Immersion Corporation Reports Second Quarter 2002 Financial Results
Net loss was $2.1 million for the second quarter of 2002, or $0.10 per share, compared to a net loss of $5.1 million for the second quarter of 2001, or $0.27 per share. The company's net loss narrowed as a result of the company's prudent expense management that reduced operating expenses by 18 percent year-over-year and the growth in higher-margin royalty revenues. The pro forma net loss, which is the net loss excluding amortization of intangibles and deferred stock compensation and acquisition related and other charges, was $1.4 million for the second quarter of 2002, or $0.07 per share, compared to a net loss on a pro forma basis of $3.6 million for the second quarter of 2001, or $0.19 per share.
For the first six months of fiscal 2002, revenues were $10.3 million, an increase of 7 percent over revenues of $9.6 million for the first six months of fiscal 2001. Net loss for the six months ended June 30, 2002 was $5.7 million, or $0.29 per share, compared to the net loss of $9.7 million, or $0.53 per share, for the six months ended June 30, 2001. The pro forma net loss was $3.7 million, or $0.19 per share, for the six months ended June 30, 2002 as compared to the pro forma net loss of $7.0 million, or $0.38 per share, for the same period a year ago.
"In spite of a challenging economic environment, each of our business segments delivered solid contributions," said Bob O'Malley, Chairman and Chief Executive Officer of Immersion. "New licensing agreements signed during the quarter with Siemens/VDO in the automotive area, Intec in the computer gaming area, and Simbionix in the medical area increased our higher-margin royalty revenues. We are also pleased with the performance of our medical simulation business, where revenues increased 52 percent over the first quarter of 2002."
Vic Viegas, President, Chief Operating Officer and Chief Financial Officer, said, "Growth in our royalty-based business led to an improvement of our gross margins to 73 percent in the quarter, a significant increase from gross margins of 62 percent in the same quarter last year. In addition, during the quarter we increased our cash position by $3.5 million to more than $15 million."
Viegas added, "As a result of the current economic environment, we are lowering our revenue and EPS guidance for the third quarter and full-year 2002. For the third quarter of 2002, we project revenues to be in the $6 million to $6.3 million range, GAAP EPS to be between ($0.10) to ($0.12), and pro forma EPS to be between ($0.07) and ($0.09). Full-year 2002 revenues are projected to be between $23 million and $25 million, GAAP EPS to be between ($0.43) and ($0.48), and pro forma EPS to be between ($0.25) and ($0.30). In spite of the lower revenue outlook, we believe that our expense management discipline will keep us on track to become cash flow positive by the fourth quarter of 2002."
About Immersion Corporation (www.immersion.com)
Founded in 1993, Immersion Corp. 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 170 issued patents worldwide.
Immersion will host a conference call with live Internet broadcast on Monday, July 29, 2002, at 5:00 p.m. EDT. Immersion is scheduled to discuss operating results for the second quarter ended June 30, 2002, as well as the outlook for the third quarter 2002 and the full year 2002. A question and answer session will follow. To listen to the call, dial (888) 391-0104, reservation number 19956364. 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 August 2, 2002, by dialing (800) 633-8284, reservation number 19956364.
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 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. Forward-looking statements include statements regarding anticipated profitability or anticipated improved financial results. 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, fluctuations in demand for touch-enabled products, potential increase in expenses and ability to retain key personnel.
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 does not undertake a duty to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
Brand and product names mentioned in this press release are trademarks or registered trademarks of their respective companies or organizations.
Immersion Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per-share amounts)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
Revenues:
Royalty revenue $ 1,633 $ 633 $ 2,867 $ 2,122
Product sales 2,821 2,739 5,219 5,746
Development contracts
and other 1,007 864 2,180 1,729
Total revenues 5,461 4,236 10,266 9,597
Costs and expenses:
Cost of product sales 1,479 1,596 2,764 3,380
Sales and marketing 1,817 2,568 3,926 5,626
Research and development 1,588 2,076 3,291 4,129
General and administrative 1,813 1,741 3,791 3,801
Amortization of intangibles
and deferred stock
compensation 712 1,400 1,626 2,652
Acquisition related and
other charges -- 100 397 125
Total costs and expenses 7,409 9,481 15,795 19,713
Operating loss (1,948) (5,245) (5,529) (10,116)
Interest and other income
(expense), net (123) 165 (196) 376
Net loss $ (2,071) $ (5,080) $ (5,725) $ (9,740)
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Basic and diluted net
loss per share $ (0.10) $ (0.27) $ (0.29) $ (0.53)
Shares used in calculating
basic and diluted net
loss per share 20,002 18,611 19,679 18,530
Immersion Corporation
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2002 2001 (1)
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents $ 15,378 $ 10,381
Short-term investments -- 2,545
Accounts receivable, net 3,891 3,779
Inventories 2,034 1,965
Prepaid expenses and other
current assets 679 1,179
Total current assets 21,982 19,849
Property and equipment, net 2,509 2,918
Purchased intangibles and other
assets, net 10,869 12,058
Other investments 2,200 2,200
TOTAL ASSETS $ 37,560 $ 37,025
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LIABILITIES
Accounts payable $ 1,250 $ 722
Accrued compensation 906 1,158
Other accrued liabilities 764 587
Deferred revenue and customer advances 905 953
Current portion of long-term debt 4,931 4,541
Total current liabilities 8,756 7,961
Long-term debt 72 250
Long-term portion of deferred revenue 4,625 --
Total liabilities 13,453 8,211
STOCKHOLDERS' EQUITY 24,107 28,814
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 37,560 $ 37,025
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(1) Derived from the Company's annual audited financial statements.