<SEC-DOCUMENT>0001193125-17-227396.txt : 20170824
<SEC-HEADER>0001193125-17-227396.hdr.sgml : 20170824
<ACCEPTANCE-DATETIME>20170713114403
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ACCESSION NUMBER:		0001193125-17-227396
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20170713

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			UNIVERSAL DISPLAY CORP \PA\
		CENTRAL INDEX KEY:			0001005284
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC COMPONENTS & ACCESSORIES [3670]
		IRS NUMBER:				232372688
		STATE OF INCORPORATION:			PA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		375 PHILLIPS BOULEVARD
		CITY:			EWING
		STATE:			NJ
		ZIP:			08618
		BUSINESS PHONE:		6096710980

	MAIL ADDRESS:	
		STREET 1:		375 PHILLIPS BOULEVARD
		STREET 2:		375 PHILLIPS BOULEVARD
		CITY:			EWING
		STATE:			NJ
		ZIP:			08618
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<TYPE>CORRESP
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Universal Display Corporation </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>375 Phillips Boulevard </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Ewing, NJ 08618 </B></P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">July&nbsp;13, 2017 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F Street,
NE </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, DC 20549 </P>
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<TD VALIGN="top">Attention:</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Russell Mancuso</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Branch Chief</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Office of Electronics and Machinery</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Division of Corporation Finance</TD></TR>
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<TD VALIGN="top">Re:</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><B>Universal Display Corporation</B></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><B>Form 10-K for the fiscal year ended December&nbsp;31, 2016</B></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><B>Filed February&nbsp;23, 2017</B></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><B>Form 10-Q for the fiscal quarter ended March&nbsp;31, 2017</B></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><B>Filed May&nbsp;4, 2017</B></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"><B><U>File No.
001-12031&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></B></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Mr.&nbsp;Mancuso: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Universal Display Corporation (&#147;we,&#148; &#147;us,&#148; &#147;our&#148; or the &#147;Company&#148;) is hereby responding to the comments of the staff
(the &#147;Staff&#148;) of the Securities and Exchange Commission (the &#147;Commission&#148;) contained in your letter addressed to Steven V. Abramson, the Company&#146;s President and Chief Executive Officer, dated July&nbsp;5, 2017, with respect
to the Company&#146;s Annual Report on Form 10-K for the fiscal year ended December&nbsp;31, 2016 and the Company&#146;s Quarterly Report on Form 10-Q for the fiscal quarter ended March&nbsp;31, 2017 (the &#147;Form 10-Q&#148;). </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In response to your letter, set forth below are the Staff&#146;s comments in bold followed by the Company&#146;s responses to the Staff&#146;s comments. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Form 10-Q for the Fiscal Quarter Ended March&nbsp;31, 2017 </U></B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations, page 25 </U></B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left"><B>1.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Please tell us the reasons that phosphorescent emitter demand was higher for developmental material sales. Also, tell us the reasons for the changes in gross margin percentage for developmental material sales, and
why your discussion of gross margin percentage is limited to commercial material sales. Include in your response your analysis of whether these issues should be addressed your Form 10-Q. </B></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">For sake of clarity, we are answering the Staff&#146;s comment in two parts, as follows: </P>

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 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange
Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">July 13, 2017 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Page 2 of 3 </P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>1)&nbsp;&nbsp;&nbsp;&nbsp;Please tell us the reasons that phosphorescent emitter demand was higher for
developmental material sales. </I></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In most cases, when developing new generations of emitters, a structured process development and scale up sequence is
followed. We classify development material sales as sales of phosphorescent emitter material that are &#147;pre-commercial,&#148; that is, in early-stage development through to &#147;final validation&#148; batch status within this sequence. Multiple
sample-sized lots of increasing volumes are developed and sold to customers, eventually leading up to the commercial-sized batches required by the customers&#146; production processes. Once we validate the phosphorescent emitter material, we
classify subsequent sales of the emitters as commercial material sales. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Development material sales will vary from quarter to quarter based on the life
cycle of our customers&#146; existing products and new product pipeline; however, we expect that on an annual basis, development material sales will not be a significant percent of total material sales as OLED technologies obtain expanded usage in
the display marketplace. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">In the first quarter of 2017, we had several emitters that were in the latter stages of the development cycle prior to
transitioning to commercial batch validation, compared to minimal such activity in the first quarter of 2016. As the volume of the sample size increases during the development cycle, latter-stage samples are larger. This accounted for the sizable
increase in development material sales volume in the first quarter of 2017 as compared to the first quarter of 2016. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><I>2)&nbsp;&nbsp;&nbsp;&nbsp;Also,
tell us the reasons for the changes in gross margin percentage for developmental material sales, and why your discussion of gross margin percentage is limited to commercial material sales. Include in your response your analysis of whether these
issues should be addressed your Form 10-Q. </I></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We do not consider the impact of the gross margin of development material sales to be significant to the
gross margin of overall material sales. In the first quarter of 2017, because the development material gross margin percentage was comparable to the commercial material gross margin percentage, it had less than a 1% point impact on the overall
material gross margin percentage; 74.1% total material gross margin compared to 73.3% commercial material gross margin as disclosed. In the first quarter of 2016, total material gross margin was 79.2% compared to 77.4% for commercial material
margin. As such, the Company believes that further explanation is not necessary. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The change in gross margin percentage for development material was
primarily due to increased scale-up activity at our contract manufacturer, PPG, to produce the increased volumes noted above. Product introduction activity in Q1 2016 was relatively negligible compared to the new emitter materials nearing
commercial-scale volumes during Q1 2017. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We expect the impact of development sales on our overall total material sales gross margin to remain minimal as
commercial material sales continue to increase. However, in the future, we </P>

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 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">United States Securities and Exchange
Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">July 13, 2017 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Page 3 of 3 </P>
<P STYLE="font-size:12pt; margin-top:0pt; margin-bottom:0pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">will continue to monitor the impact of development material sales on total gross margin and we will include in
our discussion a fuller review of total material sales and not just the main driver, commercial material sales, if there is a significant impact from development material sales. We will also continue to monitor and provide reasonable discussion
regarding other materially significant influences on gross margin in addition to development material sales, including contract research activity, technological development activity and any other cost and revenue streams that may develop, which to
date have had minimal impact. </P> <P STYLE="font-size:36pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top" COLSPAN="3">Sincerely yours,</TD></TR>
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<TD VALIGN="top" COLSPAN="3">Universal Display Corporation</TD></TR>
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<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;/s/ Steven V. Abramson</TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Steven V. Abramson</TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">President and Chief Executive Officer</TD></TR>
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<TD VALIGN="top">cc:</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Mr. Timothy Buchmiller, Division of Corporation Finance</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Mauro Premutico, Esquire</TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Justin W. Chairman, Esquire</TD></TR>
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