EX-99.1 2 a5346311ex991.txt EXHIBIT 99.1 Exhibit 99.1 Immersion Corporation Reports Fourth Quarter 2006 Financial Results SAN JOSE, Calif.--(BUSINESS WIRE)--March 1, 2007--Immersion Corporation (NASDAQ:IMMR), a leading developer and licensor of touch feedback technology, today announced its fourth quarter 2006 financial results. Revenues were $8.6 million for the quarter ended December 31, 2006 compared to revenues of $6.9 million for the fourth quarter of 2005. Net loss on a Generally Accepted Accounting Principles (GAAP) basis for the fourth quarter of 2006 was $2.0 million, or $0.08 loss per share, an improvement of 33 percent compared to a net loss on a GAAP basis of $3.0 million, or $0.12 loss per share, for the fourth quarter of 2005. Net loss for the three months ended December 31, 2006 included stock-based compensation expense of $796,000, equal to $0.03 loss per share. Net loss for the three months ended December 31, 2005 did not include any stock-based compensation expense. As of December 31, 2006, Immersion had cash and cash equivalents totaling $32.0 million as compared to $29.0 million as of September 30, 2006. Revenues were $27.9 million for the year ended December 31, 2006 compared to revenues of $24.3 million for the year ended December 31, 2005. Net loss on a GAAP basis for the year ended December 31, 2006 was $10.4 million, or $0.42 loss per share, an improvement of 20 percent compared to a net loss on a GAAP basis of $13.1 million, or $0.54 loss per share, for the year ended December 31, 2005. In a separate press release issued today, Immersion and Sony Computer Entertainment announced that the companies have agreed to conclude their patent litigation at the U.S. Court of Appeals for the Federal Circuit and have entered into a new business agreement to explore the inclusion of Immersion technology in PlayStation format products. "The fourth quarter and 2006 total revenues were at new record levels for Immersion," said Immersion CEO Victor Viegas. "In our medical business, revenue increased 62% over the fourth quarter of 2005 and 47% for the year, led by the sales of our medical simulator products." Immersion achieved another major milestone in its Mobility business in December 2006 with the launch of the first commercial phone with a VibeTonz(R)-enabled touchscreen, the Samsung SCH-W559 from China Unicom. Since that time, Samsung has released another VibeTonz-enabled touchscreen phone in China, and in February at the 3GSM World Congress in Barcelona, announced a new VibeTonz-enabled touchscreen model for Europe, the Samsung Ultra Smart F700. The VibeTonz System supplies tactile feedback in response to touchscreen presses, allowing onscreen buttons to seem as though they press and release. "Our VibeTonz system can act as an enabling platform for cost-effectively improving the mobile-device user experience by enriching music, video, messaging, games, and now touchscreens," concluded Viegas. Immersion will host a conference call with company management on Thursday, March 1, 2007, at 5:00 p.m. Eastern time to discuss operating results for the fourth quarter and year ended December 31, 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 6600266. The call will be archived and available for replay until March 9, 2007, by dialing +1 800.642.1687 and entering confirmation number 6600266. 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 March 1, 2008. 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 (www.immersion.com/corporate/products/), electronic user interfaces can be made more productive, compelling, entertaining, or safer. Immersion's technology is deployed across automotive, entertainment, industrial controls, medical training, mobility, and three-dimensional simulation markets. Immersion's patent portfolio includes over 600 issued or pending patents in the U.S. 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; any statements concerning the possible inclusion of vibro-tactile or force feedback technologies in peripheral devices for consumer gaming, or sales of vibro-tactile or force feedback peripheral devices for consumer gaming; any statements regarding consumer response that may occur as a result of having touch feedback in peripheral devices; any statements concerning consumer or market acceptance of simulator products for medical training, continuing education or evaluation; 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 ongoing litigation. For a more detailed discussion of these factors and other factors that could cause Immersion's actual results to vary materially, interested parties should review the risk factors listed in Immersion'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 Immersion's beliefs and predictions as of the date of this release. Immersion 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, 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) December 31, December 31, 2006 2005 (Unaudited) (1) ------------ ------------ ASSETS Cash and cash equivalents $32,012 $28,171 Accounts receivable, net 5,153 4,650 Inventories, net 2,639 2,655 Prepaid expenses and other current assets 1,179 1,131 ------------ ------------ Total current assets 40,983 36,607 Property and equipment, net 1,647 1,366 Intangibles and other assets, net 7,385 6,787 ------------ ------------ TOTAL ASSETS $50,015 $44,760 ============ ============ LIABILITIES Accounts payable $2,334 $2,179 Accrued compensation 1,526 1,193 Other accrued liabilities 1,750 1,604 Deferred revenue and customer advances 1,716 2,741 Current portion of long-term debt - 5 ------------ ------------ Total current liabilities 7,326 7,722 Long-term debt 18,122 17,490 Long-term liabilities and deferred revenue 32,559 21,343 Long-term customer advance from Microsoft 15,000 15,000 ------------ ------------ Total liabilities 73,007 61,555 STOCKHOLDERS' DEFICIT (22,992) (16,795) ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $50,015 $44,760 ============ ============ (1) Derived from Immersion's annual audited consolidated financial statements. Immersion Corporation Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Years Ended December 31, Ended December 31, 2006 2005 2006 2005 --------- -------- --------- --------- Revenues: Royalty and license $2,356 $2,615 $7,304 $8,888 Product sales 5,539 3,434 17,083 12,762 Development contracts and other 714 823 3,466 2,627 --------- -------- --------- --------- Total revenues 8,609 6,872 27,853 24,277 --------- -------- --------- --------- Costs and expenses: Cost of product sales (exclusive of amortization of intangibles shown separately below) 2,056 1,638 7,193 6,446 Sales and marketing 3,455 3,073 12,609 11,649 Research and development 2,184 1,520 7,609 6,003 General and administrative 2,506 3,081 10,076 10,638 Amortization of intangibles 313 206 969 1,256 Litigation settlement (300) - (1,650) - Restructuring - - - 185 ------------------ --------- --------- Total costs and expenses 10,214 9,518 36,806 36,177 --------- -------- --------- --------- Operating loss (1,605) (2,646) (8,953) (11,900) Interest and other income (expense), net (364) (271) (1,327) (1,027) --------- -------- --------- --------- Loss before provision for income taxes (1,969) (2,917) (10,280) (12,927) Provision for income taxes (13) (48) (144) (158) --------- -------- --------- --------- Net loss $(1,982) $(2,965) $(10,424) $(13,085) ========= ======== ========= ========= Basic and diluted net loss per share $(0.08) $(0.12) $(0.42) $(0.54) --------- -------- --------- --------- Shares used in calculating basic and diluted net loss per share 24,662 24,244 24,556 24,027 --------- -------- --------- --------- 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 Non Cash December 31, Three Months Stock-Based 2006, Three Months ended Compensation exclusive of ended December 31, included Non Cash December 31, 2006, as within Stock-Based 2005, as reported expense Compensation reported ------------ ------------ ------------- ------------ Costs and expenses Cost of product sales $2,056 $16 $2,040 $1,638 Sales and marketing 3,455 343 3,112 3,073 Research and development 2,184 120 2,064 1,520 General and administrative 2,506 317 2,189 3,081 Other, net 13 - 13 206 ------------ ------------ ------------- ------------ Total costs and expenses $10,214 $796 $9,418 $9,518 ============ ============ ============= ============ Year ended Non Cash December 31, Year Stock-Based 2006, Year ended Compensation exclusive of ended December 31, included Non Cash December 31, 2006, as within Stock-Based 2005, as reported expense Compensation reported ------------ ------------ ------------- ------------ Costs and expenses Cost of product sales $7,193 $70 $7,123 $6,446 Sales and marketing 12,609 1,230 11,379 11,649 Research and development 7,609 492 7,117 6,003 General and administrative 10,076 1,145 8,931 10,638 Other, net (681) - (681) 1,441 ------------ ------------ ------------- ------------ Total costs and expenses $36,806 $2,937 $33,869 $36,177 ============ ============ ============= ============ We adopted Statement of Financial Accounting Standards No. 123R "Share-Based Payment" effective January 1, 2006 and are required to recognize expense on our share-based payments from January 1, 2006. Our Consolidated Statement of Operations prior to January 1, 2006 does not include expense associated with share-based payments. We have included the above information to assist in comparing our operating expenses to prior periods. CONTACT: Immersion Corporation Stephen Ambler, +1 408-467-1900 invest@immersion.com