Search Icon
« Back

Press Release

Mar 10, 2011

Immersion Corporation Reports Fourth Quarter and Fiscal 2010 Results

 

Annual revenues from royalties and licenses grow 64% year-over-year

SAN JOSE, Calif., Mar 10, 2011--(BUSINESS WIRE)-- Immersion Corporation (NASDAQ: IMMR), the leader in developing and licensing touch feedback technology (http://www.immersion.com/corporate/), today reported financial results for the fourth quarter and year ended December 31, 2010.

Total revenues for the fourth quarter of 2010 were $6.4 million, as compared to $6.9 million for the fourth quarter of 2009. Royalty and license revenues totaled $5.4 million for the fourth quarter of 2010, an increase of 35% over $4.0 million in the same period last year. Net loss for the fourth quarter of 2010 was $(2.3) million, or $(0.08) per share. This compares to net loss of $(4.3) million or $(0.15) per share, for the fourth quarter of 2009. Adjusted EBITDA, a non-GAAP financial measure defined below, for the fourth quarter of 2010 was $(144,000), an increase of $2.0 million over $(2.1) million in the fourth quarter of 2009.

Revenues for fiscal 2010 were $31.1 million, an increase of 12% compared to revenues of $27.7 million for fiscal 2009. Royalty and license revenue for fiscal 2010 totaled $23.3 million, an increase of 64% over $14.2 million for fiscal 2009. Net loss for the fiscal 2010 was $(5.9) million, or $(0.21) per share as compared to net loss of $(28.3) million, or $(1.01) per share, for fiscal 2009. Adjusted EBITDA for fiscal 2010 was $2.6 million, an increase of $19.4 million over $(16.8) million in fiscal 2009.

"Fiscal 2010 marked a significant inflection point for Immersion as the traction and focus within our technology licensing business enabled us to transition to a streamlined, high-margin model, with revenues from royalties and licenses growing 64% year-over-year," said Immersion CEO Victor Viegas. "With our technology embedded in more than 200 million mobile phones, Immersion remains at the center of a tremendous opportunity. We are focused on delivering cutting-edge haptics and user experience solutions through a system-level approach and further building on our position as the leading enabler in the space. We are excited by the recent launch of our new MOTIV haptic development platform, which makes high performance haptic solutions more easily accessible to the broader mobile ecosystem, and believe we have the right strategy in place to pave the way for profitable growth."

As of December 31, 2010, Immersion's cash, cash equivalents, and short-term investments were $61.2 million, compared to $63.7 million as of December 30, 2009. While the Company has not made any stock repurchases within the past two years under its previously-authorized Stock Repurchase Program, Immersion's Board of Directors intends to execute on the buyback program in fiscal 2011, under which the Company currently has $31.6 million remaining.

Business Outlook

Fiscal 2010 revenues include $3.7 million in sales of products related to the transition of certain medical product lines to CAE and $1.0 million in gaming revenues related to true ups, as previously disclosed. Excluding these items, Immersion's revenue from ongoing business was $26.4 million for fiscal 2010. Based on Immersion's current outlook, the Company expects revenues for fiscal 2011 to be in the range of $31 to $33 million. In addition, the Company expects to generate net income for the full year.

Corporate Highlights

Immersion recently:

  • Announced that Alps Electric Co., Ltd., a leading global components manufacturer, has extended and expanded its license to Immersion's TouchSense™ haptics technology, extending the relationship through 2016 and broadening coverage to a diverse range of products within the automotive sector.
  • Executed a licensing agreement with Bayer MaterialScience AG (BMS), a haptics technology provider with its affiliate Artificial Muscle, Inc. (AMI). The agreement allows BMS to bundle an Immersion technology license with its actuator (including Bayfol Reflex™ products), providing a total haptics solution in products such as mobile phones and gaming devices.
  • Announced the MOTIV™ Development Platform, designed to automate haptic integration into the Android OS and mobile applications, allowing both OEMs and application developers to create differentiated and engaging user experiences with high quality tactile feedback.
  • Was awarded its 500th patent in its world-wide portfolio of over 1,000 granted and pending patents. Immersion's most recent additions to its patent portfolio are directed at improving and broadening the control of haptic feedback for a variety of touch screen devices and enabling next generation haptic experiences for consumers.
  • Entered into a reseller agreement with Tastitalia, a premier supplier of high-tech user interfaces, headquartered in Italy. Tastitalia will integrate Immersion's TouchSense 1000 and 2000 technology into its touch screen and display units under the Tasthaptic product name.

Conference Call Information

Immersion will host a conference call with company management on Thursday, March 10, 2011 at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss financial results for the fourth quarter and year ended December 31, 2010. To participate on the live call, analysts and investors should dial +1 877-941-4775 at least ten minutes prior to the start of the call. A replay of the call will be available until 11:59 p.m. Pacific time on March 16, 2011 by dialing +1 800-406-7325 and entering the passcode 4408852#. A live and archived webcast of the conference call will also be available for 90 days within the investor relations section of Immersion's corporate Web site at www.immersion.com.

About Immersion (www.immersion.com)

Founded in 1993, Immersion (NASDAQ:IMMR) is the leading innovator in haptics technology; the company's touch feedback solutions deliver a more compelling sense of the digital world. Using Immersion's high-fidelity haptic systems, partners can transform user experiences with unique and customizable touch feedback effects; excite the senses in games, videos and music; restore "mechanical" feel by providing intuitive and unmistakable confirmation; improve safety by overcoming distractions while driving or performing a medical procedure; and expand usability when audio and visual feedback are ineffective. Immersion's TouchSense technology provides haptics in mobile phone, automotive, gaming, medical and consumer electronics products from world-class companies. With over 1,000 issued or pending patents in the U.S. and other countries, Immersion helps bring the digital universe to life.

Use of Non-GAAP Financial Measures

Immersion reports all financial information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult to understand if limited to reviewing only GAAP financial measure. Immersion discloses this non-GAAP information because it is useful in understanding the company's performance as it excludes non-cash and other special charges that many investors feel may obscure the company's true operating performance. Likewise, management uses these non-GAAP financial measures to manage and assess the profitability of its business. Investors are encouraged to review the related GAAP financial measures.

Adjusted EBITDA refers to a financial measure that Immersion defines as Earnings before Interest, Taxes, Depreciation and Amortization less Share Based compensation and other non-recurring items such as internal investigation and restatement costs, restructuring costs and discontinued operations. In 2009, Adjusted EBITDA also excluded change in fair value of warranty liability. The Non-GAAP reconciliation is included in the table below.

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, but not limited to, statements regarding future financial results and future market growth.

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 or its licensees' products; a delay in or failure to achieve the acceptance of force feedback as a critical user experience; unexpected difficulties in transitioning to a pure IP licensing model; the commercial success of applications or devices into which Immersion's technology is licensed; potentially lengthy sales cycles and design processes; adverse outcomes in any future intellectual property-related litigation and the costs related thereto; unanticipated difficulties and challenges encountered in development efforts; potential restructuring charges; failure to retain key personnel; potential and actual claims and proceedings, including stockholder litigation and action by the SEC or other governmental agencies; and negative tax or other implications for Immersion resulting from accounting adjustments; competition; the impact of global economic conditions and other factors. Many of these risks and uncertainties are beyond the control of Immersion.

For a more detailed discussion of these factors, and other factors that could cause actual results to vary materially, interested parties should review the risk factors listed in Immersion's Annual Report on Form 10-K for 2009 and its most recent Quarterly Report on Form 10-Q, which are 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 TouchSense are trademarks of Immersion Corporation in the United States and other countries. All other trademarks are the property of their respective owners.

(IMMR — C)

Immersion Corporation
Condensed Consolidated Balance Sheets
(In thousands)
                 
        December 31,       December 31,
        2010       2009
        Unaudited       (1)
ASSETS                
Cash and cash equivalents     $ 12,243       $ 19,828  
Short-term investments       48,961         43,900  
Accounts receivable, net       815         2,988  
Inventories       406         2,001  
Deferred income taxes       342         248  
Prepaid expenses and other current assets       3,821         4,474  
  Total current assets       66,588         73,439  
                 
Property and equipment, net       1,931         3,498  
Intangibles and other assets, net       12,356         10,897  
                 
TOTAL ASSETS     $ 80,875       $ 87,834  
                 
LIABILITIES              
Accounts payable     $ 393       $ 1,382  
Accrued compensation       3,507         1,387  
Other current liabilities       1,488         3,087  
Deferred revenue and customer advances       4,429         6,578  
  Total current liabilities       9,817         12,434  
                 
Long-term deferred revenue       16,494         18,851  
Deferred income tax liabilities       342         248  
Other long-term liabilities       538         560  
TOTAL LIABILITIES       27,191         32,093  
                 
STOCKHOLDERS' EQUITY       53,684         55,741  
                 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

    $ 80,875       $ 87,834  
                 
(1) Derived from Immersion's annual audited consolidated financial statements.
 
Immersion Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
                         
        Three Months       Twelve Months
        Ended December 31,       Ended December 31,
        2010   2009       2010   2009
        (Unaudited)       (Unaudited)   (1)
Revenues:                      

Royalty and license

    $ 5,402     $ 4,000         $ 23,250     $ 14,202  
Product sales       768       2,406           6,803       11,924  
Development contracts and other       223       538           1,071       1,599  
Total revenues       6,393       6,944           31,124       27,725  
                         
Costs and expenses:                      

Cost of product sales (exclusive of amortization

of intangibles shown separately below)

      314       1,433           2,901       8,289  
Sales and marketing       1,956       2,371           8,033       13,324  
Research and development       2,265       2,462           8,738       12,493  
General and administrative       3,235       5,821           15,043       21,719  
Amortization and impairment of intangibles       587       212           1,237       894  
Restructuring costs       -       (70 )         -       1,462  
Total costs and expenses       8,357       12,229           35,952       58,181  
                         
Operating loss       (1,964 )     (5,285 )         (4,828 )     (30,456 )
Interest and other income       60       128           272       1,290  
                         
Loss from continuing operations before provision for income taxes       (1,904 )     (5,157 )         (4,556 )     (29,166 )
                         
Benefit/(provision) for income taxes       (403 )     887           (1,501 )     310  
                         
Loss from continuing operations       (2,307 )     (4,270 )         (6,057 )     (28,856 )
                         
Discontinued operations:                      
Gain on sales from discontinued operations       (13 )     30           129       237  
Gain (loss) from discontinued operations       -       (44 )         1       340  
                         
Net loss     $ (2,320 )   $ (4,284 )       $ (5,927 )   $ (28,279 )
                         
Basic and diluted net loss per share:                      
Continuing operations     $ (0.08 )   $ (0.15 )       $ (0.22 )   $ (1.03 )
Discontinued operations       -       -           0.01       0.02  
Total     $ (0.08 )   $ (0.15 )       $ (0.21 )   $ (1.01 )

Shares used in calculating basic and diluted net loss per share

      28,190       28,000           28,113       27,973  
                         
(1) Derived from Immersion's annual audited consolidated financial statements.
 
Immersion Corporation
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands, except per share amounts)
(Unaudited)
                         
        Three Months       Twelve Months
        Ended December 31,       Ended December 31,
        2010   2009       2010   2009
                         
GAAP Net Loss       $ (2,320 )   $ (4,284 )       $ (5,927 )   $ (28,279 )
                         
Interest and other income         (60 )     (101 )         (272 )     (773 )
Change in fair value of warrant liability         -       (27 )         -       (517 )
Provision for income taxes         403       (887 )         1,501       (310 )
Depreciation and amortization         253       355           1,095       1,563  
Amortization and impairment of intangibles         587       212           1,237       894  
Stock-based compensation         979       776           3,409       4,524  
Restatement costs         1       1,872           1,676       5,221  
Restructuring costs and sale of business         -       (70 )         41       1,462  
Discontinued operations         13       14           (130 )     (577 )
Total adjustments         2,176       2,144           8,557       11,487  
                         
Adjusted EBITDA       $ (144 )   $ (2,140 )       $ 2,630     $ (16,792 )

 

Immersion Media:
A&R Edelman
Reagan Crossley, +1-650-762-2955
reagan.crossley@edelman.com
or
Immersion Investors:
The Blueshirt Group
Jennifer Jarman, +1-415-217-5866
jennifer@blueshirtgroup.com

 

Source: Immersion Corporation

 

 

News Provided by Acquire Media