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Executives

Joe Hassett – Gregory FCA, IR

Steve Abramson – President and CEO

Sid Rosenblatt – Executive Vice President and CFO

Analysts

Darice Liu – Brigantine Advisors

John Bright – Avondale Partners

Jim Ricchiuti – Needham & Company

Jed Dorsheimer – Canaccord Genuity

Brian Lee – Goldman Sachs

Hendi Susanto – Gabelli & Company

Andrew Abrams – Avian Securities

Jagadish Iyer – Piper Jaffray

Carter Shoop – KeyBanc

Universal Display Corporation (PANL) Q4 2011 Earnings Call February 28, 2012 5:00 PM ET

Operator

Please standby, we are about to begin. Good day. And welcome to the Universal Display Corporation Fourth Quarter and 2011 Year End Earnings Call. Today’s conference is being recorded.

At this time, I would like to turn the conference over to Joe Hassett.

Joe Hassett

Thank you, and good afternoon, everyone. With us today are Steve Abramson, President and Chief Executive Officer; and Sid Rosenblatt, Executive Vice President and Chief Financial Officer of Universal Display Corporation.

Let me begin today by reminding you that this call is the property of Universal Display. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Universal Display is strictly prohibited.

Further, as this call is being webcast live and will be made available for a period of time on Universal Display’s website, this call contains time-sensitive information that is accurate only as of the date of the live webcast of this call, February 28, 2012.

All statements in this conference that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements regarding Universal Display’s beliefs, expectations, hopes or intentions regarding the future.

It is important to note that these statements are subject to risks and uncertainties that could cause Universal Display’s actual results to differ from those projected. These risks and uncertainties are discussed in the company’s periodic reports filed with the SEC. Universal Display disclaims any obligation to update any of these statements.

Now, I would like to turn the call over to Steve Abramson, President and CEO of Universal Display. Please go ahead, Steve.

Steve Abramson

Thank you, Joe. And welcome everyone listening on today’s call and webcast. We are profitable, after more than a decade and half of ground breaking research and development, building a worldwide network of business and research partnerships, and refining an innovative business model that leverages both tangible and intangible assets, we are profitable.

Our revenues doubled again for the third consecutive year. It’s a great time to be in the OLED industry and a great time to be UDC, based on our pioneer efforts we are participating in the extraordinary growth of this exciting industry.

Our business strategy is to sustain our industry leadership through a strong commitment to research and development. This will enable us to continue to provide the industry with new and innovative technology and material, which we believe will help both industry and our company grow, and let there be no mistake the industry is growing rapidly. According to display search, the AMOLED industry grew from $1.2 billion in 2010 to $3.4 billion in 2011, and it is forecasted to grow at $8.2 billion this year and $11.2 billion in 2013.

In the near-term, our current results have being driven primarily by the demand for small form factor displays primarily smartphones. These displays are getting larger. Samsung recently introduced the fabulous new product called the Galaxy Notes with features 5.3-inch AMOLED screen with extraordinary functionality.

As the acknowledged OLED industry leader Samsung has continued to build out its OLED production capacity. They sold over 20 million Galaxy S2 smartphones in 10 months and accumulated sales of Galaxy smartphone line now exceed $40 million.

During the last half of 2011 Samsung even pass Apple as a number one seller of smartphones and there have been reports that about 25% of South Koreans own a Galaxy phone. Smartphone sales should continue to grow rapidly as Samsung build new portable products containing ever larger, more power efficient AMOLED screen.

Then of course we have OLED television. At January Consumer Electronic Show 55-inch OLED TV sold the show. The industry anxious to find the next big thing that will reignite television sales as these manufactures are placing their bets on OLED technology.

We estimated there were over a 150,000 people at CES this year. I was one of them it took me an hour just to get a cab from the airport to the hotel. I wanted to see the 55-inch OLED TVs, judging from the crowd’s reaction I think everyone was there to see them as well. The crowd was so deep at Samsung and LG’s booth that it probably took some people an hour just to get a clear view.

LG’s OLED TV one of the best of show for CES, while Samsung OLED TV was equally gorgeous. Both LG and Samsung have announced initial production by the end of this year and we are continuing our strong technical support to both companies to help accelerate the widespread adoption of OLED TVs, because once you’ve seen an OLED television you’re going to want one.

AUO Optronics of Taiwan has also announced its plan to mass produce AMOLED panel for mobile phones early this year. In addition, they plan to unveil OLED TV panel samples by the end of this year. AUO demonstrated a beautiful 32-inch OLED TV prototype at the tradeshow in Japan in November. We’re working closely with AUO for number of years to support their OLED efforts.

Our strategy is to simultaneously meet current demand for our technology material, while at the same time developing new technologies and materials to support the growth of the industry. Our red emitter materials are used at all commercial AMOLED products today. Last year our green emitter materials and host materials began appearing in AMOLED products.

The OLED industry is relying on us to continue to improve the power efficiency, color and lifetimes of our emissive layer material to support and accelerate industry growth. We are expanding our technology, research and development efforts to continue to improve the performance of our proprietary emissive layer materials both emitters and host, as well as to improve our ability to specifically tailor these material to our customers’ needs.

In addition, with the introduction of OLED televisions and other large-format applications on the horizon, we are also working on additional material systems and technologies that may help improve the technologies and reduce manufacturing costs.

We continue to make excellent progress of our P2OLED solution-based technology material. Our proprietary dry printing technology, which uses a carrier gas instead of a solvent which we call organic vapor jet printing or OVJP is also showing progress.

Flexible or unbreakable displays are another new product with near-term commercial potential. Samsung is reportedly putting in production capacity for flexible displays which don’t really flex yet but will be unbreakable. This will enable manufacturers to produce films and other products that are thinner and lighter.

Integral to the development of flexible OLED is encapsulation technology. We are making excellent progress introducing our single layer encapsulation technology to customers. As I pointed out, there has a wide range of applications not just the OLED but other organic electronic products as well.

We continue to invest in our white OLED lighting technology. We are currently offering a full phosphorescent system for warm white lighting devices which is comprised of red, green and light blue material.

In lighting, we’ve also signed a number of OLED technology license agreements with the industry leaders. Our most recent announced agreement was with Lumiotec, a Japanese company whose shareholders include Mitsubishi Heavy Industries, Rohm, Toppan Printing and Mitsui.

Under this agreement, Lumiotec will integrate our proprietary UniversalPHOLED phosphorescent and other OLED technologies and materials into OLED lighting products that intend to manufacture our market.

Lumiotec joins Pioneer and Panasonic Idemitsu OLED Lighting as lighting leaders with whom we have recently signed agreements to use our highly efficient high performance UniversalPHOLED technology material in OLED lighting products.

The Department of Energy also recently recognized us for our outstanding achievements in solid-state lighting in 2011. This is the fifth consecutive year we have received this award.

Our extensive patent portfolio grew last year to over 1,400 issued and pending patents worldwide. With regard to the various legal proceedings relating to our patents, the only new item is that a new opposition was filed in Europe relating to a recently issued PHOLED patent.

As we have noted, we believe that these oppositions and other proceedings with respect to our fundamental patents are to be expected in the businesses as growing like we are. We will vigorously defend, maintain and expand our broad and deep worldwide patent portfolio to support and grow our business.

To summarize, we had strong fourth quarter and full year. We achieved profitability on a full year basis for the first time in the company’s history. We have seen significant advances in our OLED technologies and materials to prepare for future industry growth. I have said it before and I would say it again, the future looks bright for both OLED and Universal Display.

With that, I’ll turn the call over to Sid, who will take you through the financial results in more detail. Sid?

Sid Rosenblatt

Thank you, Steve. And again thank you everyone for joining us on our call today. I’ll be reviewing the financial results, as well as sharing some insights from the quarter and the full year. After that, we will open the call to take your questions.

Revenues for the fourth quarter totaled $18.7 million, a 73% increase over revenues of $10.8 million for the fourth quarter of 2010. You will note that we have revised the presentation of revenues in our financial statements that better reflect our current primary sources of revenue. Fourth quarter and full year 2010 revenues have been revised to confirm with our current classification.

Material sales now include revenue from the sales of OLED chemicals for evaluation, development and commercial manufacturing, which were previously separated into commercial chemical sales and development chemical sales.

Royalty and license sales include revenue recognized from the licensing of our intellectual property and technology, which is unchanged from our prior presentation. Technology development and support revenue includes revenue from technology development activities, government contract work and support provided to third parties for commercialization of their OLED products.

On this basis, material sales were $10.8 million for the quarter, an increase of 47% over material sales of $7.4 million for the fourth quarter of 2010. Compared to fourth quarter a year ago, we sold significantly more material under commercial agreement in the fourth quarter of 2011. We had a gross margin on material sales of 90% for the quarter, compared to 97% for the fourth quarter of 2010.

For the fourth quarter, host materials represented 12% of our total material sales whereas host materials represented 9% of our total material sales for the fourth quarter of 2010.

Royalty and license fee revenue was $5.4 million for the quarter, a 207% increase over royalty and license fee revenue of $1.8 million for the fourth quarter of 2010.

We received $10 million in 2010 under our new license agreement with Samsung. In the fourth quarter, we received a $5 million license payment from Samsung under our new license agreement. Please note that our next license fee payment from Samsung is not due until June this year. Based on the accounting treatment of the new agreement, we will not be recording any license fee revenue from Samsung in the first quarter of 2012.

Technology development and support revenue for the fourth quarter was $2.4 million, up 43% from $1.7 million for the fourth quarter of 2010. The increase is primarily additional revenue received for collaborative R&D and commercialization support provided to a number of customers.

Total operating expenses for the quarter were $15.1 million, up 37% from operating expenses of $11 million for the fourth quarter of 2010.

Patent costs for the fourth quarter were almost $2 million up $500,000 compared to the fourth quarter of 2010. The increase continues to reflect our defense of certain ongoing and new patent challenges, as well as timing of prosecution and maintenance costs associated with a number of issued patents and patent applications.

Patent costs for the quarter increased slightly from patent costs for the third quarter of 2011, which is consistent with our earlier comment that patent costs will likely be sustained or increased on a quarterly historical -- from quarterly historical levels due to the ongoing defense of our intellectual property.

Selling, general and administrative expenses for the fourth quarter were $5.6 million, up from $3.3 million for the fourth quarter of 2010. However, SG&A expenses were only marginally higher on a sequential basis as compared to $5 million for the third quarter of 2010. The increase over prior -- over the prior year included a roughly $700,000 increase in personnel and compensation costs, as well as approximately $170,000 to open and ramp up our new Asian offices.

Beside from the cost of material, which will natural vary with the quantity of material sold and the potential for any unanticipated increase in patent and legal expenses, we do not expect that we will need to significantly increase operating expenses to support our growth over the next year.

For the fourth quarter, we reported operating income of $3.6 million, which translates into an operating margin of 19.1%. Operating income in the quarter was up almost $3.8 million compared to the same quarter a year ago.

There were a couple of unusual tax items for the fourth quarter. During the year -- during the quarter we recognized a $2.7 million tax benefit in connection with the sale of approximately $45.2 million of our state-related income tax net operating losses and a $232,000 of our research and development tax credit under the New Jersey Tax Certification Transfer Program.

Also in both 2011 and 2010, the withholding tax rates for royalties and license fees paid to us by Samsung was 16.5%. For the fourth quarter, foreign income taxes of $825,000 were withheld in connection with these payments. We anticipate the amount of foreign withholding taxes to increase coincident with increases in future license fees received from Samsung.

For the fourth quarter, we reported net income of $5.7 million or $0.12 per diluted share, compared to a net loss of $5.3 million or $0.14 per share for the same quarter of 2010. The loss in the fourth quarter of 2010 included a $4.8 million non-cash charge associated with the stock warrant liability.

For the fourth quarter, cash provided by operating activities was approximately 8.6 times compared to cash used in operating activities of over $2 million for the same period in 2010. The year-over-year change was primarily attributable to a substantial improvement in our net loss including non-cash item -- excluding non-cash item.

Looking at the results for the full year, revenues were $61.3 million, more than double revenues of $30.5 million for 2010. Revenues from outside of North America represented 89% of our total revenues for 2011, of which 63% was from South Korea and 25% from Japan. Whereas revenues outside of North America represented 82% of our total 2010 revenue with the bulk of these revenues also coming from South Korea and Japan.

Full year revenue from the sale of material, which comprised both commercial and development phosphorus emitter and host material was $37.4 million for 2011, compared to $17.3 million for 2010. Phosphorescent emitter sales were approximately 70% of our total material sales in 2011, compared to approximately 88% in 2010 as we saw our host material sales increase to 30% of our total material sales in 2011, compared to 12% of our total material sales in 2010.

Royalty and license fee revenue was $15.3 million for 2011, up from $4.6 million for the previous year. A substantial portion of the increase was due to royalty and license fee payments received under our patent license agreement with Samsung. There was also a small decrease in our technology development and support revenues for 2011.

Operating income for 2011 was $5.7 million, compared to an operating loss of $10.2 million for 2010. This was our first full year profit with net income of $3.2 million or $0.07 per diluted share for 2011, compared to a net loss of $19.9 million or $0.53 per share for 2010. Results for this year and last year included $4.2 million and $10.1 million, respectively, of non-cash losses on stock warrant liability.

Our balance sheet remained strong with cash, cash equivalents and short-term investments of approximately $346 million as of December 31st. For the year, we generated $16.8 million in cash from operations whereas cash was used to support operations last year.

In addition, our liquidity also benefits from -- benefited from proceeds of our $250 million equity offering in March 2011. On this basis, I think it’s safe to say that we are in the best financial position in the company’s history.

As the industry grows and now that our new arrangement with Samsung is in place, we have a little more visibility into our potential future financial performance. Of course, the OLED industry is still at a stage where many variables could have a material effect on growth and our future financial performance.

With a very important caveat, we would like to provide some revenue guidance in an effort to increase our transparency. With these qualifications, we see our revenues for 2012 as being in the range of $90 million to $110 million. So, let me caution that individual quarters could still be very lumpy, particularly in light of the timing of payments under our new arrangement with Samsung.

With that, I would be happy to take your questions. So, at this time, if the operator could you please open the floor for questions-and-answers.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And we’ll take our first question from Darice Liu with Brigantine Advisors.

Darice Liu – Brigantine Advisors

Good afternoon, guys. My first question has to deal with the forecast for 2012, $90 million to $110 million, just to clarify for the modeling standpoint, we will not see any Samsung license fees in 1Q and 3Q?

Sid Rosenblatt

That is correct.

Darice Liu – Brigantine Advisors

So, from a margin standpoint because we aren’t going to see those license fees, we should expect a dip down in 1Q and 3Q accordingly?

Sid Rosenblatt

Yeah.

Darice Liu – Brigantine Advisors

Okay. Is there any way in the future you think you could possibly smooth that out or is that something we should be modeling going forward beyond 2012?

Sid Rosenblatt

Well, I think you can model it that way. We will do our best to give as much information about that in the first quarter conference call as we possibly can without violating any confidential agreement.

Darice Liu – Brigantine Advisors

Okay. And then just moving along to the green material, both the host and the dopant? A few months ago you mentioned that you were at least some companies were evaluating your green material. Can you give us an update on where you are with those customers outside of your largest customer of course and if there have been any additional potential customers evaluating your green?

Steve Abramson

Well, basically, I could say almost all the customers out there are looking at green materials, as well as red materials. And on lighting side, a number of them are looking at light blue materials as well, but as of now the only commercial customer is really the largest customer, but the tests are all going well.

Darice Liu – Brigantine Advisors

Is it just a factor of when you will be able to sign those license agreements for them to convert from evaluation to commercial?

Steve Abramson

Well, it’s really up to them that when they are going to introduce product and then once they introduce product, we’ll have commercial agreements in place, with some of them we have commercial agreements already others will just evolve to commercial agreements as they start introducing products. It really depends on each individual customer at what point in the process they want to move from evaluation agreement to a commercial agreement.

Darice Liu – Brigantine Advisors

Okay. Thanks. I’ll get back into the queue.

Steve Abramson

Thanks, Darice.

Sid Rosenblatt

Thank you

Operator

(Operator Instructions) We’ll go next to John Bright with Avondale Partners.

John Bright – Avondale Partners

Thank you. Good afternoon. Steve, Sid, since you’re not providing any profitability guidance for calendar ‘12. I think in the prepared text, Sid, you talked about OpEx will not significantly increase over the next year. Can we take OpEx from the fourth quarter and finally sequentially increase it maybe you think of fourth quarter next year up 10% to 15%, is that an order of magnitude that we should be thinking about?

Sid Rosenblatt

I think that’s the correct way of looking at it John.

John Bright – Avondale Partners

Okay. Second question is breaking down the revenues. As we -- how should we think about the makeup of the revenues in calendar ‘12? You talked about Samsung not being in Q1 and Q3 from a license standpoint, I assume that means materials as well, but correct me if I’m wrong there?

Sid Rosenblatt

That is, I’m sorry, I don’t mean to interrupt…

John Bright – Avondale Partners

It’s okay.

Sid Rosenblatt

… but the material sales to Samsung are based upon we will record them when we ship them. So I don’t anticipate any change in the trend or material sales. It is only the license fees that will be lumpy on a quarterly basis.

John Bright – Avondale Partners

Okay. Maybe you can talk to us in any way that you want to break it down between licensing -- between material sales royalty or maybe talk about what your assumptions are on host revenues for calendar ‘12 or maybe talk about, what devices that you have baked into your thought process between smartphones or maybe how much in tablet and TVs, alluded to those, I think, Steve in the prepared text as well, maybe give some flavor of the makeup of that $90 to $110.

Steve Abramson

It’s difficult for us to talk about the specific products since we are not in the product manufacturing business. We actually -- the makeup of our guidance is we look at obviously we know what the license fees from Samsung will be and we know what the minimum purchases of material from Samsung will be and we looked at each of our customers that we expect -- that we had and expect to have in 2012.

And we do get forecast from each of them and we look at that and we look historically at what, whether or not they meet these forecast and we also look at everything that’s out there about the industry and based upon that, we then put out what we believe is a revenue projection that we’re comfortable with.

In order to go product-by-product, I mean there are some products get into the marketplace quicker or some customers accelerate their manufacturing that will have a positive impact on us and to some extent as things get drag out a little bit longer, they will have a negative impact, but we’re comfortable with the guidance that we have given using all of our historical data and using the data that we receive from customers.

Operator

And we’ll take our next question from Jim Ricchiuti with Needham & Company.

Jim Ricchiuti – Needham & Company

Hi. Good afternoon. I’m wondering if we look at your full year guidance, can you help us understand if within that range that that reflects the minimum level of materials revenue or, I guess, what I’m trying to understand is, perhaps how much visibility do you have into that part of your revenue stream in the event that there is upside to it? Can you maybe also talk about that in terms of what you saw in Q4 without, I understand being specific?

Sid Rosenblatt

Well, I mean in Q4 the -- if you look at the old method, I mean our commercial materials in Q4 were about $9 million of the $10.8 million and then developmental material were about $1.6 million and it’s difficult for us to really answer your question unfortunately. I mean we do base it upon whatever information we have, but I really don’t have specific data that I can point you towards.

Jim Ricchiuti – Needham & Company

Okay. And, Sid, is there any color you can give on that third piece of the revenue stream in terms of how we should think about this new technology development and support revenue component? Do you have some visibility to that, is there anything that you can?

Sid Rosenblatt

I think it will be -- it’s not a significant number and in terms of that that is something that goes customer-by-customers. I don’t expect much change for the foreseeable future in that number.

Jim Ricchiuti – Needham & Company

Okay. Thank you.

Sid Rosenblatt

Thanks, Jim.

Operator

And we’ll take our next question from Jed Dorsheimer with Canaccord Genuity.

Jed Dorsheimer – Canaccord Genuity

Hi. Thanks, guys and congratulations for getting into the back here. First question, maybe just a follow-up. Sid, on Jim’s question, I guess if you end up at $90 million for the year so, what has happened to get you there? And then what has happened if you end up at the $110 million? What are that $20 million swing? What is baked into your expectation?

Is that a function of TVs not materializing in ‘12 or is it a function of smartphones not sort of getting there or is it a function of the host materials going away, maybe if you could just help us try gain a little bit more clarify around what the thought process in under and over there? That might be helpful. Then I have a follow-up.

Sid Rosenblatt

Well, as I said, I mean we look customer-by-customer based upon what we know in terms of the license fees and the guarantee minimums and what we think will increase. We looked at when we expect customers to come online.

I think what you’re hearing about TVs today is information that was probably not out there a couple of months ago when we actually gave the original guidance. If the market accelerates then faster than we thought, we will be at the top end, if it doesn’t, we’ll be at what we think the conservative approach is, right..

I really can’t give you specifics to say if TVs takeoff from one customer to another that’s where that $20 million swing is. I mean, because we have not given guidance in the past, we really wanted to try to make sure that we gave a range that we were comfortable with based upon all the information that we have in-house.

Jed Dorsheimer – Canaccord Genuity

Got you. I was just trying to get into, I’m not trying to put words in your mouth in terms of TVs. I was just trying to sort of get in your mind in terms of what the logic was. It sounds as if it’s a bit more, if a couple of customers don’t turn on that could have a much bigger impact than from an application perspective?

Sid Rosenblatt

If customers don’t turn on that we expected to turn on or that the market expects to turn on, it will have an impact on us. I mean, if the OLED industry does not grow as fast as expectations it will impact our revenue.

Jed Dorsheimer – Canaccord Genuity

Okay. Just as a follow-up. I didn’t see any extension associated with LG. I mean, I know you can’t discuss sort of where you are in terms of that negotiation, but it looks as if they’ve got some commercial products in the market.

So, I assume that’s covered under the old development agreement but in the case of Samsung, I know we saw six-month and three months extensions for the two years that it took to get that inked up into the longer agreement. With LG, is that -- is the lack of extension just a function of the difference in negotiations or should we see some type of -- how should we read into that?

Sid Rosenblatt

I’m not sure you can read anything, we’re selling them under our development agreement and under our development agreement customers can actually do small quantities of product, sample product. So I mean we are negotiating with them as we have said and other customers at this time and I don’t think you can read one thing into it or another by us not seeing an extension of the commercial terms.

Jed Dorsheimer – Canaccord Genuity

Okay. Last question, I’ll jump in the queue. Any seasonality in the business, at least to Samsung or is it just because the ramp is so strong that there is no seasonality in terms of the end products at this point, specifically going into Q1?

Sid Rosenblatt

We have not -- when we gave guidance for the fourth quarter, we thought there was some, the fourth quarter was pretty strong. I don’t really see a lot of seasonality but as I’ve said, one of the issues that we have is this is a new industry, in the first quarter we always have Chinese New Year or Lunar New Year, which impacts all the manufacturers. So there could be a little bit but it’s not anything that we have enough history out to really say will or it won’t to be honest.

Operator

And we’ll take our next question from Rob Stone with Cowen And Company. And Mr. Stone, we’re unable to hear you at this time. I’m sorry, we’re still not hearing you.

We’ll move on to Brian Lee with Goldman Sachs.

Brian Lee – Goldman Sachs

Hey, guys. Thanks for taking the question. Actually I had a few mostly related on how to think about the set up for this year. First, it seems like the lumpy nature of the Samsung payments are going to turn some investors off. So do you think you can provide at least pro forma revenue on the Samsung licensing in 1Q and 3Q when you aren’t getting the actual cash?

Sid Rosenblatt

We are going to do our best to give pro forma, give information. It is a, once you know what one quarter is you will know what it is in each quarter. It is annual amount that is payable in equal installments, one in June and one in December. So once -- one quarter is disclosed, you will know what all the other quarters are.

Brian Lee – Goldman Sachs

Sure. Exactly. So you will give us some amount of detail to help us smooth things out.

Sid Rosenblatt

Next quarter.

Brian Lee – Goldman Sachs

Okay. Okay. Fair enough. Second question I had was, what do you think the percentage split of your revenue from Samsung will be between licensing materials, is it 50-50 in 2012 or something materially different from that?

Sid Rosenblatt

I really can’t answer that without talking about how much the license fees would be. So it isn’t anything that I can answer your question of right now.

Brian Lee – Goldman Sachs

Okay. Fair enough. On 2011 you guys did about, looks like $30 million in revenue outside of Samsung. What’s your expectation for that non-Samsung revenue bucket to grow year-over-year in ‘12?

Sid Rosenblatt

We do expect it to grow and I don’t have data that is in our projection that says this is how much is Samsung versus this is how much of outside of it, I mean what we did it, we obviously did it, but I don’t have that information available right now, while...

Brian Lee – Goldman Sachs

Any reason that you think it would be materially different from just overall industry growth?

Sid Rosenblatt

No. I really expect it to grow with the industry growth.

Operator

We’ll go next to Rob Stone with Cowen And Company.

Sid Rosenblatt

Rob, I think you have to get Cowen bring for a new phone.

Operator

And I apologize we’re still unable to hear you at this time. We’ll move on to Hendi Susanto with Gabelli & Company.

Hendi Susanto – Gabelli & Company

Steve and Sid, good evening, and thank you for taking my questions. My first questions, could you indicate how much your green emitter material revenue was in Q4 in 2011 and what are their corresponding end products? One item that I want to clarify is whether Sony PSP Vita’s OLED display has your green emitter and host material as well?

Steve Abramson

Well, our green emitters that we sold, we sold approximately in the fourth quarter about $3 million worth of green commercial emitter material. We also sold some under the old category of developmental materials.

We sold about $10 million of green emitters of which $6 million of it was on developmental side under the old categories and about $3.9 million of it was on the commercial side. And in terms of which products is in, I mean we really, there has been rumors about some products at a time, but we really can’t answer that question, I mean that’s really is a question for Samsung.

Hendi Susanto – Gabelli & Company

Okay. And second question is how should we think of the corporate income tax in 2012?

Steve Abramson

Well, 2012, our NOL should carry us for everything. However, we feel we’ll have the withholding tax, which is 16.5% of the license fee that we will receive from Samsung. So we still will have some income taxes, but they are the withholding taxes that, but beyond that I don’t expect to see any additional provision for income taxes.

Operator

And we’ll go next to Andrew Abrams with Avian Securities.

Andrew Abrams – Avian Securities

Hi. Just a couple of quick questions on host material. Was all the host material that was sold in 2011 green host material?

Steve Abramson

Pretty much. I mean that is the material that we have sold. We really have not worked on red host materials and we do actually work on some blue host materials also, but I would say the bulk of our host materials that were sold relate green phosphorescent.

Andrew Abrams – Avian Securities

And of your emitter sales in 2011 and maybe looking out 2012, other than red and green, would you expect to sell any other color emitter materials in 2012 and did you in 2011?

Steve Abramson

We’ve actually sold some light blue emitter materials and some yellow materials in 2011.

Andrew Abrams – Avian Securities

And were the yellow materials used for as far as you know for white stack or is that for a separate item?

Steve Abramson

There is – as you are well aware, there is a number of ways to make white, one is using yellow and blue and another is using RGB. So I probably can assume that these were used for white.

Operator

And we’ll take our next question Jagadish Iyer with Piper Jaffray.

Jagadish Iyer – Piper Jaffray

Yeah. Thanks for taking my question. Two questions, Sid. First one. Can you tell us how many customers other than Samsung are having acceptable yields on their OLED whether it’s be it for smartphones or tablets or for TVs? Can you give us some color on that besides Samsung who else and I have a quick follow-up?

Sid Rosenblatt

We -- to be honest, yield questions really have to go through the manufacturers. It is not information that we can answer for them. So you’d have to talk to the other manufacturers.

Jagadish Iyer – Piper Jaffray

No. Maybe I can phrase it this way. How many of them in your opinion have production capability that will come on line in 2012 other than Samsung, volume production?

Steve Abramson

AUO and LG have both announced that they will have volume production in 2012.

Jagadish Iyer – Piper Jaffray

But in your opinion do you think it’s that realistic?

Sid Rosenblatt

We honestly can’t make an opinion about a manufacturers’ ability to manufacture or not. We’re a technology and material supplier to them.

Jagadish Iyer – Piper Jaffray

Fair enough. The second question is, I wanted to find out, Sid, you had talked about the last time that you would be re-filing your patents on osmium. Can you give us an update where you are with regard to that filing and any more -- can you give us any more color on what are the upcoming? Is there any other pending litigation stuff that investors ought to be aware of? Thank you.

Steve Abramson

The continuation application is simply being filed in due course. I don’t know the specific status of it -- of that right now. On the oppositions, as I have mentioned, there was one new opposition filed in Europe, one with our fundamental PHOLED patents, but there has been no other significant activity on the opposition front.

Operator

And we’ll take our next question from Carter Shoop with KeyBanc.

Carter Shoop – KeyBanc

Good evening. Thanks for taking questions. First question is on the greenhouse, obviously, we had a little bit of pre-buy in the third quarter and then that dropped down in the fourth quarter. But if we look at the annualized split between host and emitter sales in the second half of 2011, is that a good reason to think about for chemical sales in 2012?

Sid Rosenblatt

Well, as we have said in the past, the host material business is one that is just starting to get started. There was a significant amount in the third quarter that was sold. We’re going to need a couple more quarters for us to determine specifically what the mix maybe going forward. We did sell host materials in the fourth quarter, as we said approximately $1.3 million worth of them or about 12% of our material sales.

And the second -- the third quarter was significantly higher percentage wise. So I’m not so sure you can do that, just take those two quarters. I’m not trying to avoid your question. We just don’t have an answer for that, to be honest, Carter.

Carter Shoop – KeyBanc

Okay. That’s fine. My second question is the level of confidence that you have about UDC’s phosphorescent materials being used in LG and Samsung’s OLED TV that are coming out later this year, assuming they come out this year?

Steve Abramson

We think they’re going to be used.

Carter Shoop – KeyBanc

And last question. It’s been four months since you have provided your original guidance and maybe you can talk about a few items that have gone better than originally planned four months ago and maybe some items that have gone a little bit worse?

Sid Rosenblatt

Well, in terms of our guidance there hasn’t been just because when we did it we spent a lot of time working on it, announcements of things that occur short-term really don’t affect how we look at 2012 because it really is, it’s a long year and we’re still comfortable and we re-looked at it.

There has been a number of announcements recently to talk about some introduction of TVs, which may have not have been talked about a few months ago. However, there’s a lot of people announce a lot of things and whether or not there is any volume that will move our needle or not is something that we’re going to have to wait for it.

Operator

And we’ll take a follow up question from Darice Liu with Brigantine Advisors.

Darice Liu – Brigantine Advisors

Guys, can you give us an update on what’s going on with lighting? There seems to be an increased amount of development activity and your license agreements had increased nicely in that segment. And just on the side question, can you comment whether or not you are including lighting in your 2012 revenue forecast?

Steve Abramson

We are seeing an uptick in the number of companies that are involved in lighting as indicated by some license agreements and other agreements that we’ve signed with companies. There is some lighting revenue included in our forecast, but frankly it pales in comparison to the display revenue.

We think over the next year or two, you see a number of companies involved in developing products and manufacturing processes for lighting and then it’d be likely that one or more of them will step out of the gate into a production facility.

Darice Liu – Brigantine Advisors

Okay. When you mentioned that it’ll pale in comparison to display, are we talking about less than 10% or 15% of your forecast distributed to lighting?

Sid Rosenblatt

Darice, to be honest, we haven’t given any breakdowns of what’s in the forecast and so I really can’t answer your question, to be honest.

Darice Liu – Brigantine Advisors

Okay. I tried.

Sid Rosenblatt

I can tell you lighting was -- for this year our lighting was about 1% to 1.5% of our total material sales.

Darice Liu – Brigantine Advisors

Okay. They’re very insignificant. Okay. Thank you, guys.

Sid Rosenblatt

Thank you.

Operator

And we’ll go next to Brian Lee with Goldman Sachs.

Brian Lee – Goldman Sachs

Hey, guys. I just had a follow-up question on the host business. It looks like a little over $1 million in sales in Q4. How many customers did that represent and how are you seeing the trend in that material segment to start 2012?

Sid Rosenblatt

I -- we’ve sold it to a number of our customers. You were correct the number is about $1.3 million for the fourth quarter and we have a number of customers that are sampling our material. I really can’t answer any questions about the Q1 at this time.

Brian Lee – Goldman Sachs

Okay. How about, one last question for me and I’ll jump back in, on Q4, was Samsung subject to any minimum volume requirements on the material side and did they buy that minimum or more than the minimum?

Sid Rosenblatt

Well, they were subject to because there were minimums in each of the years from 2011 through 2017 and they met their minimums.

Brian Lee – Goldman Sachs

They exceeded it or they just met them?

Sid Rosenblatt

They exceeded their minimum.

Brian Lee – Goldman Sachs

Okay. Thanks.

Operator

And we’ll take our last question from Jed Dorsheimer with Canaccord Genuity.

Jed Dorsheimer – Canaccord Genuity

Hi. Thanks. Two follow-ups. I guess, one on the host, Sid, and I know the details are limited, but it seems as if, my understanding is that you got involved really in the host business to try and help your customers solve a problem that they were having. I’m wondering if, should we look at that host business as a function of the customer design?

In other words, it’s more applicable to a patent stack of RGB versus a non-patent issue and then also, your comments, I think at a recent conference seems to suggest that you weren’t sure if because that business is a commodity and I think you used the analogy of chocolate and milk with the host being the milk that that’s a business that you’re going to be in longer term. So, I’m just wondering if there is any update on that as we look forward? Then I do have one follow-up.

Steve Abramson

The hosts are all applicable to all the different designs whether it will be patent or not. So I guess I’ll answer that part of the question. Sid?

Sid Rosenblatt

I mean, it was developed for our green emitter to get the best possible performance from our green emitter. And as I’ve said, the host business historically is a commodity business and if in the long run we have to compete on a commodity basis, it’s not a business that we are setup to be in. We do think that the host business though if we can continue to develop higher performing materials, it is a business that we want to be in because we can have higher margins with higher performance.

Jed Dorsheimer – Canaccord Genuity

Okay. And then one follow-up. Sorry to beat the horse here but in terms of the guidance, I know you’re in a difficult position in terms of what you can say and what you can’t say. But if, just if, we can stay within sort of orders of magnitude, if we look at Samsung this year, it was like roughly $30 million, $35 million, if we look at their capacity increases and sort of take the license out, is it fair to say that a significant portion of that $90 to $110 is really based on non-Samsung customers coming into the market?

Steve Abramson

I think we probably beat the horse well enough, Jed.

Jed Dorsheimer – Canaccord Genuity

Okay. Thank you.

Operator

And we’ll take our final question from Jagadish Iyer with Piper Jaffray.

Jagadish Iyer – Piper Jaffray

Thanks. Just a quick follow-up. I wanted to find out on ‘012, how should we think in terms of your chemical sales, the split between the host and the emitter of ‘012…

Sid Rosenblatt

Yeah. I…

Jagadish Iyer – Piper Jaffray

… roughly percentage wise if that should be helpful in our modeling?

Sid Rosenblatt

I really can’t answer that question mainly because we haven’t given guidance specific to each separate material and as we said, I mean, the host business is one that is one that is very lumpy because it is new. So, honestly, I can’t answer your question.

Jagadish Iyer – Piper Jaffray

Okay. That’s fair enough. Thank you.

Sid Rosenblatt

Thank you.

Steve Abramson

Thank you.

Operator

There are no further questions at this time. I’d like to turn the conference back to our speakers for any closing remarks.

Steve Abramson

We’d like to thank you all very much for being on the call. As you are well aware, if you have any specific follow-up questions, I’d be happy to answer them. You can either call me or send me an email and I’d be happy to answer them and thank you again for your time.

Operator

Thank you, everyone, that does conclude today’s conference. We thank you for your participation.

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