Company, LLC

Robert Stone - Cowen & Company, LLC

Good morning. I'm Rob Stone with Cowen & Company research. Thanks for being here and hanging in with us through a long busy day. Hope your learning lots of good stuff. Universal Display is benefiting from Samsung's leading position in smartphones and mobile displays based on OLED technology. PANL enjoys a large and growing patent portfolio and developing new materials including emitters, host, encapsulation and new markets reflects mobile displays, TVs and lighting applications point to long-term opportunities.

I'm pleased to have with us today, Sid Rosenblatt, EVP and CFO. So let's go right to the questions.

Sidney D. Rosenblatt

Sure thing.

Question-and-Answer Session

Robert Stone - Cowen & Company, LLC

I guess the hot topic from the last quarter was red emitters and people looking at quarter-on-quarter and year-over-year compares. You said that your customer was able to achieve a significant reduction in red material usage. Do you have a sense of whether that's related to doping concentration or some other aspect of material use?

Sidney D. Rosenblatt

The first thing, the hot topic was obviously red. We were hoping the hot topic would be green being incorporated into the Galaxy product and that selling green and selling green host materials which was most of the sales in that quarter, but it ended up being the hot topic being the fact that red quantity of emitters quarter-over-quarter from 2012 to 2013 was down and we had said that there were price breaks that were achieved.

So there are a number of ways that we believe that they achieved efficiencies. One, from 2012 to 2013 is they had new equipment delivered which is much more efficient in the way that it deposits the red material on to the substrate so that there are new designs of source cells, linear sources with much shorter distance between the material and the substrate so that they were able to get a pretty good efficiency in terms of material utilization in their chambers. There was probably some efficiencies in reducing doping concentration but I'm not so sure that that was a big piece of it.

The other part of it was the fact that we talked about cumulative volume price breaks from the inception of our contract with Samsung which was in 2011 that they then went through for the year, they got price breaks and so the price of per gram of material in Q1 2013 compared to 2012 had gone down. So the combination of those is what caused it. The only thing that we really don't know or did not know at the time and still don't know is whether or not in Q4 2012 that Samsung bought red material that they had carried over because at the end of the year, it's not a significant dollar amount to them but we do think that they may have had some. We will know better at the end of Q2 whether this is a run rate or whether there was – because we did some more red material in Q4. So, there were almost three factors that impacted our scale of revenues.

Robert Stone - Cowen & Company, LLC

Even though volumes are going up and the deliveries are probably more frequent, there's still some lumpiness in the timing of material deliveries at this point?

Sidney D. Rosenblatt

Yes. And clearly for red and then green which just started, it's going to even be probably more lumpy.

Robert Stone - Cowen & Company, LLC

Okay. So do you have a sense of what the level of doping concentration is at this point?

Sidney D. Rosenblatt

That's really proprietary to the Samsung, so we know that what we recommend and what we do in our labs is we will give them a formula that gives you the best lifetime, best performance and we do know that they continually tweak the formula because maybe they don't need 50,000 hours of lifetime or 100,000 hours of lifetime. So when you reduce the doping concentration, you can impact the lifetime and you get to a point where you do impact performance overall where they can't go much lower. I believe over the life, since we've been selling them, this red material, I don't believe that they're going to be able to reduce the doping concentration much more.

Robert Stone - Cowen & Company, LLC

Can you just translate that and make sure it's clear since the light output from a phosphorescent red emitter molecule is a function of how much current you drive through it. Just conceptually if there's not as many molecules in the layer, you got to push each one on the same amount of light…

Sidney D. Rosenblatt

Correct.

Robert Stone - Cowen & Company, LLC

And you can only go so low before you're…

Sidney D. Rosenblatt

You're talking about…

Robert Stone - Cowen & Company, LLC

(Inaudible) a little too hard…

Sidney D. Rosenblatt

Correct.

Robert Stone - Cowen & Company, LLC

Okay. With respect to the current reduction, equipment changes and so forth, naturally people who were bearish were extrapolating this kind of thing every Q1 from each successful year. So on the material reduction side, do you think these kinds of games are repeatable or is there…?

Sidney D. Rosenblatt

Well, for red material I think we're sort of at the end in line in what they can do. I mean we've been selling them the same red material for a number of years. I do believe that – the next question would be what will happen with green, because green was clearly much more in terms of dollars in this Q1 compared to red emitters. And I do think that over time you will see efficiencies – I don't think you're going to see efficiencies in the actual equipment because you're going to be using the efficient equipment that's in place. Will they reduce the doping concentration over time? Probably.

So you will see efficiencies, I believe, in the doping concentration. And the question is pricing, so what happens is with our contract with Samsung it is we have a set price for a material. And you start out at a certain dollar amount and then as you reach thresholds of kilograms when you get to the next level, you get a price break and you get to the next level. For red which started in 2011 we're getting closer to the end of the line of price breaks for this contract. Green is right at the beginning of that curve though.

So over time as we sell more and more green materials, you will see some pricing declines. From our perspective, our emitter margins are in excess of 80% even with these price declines and we intend to keep our emitter margins in that range. So there has been a slight decrease in the margin from last year to this year, but it's still above 80% for our red emitters and we expect it to be for green.

Robert Stone - Cowen & Company, LLC

So with respect to the green pricing, this is a cumulative volume driven formula as opposed to not every quarter or once a year, it's not on a schedule. It depends on how quick the Samsung gets there?

Sidney D. Rosenblatt

Yes.

Robert Stone - Cowen & Company, LLC

So effectively you've got a different price – higher price per kilogram and green doping concentration I know you don't know Samsung has that formula, because the newer emitters tend to start out higher until they can determine last time lights, so you probably have both a higher price and a higher doping concentration on green?

Sidney D. Rosenblatt

Yes.

Robert Stone - Cowen & Company, LLC

That was going to lead into my last thought which is based on this one type of display that they're using for the Galaxy S4, it's the same time in pixel layout. So you got different number of green upticks and they're smaller. So do you have any sense of how red versus green and blue material usage is (inaudible) doping concentration part or how does that pixel layout?

Sidney D. Rosenblatt

It's interesting. The pixel layout doesn't really matter because we coat the whole substrate. So when it's in a vacuum chamber and has a shadow mask on it, we literally deposit green material, so one of the positive is it vaporizes and sticks to the glass if all that was green would all end up on the glass. If you got multiple pixels, you've got different pixels, you have a shadow mask. If it doesn't end up on the glass, it ends up on the shadow mask. So it doesn't matter whether as one diamond shaped pixel or 10 diamond shaped pixels per substrate, it's the same amount of material that going to get on to it. So the fact that there were two green pixels doesn't impact how much material we use at all.

Robert Stone - Cowen & Company, LLC

But the size and shape of the pixels might have some influence on what they need to do vis-à-vis doping concentration lifetime…?

Sidney D. Rosenblatt

That's right. If it's a smaller pixel and they need to make sure that they have longer lifetime or it needs to be brighter then the doping concentration will be impacted. But the actual material utilization really doesn't matter how many pixels there are – how many sub-pixels or (inaudible) pixels.

Robert Stone - Cowen & Company, LLC

Okay. Let's turn to mobile devices as a market opportunity overall. Samsung reportedly has already shipped 10 million Galaxy S4s. I think it took them less than a month to do that. How much of your 2013 revenue outlook is attached to mobile roughly? How should we think about that?

Sidney D. Rosenblatt

The mobile business is the business today. And our guidance for the year, most of it is mobile. We do sell developmental materials that are going into TV, good development. They may be considered a commercial material. We have two categories of materials just for folks who don't understand. They are called commercial versus development. Commercial means we're producing in commercial quantities. It doesn't mean what product it goes into.

So it may go into the Galaxy S4 or it may go into the R&D labs. Our developmental materials are materials that we're just scaling up and those materials could end up in a product but we don't have scale in terms of how much we make. So the categories may – I may sell some of my commercial materials that are going into the TV work. So, I would say not knowing the specifics probably 85% to 90% of our market this year is design for mobile devices.

Robert Stone - Cowen & Company, LLC

Okay. And specifically with respect to your green emitter and host, as you said at the beginning you would thought that as the big news on Q1 with the 2R and the GS4, do you have a sense of how widely that stack recipe is going to be used on other types of displays from Samsung or is it limited to this one high-resolution diamond pixel format?

Sidney D. Rosenblatt

Right now it is – they were back plain what they call M4 is designed to drive phosphorescent in the green phosphorescent. So anything that this back plain design goes into will use our green phosphorescent and our host material. Right now the only thing that we know that they're using it for is the Galaxy S4. Whether they have other products that it's going to get into, to be honest we don't know that.

The Samsung Display Corporation is our customer who makes the displays. Samsung Electronics who Samsung Display sells to makes the decisions about the products. And to some extent they will say it's not a good business. You're a supplier, go ask them. Just sell us the material. So we do read about it. I do believe that they're not going to go backwards.

I mean as I did last week, as you saw, there were showing Galaxy S3 next to the Galaxy S4 and showing that there was a 25% power reduction 2025. I don't imagine any portable devices that are going to be – that they're going to use, that they're going to introduce and going to say, well, we're going to go back to one that you did 25% more power. I suspect whatever products they're going to come out with are going to use this new design. But I honestly don't have an answer for you.

Robert Stone - Cowen & Company, LLC

So now that you can't answer that question, let me ask you one that you can answer. So far we haven't seen even Samsung on its own products using OLED for tablets much if at all. What do you think is pulling that back? Is it the price point they have to hit for the tablet? Is the capacity they have for that size display? What's the recipe for getting to the next larger display size?

Sidney D. Rosenblatt

Without answering questions for Samsung which I honestly can't answer, it is in the note – it is in the Galaxy Note which is essentially a tablet phone and I believe it will continue to be in the next version of the Note. It was in at least one version of their 7.1 inch tablet. I do think that their capacity is getting designated to these mobile devices. They sell to Nokia and they sell to others, so I think that they are limiting. Right now supposedly selling everything they can make. And they are adding capacity in the second half of this year. And whether or not some of that capacity gets designated to other products or not, we obviously don't know.

Robert Stone - Cowen & Company, LLC

Okay. So you talked about mobile being sort of 85% of the overall and you have a range also on your guidance. Is that driven more by the potential variation in underlying markets overall, it could be more or less mobile devices this year or as you think about TV being in and out of the numbers or more or less successful, what's the input of TV on for instance your range?

Sidney D. Rosenblatt

Our ranges – mainly because this is such a new industry and obviously last year, we had guidance that was higher and Samsung did not add capacity in the second half of the year, so we had to change our guidance. And because it is a new industry and we are not the manufacturer of the end product, it's difficult for us to predict. So our range really is where we think things can be – essentially it's our own internal plan with a little bit plus or minus.

Most of it has to do with when the capacity comes on. We never expect it and we still don't expect TVs to be a big business this year. There's a lot of R&D work that's been done. There's small quantities of TVs that are going to be delivered by LG and by Samsung, but we don't think that that's the driver. The real driver is capacity [the day you had it] and how successful the S4 and other products are on the technology.

Robert Stone - Cowen & Company, LLC

So do you expect that the TVs are being produced, let's talk about what you may or may not know about the rest of – I recall seeing at CES I think it was LG talking about their staff recipe and they do have more than one phosphorescent OLED – obviously it's white OLED with the color filter, so that's the different recipe. To your knowledge with respect to Samsung's RGB approach on TV is green, so is going to be in there?

Sidney D. Rosenblatt

We sell their – since they haven't really set the formula, we sell red materials, we sell green materials to the mobile production group and we sell it to their R&D group. What ends up being an in-product, I honestly don't know the answer to it at this time.

Robert Stone - Cowen & Company, LLC

Okay. So you mentioned on the Q1 call that you're commercializing or getting ready to commercialize the new red emitter. How is that different from the one that's been up for a long time and what's the target application?

Sidney D. Rosenblatt

We have scaled up and commercialized a new red emitter. The specifications for mobile devices versus TVs, the color coordinates or CIE coordinates are different. So they have what percentage of where the red needs to be for televisions versus where it is for handheld devices. So this red was specifically designed to work with the specs that are called more for red.

Robert Stone - Cowen & Company, LLC

Okay. And was it just for TV in general or – and I know you probably can't name them with who was, who wasn't done at the behest of a particular customer or more than one?

Sidney D. Rosenblatt

Well, there's only two customers that are making TV. One of them is making [LED backlit] with color filters and the other one is using RGB side-by-side. So I think you answered the question.

Robert Stone - Cowen & Company, LLC

Yeah, I wasn't really (inaudible) at least a couple other guys that are…?

Sidney D. Rosenblatt

Yeah, there are other guys that are developing TVs; Sony, CES showed an OLED TV that it was actually made by AUO. AUO has a pilot TV line that made the Sony TV. There are some other customers but we probably wouldn't scale it up to that level unless we thought it was a real customer use.

Robert Stone - Cowen & Company, LLC

Okay. So AUO since you mentioned them, they discussed a 55-inch panel at SID based on oxide TFT and a Gen-6 (inaudible), so bigger than what we've seen at least from other production systems. Do you have a sense of when these new back plains might be commercializable?

Sidney D. Rosenblatt

To be honest I honestly don't know when oxide TFTs will be commercializable. We'll be very happy whichever ones work and whichever ones they want to use. It doesn't really impact what we do. It doesn't impact on the materials that we sell. But I also know that AUO today does not have a Gen-6 line and I haven't seen anything that specifically states when it is they're going to put it in. So they talked about it but I haven't seen anything written that says they're building a Gen-6, 5 line.

Robert Stone - Cowen & Company, LLC

Okay. As we move more towards commercializing TV and LG has talked about investing next year in a commercial line on more than something they have today for TV. Does that hinge on new depositions approaches in that or some other replacements for (inaudible) depositions?

Sidney D. Rosenblatt

No. The next generation is all going to be backend deposited whether it's LG's approach with color filter or red, green, blue side-by-side. No one has inject printing or solutions based technology that is near commercialization at this time. I think everybody is working on TV. I guess Panasonic showed more on it to do with Sony at CES, but I don't think anybody has announced any CapEx for printing or nozzle printing technology for TVs. There still is a lot of work that has to be done in the materials themselves that are solution-processable and in the process. So I think pretty much what you will see in capacity over the next few years is all going to be backend deposited.

Robert Stone - Cowen & Company, LLC

So what are the limitations that you know of on the solution practicing approaches now? Is it the emitters are solution-processable but they don't hit the lifetime necessary or the injecting isn't giving you enough control over the pixel matrix? Which part of it is enough to snuff?

Sidney D. Rosenblatt

Well, none of it is. I mean we're talking about a lot of things that are going to happen in the future. We've worked with Epson Corporation for five years. We had a joint development license from an inject printing patent for OLEDs. Whether it's nozzle printing or inject printing you need to make these materials solution-processable. OLED materials degrade when they are in oxygen and moisture. So you have to put them into at least taking phosphorescent emitters or small molecule materials, you put solvents in them, you keep the print heads flowing.

The solvents themselves cause all things to go up, so it is somewhat of a snowball effect. In addition to that, if you're trying to make high resolution displays inject printing still has overspray, they have issues to deal with that. The nozzle printing approach prints stripes and there are still issues with that. Then the materials themselves; red, green or blue materials, we have some pretty long (inaudible) solution-processable materials but they're still probably half the lifetime of the TV.

Robert Stone - Cowen & Company, LLC

Okay. So Sony and Panasonic you mentioned demonstrating OLED TVs with CES, are you working with them and do you have a sense of when they might come to market?

Sidney D. Rosenblatt

To be honest, we work with – we've got announced relationships with a number of companies which include Pioneer, Sony, LG, AUO, Samsung, a number of companies on writing. We have relationships with probably additional 15 companies whose names we have not announced. We literally sell materials to anybody who is doing R&D today in OLED. I think Panasonic when they announced, they said that was done (inaudible) material. But no one is really – I mean I do think that the TV business which is still down the road, so for us what's important is – which is 85% of our business here is mobile and mobile devices are going to be where are money is made over the next couple of years. I think TVs will be backend deposited.

Robert Stone - Cowen & Company, LLC

So let's go back to mobile and talk about the other dimension that seems to be coming and that's flexible in the sense of maybe certainly displays you're going to actively ban the products that are conformable, lighter, more unbreakable and to my mind that's just the peak over the horizon what things might happen with wearable devices. So, Samsung and LG are both reportedly planning to launch flexible displays this year. What do you think that means for market size? Is there a tiny sliver? And what are the challenges from that production?

Sidney D. Rosenblatt

Well, I do think that – and just to add Samsung last year was going to introduce flexible discovery, so if the flexible plastic substrates are difficult, plastic is porous and oxygen, moisture cause OLEDs to degrade. We've been working on stainless steel foil actually with LG and delivered a number of units to the U.S. Department of Defense on unbreakable, flexible displays of stainless steel foil.

I think what I have seen, our prototypes is – it would be a thinner device because you don't have the pieces of glass. It could conform around the sides, so you can show information on the sides. It would be lighter. So you can either make it smaller or thinner or you can make a larger battery so that it lasts longer. The challenges are encapsulation, so you need an encapsulation process.

And the second piece of the challenge is how do you put transistors on plastic? And today no matter which process you use, the temperature is too high to deposit them directly on the plastic. So as far as we know, what they do is they literally deposit them on glass. They delaminate them and laminate them onto glass. So I do think that this will be initially a niche market, high-end market. So if I wanted to have a cool, unbreakable phone that I could toss around, I'm willing to pay a couple hundred bucks more whatever the price would be. I think that's really what you'll see first.

Robert Stone - Cowen & Company, LLC

Okay.

Sidney D. Rosenblatt

Once you get to the point where you can really truly make these bendable or flexible or whether it's wearable or whether it evens just folds in halves, I think that there are a lot of – that really is a game changer for the display industry because there's really no other technology you can do that with. And you read reports that they're coming out like Apple had an OLED watch and they talked about red display making it – I'm not so sure red display is going to make anything but probably either Samsung or – Samsung probably won't do it for Apple but LG probably would if that's what they're going to do.

Robert Stone - Cowen & Company, LLC

So you mentioned encapsulation of one of the things and at least as far as I know you guys aren't working on plastic transitions, right? What's your roadmap for bringing single layer barrier materials to market?

Sidney D. Rosenblatt

Right now we have – right now the process that's used is a multilayer process that's from a company called [Viotech]. That's a six-step organic, inorganic process which is very slow. We have a process that we had developed essentially using the (inaudible) chamber than puts one layer which gives you the same barrier properties as the sixth layer. We have a small pilot line in our facility and we're working with a couple – with at least one company as an equipment manufacturer to see whether we can scale up and is it scalable and we're actually looking at how we then monetize this. But I don't think you'll see any revenue to us at least for the foreseeable future from this process.

Robert Stone - Cowen & Company, LLC

Okay. We have I think 10 minutes of so. Any few questions in the room. Yes, go ahead.

Unidentified Analyst

[Question Inaudible]

Sidney D. Rosenblatt

Well, the phosphorescent materials has a number of manufactures. It was invented by Kodak and there's no patents that cover the use of phosphorescent in an OLED device. It expired in 2007. It was the original Kodak patent. I believe once you start using phosphorescent and you use red, red has been used by Samsung in everything but migrating to green they're adding it, I don't think that – we're not concerned that the phosphorescent material is going to displace any of our phosphorescent emitters once they start getting used. I think that they will still continue to use blue phosphorescent because it has the best lifetime. Blue phosphorescent emitters does not have commercial lifetime at this time.

And they also make some of the other materials. They make host materials. We actually work with Duksan to do one of the processes in our host materials that we then sell that ends up in Samsung's devices. Phosphorescent emitters really – that's been our competition since day one. I don't think anybody's going to go backwards and start using phosphorescent emitters. In terms of anyone making phosphorus emitters, there's nobody out there that are making phosphorus emitters that we know off that are going in any commercial products.

Robert Stone - Cowen & Company, LLC

Other questions from the room. Yes.

Unidentified Analyst

[Question Inaudible]

Sidney D. Rosenblatt

Well, Quantum dot is another improvement in OCED technology and OCED technology continuously get better. It's really at the – all their improvements are small improvements or larger big improvements were made when they were able to go from laptops to larger sizes and they started moving to TVs, a lot of those improvements were there. OLEDs and particularly for TVs, you're probably talking about 2015 if we see any real volume in OLED.

I think when you put an OLED TV next to any other TV, whether it's an LED-backlit LCD or Quantum dot TV, the picture quality of an OLED TV natural looking colors, the fact that you have refresh rates that are three times faster than video rates, the fact that you can see it on a 180 degree viewing angle. And OLEDs are much simpler devices. What they need is scale. OLED should cost about 20% less the manufacturer than a comparable LCD once you get the comparable yields and volumes. I mean to be honest, it got a back plain and then you have layers of organic material and that's the entire device. What we don't have is scale today.

So LCDs are not going to go away. We're not going to replace LCDs in the next five years. I think after five years, you can look at it and say, OLED TVs are now 10 billion or 20 billion whatever the number is, you're still selling $100 billion worth of LCD that got fully depreciated infrastructure, that's going to be hard to compete. For the OLED for the high end, I think that the manufacturers that are looking at this are looking to sell premium priced products where they can make a profit that clearly is not the same as when you're in a commodity and you're fighting the Chinese manufacturers who are cutting prices. So I think that they are going to look at OLED TVs as the premium product for the foreseeable future.

Robert Stone - Cowen & Company, LLC

Other questions. Yes.

Unidentified Analyst

[Question Inaudible]

Sidney D. Rosenblatt

Well, Samsung and LG have both said that more than 50% of their CapEx in the next couple of years is going towards OLEDs. I think they have made a bet on OLEDs. You will see AUO probably start. I think that they will be able to get a lot of the smartphone market and then the premium TV market. I think that as new players get in, you've got whether it's Sony, whether they have it made by somebody else, whether it's AUO, whether it's Sharp or whether it's any other manufacturers that are out there that are looking at this, it will take time.

I mean there really has to be – I think that Samsung was able to really beat everybody in the smartphone market with the Galaxy line of products and they will tell you it's because of the display. So I just think that everybody – as the industry and the consumers understand what benefits OLED give you, I think it will do a big [poll] to have people spend more and more money on it.

Unidentified Analyst

[Question Inaudible]

Sidney D. Rosenblatt

It's hard for me to predict. I can tell you that display search talks about 2015-2016 as those prices. We are – the material portion of an OLED TV and the materials, the entire organic stack which includes emitters and host and transporters is probably 10% of the cost. It isn't OLEDs that cost – that are going to drive whether or not OLED TVs are there. It is capacity and it is yields and it is going to scale.

Robert Stone - Cowen & Company, LLC

So the manufacturers that are not in the market now have sort of declared that they're going to do something in OLED 2014-2015 in each hand display, et cetera. Based on your experience with the guys who are in production today, is that realistic to go from a standing start to recently and co-production in a couple of years. Now I guess sort of take the question a layer down, how much of this is potentially off-the-shelf technology that they can get from some other supplier today versus in-house know-how that they might not be able to get without I guess hiring people away from the incumbent?

Sidney D. Rosenblatt

Well, I do think that there's a few. AUO has been working on OLEDs. They actually in 2007 had them in mobile devices. So AUO has been working and AUO has been working on getting efficiencies and trying to figure out how to make money when they selected moving towards scale. I think some of the others; Japan Display, Japan Display is talking about a Gen-4.5 line next year. They could probably do that.

I mean no one is talking about building in the next 12 to 18 months that I can see capacity that's going to come close to what Samsung has done. We've been working with Samsung. We signed a license screen in 2005. Samsung [STI] really starting producing product in 2009. So there is a lot of know-how. Samsung has a lot of know-how and LG, AUO. Sony has been working more on it. So there are some guys who can get into the industry and hit it somewhat running. Folks have never done it before. I think there is a lot of know-how and there's a lot that no one's going to share at this time.

Robert Stone - Cowen & Company, LLC

Are there questions from the room? Okay. I sufficiently bored them. Surprisingly the subject of patents didn't come up yet, so I can throw that to the counter firing and see how brightly it burns. You had a couple pieces of good news on the last conference call, but can you just refresh us where things stand in terms of the major outstanding actions? I guess there's something still dragging on in Europe, is there not? That's all.

Sidney D. Rosenblatt

We've got 3,000 patents issued and pending worldwide. And any time you have a large patent portfolio, you're going to have issues in terms of we have no litigation in U.S., there's no patents that have been opposed in the U.S. which is still the largest part of the market. In other countries there's a different process.

In Europe, even though the patents are issued you can go into the patent office and file an opposition and they will look at that patent during the entire – while it has been issued versus getting it invalidated. We've had three patents in Europe that were challenged; our flexible display patent, our basic phosphorescent patent and our iridium complex patent. We won the flexible display one a few years ago. It's been appealed. It's the same group of companies that have opposed all of them. It's BSF, Merck, OSRAM, Philips and (inaudible), same exact oppositions.

On our iridium complex patent we won everything. We won it, we didn't even appeal it, they appealed it. Our basic phosphorescent patent hasn't even been heard in Europe. And all of your patents in Europe are valid until the final adjudication and then if it isn't validated, it's from that date forward. It doesn't go backward. So you can license your patents you can do it.

In Korea there were a number of challenges from Duksan that dropped them all. So all of our challenges in Korea have been dropped. In Japan there were a couple of decisions that we lost where two patents invalided. We said that we believe that even if we lost them, it doesn't impact our ability to license our technology worldwide. After we lost one of them in Japan, Samsung still signed a worldwide license. They understood that this one or two patents of which we had 60 others aren't going to impact our ability to collect fees.

We said that we thought we would win and it ended up in a Japanese high court which said they were incorrect and they're just been validated. So, as we have said pretty much all along we don't believe that any of these, a, if we lost it, it would impact our ability to have a worldwide license. And two, we didn't think we would lose them. To be very honest, Samsung never would have signed a long-term worldwide license with us if they thought that there was a chance that they could win all their patents.

Robert Stone - Cowen & Company, LLC

Okay. Thanks very much for your attention everyone.

Sidney D. Rosenblatt

Thank you.

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Source: Universal Display Corporation's Management Presents at the Cowen and Company 41st Annual Technology, Media & Telecom Conference (Transcript)
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