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Immersion Corporation Reports First Quarter 2016 Results; Files Second Complaint Against Apple Inc., AT&T Inc., and AT&T Mobility LLC with U.S. International Trade Commission and in U.S. Federal District Court

SAN JOSE, Calif.--(BUSINESS WIRE)--

Immersion Corporation (IMMR), the leading developer and licensor of touch feedback technology, today reported financial results for the first quarter ended March 31, 2016.

Results for the quarter ended March 31, 2016

Total revenues for the first quarter of 2016 were $13.6 million, a decrease of 16% compared to $16.3 million for the first quarter of 2015. Royalty and license revenues of $13.4 million for the first quarter of 2016 were down 16% from the same period last year, driven primarily by the absence of revenue from Samsung.

Net loss for the first quarter of 2016 was $(2.7) million, or $(0.09) per basic and diluted share. This compares to net loss of $(59) thousand, or $0.00 per basic and diluted share, for the first quarter of 2015. Net loss for the first quarter of 2016 includes certain non-cash tax expenses and benefits associated with the company’s international tax structure, resulting in an effective tax rate for the quarter of 38.7%.

Non-GAAP net loss for the first quarter of 2016 was $(1.2) million, or $(0.04) per basic and diluted share, compared with non-GAAP net income of $1.7 million, or $0.06 per diluted share, for the first quarter of 2015. (See attached table for a reconciliation of GAAP to non-GAAP financial measures.)

As of March 31, 2016, Immersion’s cash, cash equivalents and short term investments were $60.8 million, down from $64.9 million as of December 31, 2015.

Litigation Update

Samsung: In the first quarter of 2016, Immersion initiated arbitration against Samsung with the International Chamber of Commerce to resolve a dispute around wind down rights under the license agreement between Immersion and Samsung that expired at the end of 2015. Under that agreement, Samsung had the right to purchase wind down rights prior to the expiration of the agreement that would allow Samsung to continue to sell certain Samsung products using Immersion technology for a period of time after expiration of the agreement, but Samsung did not exercise this right. Samsung continues to ship products that were licensed under the agreement without a wind down right, and Immersion has filed arbitration seeking damages. Samsung remains unlicensed for any new products using Immersion technology that have been launched after the end of 2015.

Apple: In the first quarter of 2016, Immersion filed a complaint against Apple Inc., AT&T Inc. and AT&T Mobility LLC in the U.S. International Trade Commission and in the U.S. District Court for the District of Delaware alleging that the Apple iPhone 6, Apple iPhone 6 Plus, Apple iPhone 6s, Apple iPhone 6s Plus, Apple Watch, Apple Watch Sport and Apple Watch Edition infringe certain Immersion patents covering haptic feedback systems and methods in electronic devices. The ITC instituted an investigation on March 14, 2016, and scheduled a claim construction hearing on July 20, 2016, a hearing on November 14-18, 2016, an initial determination date of February 17, 2017 and a target date for completion of the investigation of June 19, 2017. The District Court action has been stayed until the determination of the ITC becomes final.

Immersion also announced today that it has filed a second complaint with the ITC against Apple, AT&T, and AT&T Mobility LLC and a corresponding patent infringement complaint against Apple, AT&T and AT&T Mobility in the U.S. District Court for the District of Delaware. The complaints allege that the Apple iPhone 6s, Apple iPhone 6s Plus, the MacBook and the MacBook Pro with Retina Display infringe certain Immersion patents, including patents covering pressure-related haptics.

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...


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