Immersion Corporation Reports Fourth Quarter and Fiscal 2013 Results

Conference Call Information

Immersion will host a conference call with company management on Thursday, February 20, 2014 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, 2013. 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  haptics, or tactile effects; 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 1,500 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 Adjusted EBITDA, Non-GAAP Net Income (defined as Net Income less stock-based compensation) and Non-GAAP earnings per 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 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 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, resulting in Non-GAAP earnings per share of $0.27 to $0.50, assuming 30 million shares outstanding.

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)
   
December 31, December 31,
2013 2012
(Unaudited) (1)
ASSETS
Cash and cash equivalents $ 14,136 $ 4,558
Short-term investments 56,976 38,988
Accounts and other receivables, net 598 1,878
Inventories 0 141
Deferred income taxes 7,784 0
Prepaid expenses and other current assets   690   706  
Total current assets 80,184 46,271
 
Property and equipment, net 944 1,281
Deferred income tax assets 29,066 97
Intangibles and other assets, net   381   362  
 
TOTAL ASSETS $ 110,575 $ 48,011  
 
LIABILITIES
Accounts payable $ 682 $ 338
Accrued compensation 4,680 2,502
Other current liabilities 1,653 1,119
Deferred revenue   8,920   3,934  
Total current liabilities 15,935 7,893
 
Long-term deferred revenue 13,441 10,221
Other long-term liabilities   528   619  
TOTAL LIABILITIES 29,904 18,733
 
STOCKHOLDERS’ EQUITY   80,671   29,278  
 

TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY

$ 110,575 $ 48,011  
 

(1) Derived from Immersion’s annual audited consolidated financial statements, as adjusted for change in accounting method.

 

Immersion Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
       
Three Months Twelve Months
Ended December 31, Ended December 31,
2013 2012 2013 2012
  (1)   (2)
Revenues:
Royalty and license $ 11,574 $ 7,603 $ 46,154 $ 28,989
Product sales 61 837 105 1,982
Development, services, and other   432     420     1,211   1,198  
Total revenues   12,067     8,860     47,470   32,169  
 
Costs and expenses:
Cost of revenues 76 386 462 1,188
Sales and marketing 2,646 1,703 9,338 6,775
Research and development 3,007 2,015 10,883 8,421
General and administrative 5,671 5,110 23,104 22,464
Amortization of intangibles   19     19     79   49  
Total costs and expenses   11,419     9,233     43,866   38,897  
 
Operating Income (loss) 648 (373 ) 3,604 (6,728 )
Interest and other income   (12 )   26     68   170  
 
Income (loss) from continuing operations before provision for income taxes 636 (347 ) 3,672 (6,558 )
 
Benefit (provision) for income taxes   36,767     (55 )   36,483   (792 )
 
Income (loss) from continuing operations 37,403 (402 ) 40,155 (7,350 )
 
Discontinued operations:
Gain on sales of discontinued operations 0 0 0 153
       
Net Income (loss) $ 37,403   $ (402 ) $ 40,155 $ (7,197 )
 
Basic net income (loss) per share
Continuing operations $ 1.31 $ (0.01 ) $ 1.42 $ (0.27 )
Discontinued operations $ 0.00   $ 0.00   $ 0.00 $ 0.01  
Total $ 1.31   $ (0.01 ) $ 1.42 $ (0.26 )
Shares used in calculating basic net income (loss) per share   28,614     27,288     28,190   27,735  
 
Diluted net income (loss) per share
Continuing operations $ 1.26 $ (0.01 ) $ 1.37 $ (0.27 )
Discontinued operations $ 0.00   $ 0.00   $ 0.00 $ 0.01  
Total $ 1.26   $ (0.01 ) $ 1.37 $ (0.26 )
Shares used in calculating diluted net income (loss) per share   29,675     27,288     29,338   27,735  
 
(1) As adjusted for change in accounting method.

(2) Derived from Immersion’s annual audited consolidated financial statements, as adjusted for change in accounting method.

 

Immersion Corporation
Reconciliation of GAAP Net Income to Adjusted EBITDA
(In thousands)
(Unaudited)
       
Three Months Twelve Months
Ended December 31, Ended December 31,
  2013       2012     2013       2012  
 
GAAP Net Income/(Loss) $ 37,403 $ (402 ) $ 40,155 $ (7,197 )
 
Interest and other income 12 (26 ) (68 ) (170 )
Benefit (provision) for income taxes (36,767 ) 55 (36,483 ) 792
Depreciation and amortization 125 164 584 654
Amortization of intangibles 19 19 79 49
Stock-based compensation 1,206 800 4,644 3,146
Discontinued operations   0     0     0     (153 )
Total adjustments (35,405 ) 1,012 (31,244 ) 4,318
 
Adjusted EBITDA $ 1,998   $ 610   $ 8,911   $ (2,879 )




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