Immersion Corporation Reports Record Revenues in First Quarter 2014

  Immersion Corporation Reports Record Revenues in First Quarter 2014

Business Wire

SAN JOSE, Calif. -- May 1, 2014

Immersion Corporation (NASDAQ: IMMR), the leading developer and licensor of
touch feedback technology, today reported financial results for the first
quarter ended March 31, 2014.

Results for the three months ended March 31, 2014

Total revenues for the first quarter of 2014 were$15.4 million, an increase
of 11% compared to$13.9 millionfor the first quarter of 2013. Royalty and
license revenues of$15.2 millionfor the first quarter of 2014 were up 11%
from the same period last year. Net income for the first quarter of 2014 was
$1.9 million, or $0.06 per diluted share. This compares to net income of $1.7
million, or $0.06 per diluted share, for the first quarter of 2013.

Non-GAAP net income for the first quarter of fiscal 2014 was $3.4 million, or
$0.12 per diluted share, compared with non-GAAP net income of $2.7 million, or
$0.10 per diluted share, for the first quarter of fiscal 2013. (See attached
table for a reconciliation of GAAP to non-GAAP financial measures.)

As ofMarch 31, 2014, Immersion's cash, cash equivalents, and short-term
investments were$81.3 million, compared to$71.1 millionas ofDecember 31,
2013. During the March quarter, the Company used $6.9 million to buy back
approximately 0.6 million shares of its common stock under its stock
repurchase program.

Management Commentary

“We are very pleased to report record revenues during the first quarter, which
contributed to strong profitability,” said Vic Viegas, chief executive officer
of Immersion. “During the period, our innovative TouchSense solutions were
featured in some of the mobile industry’s most popular new smartphone and
wearable devices. In addition, we continued to make great progress on our
initiatives in new areas such as wearables and mobile content, positioning
Immersion to capitalize on exciting market opportunities and a growing market
awareness that Immersion’s touch technologies can bring richness and realism
to advanced user interfaces.”

"As we indicated heading into the new calendar year, based on our current
outlook we expect revenues for 2014 to be in the range of $54 million to $62
million, an increase of between 14% and 31% over the prior year. Non-GAAP net
income for 2014 is anticipated to be in the range of $8 million to $15
million," concluded Mr. Viegas.

Business Highlights

Recent business highlights that reinforce the value of Immersion haptic
technology within key markets include:

  *Samsung’s adoption of innovative new Immersion software in its most
    important and strategic product launches. In its flagship Galaxy S5
    smartphone, Samsung included Immersion TouchSense software as well as
    Tactile Assist, a new haptic accessibility feature enabling consumers with
    disabilities to enjoy visual and audio content enhanced with tactile
    effects. Additionally, Samsung incorporated custom versions of TouchSense
    into its groundbreaking Gear 2 and Gear Fit wearable devices.
  *Immersion’s unveiling new tools, technologies and user experience concepts
    at Mobile World Congress, illustrating how tactile technology enhances
    next-generation mobile and wearable devices by adding realistic and
    engaging touch experiences to user-created video, ads and entertainment,
    wearables, mobile user interfaces, gaming and more.
  *Immersion’s entry into its first content and media evaluation and testing
    agreement with an advertising technology platform partner who will
    integrate Immersion enablement tools into its software environment and
    evaluate the performance of haptically-enhanced ads.

Conference Call Information

Immersion will host a conference call with company management on Thursday, May
1, 2014 at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss
financial results for the first quarter ended March 31, 2014. To participate
on the live call, analysts and investors should dial +1 877-941-1427 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 1,600 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, such as Non-GAAP Net Income and Non-GAAP Net Income per
diluted common share, because it is useful in understanding the company’s
performance as it excludes certain non-cash expenses 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 statement regarding positioning Immersion to capitalize on exciting market
opportunities and a growing market awareness that Immersion’s touch
technologies can bring richness and realism to advanced user interfaces in a
wide variety of emerging industries and our expectation that revenues for 2014
will be in the range of $54 million to $62 million and non-GAAP net income for
2014 will be in the range of $8 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 Annual Report on Form 10-K for 2013 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)
                                                           
                                                March 31,         December 31,
                                                2014              2013
                                                (Unaudited)       (1)
ASSETS
Cash and cash equivalents                       $ 24,365          $ 14,136
Short-term investments                          56,980            56,976
Accounts receivable, net                        769               598
Deferred income taxes                           7,784             7,784
Prepaid expenses and other current assets       550               690
            Total current assets                90,448            80,184
                                                                  
Property and equipment, net                     1,154             944
Deferred income tax assets                      28,046            29,066
Intangibles and other assets, net               362               381
                                                                  
TOTAL ASSETS                                    $ 120,010         $ 110,575
                                                                  
LIABILITIES
Accounts payable                                $ 1,949           $ 682
Accrued compensation                            2,198             4,680
Other current liabilities                       2,492             1,653
Deferred revenue                                23,380            8,920
            Total current liabilities           30,019            15,935
                                                                  
Long-term deferred revenue                      11,928            13,441
Other long-term liabilities                     501               528
                                                                  
TOTAL LIABILITIES                               42,448            29,904
                                                                  
STOCKHOLDERS’ EQUITY                            77,562            80,671
                                                                  
TOTAL LIABILITIES &
STOCKHOLDERS’ EQUITY                            $ 120,010         $ 110,575
                                                                  
(1) Derived from Immersion’s annual audited consolidated financial statements.

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

                                                   Three Months
                                                   Ended March 31,
                                                    2014           2013   
                                                                    
Revenues:
Royalty and license                                $ 15,157         $ 13,649
Product sales                                        0                19
Development, services, and other                    279            192    
     Total revenues                                 15,436         13,860 
                                                                    
Costs and expenses:
     Cost of revenues (exclusive of
     amortization of
     intangibles shown separately below)             120              148
     Sales and marketing                             2,763            2,247
     Research and development                        3,058            2,573
     General and administrative                      6,521            7,178
     Amortization of intangibles                    20             20     
     Total costs and expenses                       12,482         12,166 
                                                                    
Operating Income                                     2,954            1,694
Interest and other income (expense)                 (7     )        10     
                                                                    
Income before provision for income taxes             2,947            1,704
                                                                    
Provision for income taxes                          (1,083 )        (17    )
                                                                    
                                                                   
Net Income                                         $ 1,864         $ 1,687  
                                                                    
Basic net income per share                         $ 0.07          $ 0.06   
Shares used in calculating basic net income         28,370         27,424 
per share
                                                                    
Diluted net income per share                       $ 0.06          $ 0.06   
Shares used in calculating diluted net              29,382         28,294 
income per share

                                                              
Immersion Corporation
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands, except per share amounts)
(Unaudited)
                                                                      
                                                       Three Months
                                                       Ended March 31,
                                                        2014       2013
                                                                      
GAAP Net Income                                        $ 1,864        $ 1,687
                                                                      
Stock-based compensation                                1,583         1,037
                                                                      
Non-GAAP Net Income                                    $ 3,447        $ 2,724
                                                                      
Non-GAAP Earnings Per Share                            $ 0.12         $ 0.10
                                                                      
Shares used in calculating Non-GAAP Earnings            29,382        28,294
per Share

Contact:

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