Exhibit 99.1
Immersion Corporation Reports First Quarter 2006 Financial Results
SAN JOSE, Calif.--(BUSINESS WIRE)--May 4, 2006--Immersion
Corporation, (Nasdaq:IMMR), a leading developer and licensor of touch
feedback technology, today announced its first quarter 2006 financial
results. Revenues were $6.0 million for the quarter ended March 31,
2006 compared to revenues of $5.8 million for the first quarter of
2005, an increase of 5 percent. Net loss on a Generally Accepted
Accounting Principles (GAAP) basis for the first quarter of 2006 was
$2.9 million, or $0.12 per share, an improvement of 7 percent compared
to a net loss on a GAAP basis of $3.1 million, or $0.13 per share, for
the first quarter of 2005. Net loss for the three months ended March
31, 2006 included stock-based compensation expense of $723,000, equal
to $0.03 loss per share. Net loss for the three months ended March 31,
2005 did not include any stock-based compensation expense. As of March
31, 2006, Immersion had cash and cash equivalents totaling $30.9
million as compared to $28.2 million as of December 31, 2005.
"Consistent with the video console industry, our gaming revenue
continues to be weak, while our medical revenue grew 19 percent
compared to the first quarter last year. We expect growth of medical
revenue to continue, given our new product development and the
increasing acceptance of medical simulators as an effective training
tool," explained Immersion CEO Vic Viegas.
"New wireless operators such as Orange and T-Mobile are using our
VibeTonz(R) technology for mobile phones, expanding our reach in the
market," said Viegas. The first VibeTonz-enabled GSM mobile phone, the
Samsung SGH-E770, launched in Europe in January and is now being sold
in numerous countries directly through operators and by retail stores.
A similar phone, the Samsung SGH-E778, is being sold in China and
Taiwan. Over twenty content providers have published more than
thirty-five mobile games with VibeTonz effects, and more are in
development.
Regarding Immersion's patent infringement suit against Sony
Computer Entertainment, Inc. and Sony Computer Entertainment of
America, Inc. (Sony), on March 8, 2006, the U.S. District Court for
the Northern District of California denied in its entirety Sony's
motion seeking relief from the final judgment under Rule 60B of the
Federal Rules of Civil Procedure. Sony's appeal of the District
Court's judgment, which includes a $90.7 million award, an injunction
(stayed pending appeal), and a compulsory license, was filed with the
United States Court of Appeals for the Federal Circuit on June 16,
2005. Appeal briefing is expected to be complete by the end of May
2006. "We remain confident of our position in the appeal process,"
concluded Viegas.
Immersion will host a conference call with company management on
Thursday, May 4, 2006, at 5:00 p.m. Eastern time to discuss operating
results for the first quarter ended March 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 2397923. The call will be archived and
available for replay through May 11, 2006, by dialing +1 800.642.1687
and entering confirmation number 2397923. The call will also be
simulcast on the Internet through Immersion Corporation's Web site,
www.immersion.com. An audio replay of the call will be archived and
available at www.immersion.com for replay until May 4, 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 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 (the "Company") 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 consumer or market acceptance of simulator
products for medical training, continuing education or evaluation, or
consumer and market acceptance of touch feedback products in general;
any statements concerning the breadth of and timeline to implement
touch feedback technology into handset models or into games or other
content, release of VibeTonz-enabled handsets, release of content by
service providers, or any change in revenue that may occur from such
implementation; any statements regarding consumer response that may
occur as a result of having touch feedback in handsets or content,
proposed products or services; any statements regarding future
economic conditions or performance; any statements regarding
projections of earnings, revenues, or other 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-K, 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 Balance Sheets
(In thousands)
March 31, December 31,
2006 2005
(Unaudited) (1)
------------ ------------
ASSETS
Cash and cash equivalents $30,945 $28,171
Accounts receivable, net 3,766 4,650
Inventories 2,661 2,655
Prepaid expenses and other current assets 1,089 1,131
------------ ------------
Total current assets 38,461 36,607
Property and equipment, net 1,393 1,366
Intangibles and other assets, net 6,856 6,787
------------ ------------
TOTAL ASSETS $46,710 $44,760
============ ============
LIABILITIES
Accounts payable $890 $2,179
Accrued compensation 1,219 1,193
Other accrued liabilities 1,803 1,604
Deferred revenue and customer advances 2,038 2,741
Current portion of long-term debt 3 5
------------ ------------
Total current liabilities 5,953 7,722
Long-term debt 17,648 17,490
Long-term liabilities and deferred revenue 26,595 21,343
Long-term customer advance from Microsoft 15,000 15,000
------------ ------------
Total liabilities 65,196 61,555
STOCKHOLDERS' DEFICIT (18,486) (16,795)
------------ ------------
TOTAL LIABILITIES &
STOCKHOLDERS' DEFICIT $46,710 $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
Ended March 31,
2006 2005
-------- --------
Revenues:
Royalty and license $1,910 $2,471
Product sales 3,366 2,695
Development contracts and other 756 606
-------- --------
Total revenues 6,032 5,772
-------- --------
Costs and expenses:
Cost of product sales (exclusive of amortization of
intangibles shown separately below) 1,355 1,389
Sales and marketing 3,077 2,819
Research and development 1,729 1,509
General and administrative 2,811 2,286
Amortization of intangibles and deferred stock
compensation 210 367
Litigation settlement (650) -
Restructuring - 185
-------- --------
Total costs and expenses 8,532 8,555
-------- --------
Operating loss (2,500) (2,783)
Interest and other income (expense), net (304) (285)
-------- --------
Loss before provision for income taxes (2,804) (3,068)
Provision for income taxes (102) (65)
-------- --------
Net loss $(2,906) $(3,133)
======== ========
Basic and diluted net loss per share $(0.12) $(0.13)
-------- --------
Shares used in calculating basic and diluted net
loss per share 24,419 23,663
-------- --------
Immersion Corporation
Additional Financial Information
Effect of Non Cash Stock-Based Compensation included within
Condensed Consolidated Statement of Operations
(In thousands)
(Unaudited)
Three
Months
Three ended Three
Months Non Cash March 31 Months
ended Stock-Based 2006, ended
March 31 Compensation exclusive of March 31
2006, included Non Cash 2005,
as within Stock-Based as
reported expense Compensation reported
-------- ------------ ------------ ---------
Costs and expenses
Cost of product sales $1,355 $19 $1,336 $1,389
Sales and marketing 3,077 286 2,791 2,819
Research and development 1,729 129 1,600 1,509
General and
administration 2,811 289 2,522 2,286
Other, net (440) - (440) 552
-------- ------------ ------------ ---------
Total costs and expenses $8,532 $723 $7,809 $8,555
======== ============ ============ =========
There was no Non Cash Stock-Based Compensation included within the
financial results in the three months ended March 31, 2005.
CONTACT: Immersion Corporation
Stephen Ambler, 408-467-1900
invest@immersion.com