Invest in the Future.

As an investor, you have a unique opportunity to get behind a technology that is just beginning to reach its full potential. Just as touch input changed the way that billions of devices receive input from humans, touch feedback will change the way devices convey information back to us.  From mobile phones to wearables, game consoles to automobiles, haptic feedback is enriching the way that people interact with digital technology.  And the best is yet to come as content on mobile, video, games and social networks, become richer, more realistic and more personal with haptics.  At Immersion, we’re changing the digital world.

Feb 11, 2002

Immersion Corporation Reports Fourth Quarter Results

Immersion Corporation Reports Fourth Quarter Results SAN JOSE, Calif., Feb 11, 2002 -- Immersion Corp., (NASDAQ:IMMR), a leading developer and licensor of haptic feedback technology, today announced that fourth quarter 2001 total revenues were $5.2 million. Revenue breakouts for the quarter, and versus the fourth quarter of 2000, included product revenues of $2.3 million, a decline of 24%; $2.0 million in royalty revenues, an increase of 92%; and $900,000 in development contract revenues, a decline of 24%.

The pro forma net loss, which is the net loss excluding amortization of intangibles and deferred stock compensation and acquisition related and other charges, was $1.7 million for the fourth quarter of 2001 or $0.09 per share compared to $3.8 million for the fourth quarter of 2000 or $0.21 per share. Net loss was $3.0 million for the fourth quarter of 2001 or $0.16 per share compared to $5.4 million for the fourth quarter of 2000 or $0.29 per share.

Total revenues for the year ended December 31, 2001 increased to $19.2 million from $15.3 million for the year ended December 31, 2000, an increase of 26%. Revenue breakouts for the current year, and versus the prior year, included product revenues of $10.4 million, an increase of 27%; $5.4 million in royalty revenues, an increase of 68%; and $3.5 million in development contract revenues, a decline of 10%.

The pro forma net loss, which is the net loss excluding amortization of intangibles and deferred stock compensation and acquisition related and other charges, was $16.3 million for the year ended December 31, 2001 or $0.87 per share compared to $13.6 million for the year ended December 31, 2000 or $0.77 per share.

"This past year, we squeezed over $1 million from our cost structure while we continued to gain market acceptance for new applications of our patented technology as evidenced by revenue growth of 26% across our various business segments: gaming/entertainment; personal computing; industrial/automotive; and medical," said Bob O'Malley, Chairman and CEO of Immersion. "In addition, we have continued to enhance our organization with the promotion of Victor Viegas to President and chief operating officer as announced today and the addition of two new outstanding board members, John Hodgman and Jack Saltich, that we announced in late January."

"The Company's cash consumption during the quarter dropped to under $500,000, royalty revenues grew 92% compared to the fourth quarter of last year and our gross margin improved to over 75% as we continued to manage our costs down and move closer to profitability," said Vic Viegas, President, COO and CFO. "In addition, today we filed a patent infringement lawsuit against Microsoft Corporation, Sony Computer Entertainment Inc. and Sony Computer Entertainment of America, Inc. for use of touch feedback technology on the Microsoft Xbox(TM) and Sony PlayStation® and PlayStation®2 video game systems."

About Immersion Corporation (www.immersion.com)

Founded in 1993, Immersion Corp. is a recognized leader in developing, licensing and marketing haptic technology and products. Bringing value to markets where user/product interaction needs to be made more compelling, safer or productive, Immersion helps its partners develop and increase competitive advantage and broaden market reach by making the use of touch sense feedback as critical a user experience as sight and sound. Immersion's technology is deployed across personal computing, entertainment, medical training, automotive and three-dimensional simulation markets. Immersion and its wholly owned subsidiaries hold over 150 issued patents worldwide.

Immersion will host a conference call with live Internet broadcast on Monday, February 11, 2002, at 5:00 p.m. EST. Immersion is scheduled to discuss operating results for the fourth quarter ended December 31, 2001, as well as the first quarter 2002 and the full year 2002 outlook. A question and answer session will follow. To listen to the call, dial (888) 391-0104, reservation number 19956362. To listen to the webcast, log on to the Internet at http://www.immersion.com. The call will be archived and available for replay until February 15, 2002, by dialing (800) 633-8284, reservation number 19956362.

Note to Editors: Additional background information on Immersion Corporation is available through our Web Site at http://www.immersion.com.

Statements made in this press release other than statements of historical fact are forward-looking statements, including those that reflect management's current forecast of certain aspects of Immersion's future. Forward-looking statements made in this press release are based on current information, which we have assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. 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. Forward-looking statements include statements regarding anticipated profitability or anticipated improved financial results. 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, fluctuations in demand for touch-enabled products, potential increase in expenses and ability to retain key personnel.

Risks and uncertainties related to Immersion's business are further outlined in Immersion's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. These reports are filed with the Securities and Exchange Commission. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. Immersion does not undertake a duty to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

Brand and product's names mentioned in this press release are trademarks or registered trademarks of their respective companies or organizations.
                         Immersion Corporation
            Condensed Consolidated Statements of Operations
               (In thousands, except per share amounts)
                              (Unaudited)
                                Three Months              Year
                              Ended December 31,    Ended December 31,
                                 2001      2000      2001      2000
Revenues:
 Royalty revenue               $ 1,976   $ 1,028   $ 5,362   $ 3,186
 Product sales                   2,287     3,005    10,360     8,176
 Development contracts
   and other                       900     1,178     3,510     3,901
                                  ---       ---       ---       ---
      Total revenues             5,163     5,211    19,232    15,263
                                  ---       ---       ---       ---
Costs and expenses:
 Cost of product sales           1,272     1,689     6,074     4,496
 Sales and marketing             1,939     3,287     9,868    10,990
 Research and development        1,628     2,284     7,548     7,250
 General and administrative      1,777     1,974     7,694     7,855
 Amortization of intangibles
  and deferred stock
   compensation                  1,299     1,593     5,252     5,053
 Acquisition related and
  other charges                      0        12       224     3,481
                                  ---       ---       ---       ---
      Total costs and expenses   7,915    10,839    36,660    39,125
                                             

Operating loss (2,752) (5,628) (17,428) (23,862) Interest and other income
(expense), net                   (215)      243    (4,318)    1,690
                                            
Net loss                      $ (2,967) $ (5,385) $(21,746) $(22,172)
                              ========  ========  ========  ========
Basic and diluted net loss
  per share                   $  (0.16) $  (0.29) $  (1.16) $  (1.25)
                                            
Shares used in calculating
 basic and diluted net loss
 per share                      18,951    18,331    18,702    17,719
                                            
                         Immersion Corporation
                 Condensed Consolidated Balance Sheets
                            (In thousands)
                                            December 31, December 31,
                                                2001       2000 (1)
                                            (Unaudited)
ASSETS
 Cash and cash equivalents                     $10,381     $23,474
 Short-term investments                          2,545       2,360
 Accounts receivable, net                        3,779       3,675
 Inventories                                     1,965       1,709
 Prepaid expenses and other current assets       1,179       1,306
                                                  ---         ---
        Total current assets                    19,849      32,524
 Property and equipment, net                     2,918       3,606
 Purchased intangibles and other assets, net    12,058      14,864
 Other investments                               2,200       6,500
                                                  ---         ---
        TOTAL ASSETS                           $37,025     $57,494
                                               =======     =======
LIABILITIES
 Accounts payable                              $   722     $ 1,720
 Accrued compensation                            1,158       1,042
 Other accrued liabilities                         587       1,145
 Deferred revenue and customer advances            953         932
 Current portion of long-term debt               4,113         120
                                                  ---         ---
        Total current liabilities                7,533       4,959
 Long-term debt                                    678       4,192
                                                  ---         ---
        Total liabilities                        8,211       9,151


STOCKHOLDERS' EQUITY                            28,814      48,343
                                                  ---         ---

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $37,025 $57,494
                                               =======     =======

(1) Derived from the Company's annual audited financial statements.