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Immersion Corporation Reports Fourth Quarter and Fiscal 2012 Results



  Immersion Corporation Reports Fourth Quarter and Fiscal 2012 Results

Business Wire

SAN JOSE, Calif. -- February 28, 2013

Immersion Corporation (NASDAQ: IMMR), the leading developer and licensor of
touch feedback technology, today reported financial results for the fourth
quarter and year ended December 31, 2012.

Total revenues for the fourth quarter of 2012 were $8.9 million, an increase
of 15% compared to $7.7 million for the fourth quarter of 2011. Royalty and
license revenues of $7.6 million for the fourth quarter of 2012 were up 12%
from the same period last year. Net loss for the fourth quarter of 2012 was
$(200,000), or $(0.01) per share. This compares to a net loss of $(270,000),
or $(0.01) per share, for the fourth quarter of 2011. Adjusted EBITDA for the
fourth quarter of 2012 was $1.3 million, compared to $1.9 million in the
fourth quarter of 2011.

Revenues for fiscal 2012 were $32.2 million, an increase of 5% as compared to
$30.6 million for fiscal 2011. Royalty and license revenue for fiscal 2012
totaled $29.0 million, an increase of 8% over $26.9 million for fiscal 2011.
Net loss for fiscal 2012 was $(5.6) million, or $(0.20) per share as compared
to net loss of $(1.6) million, or $(0.06) per share, for fiscal 2011. Adjusted
EBITDA for fiscal 2012 was $259,000, compared to $6.0 million in fiscal 2011.

“2012 was a pivotal year for Immersion, as we saw the value of our technology
repeatedly validated through our success in establishing the importance of our
intellectual property in the mobile market,” said Vic Viegas, chief executive
officer of Immersion. “We made significant progress in creating new haptic
technologies and user experiences, in maximizing their value, and in
monetizing both our innovative software solutions and our strong patent
portfolio. We are tremendously excited by the future for haptic technology
within both established as well as new markets. We believe that the success of
our strategic initiatives in 2012 has established a solid foundation for
future growth.”

As of December 31, 2012, Immersion’s cash, cash equivalents, and short-term
investments were $43.5 million, compared to $56.3 million as of December 31,
2011. During 2012, the Company used approximately $5.7 million to purchase
1,054,538 shares of its common stock.

Business Outlook

"Our current license with Samsung expired at the end of 2012, and we believe
we are in a strong position to seek substantially higher compensation for
Samsung’s use of our TouchSense and Integrator software solutions, as well as
for its prior and future shipments of mobile devices containing Basic Haptic
technology. While we are seeing positive momentum with existing customers and
are optimistic regarding the opportunity for new and expanded software and
patent license agreements, until we have greater clarity with regards to our
Samsung relationship, it is difficult to provide comprehensive annual guidance
at this time. However, given the health of our existing business, we are
pleased that even absent a new agreement with Samsung, our current guidance
for 2013 revenues is in the range of $28 million to $32 million,” concluded
Mr. Viegas.

Corporate Highlights

Recently:

  * Immersion entered into a settlement and license agreement with Google,
    Inc. and Motorola Mobility LLC, resolving the patent infringement
    litigation brought by Immersion against Motorola.
  * LG Electronics, Inc. expanded its agreement with Immersion to include a
    patent license covering LG’s use of simple forms of haptic effects in its
    smartphones and other mobile devices.
  * Panasonic became the newest Immersion licensee in Japan, and launched
    Docomo’s “NEXT series ELUGA X P-02E” smartphone with Immersion technology.
    The smartphone includes Immersion's TouchSense® 3000 embedded control
    software and Integrator software.
  * The Razer Edge tablet launched with Immersion tactile feedback technology,
    enabling console-style tactile effects within the gamepad controller.
  * Immersion introduced new build-time interface solutions for OEMs to enrich
    interactive mobile experiences: Tactile Presence, which transmits tactile
    information between two devices and Integrated Themes, which uses tactile
    effects to bring an added sense of realism to the branded mobile user
    interface.

Conference Call Information

Immersion will host a conference call with company management on Thursday,
February 28, 2013 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,
2012. To participate on the live call, analysts and investors should dial +1
877-941-2068 at least ten minutes prior to the start of the call. 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 haptic
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 1,300 issued or pending patents in the U.S.
and other countries, Immersion helps bring the digital universe to life. Hear
what we have to say at blog.immersion.com.

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 measures. 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.

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,
the statements regarding our expectations relating to our belief that we are
in a strong position to seek substantially higher compensation from Samsung,
expectations for fiscal 2013 revenues to be in the range of $28 to $32 million
and other statements regarding future growth and our intellectual property.

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,
potential and actual claims and proceedings, including litigation involving
Immersion’s intellectual property; 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 and in
monetizing the patent portfolio; the commercial success of applications or
devices into which Immersion's technology is licensed; potentially lengthy
sales cycles and design processes; unanticipated difficulties and challenges
encountered in development efforts; potential restructuring charges;
unexpected costs; failure to retain key personnel; competition; the inherently
uncertain nature of litigation which makes future outcomes and timing
difficult to predict; 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 most recent Quarterly Report on 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, TouchSense, HD Haptics and Reverb are
trademarks of Immersion Corporation in the United States and other countries.
All other trademarks are the property of their respective owners.

The use of the word "partner" or "partnership" in this press release does not
mean a legal partner or legal partnership.

(IMMR – C)

 
Immersion Corporation
Condensed Consolidated Balance Sheets
(In thousands)
                                                                 
                                                 December 31,     December 31,
                                                 2012             2011
                                                 (Unaudited)      (1)
ASSETS
Cash and cash equivalents                        $   4,558        $  7,298
Short-term investments                               38,988          48,987
Accounts and other receivables, net                  1,878           1,487
Inventories                                          141             423
Deferred income taxes                                165             215
Prepaid expenses and other current assets            706             479      
             Total current assets                    46,436          58,889
                                                                   
Property and equipment, net                          1,281           1,737
Intangibles and other assets, net                    15,725          14,053   
                                                                   
TOTAL ASSETS                                     $   63,442       $  74,679   
                                                                   
LIABILITIES
Accounts payable                                 $   338          $  365
Accrued compensation                                 2,502           2,830
Other current liabilities                            1,022           2,054
Deferred revenue and customer advances               3,934           4,120    
             Total current liabilities               7,796           9,369
                                                                   
Long-term deferred revenue                           10,221          13,229
Deferred income tax liabilities                      165             215
Other long-term liabilities                          619             245      
                                                                   
TOTAL LIABILITIES                                    18,801          23,058
                                                                   
STOCKHOLDERS’ EQUITY                                 44,641          51,621   
                                                                   
TOTAL LIABILITIES &
STOCKHOLDERS’ EQUITY                             $   63,442       $  74,679   
                                                                   
(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                Twelve Months
                           Ended December 31,          Ended December 31,
                           2012         2011           2012         2011
                                                                     
Revenues:
Royalty and license        $ 7,603      $ 6,806        $ 28,989     $ 26,916
Product sales                837          691            1,982        2,583
Development contracts        420          193            1,198        1,136   
and other
    Total revenues           8,860        7,690          32,169       30,635  
                                                                     
Costs and expenses:
    Cost of revenue          386          342            1,188        1,255
    Sales and marketing      1,703        1,683          6,775        7,085
    Research and             2,015        1,861          8,421        8,386
    development
    General and              4,444        3,201          19,326       12,568
    administrative
    Amortization and
    impairment of            483          378            1,554        1,394   
    intangibles
    Total costs and          9,031        7,465          37,264       30,688  
    expenses
                                                                     
Operating Income (loss)      (171   )     225            (5,095 )     (53    )
Interest and other           26           32             170          204     
income
                                                                     
Income (loss) from
continuing operations        (145   )     257            (4,925 )     151
before provision for
income taxes
                                                                     
Provision for income         (55    )     (527   )       (792   )     (1,816 )
taxes
                                                                     
Loss from continuing         (200   )     (270   )       (5,717 )     (1,665 )
operations
                                                                     
Discontinued operations:
    Gain on sales of
    discontinued             -            -              153          61
    operations
                                                                     
Net Loss                   $ (200   )   $ (270   )     $ (5,564 )   $ (1,604 )
                                                                     
Basic and diluted net
loss per share
    Continuing             $ (0.01  )   $ (0.01  )     $ (0.21  )   $ (0.06  )
    operations
    Discontinued           $ 0.00       $ 0.00         $ 0.01       $ 0.00    
    operations
Total                      $ (0.01  )   $ (0.01  )     $ (0.20  )   $ (0.06  )
Shares used in
calculating basic and        27,288       28,471         27,735       28,564  
diluted net loss per
share
                                                                              
                                                                              

Immersion Corporation
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands)
(Unaudited)
                                                                   
                           Three Months                Twelve Months
                           Ended December 31,          Ended December 31,
                           2012        2011            2012         2011
                                                                     
GAAP Net Loss              $ (200  )   $ (270  )       $ (5,564 )   $ (1,604 )
                                                                     
Interest and other           (26   )     (32   )         (170   )     (204   )
income
Provision for income         55          527             792          1,816
taxes
Depreciation and             164         411             654          1,128
amortization
Amortization and
impairment of                483         378             1,554        1,394
intangibles
Stock-based compensation     800         850             3,146        3,555
Discontinued operations      -           -               (153   )     (61    )
Total adjustments            1,476       2,134           5,823        7,628
                                                                     
Adjusted EBITDA            $ 1,276     $ 1,864         $ 259        $ 6,024   

Contact:

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