"While we are disappointed in our performance this quarter, we signed two very important multi-year, multi-million dollar agreements with Medtronic, Inc.," said Vic Viegas, Immersion's CEO. "While they contributed to our cash position and are expected to result in additional cash over the next nine quarters, recognition of the associated revenues on these licensing and development agreements must be deferred in accordance with GAAP until certain development milestones are achieved. In addition, during the quarter we entered into a royalty prepayment arrangement with an existing licensee that also generated cash in the quarter." Viegas added, "Our results continue to be affected by the longer sales cycles stemming from general economic weakness and market uncertainty in light of geopolitical events. Until the current economic environment improves, it is difficult for us to remain confident in our ability to achieve our earlier revenue target for the full year of 2003 of $23 million to $25 million. Accordingly, we are currently unable to forecast our 2003 revenues with any degree of confidence."

    About Immersion Corporation (www.immersion.com)

    Founded in 1993, Immersion Corporation 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, safe 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 185 issued patents worldwide.

    Immersion will host a conference call with company management on Monday, April 28, 2003, at 5:00 p.m. EDT to discuss operating results for the first quarter ended March 31, 2003. A question and answer session will follow. To listen to the call, dial (800) 365-3378, reservation number 20977310. The call will be archived and available for replay until May 2, 2003, by dialing (800) 633-8284, reservation number 20977310. The call will also be simulcast on the Internet through Immersion Corporation's web site, http://www.immersion.com. An audio replay of the call will be archived and available at http://www.immersion.com for replay until May 1, 2004.

    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 Immersion's future revenue and operating results, customer demand for medical and force feedback products, realization of revenues and other benefits under third party agreements and the effect of the economic downturn. Forward looking statements made in this press release are based on current information, which management has 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 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 is not obligated 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 Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months
Ended March 31,
2003 2002
------- -------
Revenues:
Royalty and license $ 833 $ 1,234
Product sales 2,148 2,398
Development contracts and other 755 1,173
------- ------- 
Total revenues 3,736 4,805
------- -------
Costs and expenses:
Cost of product sales 1,106 1,285
Sales and marketing 1,791 2,109
Research and development 1,689 1,703
General and administrative 2,156 1,978
Amortization of intangibles and
deferred stock compensation 649 914
Acquisition related and other
charges -- 397
------- -------
Total costs and expenses 7,391 8,386
------- -------
Operating loss (3,655) (3,581)
Interest and other income (expense),
net (2) (73)
------- -------
Net loss $ (3,657) $ (3,654)
======= =======
Basic and diluted net loss per share $ (0.18) $ (0.19)
------- -------
Shares used in calculating basic and
diluted net loss per share 20,144 19,351
------- -------
Immersion Corporation
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2003 2002 (1)
(Unaudited)
----------- ------------
ASSETS
Cash and cash equivalents $ 5,767 $ 8,717
Accounts receivable, net 3,121 3,645
Inventories 2,382 2,128
Prepaid expenses and other
current assets 975 1,151
----------- ------------
Total current assets 12,245 15,641
Property and equipment, net 1,840 2,044
Intangibles and other assets,
net 6,601 6,616
Other investments 1,000 1,000
----------- ------------
TOTAL ASSETS $ 21,686 $ 25,301
=========== ============
LIABILITIES
Accounts payable $ 1,015 $ 1,160
Accrued compensation 1,007 671
Other accrued liabilities 1,098 1,311
Deferred revenue and customer
advances 2,436 3,515
Current portion of long-term
debt 54 86
----------- ------------
Total current liabilities 5,610 6,743
Long-term debt 47 51
Long-term portion of deferred
revenue 5,479 4,559
----------- ------------
Total liabilities 11,136 11,353
STOCKHOLDERS' EQUITY 10,550 13,948
----------- ------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 21,686 $ 25,301
=========== ============
(1) Derived from the Company's annual audited financial statements.

--30--AM/sf* CONTACT: Immersion Corporation Victor Viegas/Bridget McQueen, 408/467-1900 Invest@immersion.com KEYWORD: CALIFORNIA INDUSTRY KEYWORD: SOFTWARE HARDWARE COMPUTERS/ELECTRONICS CONFERENCE CALLS EARNINGS SOURCE: Immersion Corporation