EXHIBIT 99.1
Immersion Corporation Reports Fourth Quarter 2005 Financial Results
SAN JOSE, Calif.--(BUSINESS WIRE)--Feb. 28, 2006--Immersion Corporation,
(Nasdaq:IMMR), a leading developer and licensor of touch feedback technology,
today announced revenues of $6.9 million for the quarter ended December 31, 2005
compared to revenues of $7.4 million for the fourth quarter of 2004. Net loss
for the fourth quarter of 2005 was $3.0 million, or $0.12 per share, an increase
of 4 percent compared to a net loss of $2.9 million, or $0.12 per share, for the
fourth quarter of 2004.
Revenues for the year ended December 31, 2005 were $24.3 million compared
to revenues of $23.8 million for the year ended December 31, 2004. Net loss for
the year ended December 31, 2005 was $13.1 million, or $0.54 per share, an
improvement of 37 percent compared to a net loss of $20.7 million, or $0.91 per
share, for the year ended December 31, 2004. As of December 31, 2005, Immersion
had cash and cash equivalents totaling $28.2 million.
"Over the first three quarters of the year, our total Gaming business
revenue increased by 41 percent over the comparable period in 2004," said Vic
Viegas, Immersion CEO. "Although we anticipated somewhat lower revenue in fourth
quarter due to next-generation console transitions, the impact of consumer
purchase delays and shortages of the new Microsoft Xbox 360 contributed to a
greater decline than we, and many in the industry, expected. The magnitude of
the downturn in the video console gaming market was a major factor in our
disappointing fourth quarter revenue and net loss.
"In January 2006, our Mobility business reached a significant milestone
with the launch of the first VibeTonz-enabled GSM mobile phone. Our first phone
for the European market as well, the Samsung SGH-E770 is designed for
mass-market appeal. It is currently being offered by Orange in the U.K. and
France, T-Mobile in Germany and the U.K, and others to come. There are currently
eight operators across three continents, representing approximately 220 million
subscribers, who offer GSM or CDMA mobile phones with our VibeTonz technology.
"In our patent infringement suit against Sony Computer Entertainment, Inc.
and Sony Computer Entertainment of America, Inc., on June 16, 2005, Sony
appealed the judgment, including the $90.7 million award, the injunction, and
the compulsory license to the United States Court of Appeals for the Federal
Circuit. We expect the appeal briefing to be completed by the end of March 2006.
We remain confident of our position in the appeal process," concluded Viegas.
In a related suit, Immersion and Electro Source announced today that they
have settled Immersion's patent infringement action against Electro Source filed
in September 2004, and, as part of the settlement, Electro Source has taken a
license for Immersion patents related to vibro-tactile devices for consumer
gaming peripherals.
Immersion will host a conference call with company management on Tuesday,
February 28, 2006 at 5:00 p.m. Eastern time to discuss operating results for the
fourth quarter ended December 31, 2005. 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 2397525. The call
will be archived and available for replay until March 7, 2006, by dialing +1
800.642.1687 and entering confirmation number 2397525. 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 until February 28, 2007.
About Immersion (www.immersion.com)
Founded in 1993, Immersion Corporation is a recognized leader in
developing, licensing, and marketing digital touch technology and products.
Bringing value to markets where man-machine interaction needs to be made more
compelling, safer, or productive, Immersion helps its partners broaden market
reach by making the use of touch feedback as critical a user experience as sight
and sound. Immersion's technology is deployed across automotive, entertainment,
medical training, mobility, personal computing, and three-dimensional simulation
markets. Immersion's patent portfolio includes over 500 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 regarding future economic
conditions or performance; any statements regarding projections of earnings,
revenues, or other cash receivables which are contingent upon Sony's compliance
with court orders; statements regarding Immersion's ability to keep any cash
received from Sony to date after completion of the appeals process or other
judicial proceedings; statements regarding the prospects and consequences of any
negative rulings from the appeals court on the judgment, including the damages
award; 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, 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 Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Years
Ended December 31, Ended December 31,
2005 2004 2005 2004
-------- --------- --------- ---------
Revenues:
Royalty and license $2,615 $3,505 $8,888 $8,778
Product sales 3,434 3,066 12,762 11,644
Development contracts and
other 823 872 2,627 3,341
-------- --------- --------- ---------
Total revenues 6,872 7,443 24,277 23,763
-------- --------- --------- ---------
Costs and expenses:
Cost of product sales
(exclusive of amortization
of intangibles shown
separately below) 1,638 1,672 6,446 6,255
Sales and marketing 3,073 3,293 11,649 11,312
Research and development 1,520 2,013 6,003 7,985
General and administrative 3,081 3,111 10,638 17,133
Amortization of intangibles 206 363 1,256 1,470
Restructuring 0 0 185 0
-------- --------- --------- ---------
Total costs and expenses 9,518 10,452 36,177 44,155
-------- --------- --------- ---------
Operating loss (2,646) (3,009) (11,900) (20,392)
Interest and other income
(expense), net (271) (3) (1,027) (497)
-------- --------- --------- ---------
Loss before provision for
income taxes (2,917) (3,012) (12,927) (20,889)
Benefit (provision) for
income taxes (48) 151 (158) 151
-------- --------- --------- ---------
Net loss $(2,965) $(2,861) $(13,085) $(20,738)
======== ========= ========= =========
Basic and diluted net loss
per share $(0.12) $(0.12) $(0.54) $(0.91)
-------- --------- --------- ---------
Shares used in calculating
basic and diluted
net loss per share 24,244 23,428 24,027 22,698
-------- --------- --------- ---------
Immersion Corporation
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2005 2004
(Unaudited) (1)
------------- -------------
ASSETS
Cash and cash equivalents $28,171 $25,538
Accounts receivable, net 4,650 5,435
Inventories 2,655 1,805
Prepaid expenses and other current
assets 1,131 1,280
------------- -------------
Total current assets 36,607 34,058
Property and equipment, net 1,366 1,174
Intangibles and other assets, net 6,787 7,018
------------- -------------
TOTAL ASSETS $44,760 $42,250
============= =============
LIABILITIES
Accounts payable $ 2,179 $ 4,038
Accrued compensation 1,193 1,499
Other accrued liabilities 1,604 2,002
Deferred revenue and customer advances 2,741 3,420
Current portion of long-term debt 5 11
------------- -------------
Total current liabilities 7,722 10,970
Long-term debt 17,490 16,917
Long-term liabilities and deferred
revenue 21,343 5,330
Long-term customer advance from
Microsoft 15,000 15,000
------------- -------------
Total liabilities 61,555 48,217
STOCKHOLDERS' DEFICIT (16,795) (5,967)
------------- -------------
TOTAL LIABILITIES &
STOCKHOLDERS' DEFICIT $44,760 $42,250
============= =============
(1) Derived from the Company's annual audited financial statements.
CONTACT: Immersion Corporation
Stephen Ambler, 408-467-1900
invest@immersion.com