Revenues were $19.2 million for the nine months ended September 30, 2006 compared to revenues of $17.4 million for the first nine months of 2005. Net loss on a GAAP basis for the first nine months of 2006 was $8.4 million, or $0.34 per share, down 17 percent compared to a net loss on a GAAP basis of $10.1 million, or $0.42 per share, for the first nine months of 2005.
"The third quarter revenue increase was led by 35 percent growth in non-gaming revenues, notably from medical and touch interface products," said Victor Viegas, Immersion CEO and president. "Gaming revenues from our third-party peripheral licensees declined 28 percent, as expected. Our overall 22 percent revenue growth over revenues in the third quarter last year demonstrates increasing demand for our haptics technology for many diverse applications.
"Medical simulation continues to gain wider acceptance as an effective training tool, which is driving interest in the acquisition of our simulation systems by teaching institutions and medical device manufacturers. In response, Immersion Medical has broadened its sales coverage, increased its distribution reach, and maintained its strong relationship with Medtronic, Inc. In addition, the new strategic relationship with Laerdal Medical A/S, announced in August, has expanded the distribution channel for vascular access products worldwide and is already contributing to our revenue growth. Medical revenue increased 64 percent compared to the year ago quarter and 41 percent year-to-date compared to the same period in 2005.
"We continue to gain support for our VibeTonz(R) technology in Korea, an early adoption proving ground for mobile technologies. We now have relationships with the top three handset makers and the top two operators or their content aggregators in Korea. Recently we established an important new affiliation with Korea Telecom Freetel (KTF), the second largest operator in Korea with 13 million subscribers. Through an Immersion agreement with content aggregator GeoTel, KTF subscribers will now have access to VibeTonz-enabled games, music, video, messaging, and other content and services. Earlier in the third quarter, we announced that our licensee SK Telecom, Korea's number one mobile operator with 20 million subscribers, launched an exclusive VibeTonz category for downloadable ringtones. These companies along with leading content providers are using our VibeTonz technology and tools to create compelling content that we believe can generate a new source of revenue for their business."
Immersion will host a conference call with company management on Thursday, November 2, 2006, at 5:00 p.m. Eastern time to discuss operating results for the third quarter ended September 30, 2006. A question and answer session will follow. To listen to the call, dial +1 800.374.2366 approximately five minutes prior to the start of the call and enter confirmation number 2398254. The call will be archived and available for replay until November 9, 2006, by dialing +1 800.642.1687 and entering confirmation number 2398254. The call will also be simulcast on the Internet through Immersion Corporation's Web site, http://www.immersion.com. An audio replay of the call will be archived and available at www.immersion.com for replay until November 2, 2007.
About Immersion (www.immersion.com)
Founded in 1993, Immersion Corporation is a recognized leader in developing, licensing, and marketing digital touch technology and products. Using Immersion's advanced touch feedback technology, electronic user interfaces can be made more productive, compelling, entertaining, or safer. Immersion technologies are deployed across automotive, entertainment, industrial controls, medical training, mobility, and three-dimensional simulation markets. Immersion's patent portfolio includes over 600 issued or pending patents in the U.S. and other countries.
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 any projections of earnings, revenues, or other financial matters; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning consumer or market acceptance of simulator products for medical training, continuing education or evaluation; adoption and market acceptance of touch-enabled mobile phones or consumer and market acceptance of force feedback products in general; future development of force feedback products; proposed products or services; any statements regarding future economic conditions or performance; and statements of belief or assumptions underlying any of the foregoing. 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, delay in or failure to achieve commercial demand for Immersion's expanded technology offerings; a delay in or failure to achieve the acceptance of force feedback as a critical user experience in new and existing markets for our business segments; and risks and uncertainties associated with ongoing litigation.
For a more detailed discussion of these factors, and other factors that could cause Immersion's actual results to vary materially, interested parties should review the risk factors listed in Immersion's most current 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, and VibeTonz are trademarks of Immersion Corporation in the U.S. and other countries. All other trademarks are the property of their respective owners.
Immersion Corporation Condensed Consolidated Balance Sheets (In thousands) September 30, December 31, 2006 2005 (Unaudited) (1) ------------- ------------ ASSETS Cash and cash equivalents $ 29,037 $ 28,171 Accounts receivable, net 5,458 4,650 Inventories, net 2,419 2,655 Prepaid expenses and other current assets 857 1,131 ------------- ------------ Total current assets 37,771 36,607 Property and equipment, net 1,724 1,366 Intangibles and other assets, net 7,243 6,787 ------------- ------------ TOTAL ASSETS $ 46,738 $ 44,760 ============= ============ LIABILITIES Accounts payable $ 1,234 $ 2,179 Accrued compensation 1,272 1,193 Other accrued liabilities 1,988 1,604 Deferred revenue and customer advances 2,179 2,741 Current portion of long-term debt - 5 ------------- ------------ Total current liabilities 6,673 7,722 Long-term debt 17,964 17,490 Long-term liabilities and deferred revenue 29,389 21,343 Long-term customer advance from Microsoft 15,000 15,000 ------------- ------------ Total liabilities 69,026 61,555 STOCKHOLDERS' DEFICIT (22,288) (16,795) ------------- ------------ TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 46,738 $ 44,760 ============= ============ (1) Derived from Immersion's annual audited consolidated financial statements.