Immersion Corporation Reports Fourth Quarter and Fiscal 2011 Results

Conference Call Information

Immersion will host a conference call with company management on Thursday, March 1, 2012 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, 2011. 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 replay of the call will be available until 11:59 p.m. Pacific time on March 7, 2012 by dialing +1 800-406-7325 and entering the passcode 4506970#. 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 haptics 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 1200 issued or pending patents in the U.S. and other countries, Immersion helps bring the digital universe to life.

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 for fiscal 2012 revenues to be in the range of $34 to $36 million, the expectation as to our Adjusted EBITDA for the full year 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, continued disruption in the markets for Immersion’s and its licensees’ products due to the recent earthquake and tsunami in Japan; 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; failure to retain key personnel; potential and actual claims and proceedings, including stockholder litigation; competition; 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 2010 and its most recent Quarterly Report on Form 10-Q, which are 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, and TouchSense 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,
2011 2010
(Unaudited) (1)
ASSETS
Cash and cash equivalents $ 7,298 $ 12,243
Short-term investments 48,987 48,961
Accounts and other receivables, net 1,487 815
Inventories 423 406
Deferred income taxes 215 342
Prepaid expenses and other current assets   479   3,821  
Total current assets 58,889 66,588
 
Property and equipment, net 1,737 1,931
Intangibles and other assets, net   14,053   12,356  
 
TOTAL ASSETS $ 74,679 $ 80,875  
 
LIABILITIES
Accounts payable $ 365 $ 393
Accrued compensation 2,830 3,507
Other current liabilities 2,054 1,488
Deferred revenue and customer advances   4,120   4,429  
Total current liabilities 9,369 9,817
 
Long-term deferred revenue 13,229 16,494
Deferred income tax liabilities 215 342
Other long-term liabilities   245   538  
 
TOTAL LIABILITIES 23,058 27,191
 
STOCKHOLDERS’ EQUITY   51,621   53,684  
 
TOTAL LIABILITIES &
STOCKHOLDERS’ EQUITY $ 74,679 $ 80,875  
 
(1) Derived from Immersion’s annual audited consolidated financial statements.
       
Immersion Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
 
Three Months Twelve Months
Ended December 31, Ended December 31,
2011 2010 2011 2010
(Unaudited) (Unaudited)   (1)
 
Revenues:
Royalty and license $ 6,806 $ 5,402 $ 26,916 $ 23,250
Product sales 691 768 2,583 6,803
Development contracts and other   193     223     1,136     1,071  
Total revenues   7,690     6,393     30,635     31,124  
 
Costs and expenses:
Cost of revenues 342 314 1,255 2,901
Sales and marketing 1,683 1,956 7,085 8,033
Research and development 1,861 2,265 8,386 8,738
General and administrative 3,201 3,235 12,568 15,043
Amortization and impairment of intangibles   378     587     1,394     1,237  
Total costs and expenses   7,465     8,357     30,688     35,952  
 
Operating Income (loss) 225 (1,964 ) (53 ) (4,828 )
Interest and other income   32     60     204     272  
 
Income (loss) from continuing operations before provision for income taxes 257 (1,904 ) 151 (4,556 )
 
Provision for income taxes   (527 )   (403 )   (1,816 )   (1,501 )
 
Loss from continuing operations (270 ) (2,307 ) (1,665 ) (6,057 )
 
Discontinued operations:
Gain (loss) on sales of discontinued operations - (13 ) 61 130
       
Net Loss $ (270 ) $ (2,320 ) $ (1,604 ) $ (5,927 )
 
Basic and diluted net loss per share
Continuing operations $ (0.01 ) $ (0.08 ) $ (0.06 ) $ (0.22 )
Discontinued operations   -     -     -     0.01  
Total $ (0.01 ) $ (0.08 ) $ (0.06 ) $ (0.21 )
Shares used in calculating basic and diluted net loss per share   28,471     28,190     28,564     28,113  
 
(1) Derived from Immersion’s annual audited consolidated financial statements.
       
Immersion Corporation
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands)
(Unaudited)
 
Three Months Twelve Months
Ended December 31, Ended December 31,
  2011       2010     2011       2010  
 
GAAP Net Loss $ (270 ) $ (2,320 ) $ (1,604 ) $ (5,927 )
 
Interest and other income (32 ) (60 ) (204 ) (272 )
Provision for income taxes 527 403 1,816 1,501
Depreciation and amortization 411 253 1,128 1,095
Amortization and impairment of intangibles 378 587 1,394 1,237
Stock-based compensation 850 979 3,555 3,409
Restatement costs - 1 - 1,676
Restructuring costs and sale of business - - - 41
Discontinued operations   -     13     (61 )   (130 )
Total adjustments 2,134 2,176 7,628 8,557
 
Adjusted EBITDA $ 1,864   $ (144 ) $ 6,024   $ 2,630  




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