Universal Display Corp (OLED) 2011 Q1 法說會逐字稿

Good day, and welcome to the Universal Display Corporation first quarter 2011 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Joe Hassett. Please go ahead, sir.

Thank you, and good afternoon, everybody. 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 express written consent of Universal Display is strictly prohibited.

Further, as this call is being webcast live and will be 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, May 9th, 2011. 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.

With that, I would like to turn the call over to Steve Abramson, President and CEO of Universal Display. Go ahead, Steve.

Thank you, Joe. And welcome to everyone listening on today's call and webcast. This afternoon I will start with a quick overview of our first quarter financial results, discuss highlights from the quarter, and update everyone on our plans to expand usage of our PHOLED technology and materials in both the display and lighting markets. Tim will then follow with more detail on our financials before we open the call to questions. All-in-all, the first quarter was a good start to what we believe will be a very exciting year. Quarter over quarter, our revenues were up, operating loss was down, and our balance sheet became significantly stronger. We were also cash flow positive in the first quarter. Tim will give you the details.

Of course, our success stems from the growing demand for bright, beautiful energy efficient OLED displays and powered by our Universal PHOLED technology and materials. There has been no slowdown in the torrid pace of OLED display market growth. Let me quickly review with you what some of the industry analysts are saying about the market. According to Display Search, AMOLED sales exceeded $1 billion in 2010. They have just raised their AMOLED revenue projections to reach about $4.2 billion this year, $7.5 billion next year, and $10.7 billion in 2013. And according to a recent Computer World article over 40 million active matrix OLED phones shipped in 2010. Google's Nexus S Smartphone, AT&T's Pantech laser, Verizon's Droid Incredible, and the Nokia E7 are among the leading smartphones incorporating OLED displays.

Samsung recently launched the Galaxy S2 with its high resolution super AMOLED display panel. According to Shin Jong Gyun, President of the Wireless Business Division of Samsung Electronics,the new model has much evolved from its predecessor Galaxy S. Some 14 million units of which have been sold since June of last year, and will fascinate even more users. The cutting edge handset will be provided by 140 mobile carriers at over 120 countries, and will bring us another Samsung smartphone boom in the global market.

To meet the increasing demand, manufacturers are bringing new capacity on line as soon as this year. LG Display is reported to be ready to start commercial production on a gen 4.5 fab. This fab has a design capacity of about 12,000 substrates a month, which equates to about 3 million, 3 inch cell phone sized displays per month. According to reports, the first line of Samsung mobile displays new gen 5.5 fab is almost complete, and will start producing panels soon. When this fab is fully operational, SMD will be capable of producing 30 million 3-inch cell phone sized displays per month. SMD supplied nearly 90% of the 46 million displays is shipped in 2010 according to market researcher iSuppli. And a spokesman for SMD said they project shipments to grow by a factor of 35 to 700 million units by 2015.

Meanwhile, AU Electronics has said that they are scheduled to start mass production on a new gen 3.5 AMOLED linein the second half of this year. From these reports, it appears that we are on the verge of eliminating a major bottleneck to increase OLED production. This should result in corresponding increase in the demand for our proprietary OLED materials and technology.

A little further out on the horizon but nevertheless, getting closer every quarter, manufacturers are continuing to prepare for the introduction of OLED televisions. Barry Young, Managing Director of the OLED Association sees 1 million to 2 million 30-inch to 40-inch OLED televisions in 2012, although they are expected to be costly. In 2013 and 2014, Young sees 5 million to 6 million OLED televisions and by 2015, 10 million to 15 million OLED TVs priced very competitively with LCD and plasma units. There have been reports LG Display, Sony and Samsung all plan to launch OLED televisions in the next few years.

We also continue to advance our flexible display technologies, which Semi predicts will be a $10 billion market by the end of the decade, with applications such as mobile displays, Enewspapers, and even wearable displays. Our WhiteOLED lighting technology is also making inroads into the approximately $100 billion lighting market. Most recently, we were honored by the US Department of Energy for our significant achievement in solid state lighting R&Daccomplished under DoE funded programs. It isone of only four companies to receive a Transformations in Lighting Award, we were recognized for our advances in white OLED lighting performance using our high efficiency OLED technology and materials. Specifically, along with project partners, Armstrong World Industries, the University of Michigan, and the University of Southern California, we successfully demonstrated two phosphorescent OLED luminaire systems, the first of their kind in the US. This achievement marked a critical step in the development of practical OLED lighting in a complete luminairesystem, which included a decorative housing, power supply, mounting and maintenance components.

To capitalize on what is certain to be an exciting increase in demand for OLED displays and lighting products, we have been strengthening our organization. We are investing in infrastructure support for our growth objectives. This past quarter, we established a new facility in Hong Kong to build on and expand our footprint in Asia. This facility will host a world-class chemistry laboratory to support our expanding research and development initiative in OLED materials and technologies. These investments will strengthen and broaden our line of OLED materials to support our customers in the fast growing OLED market.

We also established a new subsidiary in Japan to better serve and support the needs of our Japanese OLED display and lighting customers and partners. Establishing a subsidiary further demonstrates our commitment to providing comprehensive business and technical support to our OLED customers and partners in Japan. This compliments the new subsidiary we established in Korea last year. We have also announced a number of technological advances.

This quarter, we unveiled a novel, single layer encapsulation technology for plastic substrate systems and thin film devices, including rigid and flexible OLED displays and lighting panels, developed in collaboration with our research partner, Princeton University, our single hybrid organic/inorganic layer approach has been demonstrated successfully as an encapsulate for flexible and rigid OLED devices. The encapsulation layer provides an effective permeation barrier to protect thin film devices from environmental conditions, such as moisture and oxygen which is critical for the long-term performance of OLED display and lighting products. Using environmentally benign and non-toxic materials and a potentially low cost process, the barrier film technology may also be well suited for high performance plastic substrate systems, and other thin film devices such as photovoltaics and batteries. This is an elegant solution to improve the manufacture and performance of OLEDs and a range of other thin film devices.

One of the other challenges we are working on is to further development new deposition methods for the cost effective manufacture of large area OLED displays and lighting devices. One method in which we have been making progress is in solution-based manufacturing processes. On April 21st, we announced advances in our Universal P Squared OLED solution processible phosphorescent OLED material system.

These advances drive OLED performance closer to the levels currently obtained using vacuum based manufacturing today. Lowering the cost of OLED technology will open the door to even more applications, potentially expanding the market opportunities significantly. In two weeks, the Annual Society for Information Display Convention will be held in Los Angeles. If you are there, please visit us at our Booth Number 1212.

Let me briefly close with an update on our strategy and potential uses of the proceeds from our recent public offering. We believe that we are the largest and most innovative technology materials developer in the phosphorescent OLED space. While it has taken us 15 years to get to this place, the OLED revolution is just beginning. We intend to leverage and expand our position to grow with this rapidly expanding market, thereby enhancing shareholder value. We believe there will be many opportunities to do this as the OLED market expands, whether through an enhanced patent portfolio, additional material sales outside of phosphorescent emitters, expanded technology offerings for flexible displays and lighting products, or additional pathways.

We will continue to update you on our progress in these areas as exciting new developments occur. On behalf of all of us at Universal Display, I would like to thank our supporters for their dedication to the Company over the past 15 years. We believe that the events of this past quarter have demonstrated the value of that commitment and shown the incredible potential of OLEDs. We look forward to our growth prospects and to sharing that growth with you in the future.

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

Thank you, Steve. Again, thank you everyone for joining us on the call today. I will be reviewing the financial results for the first quarter, as well as sharing some insights from the quarter, after which we will open the call to take your questions. Revenues for the first quarter totalled $9.6 million, an increase of $5.4 million, or 126% compared to revenue of $4.2 million for the first quarter of 2010.

As mentioned on our last call, revenues on a sequential basis compared to the fourth quarter reflect both the seasonality we typically experience in the first quarter, as well as the lack of any new industry capacity coming online. Commercial revenue was $4.7 million for the first quarter, an increase of 159% compared to commercial revenue of $1.8 million for the first quarter of 2010. The increase was primarily due to increased commercial chemical and royalty revenue, which mainly represented chemicals shipped and royalties received under our patent license agreement with Samsung SMD.

Developmental revenue was $4.9 million for the first quarter, an increase of 101% compared to developmental revenue of $2.4 million for the first quarter of 2010. The increase was primarily due to a $1.6 million increase in development chemical sales, and nearly an $800,000 increase in contract research revenue. The increase in contract research revenue reflects an overall increase in contract value this quarter compared to the first quarter of last year. Development revenue was down sequentially from $6.3 million in the fourth quarter of last year, mainly due to decreased sales of development chemicals.

As we have said in the past, we cannot accurately predict the timing of development chemical purchases due to the early stage of our industry. Total operating expenses for the first quarter were $12.3 million, up from $8.5 million for the first quarter of 2010. However, sequentially compared to the fourth quarter operating costs were up only $850,000, mainly due to increased costs associated with our PPG agreement.

Research and Development expenses for the first quarter were $6.6 million, up compared to $4.8 million for the same period in 2010. The increase was primarily due to increased costs associated with our PPG agreement, and increased employee costs mainly associated with stock compensation, R&D investment remains consistent with our ongoing research efforts, and commitments to advance our various OLED technologies.

Selling, General and Administrative expenses for the quarter were $3.9 million, up from $2.6 million for the same quarter in 2010. The increase was mainly due to increased employee costs, primarily executive compensation and costs associated with the implementation of an unfunded executive officer pension plan. On a sequential basis, there was no change in the G&A expenses on an operational level. Patent costs increased in the quarter to $1.6 million compared to $781,000 for the first quarter of 2010, and $1.5 million for the fourth quarter of 2010. The increase is due primarily to timing of prosecution and maintenance costs associated with a number of patents and patent applications, as well as the timing of costs of certain ongoing and new patent matters.

For the quarter, we reported an operating loss of $2.7 million, down more than $1.5 million from the $4.2 millionoperating loss reported in the first quarter of 2010. The loss on a sequential basis for the fourth quarter of 2010 was larger due to reduced revenue of $1.2 million, and an increase in operating expenses of approximately $800,000.

Due to the distortion in our results caused by some large non-operational charges that affect our bottom line, we believe that operating performance is a better indicator of our fundamental financial position than is our net loss. In particular, at the end of the first quarter, we had outstanding warrants to purchase approximately 317,000 shares of common stock, which warrants contain a down round provision requiring liability classification. The change in fair value of these warrants during the period resulted in an $8.9 million non-cash expense in our first quarter statement of operations, compared to a $713,000 gain for the same period in 2010. This is an unfortunate side effect of the recent increase in our price of our common stock. The warrants mature in the third quarter of the current year.

For the quarter, we had an income tax expense of $296,000 compared to an income tax benefit of $464,000 for the first quarter of 2010. We filed for and in May of 2005 were granted a five-year exemption from Korean withholding tax or on royalty payments received from Samsung SMD. under our patent license agreement. That exemption remains in effect until May of 2010. Since which time, Samsung SMD has been required to withhold taxes upon payment of royalties to us. In 2011 and 2010, the withholding tax rate for royalty payments made by Samsung SMD was 16.5%.

For the first quarter, foreign income taxes of $296,000 were withheld in connection with our royalty revenues. In contrast for the first quarter of 2010, we reported a sale of our New Jersey NOLs and R&D tax credits, thereby reporting a gain of $462,000. We did not sell any NOLs or tax credits in the first quarter of 2011.

After taking the stock warrant liability expense into account, we incurred a net loss for the fourth quarter of $11.9 million, or $0.31 per diluted share compared to a net loss of $3 million, or $0.08 per diluted share for the first quarter of 2010. For the quarter, cash provided by operating activities was $1.6 million compared to cash used of $443,000 for the same period in 2010. This is the second quarter in a row where we shared cash provided from operating activities. The increase this quarter was mainly due to a decrease of approximately $1.2 million in our operating loss after adjusting for the impact of non-cash items, an increase of $379,000 in deferred revenue and license fees received, and the impact of the timing of receipts of Accounts Receivable.

As Steve briefly mentioned, our financial position is the best in the history of the Company, our balance sheet increased and remained strong with cash, cash equivalents, and short-term investments of $325 million as of March 31st. This was mainly the result of our common stock offering which closed on March 30th, and was led by Goldman Sachs. We sold 5,750,000 shares of common stock at $46 per share, and received net proceed of approximately $250 million.

With that, we would like to take a moment while the operator compiles our Q&A list, and then we will start taking your questions.

Thank you. (Operator Instructions). To ask a question at this time, we will pause jut a moment. We will take our first question from Darice Liu with Brigantine Advisors.

Good afternoon, guys. A couple of questions regarding OLED lighting. It seems that a number of companies are looking into or are already creating OLED lighting color times. Can you provide more color on the level of activity going on with your lighting customers, both developmental and commercial? And can you also talk about when do your development agreements transition to license agreements? For example, acuity lighting last week introduced OLED lighting products for the first time, which they sourced from LG Chemical, which I believe is one of your developmental customers?

Good set of questions, Doris. I guess to start off with, over the past six months to a year, we have been seeing increased activity both among additional lighting customers, as well as within each of those lighting customers. So we do see an acceleration of activity, both with the number of customers, as well as within each customer.

In terms of the transition it is really a gradual transition. As you know, we basically work with the manufacturers, and so, when they sell, when they would sell products for commercial use, very often that would be recorded as commercial revenue, depending on the specific deal. Right now, we are working with customers to enable their prototypes in a wide variety of areas, both through acuity and at trade shows.

You mentioned that in the past six months that you have seen increased activity. Can you quantify somehow, if you see an increase in developmental customers for OLED lighting?

We are seeing more customers, and we are seeing more activity in those customers. Now overall, that is still a very, very small portion of our total revenues. But we are seeing the increase.

Okay. With that momentum growing, and you talked about how your P Squared materials have been, are getting closer, on par with your powder materials. When you talk to your potential customers or your developmental customers, can you talk about what is going on from the manufacturing side, and what type of manufacturing method you are going to be using in your JV facility with Moser Baer? Is it going to be fine middle mass? Is it going to be inject printing or roll printing?

Well, we are developing our materials,so whether people want to use vacuum deposition, or any of the solution processing techniques under development, we want to make sure that our materials will be applicable to those manufacturing methods. So different customers are working with one or more of those manufacturing methodologies. I don't recall if most of our--, most of ours are probably going to be using VT, certainly on the private line.

Okay. Thank you, guys. I will go back into the queue.

Thanks Darice.

Thanks Darice.

We will take our next question from Jim Ricchiuti with Needham & Company.

Thanks. Good afternoon. Question with respect to the commercial chemicals revenue in the quarter, did any of that come from LG Display, or is LG still all in the development chemicals area?

There are a few customers, the bulk of it is from SMD, but there is a small amount that are from at least two other customers

Okay. And Sid, as we look out at that line, is there going to be a bigger shift as we go into the next quarter, or is it the September quarter?

We expect it to start to shift. I don't think LG has announced that, they are making, we have read that they are making samples, sampling products, but I have not read when they have stated publicly when they will start shipping commercial products on a regular basis yet.

Okay. And on the contract R&D side, is that level of revenue that you saw in Q1, is that sustainable? Or maybe you could just--?

No. It is up, and we expect it to be up in the next quarter, not from this number, but the number for the year, I expect it to be in the $5 million to $5.5 million range.

Okay. And then is there any guidance you can give just with respect to R&D? How should we think about that? Should there be much of a change going forward from these levels?

No. We have added some folks in the Hong Kong laboratory, and I don't expect from our standpoint here to see any significant increases, one of the issues, speaking of stock compensation for some of the officers. It always changes based upon the stock price.

That is something we don't have much control over.

Right. That is the wild card. And I wonder if you could also give an update on the green phosphorescent material, and where you stand particularly as we get closer to the SID Conference. If you could talk a little bit about what we might be hearing there?

We are continuing to provide it to a number of customers and the materials have been qualified. A number of customers are putting them in test lines, we really don't have anything that we can announce at this time in terms of who will adopt green. I know where your question is coming from, and the question is when is Samsung going to adopt green, and that is really something that right now, we are still, and I am sure we will get questions about Samsung. We are still negotiating with Samsung.

Okay. Thanks a lot.

Thanks, Jim.

Thanks, Jim.

We will go next to Rob Stone with Cowen & Company.

Hi, guys. With OpEx, was there anything in one-time in nature in Q1 as you were ramping up these new facilities, or are we likely to be seeing same or higher levels from here?

I think you should see stable levels from here. There are no big one-time charges to CapEx expenditures, obviously for Hong Kong are going to be amortized over their useful life. But it is not significant numbers for the folks there.

In terms of thinking about the run rate for the year, are we likely to see additional step-ups like we saw in the last couple of quarters, or what can you say about the flow?

I think in these quarters, one, if it is stock compensation, we can't really, it is mark the market at the end of each quarter. That sort of goes up and down. The PPG expenses in this quarter on the R&D side were up, and I expect them to be probably at these same levels for the rest of the year.

What is it that drives the higher expense of PPG?

They do a lot of development work and as we scale up the developmental materials, we either develop a new molecule with them that we have developed here, and then they try to see whether it is manufacturable, and then as we move molecules towards commercial production, we do a number of runs, all of which is now classified as R&D expenses. In the past, some of these were put into developmental chemical costs, but as you have seen our costs of sales is only based upon commercial chemical sales at this time.

Are you still discussing with PPG the potential to manufacture in a second location?

We are, part of our discussions with PPG have been to look at the second location. And, yes, we think it is very important that there is a second location, and that there is increased capacity.

Would that potentially allow you to locate someplace that would be favorable for your future tax planning?

No. I think it is more the facility that we are in today doesn't have room to expand, and they have a facility a little further west that does have excess capacity. So as we scale these batches up, we wanted to move to a place that actually is better for us in terms of its ability to continue to scale.

So with that, how should we think about this tax item that you mentioned? What's a good way to relate that to your--?

The tax item that I mentioned has nothing to do with PPG

I know. I just meant, I was segueing from the subject of taxes in general, I thought you might be able to locate someplace where you wouldn't have to pay the exorbitant US rate. But leaving that aside.

I wasn't sure where you were going. We are looking at a number of options, as we have got significantNOLs that we can carry over, but we are looking, obviously as the revenues turn, and the profitability turns, we are looking at methods of making sure that we don't pay more than our fair share of taxes.

Okay. A question for Steve, you have mentioned a few times the ramp-up plans of the big three guys that we have known about for a while. Are you seeing indications of capacity plans by other OEMs, potentially smaller players for another traunch coming along?

Well, there are a number of other people that are interested, but until anybody announces something publicly, we really can't say anything.

Okay. Thank you.

Thanks, Rob.

We will take our next question from Hendi Susanto with Gabelli and Company.

Good evening. First we have read that Sharp is going to commercialize this very production using oxide semiconductor technology? How do you feel this oxide semiconductor technology,would it help more adoption of OLED display, and if it may help Apple to use OLED for the iPhone down the line? Do you also have any collaboration with Sharp, or other customers on oxide semiconductor technology?

The oxide technology is a TFT technology, and our guys say that if it does work, it obviously will be a benefit to OLEDs. But there is no plans that we know of to incorporate it with OLEDs at this time. And in terms of commenting on iPhones, or anything like that, there is nothing been announced, and there is nothing we can comment on.

Do you have any collaboration with Sharp at this point?

We have never announced anything with Sharp.

Second question, could you give us some perspective on green [phosphorescent] material and its potential adoption. besides lower power consumptions? Are there other advantages of green phosphorescent material versus green fluorescence, for example whether it is for some sort of visual enhancement, and furthermore on the display manufacturer side with the adoption of green phosphorescent material require major or minor modification on existing equipment?

The major advantage of our green phosphorescent material is in power consumption. Depending upon this specific CIE coordinates of either fluorescent or phosphorescent molecules, that is the color that you will see, but those are basically the same. You get the advantage of power consumption. When you have the advantage of power consumption, you can also see advantages in lifetime and lower cost components.

What was the other, I am sorry. What was the second half?

The same equipment.

It is the same equipment. You have put in different materials and you may have to tweak the operating process.

So no change in the CFC back plane, et cetera?

No.

We will take our next question from Andrew Abrams with Avian Securities.

Hi, guys, expectations for the SMD 5.5, do you expect this to be one line open at the onset with the assumption that there will be three lines eventually with the 30K kind of expectations?

Whatever was published publicly is all we can comment on. My understanding is it will obviously come on in increments, and the first section of it is from what we understand in place, but beyond that, I really can't comment until Samsung comments publicly.

Okay. Can you talk a little bit about the cost of the display as it shows to you in something like the Galaxy, the old Galaxy, the new Galaxy, just so we can get some kind of ballpark number on what you guys see as a display price?

I can give you the numbers that I have read from Display Search, in terms of the screen size, which is my understanding from Display Search, the Galaxy 1 phone display is about $25. I have not seen any estimates of what it is for the next generation product.

Got it. And on an absolute basis, the relative amount of material when you are comparing red to green. I know your eyes are more sensitive to green. Would that mean that you would wind up using less or more, or how would the math work for just looking at those two colors?

Probably, from a pixel size standpoint, you would use the same amount. The amount people purchased from us really depends upon the nature of the materials, and the doping percentage of the amount of materials they would use in each display, and that is different, depending customer to customer, material to material.

Got it. Terrific. Thanks very much. I appreciate it.

Thanks, Andy.

We will take our next question from Jonathan Skeels with Davenport.

Hey guys, just a question on the income tax expense. That 16.5% rate, that is on the gross royalty amount?

That is correct. It is a statutory rate that any royalties coming out of Korea are paid.

Okay. So that will continue to remain in place going forward? Right?

That is correct.

Okay. And then, maybe just one on the Samsung conversations. I know there is not much more you could say than what has already been said. But have those discussions moved from the licensing department up to a higher level within the organization, or can you comment on that at all?

No. Actually, we can't.

Okay. Alright. Thanks.

We will go next to JedDorsheimer with Canaccord.

Thanks. Any comments on progress on blue?

We continue to work very hard, Jed, but we haven't made any announcements recently. We do believe that our display architecture, we call RGB1 B2, is a very significant advance for the adoption of blue, because what it enables us to do is use a lot of the learnings that we have taken from our green molecules and apply it to light blue, which we are finding is a way to have significant efficiency advancements and lifetime improvements, and the eye does not use deep blue that much. And deep blue is the stickiest of the issues. We think that one of the major events over the last year or so has been the development of this quad pixel architecture, using red, green, B1, B2, a light blue and a dark blue pixel.

So using the quad pixel, how far away from the requirements for a display application?

It is tough to say. We are still a ways away.

Okay.

We are a ways away, but we are a lot closer than we used to be.

What did pricing do on the materials? I am not asking for what the prices are, but just on a quarter to quarter basis, how should we think about rate of change in terms of pricing, or on a program basis?

It is fairly consistent.

Okay.

On a commercial side price per gram is very consistent.

Then on the contract, on the license agreements that you have in place, other than LG, is there anyone with a most favorite nations clause in their contract?

We actually don't really talk about the specifics of the contract.

Okay. Broadly speaking, are any other contracts tied to Samsung?

Well, nobody is really tied to Samsung. I mean nobody is really tied to Samsung in that respect.

Okay. So there are some that are based off of when Samsung signs, there are no contracts that are influenced at all to Samsung?

Not in any legal sense, that is correct.

Okay. That is it for me. Thanks.

Thanks, Jed.

And our final question today comes from Darice Liu with Brigantine Advisors.

Following up on the green question, how much does the recipe have to change, and how much down time would be needed for panel makers to switch from fluorescent green to phosphorescent green when you finalize the license agreements?

Well A, I am not sure there is a connection between the finalization of a license agreement and the adoption of green. But B, the manufacturers are very skilled at keeping the lines running while inserting new materials. So I suspect they have the methodology down, so they can keep the line running fairly efficiently as they would introduce a new material.

Okay. And then, can you provide an update on your relationship with Idemitsu Kosan, are you still working with them, and is there any implication with Idemitsu Kosan now starting to gain some customers, including Panasonic Electric Works, who I believe was working with you?

We are still working very closely with Idemitsu Kosan. But what Idemitsu and Panasonic formed a joint venture to produce OLED lighting panels. But that doesn't affect our relationships with either one of them.

Okay. Thank you, guys.

Thank you, Darice.

That is our final question today ladies and gentlemen. At this time, Mr. Abramson, I will turn the call back over to you.

I would like to thank you all for being on the call, and again, if you have any follow-up questions, please feel free to give us a call. Thank you very much for your time.

Thank you.

This does conclude today's conference. We do appreciate your participation.