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Press Release

Oct 30, 2000

Immersion Corporation Reports Record Net Revenues of $3.8 Million for Third Quarter

Immersion Corporation Reports Record Net Revenues of $3.8 Million for Third Quarter SAN JOSE, Calif. Oct. 30, 2000--Immersion Corporation, (Nasdaq:IMMR), the pioneering developer of sensory interaction technology, announced today that third quarter 2000 total revenues were $3.8 million, as compared with $2.7 million in the third quarter of 1999, an increase of 40%. The third quarter 2000 revenue was comprised of $2.2 million in product revenue, which was $811,000 or 60% higher than the third quarter of 1999; $1.3 million in development contract revenue, which was $623,000 or 87% higher than the third quarter of 1999; and $308,000 in royalty revenue, which was $341,000 or 53% less than the third quarter of 1999, the entire royalty revenue decrease was attributable to the expiration of a lump-sum royalty fee recognized in the third quarter of 1999. Excluding the lump-sum payment, recurring royalty in the third quarter of 2000 increased by 11% as compared to the third quarter of 1999. The pro forma net loss, excluding amortization of intangibles and deferred stock compensation and acquisition related charges, was $4.2 million for the third quarter of 2000 or $0.23 per diluted share compared to $2.5 million for the third quarter of 1999 or $0.35 per diluted share.

Total revenues for the nine months ended September 30, 2000 increased to $10.1 million from $8.0 million for the nine months ended September 30, 1999, an increase of 26%. Revenue for the nine months ended September 30, 2000 was comprised of $5.2 million in product sales, which was $700,000 or 16% higher than the product sales for the nine months ended September 30, 1999; $2.7 million in development contract revenue, which was $493,000 or 22% higher than the development contract revenue for the nine months ended September 30, 1999; and $2.2 million in royalty revenue, which was $893,000 or 71% higher than the royalty revenue for the nine months ended September 30, 1999. Pro forma net loss, excluding amortization of intangibles and deferred stock compensation and acquisition related charges, was $9.9 million for the nine months ended September 30, 2000 or $0.56 per diluted share compared to $5.1 million for the nine months ended September 30, 1999 or $0.78 per diluted share.

"We're very pleased with our third quarter financial results and the progress we made during the quarter in our various business groups," said Victor Viegas, CFO at Immersion. "The purchase of VTi and HT Medical during the quarter, enhances our patent portfolio, increases our presence in two new markets and most importantly, adds valuable human resources experienced in the field of haptics. Our third quarter was important to us for a number of other reasons including, the addition of our new CEO and President, Bob O'Malley, the introduction of two new tactile mice products from Logitech and the multitude of announcements by various licensees of new gaming devices available for this holiday season, including products for the PlayStation 2 platform."

About Immersion Corporation (www.immersion.com)

Founded in 1993, Immersion Corporation develops advanced hardware and software technologies that enable users to interact with computers using their sense of touch. Immersion's patented TouchSense(TM) technologies, enable computer peripheral devices to deliver tactile sensations that correspond to on-screen events. Immersion licenses its hardware and software technology, on which it and its wholly owned subsidiaries hold over 80 issued patents worldwide, to industry-leaders in order to integrate and implement its sensory feedback into professional simulation and modeling, consumer devices, and enabling technologies.

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 certain aspects of Immersion's future. Forward-looking statements made in this press release are based on current information, which we have 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.

Additional risks and uncertainties are outlined in Immersion's reports on Forms 10-K and 10Q and its proxy statement/prospectus dated September 13, 2000, as 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.

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

                         Immersion Corporation
            Condensed Consolidated Statements of Operations
               (In thousands, except per share amounts)
                              (Unaudited)

                              Three Months          Nine Months
                           Ended September 30,   Ended September 30,
                             2000      1999        2000      1999
                             ---    ---          
Revenues:
 Royalty revenue            $   308   $   649    $  2,158  $  1,265
 Product sales                2,153     1,342       5,179     4,479
 Development contracts 
  and other                   1,343       720       2,715     2,222
                             ---    ---          

   Total revenues             3,804     2,711      10,052     7,966
                             ---    ---          

Costs and expenses:
 Cost of product sales        1,165       682       2,822     2,128
 Sales and marketing          2,914       988       7,713     2,239
 Research and
  development                 1,876     1,388       4,974     3,943
 General and
  administrative              2,408     1,973       5,852     4,023
 Amortization of
  intangibles and deferred
  stock compensation          1,590       444       3,460       876
 Acquisition related 
  charges                     2,583        --       3,469     1,190
                             ---    ---          

   Total costs and 
    expenses                 12,536     5,475      28,290    14,399
                             ---    ---          

Operating loss               (8,732)   (2,764)    (18,238)   (6,433)
Interest and other
 income/(expense), net          383      (142)      1,451      (715)
                             ---    ---          

Net loss                    $(8,349)  $(2,906)   $(16,787) $ (7,148)
                            =======   =======    ========  ========
Basic and diluted
 net loss per share         $ (0.46)  $ (0.41)   $  (0.96) $  (1.10)
                             ---    ---          

Shares used in
 calculating basic and 
 diluted net loss 
 per share                   17,955     7,085      17,509     6,478
                             ---    ---          

                         Immersion Corporation
                 Condensed Consolidated Balance Sheets
                            (In thousands)

                                      September 30,      December 31,
                                          2000             1999 (1)
                                      (Unaudited)
                                                  ---
ASSETS
  Cash and cash equivalents            $   24,899         $   46,606
  Short-term investments                    8,002              4,781
  Accounts receivable, net                  2,457              1,362
  Inventories                               1,475                949
  Prepaids and other current assets         1,320              1,160
                                         --           --

               Total current assets        38,153             54,858

  Property and equipment, net               3,627              1,316
  Purchased intangibles 
   and other assets, net                   15,328              4,813
  Other investments                         6,500                 --
                                         --           --

          TOTAL ASSETS                 $   63,608         $   60,987
                                       ==========         ==========

LIABILITIES
  Accounts payable                     $    2,436         $    1,372
  Accrued compensation                        594                478
  Other accrued liabilities                 2,400                505
  Deferred revenue and 
   customer advances                          911              1,736
  Current portion of long-term debt           115                110
                                         --           --

          Total current liabilities         6,456              4,201

  Long-term debt                            3,928              3,682
  Other long-term liabilities                   0                 39
                                         --           --

          Total liabilities                10,384              7,922

STOCKHOLDERS' EQUITY                       53,224             53,065
                                         --           --

TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY                   $   63,608         $   60,987
                                       ==========         ==========

(1) Derived from the Company's annual audited financial statements and
restated to include Company's subsidiary, HT Medical.