Immersion Corporation Reports Second Quarter 2013 Results

  Immersion Corporation Reports Second Quarter 2013 Results

                   Record Revenue for Second Quarter Period

Business Wire

SAN JOSE, Calif. -- August 1, 2013

Immersion Corporation (NASDAQ: IMMR), the leading developer and licensor of
touch feedback technology, today reported financial results for the second
quarter ended June 30, 2013.

Total revenues for the second quarter of 2013 were $10.2 million, an increase
of 58% compared to $6.5 million for the second quarter of 2012. Royalty and
license revenues of $10.0 million for the second quarter of 2013 were up 68%
from the same period last year. Net income for the second quarter of 2013 was
$776,000, or $ 0.03 per share. This compares to a net loss of $(2.2 million),
or $(0.08) per share, for the second quarter of 2012. Adjusted EBITDA for the
second quarter of 2013 was $2.4 million, compared to a loss of $(938,000) in
the second quarter of 2012.

“Immersion continued to execute in the June quarter, posting tremendous growth
year-over-year and achieving record revenues for the second quarter period
along with solid profitability,” said Vic Viegas, chief executive officer of
Immersion. “We were very pleased to add Sharp as a new licensee of our
software during the quarter and to see our partners continue to launch new
products showcasing our technologies. Given the current license agreements in
place, we believe we have good visibility and predictable revenue growth over
the next 12-24 months. In addition, we are also excited about the new growth
opportunities in the mobile, gaming and auto markets and are also working
diligently to lay the foundation to further expand our addressable markets and
long-term growth engine through continued innovation.”

“As we enter the second half of the year, we remain on track to achieve record
top-line results in 2013 and expect annual revenues to be in the range of $45
million to $48 million, an increase of between 40% and 49% over last year’s
revenue of $32.2 million. In addition, we continue to anticipate Adjusted
EBITDA for 2013 to be in the range of $12 million to $15 million,” concluded
Mr. Viegas.

As of June 30, 2013, Immersion’s cash, cash equivalents, and short-term
investments were $63.9 million, compared to $43.5 million as of December 31,
2012.

Corporate Highlights

Recently:

  *Sharp entered a new license agreement with Immersion for its
    TouchSense®and Integrator software. Offered through DOCOMO, the AQUOS
    SH-06E smartphone is Sharp’s first device using Immersion’s haptics.
  *Power A, the company behind the leading MOGA™ Mobile Gaming System, and
    Immersion announced a collaboration where Immersion’s haptic technology
    will be used to add rumble effects to the next generation MOGA Power
    Series Pro mobile controller.
  *Immersion expanded its Haptic SDK functionality with new plug-ins and
    integrations into three top game development platforms- Unity, GameMaker:
    Studio, and Marmalade.
  *Immersion released Haptic Muse, a preview app on Google Play designed to
    inspire creativity for game developers. The developer tool kit includes
    the Haptic SDK’s library of 124 pre-designed haptic effects.

Conference Call Information

Immersion will host a conference call with company management on Thursday,
August 1, 2013 at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss
financial results for the second quarter ended June 30, 2013. 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 inhaptic
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 our visibility and
predictable revenue growth over the next 12-24 months , our expectations
relating to new growth opportunities and the expansion of addressable markets
and long-term growth and our expectation that revenues for 2013 will be in the
range of $45 million to $48 million and adjusted EBITDA for 2013 will be in
the range of $12 million to $15 million.

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 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; 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)
                                                           
                                              June 30,         December 31,
                                              2013             2012
                                              (Unaudited)      (1)
ASSETS
Cash and cash equivalents                     $    6,904       $   4,558
Short-term investments                             56,982          38,988
Accounts and other receivables, net                873             1,878
Inventories                                        41              141
Deferred income taxes                              165             165
Prepaid expenses and other current assets         945            706      
Total current assets                               65,910          46,436
                                                               
Property and equipment, net                        1,118           1,281
Intangibles and other assets, net                 16,575         15,725   
                                                               
TOTAL ASSETS                                  $    83,603      $   63,442   
                                                               
LIABILITIES
Accounts payable                              $    598         $   338
Accrued compensation                               2,459           2,502
Other current liabilities                          1,035           1,022
Deferred revenue and customer advances            13,990         3,934    
Total current liabilities                          18,082          7,796
                                                               
Long-term deferred revenue                         8,817           10,221
Deferred income tax liabilities                    165             165
Other long-term liabilities                       573            619      
                                                               
TOTAL LIABILITIES                                  27,637          18,801
                                                               
STOCKHOLDERS’ EQUITY                              55,966         44,641   
                                                               
TOTAL LIABILITIES &
STOCKHOLDERS’ EQUITY                          $    83,603      $   63,442   
                                                               
(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              Six Months
                             Ended June 30,            Ended June 30,
                              2013       2012       2013       2012   
                                                                    
Revenues:
Royalty and license          $ 9,980      $ 5,930      $ 23,629     $ 15,015
Product sales                  13           344          32           616
Development contracts and     208        202        400        536    
other
Total revenues                10,201     6,476      24,061     16,167 
                                                                    
Costs and expenses:
Cost of revenues               127          214          275          529
Sales and marketing            2,294        1,694        4,541        3,440
Research and development       2,663        2,124        5,236        4,318
General and administrative     3,976        4,361        10,114       9,132
Amortization and              383        393        877        734    
abandonment of intangibles
Total costs and expenses      9,443      8,786      21,043     18,153 
                                                                    
Operating Income (loss)        758          (2,310 )     3,018        (1,986 )
Interest and other income     28         68         38         78     
                                                                    
Income (loss) from
continuing operations          786          (2,242 )     3,056        (1,908 )
before provision for
income taxes
                                                                    
Provision for income taxes    (10    )    (66    )    (27    )    (619   )
                                                                    
Income (loss) from             776          (2,308 )     3,029        (2,527 )
continuing operations
                                                                    
Discontinued operations:
Gain on sales of               -            153          -            153
discontinued operations
                                                                 
Net Income (loss)            $ 776       $ (2,155 )   $ 3,029     $ (2,374 )
                                                                    
Basic net income (loss)
per share
Continuing operations        $ 0.03       $ (0.08  )   $ 0.11       $ (0.09  )
Discontinued operations      $ 0.00      $ 0.00      $ 0.00      $ 0.00   
Total                        $ 0.03      $ (0.08  )   $ 0.11      $ (0.09  )
Shares used in calculating
basic net income (loss)       28,146     28,058     27,787     28,000 
per share
                                                                    
Diluted net income (loss)
per share
Continuing operations        $ 0.03       $ (0.08  )   $ 0.10       $ (0.09  )
Discontinued operations      $ 0.00      $ 0.00      $ 0.00      $ 0.00   
Total                        $ 0.03      $ (0.08  )   $ 0.10      $ (0.09  )
Shares used in calculating
diluted net income (loss)     29,293     28,058     28,912     28,000 
per share
                                                                             

Immersion Corporation
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands)
(Unaudited)
                                                               
                               Three Months             Six Months
                               Ended June 30,           Ended June 30,
                                2013     2012       2013     2012   
                                                                    
GAAP Net Income (Loss)         $ 776       $ (2,155 )   $ 3,029     $ (2,374 )
                                                                    
Interest and other income        (28   )     (68    )     (38   )     (78    )
Provision for income taxes       10          66           27          619
Depreciation and                 149         161          313         327
amortization
Amortization and abandonment     383         393          877         734
of intangibles
Stock-based compensation         1,151       818          2,189       1,538
Discontinued operations         -         (153   )    -         (153   )
Total adjustments                1,665       1,217        3,368       2,987
                                                                    
Adjusted EBITDA                $ 2,441    $ (938   )   $ 6,397    $ 613    

Contact:

Media Contact:
Edelman
Reagan Crossley, +1 650-762-2955
reagan.crossley@edelman.com
or
Investor Contact:
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jennifer@blueshirtgroup.com