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Press Release

Feb 10, 2003

Immersion Corporation Reports Fourth Quarter 2002 Financial Results

Immersion Corporation Reports Fourth Quarter 2002 Financial Results SAN JOSE, Calif., Feb 10, 2003 -- Immersion Corporation, (Nasdaq:IMMR), a leading developer and licensor of haptic feedback technology, today announced that revenues for the quarter ended December 31, 2002 increased to $5.5 million over revenues of $5.2 million in the fourth quarter of 2001. This growth was driven primarily by an increase in medical product sales during the quarter.

Net loss for the fourth quarter of 2002 was $6.4 million, or $0.32 per share, compared to a net loss of $3.0 million, or $0.16 per share, for the fourth quarter of 2001. Current quarter net loss includes the write off of $3.8 million of goodwill associated with certain prior year business acquisitions. The net loss increased as a result of the goodwill write-off, partially offset by reduced interest expense on long-term debt and revenue growth year-over-year. The pro forma net loss, which is the net loss excluding amortization of intangibles and deferred stock compensation, acquisition related and other charges, and the write off of goodwill, was $1.9 million, or $0.09 per share, for the fourth quarter of 2002 compared to a pro forma net loss of $1.7 million, or $0.09 per share, for the fourth quarter of 2001.

For fiscal 2002, revenues increased to $20.2 million over revenues of $19.2 million in fiscal 2001. Net loss for the twelve months ended December 31, 2002 was $16.5 million, or $0.83 per share, compared to a net loss of $21.7 million, or $1.16 per share, for the twelve months ended December 31, 2001. The pro forma net loss for the twelve months ended December 31, 2002 was $9.3 million, or $0.47 per share, compared to the pro forma net loss of $16.3 million, or $0.87 per share, for the same period a year ago.

The Company also announced that Robert O'Malley has resigned as Chairman of the Board to pursue other interests and that the Company has no immediate plans to name a replacement. Vic Viegas, Immersion's CEO, said "We at Immersion appreciate the guidance and vision Bob provided to the Company, in particular his leadership in our medical business, which experienced revenue growth of 58 percent during 2002."

Viegas continued, "Longer sales cycles and delayed shipments by some licensees, continue to make 2003 a challenge and forecasting difficult. As a result, we will not be providing quarterly revenue or earnings guidance until our visibility on market or customer conditions improves. We currently believe that revenue for the full year of 2003 will be approximately $23 million to $25 million."

About Immersion Corporation (www.immersion.com)

Founded in 1993, Immersion Corporation is a recognized leader in developing, licensing and marketing haptic technology and products. Bringing value to markets where user/product interaction needs to be made more compelling, safe or productive, Immersion helps its partners develop and increase competitive advantage and broaden market reach by making the use of touch sense feedback as critical a user experience as sight and sound. Immersion's technology is deployed across personal computing, entertainment, medical training, automotive and three-dimensional simulation markets. Immersion and its wholly owned subsidiaries hold over 186 issued patents worldwide.

Immersion will host a conference call with live Internet broadcast on Monday, February 10, 2003, at 5:00 p.m. EST. Immersion is scheduled to discuss operating results for the fourth quarter ended December 31, 2002. A question and answer session will follow. To listen to the call, dial (800) 365-3378, reservation number 20977309. To listen to the web cast, log on to the Internet at http://www.immersion.com. The call will be archived and available for replay until February 14, 2003, by dialing (800) 633-8284, reservation number 20977309.

Note to Editors: Additional background information on Immersion Corporation is available through our Web Site at http://www.immersion.com.

Statements made in this press release, other than statements of historical fact are forward-looking statements including those that reflect management's current forecast of Immersion's future revenue and operating results, customer demand for medical and force feedback products, the effect of changes in management and the effect of the economic downturn. Forward looking statements made in this press release are based on current information, which management has assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. 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.

Risks and uncertainties related to Immersion's business are further outlined in Immersion's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. These reports are filed with the Securities and Exchange Commission. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. Immersion is not obligated to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

                         Immersion Corporation
            Condensed Consolidated Statements of Operations
               (In thousands, except per share amounts)
                              (Unaudited)
                                 Three Months         Twelve  Months
                                Ended Dec. 31,        Ended Dec. 31,
                                2002      2001        2002      2001
Revenues:
 Royalty revenue             $  1,486  $  1,977    $  5,231  $  5,362
 Product sales                  2,892     2,287      10,723    10,360
 Development contracts and
  other                         1,114       900       4,281     3,510
                               -   -     -   -
    Total revenues              5,492     5,164      20,235    19,232
                               -   -     -   -
Costs and expenses:
 Cost of product sales          1,494     1,273       5,881     6,074
 Sales and marketing            2,033     1,939       7,566     9,868
 Research and development       1,648     1,628       6,496     7,548
 General and administrative     2,211     1,777       8,064     7,694
 Amortization of intangibles
  and deferred stock
  compensation                    734     1,299       3,108     5,252
 Impairment of goodwill         3,758        --       3,758        --
 Acquisition related and
  other charges                    --        (1)        397       224
    Total costs and expenses   11,878     7,915      35,270    36,660
                               -   -     -   -
Operating loss                 (6,386)   (2,751)    (15,035)  (17,428)
Interest and other income
 (expense), net                    13      (217)     (1,495)   (4,318)
                               -   -     -   -
Net loss                     $ (6,373) $ (2,968)   $(16,530) $(21,746)
Basic and diluted net loss
 per share                   $  (0.32) $  (0.16)   $  (0.83) $  (1.16)
Shares used in calculating
 basic and diluted net loss
 per share                     20,134    18,951      19,906    18,702
                        Immersion Corporation
                Condensed Consolidated Balance Sheets
                            (In thousands)
                                                 Dec. 31,    Dec. 31,
                                                   2002       2001(1)
                                                (Unaudited)  (Audited)
ASSETS
  Cash and cash equivalents                       $ 8,717     $10,381
  Short-term investments                               --       2,545
  Accounts receivable, net                          3,645       3,779
  Inventories                                       2,128       1,965
  Prepaid expenses and other current assets         1,151       1,179
                                                          
         Total current assets                      15,641      19,849
  Property and equipment, net                       2,044       2,918
  Purchased intangibles and other assets, net       6,616      12,058
  Other investments                                 1,000       2,200
                                                          
         TOTAL ASSETS                             $25,301     $37,025
                                                  ========    ========
LIABILITIES
  Accounts payable                                $ 1,160     $   722
  Accrued compensation                                671       1,158
  Other accrued liabilities                         1,311         587
  Deferred revenue and customer advances            3,515         953
  Current portion of long-term debt                    86       4,541
                                                          
         Total current liabilities                  6,743       7,961
  Long-term debt                                       51         250
  Long-term portion of deferred revenue             4,559          --
                                                          
         Total liabilities                         11,353       8,211
STOCKHOLDERS' EQUITY                               13,948      28,814
                                                          
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY                              $25,301     $37,025
                                                  ========    ========
(1)  Derived from the Company's annual audited financial statements.
                         Immersion Corporation
           Reconciliation of Net Loss to Pro Forma Net Loss
                            (In thousands)
                              (Unaudited)
                                     Three Months       Twelve Months
                                    Ended Dec. 31,     Ended Dec. 31,
                                    2002     2001      2002      2001
Net loss                       $ (6,373) $ (2,968) $(16,530) $(21,746)
Pro forma adjustments:
 Amortization of intangibles
  and deferred stock
  compensation                      734     1,299     3,108     5,252
 Impairment of goodwill           3,758        --     3,758        --
 Acquisition related and other
  charges                            --        (1)      397       224
                                 -   -   -   -
Pro forma net loss             $ (1,881) $ (1,670) $ (9,267) $(16,270)