Immersion Corporation 2001 Annual Report Understanding Information
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Immersion Corporation 2001 Annual Report Understanding information through touch. to our valued shareholders Major 2001 milestones include: • Added new licensees During 2001, we remained focused on increasing the awareness and gaining broader adoption of including Saitek, Mad Catz our pioneering technology, haptics—the science of touch. We continued to innovate while delivering solu- and NYKO, producers of a wide tions for a number of near term opportunities. Although our financial performance was mixed, reflecting range of touch feedback gam- the challenges posed by the overall economy, we took decisive action towards achieving profitability. ing products compatible with Sony, Nintendo and Microsoft Revenues were lower than anticipated primarily because we were unable to reach a successful conclusion in console gaming platforms. our ongoing discussions with either Microsoft or Sony related to their use of our technology. Absent a satis- factory resolution, we filed a patent infringement lawsuit against both companies on February 11, 2002. • Introduced TouchWare® During the year, we succeeded with our expense management initiatives, reducing our operating expenses Business software, making by 12% while growing revenues 26%. We ended the year with $12.9 million in cash, cash equivalents and basic navigation functions short-term investments after having reduced our rate of cash consumption to less than $500,000 during the such as editing in Excel and final quarter of 2001. We believe that our cash management initiatives will yield an additional $1 million Word more intuitive, for use in quarterly cash savings beginning in the second half of 2002 and that we will become profitable by the with Logitech’s iFeel mouse. fourth quarter of 2002. We have matured as a company: from an inventor of touch technology to one that has capitalized on the • Added Hewlett-Packard and market’s awareness and validation of the business of haptics. We continue to develop our competitive RCA’s co-branded computer advantages from our haptics technologies. Our goal is to make our touch-enabled technology part of a mouse, targeted at the gener- wide-ranging group of everyday devices. We are convinced that the need for tactile interaction is just al computing and business beginning and that our touch technology will become a pervasive part of our lives. markets. Our TouchSense™ technology can be found in Touch-enabled devices using our technology can deliver tactile feedback sensations to users. We bring the computer mice of five value to any market where user interaction needs to be made more realistic, intuitive, entertaining, safe manufacturers. or productive. Our customers are better enabled to increase their competitiveness by virtue of using our technology in their products. • Introduction of the highly In early 2002, we implemented changes to our board and management team. Bob O’Malley, as Chairman acclaimed BMW 2002 Series 7 and CEO, will work closely with Vic Viegas, recently promoted to President and COO in addition to his role sedan incorporating our tech- as CFO, to develop major customer opportunities and devote more time to our important medical simulation nology into its revolutionary business. In his expanded role, Vic will manage day-to-day operations and lead our licensing initiatives. iDrive™ feature. In addition, Two new board members were added: Jack Saltich, President and CEO of Three-Five Systems, a recognized we partnered with Nissan to leader in the design and manufacture of LCD modules and embedded technologies for cell phones and similarly reduce dashboard PDAs; and, John Hodgman, Chairman and CEO of Cygnus, a developer and manufacturer of diagnostic clutter in their demonstration medical devices. vehicle shown at the Tokyo Motor Show. Going forward, we plan to leverage our leadership position in the markets that have already validated our technology. We will selectively pursue other markets, platforms and applications that are amenable to the adoption of our technology. We are confident that we have the team in place to attain sustainable growth. • Several leading hospitals, Our development efforts will be focused on revenue generating opportunities and we will continue to manage including The Mayo Clinic, our costs and take the steps necessary to achieve adequate levels of cash. We appreciate the dedication adopted one of our computer and hard work of our employees, we are grateful for the loyalty of our shareholders, and we value the based medical simulation continued commitment and support of both. systems that mimics the look, sound and feel of a real patient. • Increased our industry leading patent portfolio to 153 patents awarded world- Robert O’Malley Victor Viegas wide with over 200 pending. Chairman and CEO President, COO and CFO corporate directory Board of Directors Corporate Headquarters Stockholder Information All statements contained herein, as well 801 Fox Lane A copy of the Company’s Form 10-K, as as oral statements that may be made by Robert O’Malley San Jose, California 95131 filed with the Securities and Exchange Immersion or by officers, directors or employees of Immersion acting on Chairman and Phone: 408-467-1900 Commission for the year ended Immersion’s behalf, that are not statements Chief Executive Officer Fax: 408-467-1901 December 31, 2001, is available without of historical fact, constitute “forward-look- Immersion Corporation Web: www.immersion.com charge upon written request to: ing statements” and are made pursuant to Immersion Corporation. Attn: Investor the Safe-Harbor provisions of the Private Steven Blank Relations, 801 Fox Lane, San Jose, CA Securities Litigation Reform Act of 1995. Co-Founder and Former Immersion Canada 95131. The Company’s Form 10-K, other Forward looking statements are identified Executive Vice President of Marketing 3575 St-Laurent Blvd., Suite 422 general financial information, and news by words such as “believes”, “anticipates”, “expects”, “intends”, “may”, “will” and E.piphany Montreal QC about Immersion’s products are also other similar expressions. However, these H2X 2T7 Canada available on the Company’s Web site at words are not the only way the Company Jonathan Rubinstein Phone: 514-987-9800 www.immersion.com. identifies forward-looking statements. In Senior Vice President Fax: 514-987-9808 addition, any statements which refer to of Hardware Engineering Web: www.immersion.com expectations, projections or other charac- Apple Computer, Inc. Market Information – terizations of future events or circumstances Common Stock are forward-looking statements. John Hodgman Immersion Medical The Company’s Common Stock has been Such forward-looking statements involve President, Chief Executive Officer, 55 W. Watkins Mill Road traded over-the-counter on the NASDAQ known and unknown risks, uncertainties Chairman of the Board Gaithersburg, Maryland 20878 National Market under the symbol "IMMR" and other factors that could cause the actual Cygnus Phone: 301-984-3706 since the Company’s initial public offer- results of Immersion to be materially differ- Fax: 301-984-2104 ing on November 12, 1999. ent from the historical results or from any Jack Saltich Web: www.immersion.com future results expressed or implied by such forward-looking statements. Such risks and President, Chief Executive Officer, uncertainties are outlined in Immersion’s and Director Annual Report on Form 10-K and its Three-Five Systems Inc. Quarterly Reports on Form 10-Q, and may Corporate Legal Counsel Annual Meeting include risks related to the development of Gray Cary Ware & Freidenrich LLP The Immersion Corporation Annual the market for the Company’s products, the Corporate Officers 400 Hamilton Avenue Meeting of Shareholders will be held Company’s ability to achieve and maintain Palo Alto, California 94301 June 4, 2002 at 9:30 a.m. at the Silicon profitability, the volatility of the Company’s quarterly revenues and operating results, Valley Conference Center, 2161 North Robert O’Malley and the slowdown in the personal computer Chairman and Chief Executive Officer First Street, San Jose, California 95131. industry. These reports are filed with the Independent Auditors Securities and Exchange Commission. These Victor Viegas Deloitte & Touche LLP factors may not constitute all factors that President, Chief Operating Officer, 225 West Santa Clara St., Suite 600 could cause actual results to differ materially and Chief Financial Officer San Jose, California 95113 from those discussed in any forward-looking statement. The Company is not obligated to revise or update any forward-looking state- J. Stuart Mitchell ments in order to reflect events or circum- Executive Vice President Transfer Agent stances that may arise after the date of of Business Groups EquiServe Trust Company, N.A. this release. c/o EquiServe, Inc. Rod Hilton PO Box 43010 © 2002 Immersion Corporation. Immersion, the Immersion logo, President, Immersion Medical Providence, RI 02940-3010 MicroScribe-3D, LightScribe-3D, and TouchSense are trademarks of Immersion Corporation. All other trademarks are the property of their respective owners. All rights reserved. Corporate Headquarters 801 Fox Lane, San Jose, California 95131 phone: 408-467-1900 • fax: 408-467-1901 • web: www.immersion.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ¥ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2001 or n TRANSITION REPORT PURSUANT TO SECTION 13 OR