EX-99.1 2 a5201854ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Immersion Corporation Reports Second Quarter 2006 Financial Results SAN JOSE, Calif.--(BUSINESS WIRE)--Aug. 3, 2006--Immersion Corporation (Nasdaq:IMMR), a leading developer and licensor of touch feedback technology, today announced its second quarter 2006 financial results. Revenues were $6.7 million for the quarter ended June 30, 2006 compared to revenues of $6.2 million for the second quarter of 2005. Net loss on a Generally Accepted Accounting Principles (GAAP) basis for the second quarter of 2006 was $2.4 million, or $0.10 per share, down 16 percent compared to a net loss on a GAAP basis of $2.8 million, or $0.12 per share, for the second quarter of 2005. Net loss for the three months ended June 30, 2006 included stock-based compensation expense of $694,000, equal to $0.03 loss per share. Net loss for the three months ended June 30, 2005 did not include any stock-based compensation expense. Revenues were $12.7 million for the six months ended June 30, 2006 compared to revenues of $12.0 million for the first six months of 2005. Net loss on a GAAP basis for the first six months of 2006 was $5.3 million, or $0.22 per share, down 11 percent compared to a net loss on a GAAP basis of $6.0 million, or $0.25 per share, for the first six months of 2005. As of June 30, 2006, Immersion had cash and cash equivalents totaling $30.9 million. "Our loss for the quarter, excluding non cash stock compensation, is the lowest quarterly loss since going public in 1999 and reflects our continued efforts to achieve profitability," said Victor Viegas, Immersion CEO and president. "Our overall revenue growth of 7 percent results from a 28 percent growth in our non-gaming businesses and a 46 percent decrease in our gaming revenue mainly due to the downturn of third-party controller sales in the video game industry. "In June, we announced our new TouchSense(R) technology for next-generation video console systems. The new vibration feedback technology provides a far more engaging, realistic, and immersive tactile experience that matches the realism expected of next-generation high-definition graphics and high-fidelity sound. This new TouchSense technology can work alongside motion and tilt sensing and provides backward compatibility for existing dual-motor systems, allowing an implementation path at any stage of product lifecycle, even after a console model has launched. "In the past three months, several significant advances have been made in our Mobility business. We signed a license agreement for our VibeTonz(R) System with LG Electronics, the number four mobile handset manufacturer in the world and the top producer of handsets based on CDMA technology.(1) In addition, we continue to build support from wireless operators such as SK Telecom (SKT), the leading Korean mobile operator. SKT recently launched a VibeTonz-only content service called VibeBell, offering over 1,000 VibeTonz-enhanced music clips that subscribers can use to personalize their phones. SKT's first handset to support this service is the newly-released Samsung SCH-B450, which uses the VibeTonz System to play touch effects embedded in games and MPEG-4 media. Also in June, we introduced an important new capability of our VibeTonz System, the enablement of tactile feedback in touchscreens for smartphones, the fastest-growing products in the handset market." Immersion will host a conference call with company management on Thursday, August 3, 2006, at 5:00 p.m. Eastern time to discuss operating results for the second quarter ended June 30, 2006. A question and answer session will follow. To listen to the call, dial +1 800.374.2366 approximately five minutes prior to the start of the call and enter confirmation number 2398093. The call will be archived and available for replay until August 10, 2006, by dialing +1 800.642.1687 and entering confirmation number 2398093. The call will also be simulcast on the Internet through Immersion Corporation's Web site, http://www.immersion.com. An audio replay of the call will be archived and available at www.immersion.com for replay until August 3, 2007. (1) IDC, Worldwide Quarterly Mobile Phone Tracker, Q1 2006, June 2006 About Immersion (www.immersion.com) Founded in 1993, Immersion Corporation is a recognized leader in developing, licensing and marketing digital touch technology and products. Using Immersion's advanced touch feedback technology, electronic user interfaces can be made more productive, compelling, entertaining, or safer. Immersion's technology is deployed across automotive, entertainment, medical training, mobility, personal computing, and three-dimensional simulation markets. Immersion's patent portfolio includes over 600 issued or pending patents in the United States and other countries. Forward-Looking Statements This press release contains "forward-looking statements" that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Immersion Corporation and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements. All statements, other than the statements of historical fact, are statements that may be deemed forward-looking statements, including any projections of earnings, revenues, or other financial matters; any statements of the plans, strategies, and objectives of management for future operations; proposed products or services; any statements concerning the breadth and timeline to implement next-generation vibration technology into gaming consoles, peripherals, or games, release of gaming consoles, peripherals, or games supporting next-generation vibration technology, or any change in revenue that may occur from such implementation, or consumer and market acceptance of next-generation vibration technology in particular, and force feedback products in general; any statements concerning adoption and market acceptance of touch-enabled mobile phones or consumer and market acceptance of force feedback products in general, future development of force feedback products; proposed products or services; any statements regarding future economic conditions or performance; and statements of belief or assumptions underlying any of the foregoing. Immersion's actual results might differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with Immersion's business which include, but are not limited to, delay in or failure to achieve commercial demand for Immersion's expanded technology offerings; a delay in or failure to achieve the acceptance of force feedback as a critical user experience in new and existing markets for our business segments; and risks and uncertainties associated with the ongoing litigation. For a more detailed discussion of these factors, and other factors that could cause the Company's actual results to vary materially, interested parties should review the risk factors listed in the Company's most current Form 10-Q, which is on file with the U.S. Securities and Exchange Commission. The forward-looking statements in this press release reflect the Company's beliefs and predictions as of the date of this release. The Company disclaims any obligation to update these forward-looking statements as a result of financial, business, or any other developments occurring after the date of this release. Immersion, the Immersion logo, TouchSense, and VibeTonz are trademarks of Immersion Corporation in the U.S. and other countries. All other trademarks are the property of their respective owners. Immersion Corporation Condensed Consolidated Balance Sheets (In thousands) June 30, December 31, 2006 2005 (Unaudited) (1) ----------- ------------ ASSETS Cash and cash equivalents $ 30,860 $ 28,171 Accounts receivable, net 4,325 4,650 Inventories 2,417 2,655 Prepaid expenses and other current assets 1,044 1,131 ----------- ------------ Total current assets 38,646 36,607 Property and equipment, net 1,733 1,366 Intangibles and other assets, net 7,001 6,787 ----------- ------------ TOTAL ASSETS $ 47,380 $ 44,760 =========== ============ LIABILITIES Accounts payable $ 1,011 $ 2,179 Accrued compensation 1,287 1,193 Other accrued liabilities 2,112 1,604 Deferred revenue and customer advances 2,332 2,741 Current portion of long-term debt - 5 ----------- ------------ Total current liabilities 6,742 7,722 Long-term debt 17,806 17,490 Long-term liabilities and deferred revenue 27,898 21,343 Long-term customer advance from Microsoft 15,000 15,000 ----------- ------------ Total liabilities 67,446 61,555 STOCKHOLDERS' DEFICIT (20,066) (16,795) ----------- ------------ TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 47,380 $ 44,760 =========== ============ (1) Derived from the Company's annual audited financial statements. Immersion Corporation Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Six Months Ended June 30, Ended June 30, 2006 2005 2006 2005 -------- -------- -------- -------- Revenues: Royalty and license $ 1,702 $ 2,329 $ 3,612 $ 4,800 Product sales 3,917 3,257 7,283 5,952 Development contracts and other 1,034 660 1,790 1,266 -------- -------- -------- -------- Total revenues 6,653 6,246 12,685 12,018 -------- -------- -------- -------- Costs and expenses: Cost of product sales (exclusive of amortization of intangibles shown separately below) 1,802 1,663 3,157 3,052 Sales and marketing 3,009 3,078 6,086 5,897 Research and development 1,802 1,528 3,531 3,037 General and administrative 2,296 2,198 5,107 4,484 Amortization of intangibles 219 369 429 736 Litigation settlement (400) - (1,050) - Restructuring - - - 185 ----------------- -------- -------- Total costs and expenses 8,728 8,836 17,260 17,391 -------- -------- -------- -------- Operating loss (2,075) (2,590) (4,575) (5,373) Interest and other income (expense), net (319) (206) (623) (491) -------- -------- -------- -------- Loss before benefit (provision) for income taxes (2,394) (2,796) (5,198) (5,864) Benefit (provision) for income taxes 15 (33) (87) (98) -------- -------- -------- -------- Net loss $(2,379) $(2,829) $(5,285) $(5,962) ======== ======== ======== ======== Basic and diluted net loss per share $ (0.10) $ (0.12) $ (0.22) $ (0.25) -------- -------- -------- -------- Shares used in calculating basic and diluted net loss per share 24,546 24,050 24,483 23,858 -------- -------- -------- -------- Immersion Corporation Additional Financial Information Effect of Non Cash Stock-Based Compensation included within Condensed Consolidated Statement of Operations (In thousands) (Unaudited) Three Months ended Three June 30 Three Months Non Cash 2006, Months ended Stock-Based exclusive ended June 30 Compensation of June 30 2006, included Non Cash 2005, as within Stock-Based as reported expense Compensation reported --------- ------------ ------------ --------- Costs and expenses Cost of product sales $ 1,802 $ 18 $ 1,784 $ 1,663 Sales and marketing 3,009 296 2,713 3,078 Research and development 1,802 121 1,681 1,528 General and administration 2,296 259 2,037 2,198 Other, net (181) - (181) 369 --------- ------------ ------------ --------- Total costs and expenses $ 8,728 $ 694 $ 8,034 $ 8,836 ========= ============ ============ ========= Six Months ended Six June 30 Six Months Non Cash 2006, Months ended Stock-Based exclusive ended June 30 Compensation of June 30 2006, included Non Cash 2005, as within Stock-Based as reported expense Compensation reported --------- ------------ ------------ --------- Costs and expenses Cost of product sales $ 3,157 $ 37 $ 3,120 $ 3,052 Sales and marketing 6,086 582 5,504 5,897 Research and development 3,531 250 3,281 3,037 General and administration 5,107 548 4,559 4,484 Other, net (621) - (621) 921 --------- ------------ ------------ --------- Total costs and expenses $ 17,260 $ 1,417 $ 15,843 $ 17,391 ========= ============ ============ ========= There was no Non Cash Stock-Based Compensation included within the financial results in the three and six month periods ended June 30, 2005. CONTACT: Immersion Corporation Stephen Ambler, 408-467-1900 invest@immersion.com