Immersion Corporation Reports Third Quarter 2013 Results

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 Adjusted EBITDA, 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 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 $46 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, particularly for new and emerging applications; 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)
   
September 30, December 31,
2013 2012
(Unaudited) (1)
ASSETS
Cash and cash equivalents $ 16,664 $ 4,558
Short-term investments 47,990 38,988
Accounts and other receivables, net 294 1,878
Inventories 0 141
Deferred income taxes 165 165
Prepaid expenses and other current assets   870   706  
Total current assets 65,983 46,436
 
Property and equipment, net 984 1,281
Intangibles and other assets, net   17,165   15,725  
 
TOTAL ASSETS $ 84,132 $ 63,442  
 
LIABILITIES
Accounts payable $ 618 $ 338
Accrued compensation 3,353 2,502
Other current liabilities 1,379 1,022
Deferred revenue and customer advances   11,186   3,934  
Total current liabilities 16,536 7,796
 
Long-term deferred revenue 8,045 10,221
Deferred income tax liabilities 165 165
Other long-term liabilities   551   619  
TOTAL LIABILITIES 25,297 18,801
 
STOCKHOLDERS’ EQUITY   58,835   44,641  
 

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

$ 84,132 $ 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 Nine Months
Ended September 30, Ended September 30,
  2013     2012     2013     2012  
 
Revenues:
Royalty and license $ 10,951 $ 6,371 $ 34,580 $ 21,386
Product sales 12 529 44 1,145
Development contracts and other   379     242     779     778  
Total revenues   11,342     7,142     35,403     23,309  
 
Costs and expenses:
Cost of revenues 111 273 386 802
Sales and marketing 2,151 1,632 6,692 5,072
Research and development 2,640 2,088 7,876 6,406
General and administrative 4,533 5,750 14,647 14,882
Amortization and abandonment of intangibles   487     337     1,364     1,071  
Total costs and expenses   9,922     10,080     30,965     28,233  
 
Operating Income (loss) 1,420 (2,938 ) 4,438 (4,924 )
Interest and other income   42     66     80     144  
 
Income (loss) from continuing operations before provision for income taxes 1,462 (2,872 ) 4,518 (4,780 )
 
Provision for income taxes   (257 )   (118 )   (284 )   (737 )
 
Income (loss) from continuing operations 1,205 (2,990 ) 4,234 (5,517 )
 
Discontinued operations:
Gain on sales of discontinued operations 0 0 0 153
       
Net Income (loss) $ 1,205   $ (2,990 ) $ 4,234   $ (5,364 )
 
Basic net income (loss) per share
Continuing operations $ 0.04 $ (0.11 ) $ 0.15 $ (0.20 )
Discontinued operations $ 0.00   $ 0.00   $ 0.00   $ 0.01  
Total $ 0.04   $ (0.11 ) $ 0.15   $ (0.19 )
Shares used in calculating basic net income (loss) per share   28,558     27,658     28,047     27,885  
 
Diluted net income (loss) per share
Continuing operations $ 0.04 $ (0.11 ) $ 0.14 $ (0.20 )
Discontinued operations $ 0.00   $ 0.00   $ 0.00   $ 0.01  
Total $ 0.04   $ (0.11 ) $ 0.14   $ (0.19 )
Shares used in calculating diluted net income (loss) per share   29,653     27,658     29,205     27,885  
 
Immersion Corporation
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands)
(Unaudited)
       
Three Months Nine Months
Ended September 30, Ended September 30,
  2013       2012     2013       2012  
 
GAAP Net Income (Loss) $ 1,205 $ (2,990 ) $ 4,234 $ (5,364 )
 
Interest and other income (42 ) (66 ) (80 ) (144 )
Provision for income taxes 257 118 284 737
Depreciation and amortization 146 163 459 490
Amortization and impairment of intangibles 487 337 1,364 1,071
Stock-based compensation 1,249 808 3,438 2,346
Discontinued operations   0     0     0     (153 )
Total adjustments 2,097 1,360 5,465 4,347
 
Adjusted EBITDA $ 3,302   $ (1,630 ) $ 9,699   $ (1,017 )




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