Paul Johnson - IR Steve Abramson - President, COO Sid Rosenblatt - EVP, CFO

Darice Liu - Maxim Group Hugh Mai - Broadpoint Capital Robert Stone - Cowen & Company Jim Ricchiuti - Needham& Company Bennett Notman - Davenport& Co.

Good afternoon. My name is Nikki, and I will be yourconference operator today. At this time, I would like to welcome everyone tothe Universal Display Third Quarter 2007 Conference Call. All lines have beenplaced on mute to prevent any background noise. After the speakers remarksthere will be a question-and-answer period. (Operator Instructions). It’s now my pleasure to turn the floor over to your host,[Paul Johnson], on behalf of Universal Display Corp. Sir, you may begin yourconference.

Thank you Nikki and thanks to everyone for joining us today.With us today are Steve Abramson, President and Chief Operating Officer, andSid Rosenblatt, Chief Financial Officer of Universal Display Corporation. Let me start today by reminding you that this call is theproperty of Universal Display Corporation. Any redistribution, retransmission,rebroadcast of this call in any form without the expressed written consent ofUniversal Display is prohibited. Further, as this call is being webcast liveand 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 thedate of the live webcast of this call November 8, 2007. All statements in this conference call that are nothistorical are forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. These include, but are not limitedto, statements regarding Universal Display's beliefs, expectations, hopes, orintentions regarding the future. It is important to note that these statements are subject torisks and uncertainties that could cause Universal Display's actual results todiffer from those projected. These risks and uncertainties are discussed in theCompany's periodic reports filed with the SEC. Universal Display disclaims anyobligation to update any forward-looking statements. With that said, now I'd like to turn the call over to SteveAbramson, President of Universal Display. Please go ahead, Steve.

Thank you Paul, and thank you to everyone for joining us forour Third Quarter 2007 Conference Call. This quarter saw a number of positivetrends for Universal Display. Although revenues and net loss were essentially evenyear-over-year, they both improved quarter-over-quarter. In addition ourrevenue mix continues to reflect the shift to commercialization of our PHOLEDtechnology as our commercial chemical revenues showed a healthy increase. WhenI finish speaking, Sid will review these results with you in more details. We’re seeing a positive trend of increased momentum in thedisplay industry towards commercialization of OLED products. The Flat PanelDisplay Conference in Yokohama, Japan lastmonth, the optimism about OLED was comparable. There were a variety of active-matrixOLED displays from 2 inch to 14 inch from a number of companies. There alsohave been a number of positive articles of our AMOLED product introductions.The Korea Times, for example, has talked about active-matrix OLED being thenext cash cow or golden goose, in the consumer electronic market. As we approach the end of 2007, our license Samsung SDI hasstarted volume production of active-matrix OLED displays for its worldwidecustomer base of handsets and personal electronic manufactures. The customerlist includes some of the biggest names in the industry Toshiba, Hitachi, KDDI, SonyEricsson, Kyocera and Nokia and represents a sizable potential market forAMOLED displays. Nokia's Prism phone is a great example of Samsung SDIdisplays are being featured in commercial handsets today. Nokia itselfhighlights the OLED screen in the song as a new alternative tradition TFT LCDdisplays. (inaudible) companies are on commercial to Prism 7900 model. The 7900Prism is one of the first phones by Nokia to feature OLED screen. OLED usesmuch less power than TFT LCDs as a greater contracts and color range. Clearly,these marriages of AMOLED displays over LCDs are a strong selling point forhandset manufactures, especially the low power consumptions, a…

Thank you, Steve. And again, thank you everyone for joiningus today. First, I'm going to run through overall revenues for thequarter and nine months period. Then, I'll be reviewing the specific numbers indetails behind our individual revenue components for the same time period, as wellas other key financial data. For purposes of this discussion, we have rounded each of thenumbers to its approximate value. Of course, the detailed numbers are availablein both our earnings release and Form 10-Q filing. At the conclusion of myremarks, Steve and I will be happy to take your questions. For the third quarter of 2007, we reported a net loss of$2,960,000 or $0.08 per diluted share, versus a net loss of $2,943,000 or $0.09per diluted share, for the same quarter of 2006. The net loss for thenine-month period was $12.7 million, or $0.38 per diluted share, compared to anet loss of $10,800,000 or $0.35 per diluted share, for the same nine-monthperiod in 2006. As expected, revenues increased in the last quarter and thishelped to reduce the losses for the third quarter. Revenues for the three months ended September 30, 2007, were $377,000compared to revenues of $396,000 for the third quarter of 2006. Revenues forthe nine-month period ended September 30, 2007, were $8.4 million compared to revenues of $9.4 millionfor the same period in 2006. Revenue components for the thirdquarter, and first nine months of 2007, were as follows: Commercial chemicalrevenue was $1.2 million for the third quarter, compared to $201,000 for thethird quarter of 2006. For the nine months period: commercial chemical revenueswere $2.7 million compared to $936 for the comparable prior period. Commercialchemical revenue for the first nine months of 2007 was positively impacted bymaterial shipment almost entirely to Samsung SDI compared to 2006 was mainlyfor material shipments to AU Optronics. We also booked…

(Operator instructions) The first question comes from Darice Liu from Maxim Group.Please proceed.

Good afternoon, guys. As you mentioned, there has been a lotof positive announcements by various panel makers entering into OLED space. Theindustry continues to ramp. How should we start modeling you guys, because weknow now you announced them in the production capacity extension plans at SDIand Chi Mei and others? Is it one-to-one correlation or how should we go aboutit?

It's a difficult question to answer at this time, onlybecause until we have, I would say, at least a couple of quarters behind uswith SDI and Chi Mei in production to see exactly how much material they arepurchasing and how their shipments go. We think it's best not to make any predictions at this time.I do believe that once we get a few quarters behind us, we will able to have amuch better feel for it. Initially, when they start production, utilization maynot be quite as high as it is. So the number will fluctuate. I don’t have areal good answer for you.

Okay. Maybe I'll go about it a different way. In terms ofyour revenue profile, how has the testing been for your green products? I knowthat you guys were testing with SDI and possibly with Chi Mei. Have the resultcome in?

Yes, right now, the commercial materials that we are sellingare the red materials. We're continuing our conversations at our technicalcollaborations with a number of different partners on green. And the way thegreen is adopted; then I am sure we will be able to talk about it.

Okay. And from the license androyalty stream standpoint, some of your panel makers, your customers havesigned numerous agreements. For example, Chi Mei signed with Universal Panel.Kodak and I think LPL has done the same thing. How the decisions get made interms of whose material gets, I guess, designed into certain product?

We believe that they are going touse the most efficient materials that give them the best CIE coordinates andgive them the most power efficient device. And our phosphorescent technologygives them a significant advantage over fluorescence. So we believe that theywill continue to use phosphorescence and use more and more color that they movedown the production trail. Our technology clearly allows thehandset manufacturers to put, as one of their sale pitches that this devicewill last longer because of the display. And as you have seen from commentsthat said Steve earlier on Nokia, there is a power efficiency that's veryimportant.

So correlating the rollingforecast that you get from your customers and also what you see their plans arefor capacity expansion, can you guys, I guess, pinpoint that you guys will bethe primary material player?

Well, Darice, there is a numberof materials in the stock. We are clearly one of the material players. And asthe industry progresses, we think we're going to get ever greater share of theindustrial material.

Thanks. Fair enough. And then from a housekeepingstandpoint, OpEx took a nice dip this quarter sequentially by more than $1million. How sustainable is that and what should be remodeling going forwardbecause Q4 has historically been on quarter-over-quarter then 1Q comes down andI am just trying to gauge what the level should be?

In this quarter there was a couple of things, expenses wentup by about a $0.5 million over last quarter, but our interest income went up,because we have more cash so the increase in the expenses was offset by theincreased interest income. I think this quarter..,

And in the managed operating expenses you talked about, the, the R&D and SG&A?

Okay. Over, you are talking about our past quarter, one ofthe things that impacted this quarter is our research agreement and materialagreement with PBG Industries it was down a little bit in this quarter over thepast quarter. I think that this quarter is probably close to what it will be,but it may be up a little bit. I don't think it will not go back as high as itwas in the prior quarter and this is more reflective of what we think futurewill look like.

And when you see historical cost decline in 1Q following 4Q,I mean OpEx stand point?

It's hard to tell.

Or just model flat going forward?

Yeah, I think its going to model flat with some growthobviously in terms of, may be additional employees, but its not significant. Wedon’t anticipating any significant increases in OpEx.

Okay Thank you guys.

Thanks Darice.

Your next question comes from Hugh Mai from BroadpointCapital. Please proceed.

Hi guys.

Hi Hugh.

Yeah just a quick question on the -- have you guys thoughtanything on the progress that the industry has made totally viable on amorphous-Siliconactive-matrix PHOLED? The reason I asked, because of lot of buzz surroundingthe OLED TV?

Well you -- the flexible display we demonstrated with [LBL]the 4 inch flexible display was on amorphous-Silicon. . So we do see a --number of people pushing forward on amorphous as well low temperaturepoly-Silicon and our material is compatible with those

So would all the OLED TV’s sort of announcing are thosegoing be on poly-Silicon?

I think that you will probably see them using bothbackplanes.

Okay, got it. And then Samsung SDI recently claimed that 90%of the 2008 capacity has already been sold out. I was wondering to the extent,if you can is this based on $3 million to $4 million a month capacity or thisbased on the $8 million, like full, I guess full dimension.

You probably have to ask them.

I got it.

(inaudible).

And in terms of that you got an arrangement with PPG is thepeople who handling, I guess Samsung SDI’s aggressive ramping of (inaudible).Are you.

We’re very comfortable with the abilities and capabilitiesof PPG to meet all of our needs for the foreseeable future based upon what webelieve our customers are going to need.

I got it. And just one final question, the last quarter youmentioned that the yields were at around 60% and those two guys, do you haveany update on those.

CMEL has announced that their yields are averaging 65% Idon’t believe Samsung SDI has made any yield analysis recently.

Okay I’ll get back into the queue.

Okay. Thank you.

Your next question comes from Robert Stone from Cowen & Company.Please proceed. Robert Stone - Cowen &Company: Hey guys

Hey Rob. Robert Stone - Cowen &Company: So Steve, you mentioned a whole list of specific OEM’s withlarger screen target prices by years until (inaudible) have to playback thetaped to get all that, but I wonder if you could talk about what technologicalhurdles need to be overcome to get to those larger format, display or perhapshigher brightness, longer life time application like TV, as between what youneed to do on the material set and what the OEM need to do with our claims orsystems or other technology? Thanks.

Well all that information I was giving this morning, or thisafternoon is actually publicly available information that was in the various tradeprocess. What we need to do is we need to increase our efficiency and extendour operating lifetime, and in certain areas if this is improve the CIEcoordinates as well or match the various elements to the particular displaysthat the customers are making. As a material manufacture/materials developer,those are the key elements that we are focusing on are. Generally themanufactures are looking to increase their yields and increase theirthroughputs so that they can do sell through on larger sizes, and then move tolarger area of production lines, so they can increase the total timing,increase the throughput and be able to lower cost.

The basic scale up issues, goingfrom one generation to the next, really is what the manufactures have to gothrough, and really, as Steve said, make sure that they can get yields and beable to meet the customer demands as PHOLED TV start to get into themarketplace, because of how bright they are look, and because of the contrastratio is how good they look. We're pretty certain that once a customer startsto see the demand, he is really going to pull them through.

So can you put some specifics ona couple of those numbers, Steve, for example, I know with respect to colorcoordinates, one of the things you are working around is the deeper blue. Butwith respect to lifetimes generally, how much farther do you need to go versuswhere you are today on lifetimes to get to enough hours for TV, for example?

Sure. Our redduring the 300,000 hours gets 50% luminance. Our green during the 100,000 to200,000 hours is 50% luminance. I think once you get TVs over 250,000 hours,you're probably hitting the manufacturer targets that they need. On blues, themost recent announcements was, a light blue at about 9,000 hours, so obviouslythe blue needs to be improved as well. The reds are probably there for TV.

But withrespect to the full color displays that are being made today, obviously that'susing someone else's blue and for the moment green as well. What's your senseof where their lifetimes are there? I mean obviously TV being a plug-inapplication would be lesser to power consumption.

I think you'reprobably looking at the middle of those 20,000 hours lifetime. And then I needto make sure that the color is matched. The lifetimes can match up, and theycan adjust them to make sure you continue with the right color balance. But Ithink you're probably looking at 20,000 hours and a 1,000 for each color forproduct introduction.

Okay. Thanks very much.

Sure.

Thank you, Rob.

The next question comes from Jim Ricchiuti from Needham& Company. Please go ahead. Jim Ricchiuti - Needham & Company: Thank you. Good afternoon.

Hi, Jim. Jim Ricchiuti - Needham & Company: Hi. I was just wondering, with the activity you are seeingwith your existing commercial customers, have you noticed a pick-up in interestfrom potential other new commercial customers? It would seem like we arestarting to see products hitting the market. I am just wondering: has theactivity picked up with potential new commercial customers?

Over the past year, we have seen some renewed interest frommanufacturers in Asia, focusing on OLEDdisplays, yes. Jim Ricchiuti - Needham & Company: Anything more near-term in that, Steve?

Well, unfortunately, perhaps we haven't announced anythingand they haven't announced anything. Jim Ricchiuti - Needham & Company: No, no. I don't need any specific announcements. Just ingeneral, how --

In general, we are seeing a renewed interest. What we haveseen is some really accelerated interest over the past year. I think that twoof the major motivators were the Sony 11-inch TV announcement and Samsung SDIramp of the small area of commercial display. Jim Ricchiuti - Needham & Company: Okay. Now, I think we are all still struggling with when theproducts begin to hit the market in a bigger way. Do you get the sense it's theDecember quarter that we see more of these consumer products being available oris it the March quarter?

Well, I think that it's going to be -- it's not clear wherethe tipping point is. I think, every quarter, you are starting to see moreproducts. And over the past years, principally being: Samsung SDI or a Chi Meihave started to ship the second half of this year. LPL is talking aboutstarting to ship in the beginning of next year. So I think you are continuingto see that type of ramp. Jim Ricchiuti - Needham & Company: So your commercial chemical business, it would seem, isgoing to be increasing sequentially? I know there is some lumpiness to it, but,just by the virtue of the fact that you have got more commercial customers, andSamsung clearly is ramping.

We believe that to be the case. I mean Samsung SDI isramping. And as they continue, as they said they expected to double theiroutput next year and CMEL entering the marketplace now, and LPL next year, wewould expect to see our commercial chemical start to ramp in conjunction withthem producing products. Jim Ricchiuti - Needham & Company: And then, Sid, the commercial, the licensing royalty streamis still pretty low. At what point do we begin to see that start to pick up? Isthat do you think more of a June quarter?

I guess, you're probably correct, because SDI, there is aquarter lag on when we get our royalty reports. So regarding SDI, that is thecase. Jim Ricchiuti - Needham & Company: Okay. And just a quick question on the government contractrevenue: Can you give us some sense as to what percentage you are seeing ofthis revenue from lighting versus display and whether you see this changingover the near term?

The specific answer, I can't give right now. We've seen moreof interest in this year and clearly for the next year for our lightingapplications. Flexible displays are still very important. But I would say themix will probably start to shift a little bit more towards lighting next year.It's difficult to say, but I think we will see that. Jim Ricchiuti - Needham & Company: Any help you can give us on how that part of your revenuecomponent is going to trend over the next one to two quarters, Sid?

I think we've said we thought it for the year it will beabout $4.5 million for 2007 and I would expect the first quarter of next year,I think it was $1.2. I would expect to be in that range. It’s difficult to seeexactly when programs start and finish on the revenue side, but this isballpark. Jim Ricchiuti - Needham & Company: Okay, thanks you.

Thank you.

[Operator Instruction]. The next question comes from BennettNotman from Davenport & Co. Please proceed. Bennett Notman - Davenport & Co.: Hi, good afternoon gentlemen.

Hi, Bennett.

Hi, Bennett. Bennett Notman - Davenport & Co.: Can you tell us anymore detail on what LPL capacity is goingto be? And if they need to sort of invest in separate facility or if they arejust converting the couple of lines and sort of how biggest splash you wouldexpect on the make when they do ramp up in the Q1?

Actually LPL is been strangely silent about what theirproduction capacity is and how they are going to ramp. So, I think there iscouple of things going on with LPL, if you have seen them in the press, theyare talking about combining LPL and LG to OLED lines together in someway, andthey've talked about active-matrix OLED beginning of next years. And so I thinkwe'll probably have better visibility of that towards the end of the year. Bennett Notman - Davenport & Co.: And then on -- if you just lookat sort of that overall market capacity and when you think of -- when you hadnice growth in what SDI done and Chi Mei coming on and LPL, but we are stillare not look at overall numbers that are big enough for say Nokia or any of theother big handset guys to really start relaying on OLED for a big piece oftheir handset lineup. How do expect '08 to flush out? I mean, customer demandthere to push the panel guys to give them capacity that they need or is itstill more of a try-and-see-it strategy on the OEM side?

With the reports that SDI'scapacity for the year is taken, I think that it's clear that the manufacturerswant more and more OLED displays, and it's really capacity. SDI has talkedabout increasing their capacity next year. I think that's why CMEL announcedthat they are going to increase their capacity. LPL with LG, LPL dissolving theLG line into theirs. All of them, I think you will see more growth next yearthan obviously we've seen in the past. And it really depends on how strong thepull is, as folks invest more money to increase their capacity. But I think youwill see that probably in the first half of '08. Bennett Notman - Davenport& Company: And so Chi Mei's capacityexpansion, how long is it going to take them, to the best that you guys cancomment on it, to get up to the new 700,000 units a month run rate from the newline? Is that something that happens relatively quickly or does that take sixto nine months, again, for lead time in OLED?

Well, they were talking aboutthird quarter, really starting that ramp-up. And they moved very rapidly. Theyneed to have the equipment. It's not a nine-month ramp up. Bennett Notman - Davenport& Company: Okay. And then who is the primarydevelopmental chemical customer at this point in time?

We really don't disclose who ourdevelopmental customers are.

But there is a lot of differentones.

Yeah, there is a number ofdifferent ones, but we don't disclose who they are specifically. Bennett Notman - Davenport& Company: Okay. And then, because you dohave one quarter lag with SDI on the royalty rate, meanwhile the numbers arestill relatively small, would it be safe to assume that they probably do pickup over the next couple of quarters, given the capacity ramp those guys arehaving?

We are sure we hope so. Bennett Notman - Davenport& Company: All right. Thanks guys.

Thanks, Bennett.

Thanks, Bennett.

There appear to be no further questions at this time. I'dlike to turn the floor back over for any closing comments.

We'd like to thank you all very much for attending thismeeting and if any of you have any other specific questions, we know you cancontact the company directly. Thank you very much, and good evening folks.

Thank you. Good evening.

This concludes today's conference call. You may nowdisconnect your lines, and have a wonderful evening.