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Executives

Sid Rosenblatt – Chief Financial Officer

Analysts

Rod Hall – JPMorgan

Universal Display Corporation (PANL) JPMorgan TMT Conference Call May 17, 2012 1:10 PM ET

Rod Hall – JPMorgan

Okay, I think we are going to get started. My name is Rod Hall. I’m with JPMorgan. I am our communications equipment analyst. I have also become our glass analyst, it turns out covering Corning. And so we are very interested in what’s going on in the OLED world and we’ve got the pleasure of having Sid Rosenblatt here with us from Universal Display Corporation. UDC is one of the leaders in OLED technology. It has been for quite a while. So, we are very pleased to have you here with us very interested in what you've got to say. And with that I’m going to kick off with some Q&A and then we are going to open up to the audience as well if you have questions get them ready, because you will be able to have a chance to ask Sid questions if you have them.

And I guess the first thing I’ll start off with just something kind of topical, Sid, if you could talk to us a little bit about some of patent activity in Japan, I know you were just kind of updating me there has been some back and forth in terms of appeals and so on over OLED patents, so an update on that would be great to have?

Sid Rosenblatt

Okay. Well, thank you very much for having me here. And the issue we are an IP licensing company. We have more than 1400 patents issued in pending worldwide and our technology is being used by Samsung and a number of others and it is we have signed license agreements worldwide.

And we have a number of jurisdictions, where we have had administrative office actions and proceedings. In the U.S., we have over 600 patents of which we had no proceedings, where we have no claims either from customers or anyone else. But in other jurisdictions, we have had a number of them, one in Europe, in Japan and in Korea. I will talk about the ones in Japan first, because it is topical. We issued an 8-K this morning. There were two decisions, one of them is the appeal of the decision that occurred at the trial court level and the high court level affirmed the lower court level. And I will go through what this stuff means and some of you guys maybe lawyers.

Essentially what they said is for our organometallic iridium complex patent, they acknowledge our invention and they upheld most of the patent, but they rejected the first three claims. And in the first three claims, it is very broad claims. And when you file patents, you have multiple claims some patents have hundreds of claims, but we normally will put the broadest claim first and then work your way to the narrowest claim.

In the U.S., very broad claims are issued quite a bit. In other jurisdictions it gets narrower and narrower and Japan is historically known for being very narrow in its interpretation. I am not trying to make excuses for why these claims were disallowed. We do have another level of appeal. We think that they are incorrect, but most of this patent is still valid and it is organometallic patent for iridium complexes that go into an OLED device. In English, these are the only materials that actually work today that phosphorescent OLED devices. This same patent was just affirmed. All of these claims were just affirmed in a European decision.

So, just to give you an idea that there are differences depending on where you go, the exact same claims were just upheld in Europe and they are valid in the U.S., in Korea, in China, in Taiwan, and in other jurisdictions. The second decision that just came down was at a trial court level, which essentially the same thing, it recognized our invention of phosphorescent technology. It recognized the force, but they did not recognized the full scope. So, essentially, they invalidated a number of the first few claims, but gave us the remainder of the claims. We again think that this is incorrect and we are going to appeal this. So, this is a hot topic. I’ve actually been in one-on-ones on morning, but my phone has been ringing off to hook and we did do an 8-K this morning about this. So, I – this is the first chance I’ve actually had to speak about it, that was not in a room. So, it is something, it is part of our business. We understand that these patents are important. We do not believe that any of these decisions will impair our ability to license our technology in Japan or any place sales in the world based upon these decisions. We have three in Europe that we’re going through and there is a number by a company in Korea that’s challenging our material patents because they said they want to get into the phosphorescent material business but they are blocked by Universal Display and we agree with them.

Rod Hall – JPMorgan

Is there anything that keeps you, that protects you beyond just the patents so let’s say your fields don’t play out quite the way you like may be you don’t get all the claims substantiated in Japan or any other jurisdiction, what other protections does UDC have in that case since you are a mostly licensing company, can you talk us through that?

Sid Rosenblatt

Well in licensing business our patents are obviously our asset and we do not believe that we will loose patents or any of these in any other jurisdictions, the U.S. which is where the way the patent now works is its made or sold. So if you make it in Japan and sell it anywhere else it will still be covered by the patents else where. We are continuing to file new patents; we actually have 200 patents in the last years. We have multiple layers of patents for phosphorescence and for those of you who do not know much about us, it may make sense to just talk a little bit about what an OLED is and how this works.

An OLED is the screens that are in all the Galaxy phones and Samsung and LG have actually demonstrated 55 inch TVs and we are talking about introducing them. An OLED is very different than other technologies for displays, your liquid crystal display or your laptop that you have essentially has a bright white light behind it, the light shines through a transistor, reflects off of layers of liquid crystals. An OLED is very different. There is no lights in OLEDs. An OLED is layers of film between two pieces of glass and one of the layers of that film are self immersive molecules, so when you turn them on, when you put current in to them, the molecules actually light up, its not a reflective technology, it is not a technology, it is a backlit technology.

It gives you very good picture quality, one is very thin, it’s as thin as whatever you put it between glass, plastic or metal foil, you have a black background, so you actually have a million to one contrast ratio, they inherently switch on and off three times faster than video rates and the key to Universal Display’s technology is we have patents on this process that we call phosphorescence, which essentially means we use 75% less power to get the same amount of light out of the molecule. So if you put it in your cell phone you extend the battery life, if you put it in large area TVs the circuitry could be less robust and you don’t have to spend as much money on managing the heat and that process of phosphorescence is really the key to the first level of patterns that we have.

We also have basic patterns on making him on plastic and flexible substrates on lighting applications on encapsulation technologies on stacked OLEDs. There is a number of others that we have this on. And they have been issued in every major jurisdiction around the world.

Rod Hall – JPMorgan

Okay. Let’s talk a little bit about just OLED technology bigger picture. There is a lot of discussion especially among people who cover coating but generally in the industry about where this is all headed. I guess I want to start with a shorter term outlook for OLED and then maybe get into the longer term, shorter term as OLED expand beyond just the handsets into bigger form factor displays. It clearly will and it’s a very high quality display technology from my experience anyway. Do we get to the point where there is a big debate over where there as we move to TVs next year that are more affordable and we’ll have OLED this year that those TVs will whether those TVs will have two pieces of glass once ceiling the back of the OLED panel or not have two pieces of glass. And I just wanted to get your opinion on that, you’re kind of a technology oriented by standard in this whole thing?

Sid Rosenblatt

The by standard is probably the right word. Today, OLED use two pieces of glass and they use coating glass. One other reasons they use two pieces of glass today is oxygen and moisture cause OLEDs to degrade faster. Glass is a very good oxygen and moisture barrier. So you have two pieces of glass and then you encapsulate them. One reason that OLEDs are really starting to move into the market over the past its then it was five years ago is the lifetime of these materials has gotten significantly longer that manufacturers are able to now commit to build TVs, so that the lifetime of these materials meets their TV specifications. And they measure these from initial brightness to 50% or 70% or 95% brightness, they’re actually very similar to your cathode ray tube over time they’re not quite as bright.

In order to get – in order to move to a single piece of glass or to no glass you need to work on barrier layer technologies and there are some technologies that you – that are being used today Samsung actually had a prototype of a cell phone with a plastic display at CES and they’ve actually talked about introducing it by the end of this year. It is non-glasses no glass either top or bottom it’s hard coated, it reduces the thickness and it reduces the weight of the device. It is still needs some development work the barrier layer technology is the key. And we actually are working on some barrier layer technologies that are high volume manufacturer.

How quickly it will transition I honestly don’t know the answer to that I mean that’s really the manufacturers I think if they can save weight and save costs they will move to less glass obviously the TVs are they break and are the number one reason your cell phone or your iPad or your laptop is returned to the manufacturer because you dropped it and broke the glass. So having an unbreakable display is very desirable. I do think it will start to move in that direction how quick I honestly can’t answer that.

Rod Hall – JPMorgan

Okay. Bunch of questions on that, but one is on the handsets themselves we all - well those of us who follow Apple we know there was a big debate with Steve Jobs over whether it a big glass or plastic on the first iPhone. And in the end the guys are doing for glass one out because it’s unscratchable. Do you think that’s an issue or is it Samsung goes to a plastic displays on these smartphones, do they – are they easier to scratch or they solve that problem by now?

Sid Rosenblatt

I know that was the issue, but I actually don’t know the answer to that. I mean I think I do know that the hard coating on it and the durability of the device is very important.

Rod Hall – JPMorgan

Okay.

Sid Rosenblatt

And I don’t know the answer.

Rod Hall – JPMorgan

Another question that comes out of that comment is it sounds like I mean the device Samsung has in mind always what we believe and I’d be interested in because you probably know is a form factor very similar to what we are used to, it’s a rigid phone just happens to have plastic display, but from a look and feel point of view may be its thinner or may be its slighter, but it looks kind of similar to what we used to the smartphones. Is there a point though that I mean OLED one of the big visions of OLED I remember back in mid 90s was we’re going to be a little roll displays up and put them into different form-factors and all kinds of these stuff. How far away from that kind of innovation are with actual devices we’d be able to buy.

Sid Rosenblatt

Well that clearly in the 90s end even 2000s, we are actually on our website have a device that depend that you pull the screen out and back and that is the ultimate goal to have a truly flexible, bendable device. How far away it really relates to barrier layer technology and durability, bendable, confirmable transistors, there is a lot that go into a display that is just not OLED related that you need to have robust enough to have in a bendable, flexible display. For the Samsung it is the same form factor, it is flat they actually have the information going around the sides also so the screen actually conforms. So, I think the first applications for a flexible display will be a confirmable display. It may not be flat, it may fit your hand, it maybe curve depending on your application, but not really bend and move. One of the other prototype to Samsung has shown it is a flip phone and when you open it up you have a screen that goes across the entire device so that actually has a hinge and a flexible display.

I think over the next few years we’re going to see more and more move towards truly flexible and bendable displays, but a timeframe I mean, in the 90s OLEDs were their own worst enemy, because they were saying that OLEDs are going to replace the LCDs and they’d be perfectly honest nobody could even make one in the 90s and the lifetime of the materials was 10 minutes.

Rod Hall – JPMorgan

So, right, it’s yeah I remember Sherwin telling me they burned out in a matter of seconds I think…

Sid Rosenblatt

10 seconds.

Rod Hall – JPMorgan

First got involved in minutes and now it’s up to years. Do you think I mean Samsung is, it sounds pretty innovative even without the ability to roll things up it sounds like devices coming at the end of the year with this kind of technology could be – it could be pretty attractive for consumers? Is Samsung the only company that’s going to have access to this stuff I know you’re a partner with Samsung or are there others that you think will produce similar form factor devices with similar technology?

Sid Rosenblatt

Our relationship with Samsung is non-exclusive. So, LG actually has demonstrated plastic and bendable displays. We actually delivered a risk mounted unit to the government on the one of our government programs with flexible technologies where LG made the backplane, they did the transistors on stainless steel foil. We put the OLED on top of that and then L3 Communications actually made the harness that it went on. So, you had a six inch screen that a soldier can put on his risk, send receive information just like your laptop except the way to £1 or £1.5 versus a £20 ruggedized laptop. So we are a non-exclusive license sort of our technology and LG has worked on it and we believe that there are others who have demonstrated plastic or unbreakable display. So I think it will be industry-wide.

Rod Hall – JPMorgan

So when it comes time to do my holiday shopping issue am I going to handle whole bunch of the – do you think I’ll have four, five different products to choose from or do you think it will be one or maybe two and the real – the real multiplication of the number of profits - profits of the products as analyst and analyst referring is what the of products comes next year?

Sid Rosenblatt

On flexibles or on unbreakables?

Rod Hall – JPMorgan

Yeah on these confirmable displays on….

Sid Rosenblatt

I think the only one that I have seen or have read about is this one product that Samsung has.

Rod Hall – JPMorgan

Okay.

Sid Rosenblatt

Obviously anyone else, I mean right now Samsung and LG each have just announced 55 inch OLED TVs glass-based for $9,000 to $10,000 a piece. But it is early adoption and mass production of those probably will not start until the end of 2013 or early 2014.

Rod Hall – JPMorgan

Okay, okay. Can we go back to the barrier technologies a little bit, I just one thing I know its coming people are working on it. But, anything you could give us with respect to timing on that would be very interesting to us. I mean is it, what we see in those technologies mature enough to be deployed in 2013 is it 2014. How soon do you think its going to be possible to?

Sid Rosenblatt

Well the technology is being used today by Samsung is a process that a company called Vitex invented Samsung, but Vitex was a small company in California. It is a multi-layer encapsulation process. So you literally take your device and put it into a chamber where you put a polymer on it, then you need to pull it out and you actually turn it into different directions, so that you have different directions as moisture barriers and oxygen barriers. We don’t believe that is a real high volume manufacturable process. Our process is a single layer of material that you deposit in a sputtering chamber. And we’re scaling it up, is it probably not 2013 in high volume but it could be beyond that.

Rod Hall – JPMorgan

Okay. So maybe by 2014 we are at a point where these kinds of processes the technologies are available and we don’t need the panel glass on the back and that would go for TVs as well as with all sizes of devices or?

Sid Rosenblatt

Well it theoretically will work with all size of devices. The question is in displays you tend to go from small to large as you get your yields up. So whether or not the equipment manufacturers who will make this equipment can scale it up or it will be for small areas and then work to larger areas as most equipments do. So it is something that we are working on today and we honestly it is not our business of making the equipment.

Rod Hall – JPMorgan

What now you’ve used a technical term there. I didn’t recognize the sputtering chamber what exactly is that is it something?

Sid Rosenblatt

It’s just a method of putting materials down in a vacuum.

Rod Hall – JPMorgan

Okay, okay. So back to timing would you assume then if you mean do you assume that 2014 is the year where we got encapsulation technologies for smaller size screens maybe 2015 when we start moving into bigger screens or even 2016. Is that the way to think or?

Sid Rosenblatt

To be honest it’s hard to tell.

Rod Hall – JPMorgan

Okay.

Sid Rosenblatt

Something is actually if they adopt it and manufacturers adopt the process quicker it can happen much quicker. I mean, we are developing the process, we are doing all we can to enable the industry and to some extent according to me like this is we don’t really care if its glass or plastic. We just want the OLED industry to grow, but we think that having plastic is something that OLEDs can do that others cannot, that we are just accelerating the adoption.

Rod Hall – JPMorgan

Just wondering what your big picture thinking is whether the display industry goes let’s not limit ourselves just to TVs, but may be things like this as well, do you think that we are evolving toward like – when those encapsulation technologies become available, do we see products coming out I mean am I going to be able to go buy a 55-inch TV that rolls out from a plastic sheet and rolls back up into a little roll at that point or is that a technology that’s still again another couple of years down the road, I mean how does it all…

Sid Rosenblatt

You’re quite younger than I am, so you may see it.

Rod Hall – JPMorgan

Like you going

Sid Rosenblatt

I know you tend to go anywhere. I know you tend to I mean that is been the founders vision and our vision actually since we started the company. We called our Pandora mascot when we formed the company, it was literally a pull out then and how quickly that can occur, we started the company in 1994, we are just getting product into the marketplace in real volumes last year and this year. But I do think that it will accelerate and where we see it in five years, that’s probably more of the timeframe than two or three. Its -- there are other – there are other as I said there is TFTs, there is a number of technologies also have to be developed. OLEDs are actually the simplest part. Organic materials are very playable, they bend and you can bend them and they are very resilient. The question is can you have transistors, connectors number of other technologies, because you actually bend and score if does it break, I mean there is lots of issues with getting something that truly is bendable and flexible.

Rod Hall – JPMorgan

So, we probably the way this goes is as we work on encapsulation techniques that allow for a single panic of glass much thinner displays, but still glass-based over the next two or three years and then maybe as we get out on to four or five years from now we start to get in to – get to the point where processes have come along technologies come along where we might see some bendables replaced or to be merged.

Sid Rosenblatt

Yeah I think that is really in the court of the manufacturers as suppose to us what we work on this making sure that our materials meet their specifications that the lifetime of the materials continues to get better and that they adopt more of our materials and there are more manufacturers getting into the marketplace. So capacity growth in all OLEDs irrespective of the substrates is much important to our businesses.

Rod Hall – JPMorgan

Okay. Well let’s talk on lifetime a little bit it gets one of the things still an issue for OLED at least in my understanding. How long one of these displays last, let’s say, I decide and I don’t think I will consider in a state of the markets, but I decide to go buy $10,000 TV in this year. How long is that thing it will last me and next year what’s the life time of these products now?

Sid Rosenblatt

I do hope you by one realizing. The display lifetime the rating of the material is from initial brightness to either 50% brightness or 70% brightness or 95% brightness. And today we have materials, red materials and green materials that near exceed all the specifications. We have a 100 -- I’m sorry 1 million hours of lifetime from initial brightness to 50% for some of our red materials to 95% we have 50,000 hours, 50,000 hours or six hours a day for 20 years. The device the Samsung Galaxy phone my understanding is the lifetime rating for this screen is 50,000 hours. So I don’t think any of us are going to have this for 20 years unless we got some guys in the audience who have their old Nokia phones with a little green screen on it. So there maybe some who don’t have any of those.

Rod Hall – JPMorgan

I hope you don’t have any of those.

Sid Rosenblatt

Maybe, maybe. So lifetime, we as a company made a commitment in 2004 that we needed to increase the efforts that we had in the lifetime of the materials and we were working with PPG industries who is our material supplier. And we hired a number of their researchers built our own chemistry labs. And we now have more than 70 technical folks pretty much all on the chemistry side. We have, I think 30 organic chemist and above. And we have taken the lifetime of these materials from 20,000, 30,000, 40,000 hours to 50% brightness to 600,000, 700,000, 800,000 hours, a million hours to 50% brightness. So, we've made significant improvements in the phosphorescent emitters for red and green.

The blue emissive material that goes into displays are phosphorescent material does not meet commercial specifications today. But there is existing materials, which are – what we call fluorescent materials or such materials that were originally invented under the codec technology, which is not power efficient, but these materials had been around for a longtime and they are the materials that are been used for blue and have been used in green or red has been in all devices pretty much since 2007 when we signed our first license agreement. So, I think that the material side is not the issue anymore. So, I would expect that the guarantee we’ll get on that will be four or five years or something like that, I actually don’t know.

Rod Hall – JPMorgan

Okay, but it's – the lifetimes are not a big deal, what about blue, when are you – you’re working on blue when might you have the new option?

Sid Rosenblatt

That’s a good thing. It’s a good question, I get that question quite a bit blue and mixed material is a very difficult challenge. LEDs and lasers, the blue color was the last one that was discovered with any lifetime debt indebted. It has to do with the wavelength in the emissive spectrum of blue, which is very short, which the scientists tell me has a very short wavelength means it is in unstable molecule. The big hurdle five years ago was people said you will never be able to get a blue material to phosphorous. And by phosphorous, the way that these molecules actually work as you put current into a molecule goes into excited state creates energy and it recombines to its original state and then the energy that comes out in the form of light or heat.

The Kodak technology or its called fluorescence, 25% of the energy is converted into usable light, 75% is wasted as heat. Our process of phosphorescence converts that 75% into usable light. So, that’s where our energy efficiency is pretty much the industry said you will never get a blue molecule to the phosphorous. You’ll never be able to convert that let's call it triplet energy into usable light. We can do that for light blue for lighting applications, we actually have devices that lasts for 30,000 hours to 70% brightness for lighting for white light.

For deep blue which you need for displays, we are not there. And we’ve made a lot of progress, but we still do not need the specs. And to be honest, I’ve been asked this question for five years and we are not there yet. We will be there tomorrow, we need significant discoveries and engineering to get us there and we really can’t predict.

Rod Hall – JPMorgan

Okay. So it’s still working out there.

Sid Rosenblatt

It is still working. If somebody makes a win and the cheer and then at the blue LED, pretty much the industry slapped our head and said why don’t I think of that, that wasn’t that hard. To some extent, it was like a nice ship movement and what we need is one of those.

Rod Hall – JPMorgan

Okay, okay. Can you talk to us a little bit about your business, I know it’s a licensing business but then there is always talk about material supply. So how much – how important is the material supply, is that fade over time and license can really – becomes 99% of what you are doing or…

Sid Rosenblatt

Exactly the opposite.

Rod Hall – JPMorgan

Okay.

Sid Rosenblatt

We do have a licensing business, last year of our $60 million in revenue, $37 million was from material sales and so we have a license agreement with Samsung where we get fixed payments each year over the 220.17 in 2012 where we get $30 million in the license fee. We do expect our material sales to then end to others this year to be higher than that. We’ve given guidance for the year of 100 – from $90 million to $110 million. Material is scales as capacity scales. So, in this device within these square inches of glass, I have to make up number of $0.10 of material. But if I then move to a piece of glass that is 10 times the size I will get 10 times the square – the material, the ASP may not scale at the same rate, because so as there is more capacity our material business will actually grow linear with the capacity whereas the licensing side and a royalty side probably has more price erosion built into it.

Rod Hall – JPMorgan

Okay.

Sid Rosenblatt

And for OLED lighting which is something we haven’t really talked about, but and OLED light source is actually a very simple device this screen probably has an ASP of $25 with has I don’t know -- assumes the dollar content of ours a once foot meter – one foot square of light source may still have an ASP of $25, but it will have 12 times of square foot of the inches of material in it.

Rod Hall – JPMorgan

Okay. And on the material – why is it so important to provide the material and is that a defensible business for you or other people out there to start making this stuff. It sounds like it's probably not very easy to make?

Sid Rosenblatt

Well it’s a, is not easy to make but these are patented molecules. So we have intellectual property on the architecture of using phosphorescent emitters and using organometallics and lots of different things we have basic patents on architecture of flexible displays and a number of other areas. We also have specific patents on these materials very similar to the pharma industry were you have patent on a drug. We have patents on these materials and we look at the material business and we don’t want anyone else in the material business that we intend to stay in it because there is a patented materials we have 90% gross margins on our materials at this time. And we’ve got 97% gross margins on our licensing business.

So we think both of them are important and in addition with customers. So, we not only walk-in and say we have the stack of patents pay us. We are also providing value, providing materials. We work with them on technology development, where we provide them with they say we need materials to do this we want them to be in this color spectrum, we want this slight upward we want all of these different things and we work with our R&D groups to help them move forward. So we do everything we can that help move the industry forward in addition to getting license fees and royalty. So, all of that we provide value to our customers as opposed to just walking in and saying pay me.

Rod Hall – JPMorgan

And then why don’t you want anybody else to make else materials one on just license as other people let it with them worry about making them?

Sid Rosenblatt

90% gross margins.

Rod Hall – JPMorgan

Okay. Fair enough.

Sid Rosenblatt

And we see that as a big piece of our business I mean, it will be more than 50% of our revenues for the foreseeable future.

Rod Hall – JPMorgan

Okay.

Sid Rosenblatt

And we are continuing to develop new molecules so that when the patent is either on the architecture or on some of the other ones go away which we don’t believe that will happen for sometime we will continue to develop new and better materials so we will always be selling patented materials.

Question-and-Answer Session

Rod Hall – JPMorgan

Okay. I want to make sure people in the audience have a chance to ask questions. So, just open it up for questions now, is there anybody have anything up that you want to ask Sid? There is a question here in the middle.

Unidentified Analyst

Yes, can you talk about your views on high polymer materials?

Sid Rosenblatt

I'm sorry.

Unidentified Analyst

Can you talk about your views on high polymer material? Is it competing your technology or not?

Sid Rosenblatt

Was that did you say high polymer multilayer?

Unidentified Analyst

Yes, (indiscernible)?

Sid Rosenblatt

Our polymer materials, polymer OLEDs?

Unidentified Analyst

Yes, high polymer.

Sid Rosenblatt

Yeah. We believe that our phosphorescent patents cover small molecules and polymer technology, our patent say if we use it in an OLED device it’s covered by our intellectual property. So, if you have a polymer that uses a phosphorescent emitter we believe that our patents cover that.

Rod Hall – JPMorgan

Okay, are there questions?

Unidentified Analyst

Thanks for taking the time. I do have a question for you on the Samsung license fees, so we don’t exactly know how much you all get every year, but I think we have – we know for this year it’s 30 million and I believe in the 10-K it says its linked to the group, when the contractor sign is linked to the overall growth in the OLED market do you know what source you all use in the agreement to link it?

Sid Rosenblatt

We get this question quite a bit. When we sign the Samsung license agreement there was a negotiation process where we each looked at the market, we looked at what we thought the market will do, they’ve had their projections, they were independent sources and we had looked at royalty rates, we looked at market share and we came up with fixed dollar amounts in each year. And those are based upon market projections and agreed upon market projections.

We can’t really disclose what numbers that we use because I can’t tell you the number for next year, we disclose the number for this year because the accounting for requires us to recorded twice a year as oppose to on a quarterly basis and we felt that was important for disclosure purposes. It is based upon overall growth in the OLED market when we negotiated the deal. So, if you look at some projections, it doesn’t matter of whose. What you think the OLED market would have looked like, that’s a decent guide for where we expect the revenues to go. But I don’t have answers for you.

Unidentified Analyst

Can you manage the date when you negotiated the contract?

Sid Rosenblatt

We signed it in August of last year.

Unidentified Analyst

August of last year, okay thank you.

Rod Hall – JPMorgan

So you are just to clarify that deal is based on what you thought in August of last year and if it theoretically changes tomorrow….

Sid Rosenblatt

It does not.

Rod Hall – JPMorgan

The deal won’t change

Sid Rosenblatt

It is fixed. We know what we announced out each year through 2017.

Rod Hall – JPMorgan

Okay.

Sid Rosenblatt

And in addition, they have guaranteed minimum purchase of materials red and green phosphorescent emitters through 2017 and it increases each year also.

Rod Hall – JPMorgan

Okay. Are there questions out there, yeah there are couple, – she told me to cut. We are getting – we may take one more and then we will finish so with that.

Sid Rosenblatt

I can be happy to answer the questions out in the hall if you would like.

Unidentified Analyst

Can you talk a little bit about I know there is chatter of potential competition particularly in the green emitter side. Can you talk a little bit about competitive – any competitive threats if there are any obviously down as we move on probably bottom line? And how as these prices build – ASPs will go down as Samsung and other folks end up buying more volume right, (indiscernible)?

Sid Rosenblatt

Well, in terms of other materials, we do not believe anybody can make a phosphorescent emitter that does not violate our patents. Today, all the phosphorescent emitters are organometallic iridium complexes, they are dealing ones at work in products and our patents have been issued around the world. So, we do not believe anybody can make them without violating our patents. So I know that our question has come up in a number of times and there are been a number of companies that about phosphorescence in their websites, but we do not know if anybody is making materials and selling it commercially.

Unidentified Analyst

Okay.

Sid Rosenblatt

And I think probably some erosion on pricing, on because as not part of erosion from us, but ASPs will come down just in any display as the volume goes up, the efficiencies are there.

Unidentified Analyst

Okay you will be getting the bulk of discounts to your customers that need to those of you and you are able to hold to that ASP?

Sid Rosenblatt

We on the materials.

Unidentified Analyst

Yeah.

Sid Rosenblatt

Yeah, on materials, we have volume discounts for our customers. As their volumes grow, we have discounts built-in. We believe though that we will be able to maintain our margins, because as our volume grows we should be able to also get economies of scale.

Rod Hall – JPMorgan

Okay, good. I think we’re over time. So, thanks.

Sid Rosenblatt

Thank you.

Rod Hall – JPMorgan

Thank you for coming. Thanks everyone for attending.

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