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