Immersion Corporation Reports Second Quarter 2014 Results

  Immersion Corporation Reports Second Quarter 2014 Results                        Posts Record June Quarter Revenue  Business Wire  SAN JOSE, Calif. -- July 31, 2014  Immersion Corporation (NASDAQ:IMMR), the leading developer and licensor of touch feedback technology, today reported financial results for the second quarter ended June 30, 2014.  Results for the three months ended June 30, 2014  Total revenues for the second quarter of 2014 were $11.8 million, an increase of 16% compared to $10.2 million for the second quarter of 2013. Royalty and license revenues of $11.6 million for the second quarter of 2014 were up 16% from the same period last year. Net income for the second quarter of 2014 was $169,000, or $0.01 per diluted share. This compares to net income of $466,000, or $0.02 per diluted share, for the second quarter of 2013.  Non-GAAP net income for the second quarter of 2014 was $1.5 million, or $0.05 per diluted share, compared with non-GAAP net income of $1.6 million, or $0.06 per diluted share, for the second quarter of 2013. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)  As of June 30, 2014, Immersion’s cash, cash equivalents, and short-term investments were $74.2 million, compared to $71.1 million as of December 31, 2013. During the June quarter, the Company used $109 thousand to buy back approximately 11 thousand shares of its common stock under its stock repurchase program.  Management Commentary  “We are pleased to report record June quarter revenues and our sixth consecutive quarter of profitability,” said Vic Viegas, chief executive officer of Immersion. “During the period, we continued to make great progress in executing across our key initiatives with both our OEM customers and our content business. This includes the launch of our new official business entity in Shanghai as well as our entering into a new multi-year licensing agreement with Huawei, one of the largest smartphone makers in the world.”  “We are very optimistic regarding the opportunities in front of us given the headway we have made to date and our prospects for growth in the future. However, due to the timing of new agreements and the pace of certain negotiations, including our renewal negotiations with LG Electronics, we are revising our 2014 financial outlook. We now expect revenues for 2014 to be in the range of $51 million to $56 million, an increase of between 7% and 18% over the prior year. Non-GAAP net income for 2014 is anticipated to be in the range of $6 million to $12 million,” concluded Mr. Viegas.  Business Highlights  Recent business highlights demonstrate continued progress across Immersion’s strategic initiatives, including:    *The addition of new mobile licensee Huawei Device (Dongguan) Co., Ltd.,     the third largest global supplier of smartphones according to IDC. This     first direct license agreement with Huawei for Immersion’s haptic     software, TouchSense 3000, enables Huawei to add tactile feedback to     certain Huawei branded devices to create rich, multi-dimensional user     experiences.   *The expansion of Immersion’s haptic business in China with the opening of     an official business entity. Immersion (Shanghai) Science & Technology     Company, Ltd., a wholly owned subsidiary in China, expands the Company’s     sales and support activities as it continues to grow its customer base in     China, broadens its engagement with the Chinese mobile ecosystem, and     establishes a new technology center and base of operations in the region.   *Immersion’s entry into a content and media evaluation license agreement     with a second significant mobile ad network, setting the stage for     additional testing and integration work as the Company moves toward     commercial launches of haptically-enhanced ads as early as this calendar     year.  Conference Call Information  Immersion will host a conference call with company management on Thursday, July 31, 2014 at 2:00 p.m. Pacific time (5:00 p.m. Eastern time) to discuss financial results for the second quarter ended June 30, 2014. To participate on the live call, analysts and investors should dial +1 888-455-2260 (conference ID: 2161690) 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 1,700 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 $51 million to $56 million and non-GAAP net income for 2014 will be in the range of $6 million to $12 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)                                                                                           June 30,                  December 31,                                    2014                      2013                                    (Unaudited)               (1) ASSETS Cash and cash equivalents          $     17,217              $   14,136 Short-term investments                   56,980                  56,976 Accounts and other                       1,348                   598 receivables, net Deferred income taxes                    7,784                   7,784 Prepaid expenses and other              1,094                  690        current assets Total current assets                     84,423                  80,184                                                               Property and equipment, net              1,364                   944 Deferred income tax assets               28,031                  29,066 Intangibles and other assets,           345                    381        net                                                               TOTAL ASSETS                       $     114,163             $   110,575                                                                  LIABILITIES Accounts payable                   $     1,366               $   682 Accrued compensation                     2,060                   4,680 Other current liabilities                2,119                   1,653 Deferred revenue                        18,020                 8,920      Total current liabilities                23,565                  15,935                                                               Long-term deferred revenue               10,462                  13,441 Other long-term liabilities             476                    528        TOTAL LIABILITIES                        34,503                  29,904                                                               STOCKHOLDERS’ EQUITY                    79,660                 80,671                                                                   TOTAL LIABILITIES &                $     114,163             $   110,575    STOCKHOLDERS’ EQUITY                                                               (1) Derived from Immersion’s annual audited consolidated financial statements, as adjusted for change in accounting method.    Immersion Corporation Condensed Consolidated Statements of Income (In thousands, except per share amounts) (Unaudited)                                                                                    Three Months                  Six Months                        Ended June 30,                Ended June 30,                         2014         2013         2014         2013    Revenues: Royalty and license    $ 11,602       $ 9,980        $ 26,759       $ 23,629 Product sales            0              13             0              32 Development,            229          208          508          400     services, and other Total revenues          11,831       10,201       27,267       24,061                                                                       Costs and expenses: Cost of revenues         101            127            221            275 Sales and marketing      2,637          2,294          5,400          4,541 Research and             3,006          2,663          6,064          5,236 development General and              5,950          4,649          12,471         11,827 administrative Amortization of         20           20           40           40      intangibles Total costs and         11,714       9,753        24,196       21,919  expenses                                                                      Operating Income         117            448            3,071          2,142 Interest and other      144          28           137          38      income                                                                      Income before provision for income     261            476            3,208          2,180 taxes                                                                      Provision for           (92    )      (10    )      (1,175 )      (27    ) income taxes                                                                      Net Income             $ 169         $ 466         $ 2,033       $ 2,153                                                                        Basic net income per   $ 0.01        $ 0.02        $ 0.07        $ 0.08    share Shares used in calculating basic       28,383       28,146       28,376       27,787  net income per share                                                                      Diluted net income     $ 0.01        $ 0.02        $ 0.07        $ 0.07    per share Shares used in calculating diluted     29,210       29,293       29,330       28,912  net income per share                                                                                                                                      Immersion Corporation Reconciliation of GAAP Net Income to Non-GAAP Net Income (In thousands, except per share amounts) (Unaudited)                                                                                                       Three Months              Six Months                                Ended June 30,            Ended June 30,                                2014       2013         2014       2013                                                                        GAAP Net Income                $ 169        $ 466        $ 2,033      $ 2,153                                                                        Stock-based compensation        1,344       1,151       2,927       2,189                                                                        Non-GAAP Net Income            $ 1,513      $ 1,617      $ 4,960      $ 4,342                                                                        Non-GAAP Earnings Per          $0.05        $0.06        $0.17        $0.15 Share                                                                        Shares used in calculating      29,210      29,293      29,330      28,912 Non-GAAP Earnings 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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