The complaints assert infringement by the Apple iPhone 6s and Apple iPhone 6s Plus of the following three Immersion patents:U.S. Patent No. 8,749,507, "Systems and Methods for Adaptive Interpretation of Input from a Touch-Sensitive Input Device" U.S. Patent No. 7,808,488, "Method and Apparatus for Providing Tactile Sensations" U.S. Patent No. 8,581,710, "Systems and Methods for Haptic Confirmation of Commands" The complaints also assert infringement by the Apple MacBook and Apple MacBook Pro with Retina display of the following Immersion patent: U.S. Patent No. 7,336,260, "Method and Apparatus for Providing Tactile Sensations" Sony: In the first quarter of 2016, Immersion received a favorable ruling in an arbitration against Sony Computer Entertainment America, LLC and Sony Computer Entertainment, Inc. resolving whether certain Sony products sold in Japan were covered by one of Immersion's Japanese patents and thus were royalty-bearing products under the 2007 license agreement between the parties. On April 26, 2016, the District Court for the Northern District of California issued an order granting Immersion's petition to confirm the arbitral award and denying Sony's motion to vacate the award. Management Commentary "I am pleased with the results we achieved in the March quarter despite a change in customer mix as we work to protect and preserve our intellectual property with top-tier mobile OEMs," said Vic Viegas, chief executive officer of Immersion. "During the quarter, we continued to see momentum in our business, including the launch of new mobile devices featuring our TouchSense software, multiple haptically-enabled advertising campaign wins and the addition of new content gaming partners. With our latest win against Sony, we also achieved another proof point that our gaming intellectual property portfolio remains relevant." "Based on our March quarter performance and current outlook, we remain on track towards our 2016 revenue outlook of $55 million to $65 million, with non-GAAP net income ranging from non-GAAP net loss of $(8) million to non-GAAP net income of $3 million. Our healthy business fundamentals and strong financial position provide a solid platform to make the necessary yet fiscally responsible investments to strengthen and position our business for long-term, profitable growth," concluded Mr. Viegas.
Recent Business Highlights
- Immersion renewed its license agreement with MEIZU Technology Co. Ltd., a leading manufacturer of mobile devices in China, for the use of Immersion TouchSense® technology in MEIZU branded smartphones. MEIZU's recently launched PRO 6 series feature a number of different use cases with Immersion's haptic technology, such as the back button, long-click home button, incoming calls, dial pad and keyboard.
- Immersion and CRI Middleware Co., Ltd., a leading provider of audio and video solutions for the gaming industry in Japan, signed an agreement to enable game developers using CRI Middleware platform's CRIWARE to incorporate Immersion's TouchSense® technology in their Android mobile games.
- Immersion's TouchSense® haptic technology was featured in Kyocera's New DuraForce XD Smartphone. This full-feature smartphone uses Immersion's TouchSense Haptic Enabling Kit to enhance user functionality with touch feedback. Immersion's haptic technology precisely controls the actuator(s) in the device to create nuanced tactile effects that simulate the connected experience of the physical world.
- Immersion delivered eight advertising campaigns with haptics in the first quarter of 2016 through Opera Mediaworks' ad network and TF1, the largest broadcast network channel in France, spanning multiple industries including consumer brands, automotive and entertainment.
- Immersion's TouchSense® Technology was featured in the in-app mobile ad for the Lexus GS F. Lexus, in partnership with its advertising agency Team One, has launched a haptic ad campaign for the first-ever Lexus GS F that currently runs on Opera Mediaworks-enabled Android mobile apps in the United States. Team One, Immersion and Opera Mediaworks worked together to enhance the Lexus mobile ad with sophisticated tactile effects to capture how it feels to drive the most powerful Lexus sedan.
Forward-looking StatementsThis 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 the momentum of Immersion's business, the benefits of the outcome of the arbitration against Sony, the relevance of our intellectual property portfolio and our expectation that revenues for 2016 will be in the range of $55 million to $65 million and non-GAAP net income for 2016 ranging from a non-GAAP net loss of $8 million to non-GAAP net income of $3 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; ability to track and retain partners, the continued popularity of mobile games, mobile advertisements and wearables; potentially lengthy sales cycles and design processes; unanticipated difficulties and challenges encountered in development efforts; unexpected costs; the fact that certain target markets are still relatively nascent; risks associated with doing business internationally; litigation costs in any current or future litigation; failure to retain key personnel; ability to retain personnel; competition; the inherently uncertain nature of litigation which makes future outcomes and timing difficult to predict; the impact of global economic conditions and foreign currency exchange rates 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 2015 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 TouchSense are trademarks or registered 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)
|Condensed Consolidated Balance Sheets|
|March 31,||December 31,|
|Cash and cash equivalents||$||20,879||$||25,013|
|Accounts receivable, net||4,774||1,213|
|Prepaid expenses and other current assets||2,679||2,790|
|Total current assets||68,259||68,934|
|Property and equipment, net||4,412||4,589|
|Deferred income tax assets||26,262||24,633|
|Prepaid income taxes||6,270||6,995|
|Intangibles and other assets, net||245||264|
|Other current liabilities||2,782||2,999|
|Total current liabilities||15,472||15,185|
|Long-term deferred revenue||1,121||2,516|
|Other long-term liabilities||837||1,099|
|TOTAL LIABILITIES &|
|(1) Derived from Immersion's annual audited consolidated financial statements.|
|Condensed Consolidated Statements of Operations|
|(In thousands, except per share amounts)|
|Ended March 31,|
|Royalty and license||$||13,448||$||16,012|
|Development, services, and other||175||275|
|Costs and expenses:|
|Cost of revenues||23||115|
|Sales and marketing||3,803||4,210|
|Research and development||4,312||3,727|
|General and administrative||10,090||8,293|
|Amortization of intangibles||3||12|
|Total costs and expenses||18,231||16,357|
|Interest and other income (expense)||212||(25||)|
|Loss before benefit for income taxes||(4,396||)||(95||)|
|Benefit for income taxes||1,701||36|
|Basic and diluted net loss per share||$||(0.09||)||$||0.00|
|Shares used in calculating basic and diluted net loss per share||28,493||27,818|
|Reconciliation of GAAP Net Loss to Non-GAAP Net Income (loss)|
|(In thousands, except per share amounts)|
|Ended March 31,|
|GAAP net loss||$||(2,695||)||$||(59||)|
|Add: Stock-based compensation||2,334||1,740|
|Less: Benefit for income taxes||(1,701||)||(36||)|
|Add: Non-GAAP benefit for income taxes (at 19%)||835||18|
|Non-GAAP net income (loss)||$||(1,227||)||$||1,663|
|Non-GAAP earnings (loss) per share||$||(0.04||)||$||0.06|
|Shares used in calculating Non-GAAP earnings (loss) per share||28,493||28,587|
|Note: Shares used in calculating Non-GAAP earnings per share have been adjusted for the three months ended March 31, 2015 period for potentially dilutive securities of 227,000 shares for restricted stock units and 542,000 shares for stock options that are not included in GAAP net loss per share calculation.|