Exhibit 99.1
Immersion Corporation Reports Third Quarter 2006 Financial Results
SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 2, 2006--Immersion
Corporation, (Nasdaq:IMMR), a leading developer and licensor of touch
feedback technology, today announced its third quarter 2006 financial
results. Revenues were $6.6 million for the quarter ended September
30, 2006 compared to revenues of $5.4 million for the third quarter of
2005. Net loss on a Generally Accepted Accounting Principles (GAAP)
basis for the third quarter of 2006 was $3.2 million, or $0.13 per
share, down 24 percent compared to a net loss on a GAAP basis of $4.2
million, or $0.17 per share, for the third quarter of 2005. Net loss
for the three months ended September 30, 2006 included stock-based
compensation expense of $724,000, equal to $0.03 loss per share. Net
loss for the three months ended September 30, 2005 did not include any
stock-based compensation expense. As of September 30, 2006, Immersion
had cash and cash equivalents totaling $29.0 million as compared to
$30.9 million as of June 30, 2006.
Revenues were $19.2 million for the nine months ended September
30, 2006 compared to revenues of $17.4 million for the first nine
months of 2005. Net loss on a GAAP basis for the first nine months of
2006 was $8.4 million, or $0.34 per share, down 17 percent compared to
a net loss on a GAAP basis of $10.1 million, or $0.42 per share, for
the first nine months of 2005.
"The third quarter revenue increase was led by 35 percent growth
in non-gaming revenues, notably from medical and touch interface
products," said Victor Viegas, Immersion CEO and president. "Gaming
revenues from our third-party peripheral licensees declined 28
percent, as expected. Our overall 22 percent revenue growth over
revenues in the third quarter last year demonstrates increasing demand
for our haptics technology for many diverse applications.
"Medical simulation continues to gain wider acceptance as an
effective training tool, which is driving interest in the acquisition
of our simulation systems by teaching institutions and medical device
manufacturers. In response, Immersion Medical has broadened its sales
coverage, increased its distribution reach, and maintained its strong
relationship with Medtronic, Inc. In addition, the new strategic
relationship with Laerdal Medical A/S, announced in August, has
expanded the distribution channel for vascular access products
worldwide and is already contributing to our revenue growth. Medical
revenue increased 64 percent compared to the year ago quarter and 41
percent year-to-date compared to the same period in 2005.
"We continue to gain support for our VibeTonz(R) technology in
Korea, an early adoption proving ground for mobile technologies. We
now have relationships with the top three handset makers and the top
two operators or their content aggregators in Korea. Recently we
established an important new affiliation with Korea Telecom Freetel
(KTF), the second largest operator in Korea with 13 million
subscribers. Through an Immersion agreement with content aggregator
GeoTel, KTF subscribers will now have access to VibeTonz-enabled
games, music, video, messaging, and other content and services.
Earlier in the third quarter, we announced that our licensee SK
Telecom, Korea's number one mobile operator with 20 million
subscribers, launched an exclusive VibeTonz category for downloadable
ringtones. These companies along with leading content providers are
using our VibeTonz technology and tools to create compelling content
that we believe can generate a new source of revenue for their
business."
Immersion will host a conference call with company management on
Thursday, November 2, 2006, at 5:00 p.m. Eastern time to discuss
operating results for the third quarter ended September 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 2398254. The call will be archived
and available for replay until November 9, 2006, by dialing +1
800.642.1687 and entering confirmation number 2398254. 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 November
2, 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. Using Immersion's advanced touch feedback technology,
electronic user interfaces can be made more productive, compelling,
entertaining, or safer. Immersion technologies are 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 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)
September 30, December 31,
2006 2005
(Unaudited) (1)
------------- ------------
ASSETS
Cash and cash equivalents $ 29,037 $ 28,171
Accounts receivable, net 5,458 4,650
Inventories, net 2,419 2,655
Prepaid expenses and other current assets 857 1,131
------------- ------------
Total current assets 37,771 36,607
Property and equipment, net 1,724 1,366
Intangibles and other assets, net 7,243 6,787
------------- ------------
TOTAL ASSETS $ 46,738 $ 44,760
============= ============
LIABILITIES
Accounts payable $ 1,234 $ 2,179
Accrued compensation 1,272 1,193
Other accrued liabilities 1,988 1,604
Deferred revenue and customer advances 2,179 2,741
Current portion of long-term debt - 5
------------- ------------
Total current liabilities 6,673 7,722
Long-term debt 17,964 17,490
Long-term liabilities and deferred
revenue 29,389 21,343
Long-term customer advance from Microsoft 15,000 15,000
------------- ------------
Total liabilities 69,026 61,555
STOCKHOLDERS' DEFICIT (22,288) (16,795)
------------- ------------
TOTAL LIABILITIES &
STOCKHOLDERS' DEFICIT $ 46,738 $ 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 Nine Months
Ended September Ended September
30, 30,
2006 2005 2006 2005
--------- -------- -------- ---------
Revenues:
Royalty and license $ 1,336 $ 1,473 $ 4,948 $ 6,273
Product sales 4,261 3,376 11,544 9,328
Development contracts and
other 962 538 2,752 1,804
--------- -------- -------- ---------
Total revenues 6,559 5,387 19,244 17,405
--------- -------- -------- ---------
Costs and expenses:
Cost of product sales
(exclusive of amortization of
intangibles shown separately
below) 1,980 1,756 5,137 4,808
Sales and marketing 3,068 2,679 9,154 8,576
Research and development 1,894 1,446 5,425 4,483
General and administrative 2,463 3,073 7,570 7,557
Amortization of intangibles 227 314 656 1,050
Litigation settlement (300) - (1,350) -
Restructuring - - - 185
------------------ -------- ---------
Total costs and
expenses 9,332 9,268 26,592 26,659
--------- -------- -------- ---------
Operating loss (2,773) (3,881) (7,348) (9,254)
Interest and other income
(expense), net (340) (265) (963) (756)
--------- -------- -------- ---------
Loss before provision for income
taxes (3,113) (4,146) (8,311) (10,010)
Provision for income taxes (44) (12) (131) (110)
--------- -------- -------- ---------
Net loss $ (3,157) $(4,158) $(8,442) $(10,120)
========= ======== ======== =========
Basic and diluted net loss per
share $ (0.13) $ (0.17) $ (0.34) $ (0.42)
--------- -------- -------- ---------
Shares used in calculating basic
and diluted net loss per share 24,590 24,132 24,519 23,950
--------- -------- -------- ---------
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 September Months
ended Stock-Based 30, 2006, ended
September Compensation exclusive of September
30, 2006, included Non Cash 30, 2005,
as within Stock-Based as
reported expense Compensation reported
----------- -------------- ------------- -----------
Costs and expenses
Cost of product
sales $ 1,980 $ 17 $ 1,963 $ 1,756
Sales and
marketing 3,068 305 2,763 2,679
Research and
development 1,894 122 1,772 1,446
General and
administration 2,463 280 2,183 3,073
Other, net (73) - (73) 314
----------- -------------- ------------- -----------
Total costs and
expenses $ 9,332 $ 724 $ 8,608 $ 9,268
=========== ============== ============= ===========
Nine Months
ended
Nine Months Non Cash September Nine Months
ended Stock-Based 30, 2006, ended
September Compensation exclusive of September
30, 2006, included Non Cash 30, 2005,
as within Stock-Based as
reported expense Compensation reported
----------- -------------- ------------- -----------
Costs and expenses
Cost of product
sales $ 5,137 $ 54 $ 5,083 $ 4,808
Sales and
marketing 9,154 887 8,267 8,576
Research and
development 5,425 372 5,053 4,483
General and
administration 7,570 828 6,742 7,557
Other, net (694) - (694) 1,235
----------- -------------- ------------- -----------
Total costs and
expenses $ 26,592 $ 2,141 $ 24,451 $ 26,659
=========== ============== ============= ===========
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