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Press Release

Apr 30, 2001

Immersion Corporation Reports Record First Quarter Net Revenues of $5.4 Million, an Increase of 63% Over Q1 2000

Immersion Corporation Reports Record First Quarter Net Revenues of $5.4 Million, an Increase of 63% Over Q1 2000 SAN JOSE, Calif. April 30, 2001--Immersion Corporation, (Nasdaq:IMMR), the pioneering developer of sensory interaction technology, announced today that first quarter 2001 total revenues were $5.4 million, as compared with $3.3 million in the first quarter of 2000, an increase of 63%. The first quarter 2001 revenue was comprised of $3.0 million in product revenue, which was $1.3 million or 72% higher than the first quarter of 2000; $1.5 million in royalty revenue, which was $614,000 or 70% more than the first quarter of 2000; and $865,000 in development contract revenue, which was $203,000 or 31% higher than the first quarter of 2000. The pro forma net loss, excluding amortization of intangibles and deferred stock compensation and acquisition related charges, was $3.4 million for the first quarter of 2001 or $0.18 per diluted share compared to $2.0 million for the first quarter of 2000 or $0.12 per diluted share.

"We're very pleased with our first quarter financial results and the progress we made during the quarter in our various business groups," said Victor Viegas, CFO of Immersion. "First and foremost, we're pleased to have reached a favorable settlement of our patent infringement lawsuit against InterAct Accessories over its use of our intellectual property in tactile-vibration gaming peripherals. As a result of the settlement, Immersion has achieved a royalty bearing license arrangement with InterAct covering their shipment of these products for use with multiple gaming platforms, including the Sony PlayStation® 2 and the upcoming Microsoft Xbox(TM). In addition, during the first quarter we extended our licensee base in the mouse/trackball market with the previously announced licensing of Saitek and Kensington. Finally, we take pride in reaching a milestone here at Immersion with the granting of our 100th patent."

About Immersion Corporation (

Founded in 1993, Immersion Corp. develops and licenses advanced hardware and software technologies that let people use their sense of touch to better interact with the digital world around them. Immersion's haptic technology can be applied to virtually every digital experience including personal computing, entertainment, medical training, automotive interfaces, and three-dimensional simulation. Immersion's patented TouchSense(TM) technologies can dramatically improve computer users' performance and productivity by unlocking their sense of touch and allowing them to feel what they see and do on the computer screen. Immersion and its wholly owned subsidiaries hold over 100 issued patents worldwide.

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.

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 and the registration statement 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.

Immersion will host a conference call with live Internet broadcast on Monday, April 30, 2001, at 5:00 p.m. EDT. Immersion is scheduled to discuss operating results for the first quarter ended March 31, 2001 and the full year 2001 outlook. A question and answer session will follow. To listen to the call, dial 212/346-6392, reservation number 16836330. To listen to the webcast, log on to the Internet at The call will be archived and available for replay until May 4, 2001, by dialing 800/633-8284, reservation number 16836330.

Note to Editors: Additional background information on Immersion Corporation is available through our Web Site at

                         Immersion Corporation
            Condensed Consolidated Statements of Operations
               (In thousands, except per share amounts)

                                                   Three Months
                                                  Ended March 31,
                                               2001             2000
 Royalty revenue                             $  1,489        $    875
 Product sales                                  3,007           1,751
 Development contracts and other                  865             662
    Total revenues                              5,361           3,288

Costs and expenses:
 Cost of product sales                          1,784             836
 Sales and marketing                            3,058           1,888
 Research and development                       2,053           1,410
 General and administrative                     2,060           1,716
 Amortization of intangibles and
  deferred stock compensation                   1,252             709
 Acquisition related charges                       25             887
    Total costs and expenses                   10,232           7,446

Operating loss                                 (4,871)         (4,158)
Interest and other income, net                    211             586
Net loss                                     $ (4,660)       $ (3,572)
                                             ========        ========
Basic and diluted net
 loss per share                              $  (0.25)       $  (0.21)
Shares used in calculating
 basic and diluted
 net loss per share                            18,448          17,034

                         Immersion Corporation
                 Condensed Consolidated Balance Sheets
                            (In thousands)

                                            March 31,     December 31,
                                              2001           2000(1)

 Cash and cash equivalents                   $20,041        $23,474
 Short-term investments                        1,000          2,360
 Accounts receivable, net                      4,367          3,675
 Inventories                                   1,766          1,709
 Prepaids and other current assets             1,129          1,306
                                              ---         ---
    Total current assets                      28,303         32,524

Property and equipment, net                    3,553          3,606
Purchased intangibles and
 other assets, net                            14,066         14,864
Other investments                              6,500          6,500
                                              ---         ---
TOTAL ASSETS                                 $52,422        $57,494
                                             =======        =======

 Accounts payable                            $ 1,214        $ 1,720
 Accrued compensation                            910          1,042
 Other accrued liabilities                     1,022          1,145
 Deferred revenue and customer advances          558            932
 Current portion of long-term debt               123            120
                                              ---         ---
    Total current liabilities                  3,827          4,959

Long-term debt                                 4,338          4,192
                                              ---         ---
    Total liabilities                          8,165          9,151

STOCKHOLDERS' EQUITY                          44,257         48,343
                                              ---         ---

                                             =======        =======

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