Newsbits


 MicroTouch Reports 12.4% Sales Increase for  1998, 56% Increase in   Earnings  
             Per Share - Both New Records; Announces 1999 Strategy             
                       (Business Wire; 02/02/99)                       

METHUEN, MASS. (Feb. 2) BUSINESS WIRE -Feb. 1, 1999--MicroTouch Systems, Inc. 
(NASDAQ: MTSI) today announced that revenues for its fourth quarter of 1998 
increased by 10% to $36.6 million compared to $33.3 million for the fourth 
quarter of 1997. MicroTouch recorded net earnings from operations of $2.5 
million ($0.33 per share) as compared to net earnings from operations of 
$17,000 for the fourth quarter of 1997. During the fourth quarter of 1997, the 
Company recorded a $2.3 million (pre-tax) restructuring charge for its Business 
Products Division. Excluding this charge in 1997, this year's fourth quarter 
earnings of $2.5 million increased 56% as compared to last year's fourth 
quarter earnings of $1.6 million or $0.17 per share.

For the year ended December 31, 1998, MicroTouch's revenue increased 12.4% to 
$144.4 million, compared to $128.5 million for 1997. Including the 1997 
restructuring charge, net income for last year was $6.4 million ($0.77 per 
share) as compared to $9.4 million ($1.20) in 1998. Excluding the 1997 
restructuring charge, foreign exchange losses in both years and a $600,000 one-
time, non-recurring pre-tax charge for the final settlement of the Nissha 
arbitration matter recorded during the second quarter of 1997, net income rose 
$0.6 million or 7% to $9.6 million ($1.23 per share) as compared to 1997 
operating earnings of $9.0 million ($1.08 per share).

"1998 was a year of transition for MicroTouch", said Geoffrey Clear, vice 
president - finance and administration. "Revenues increased by 12.5% as 
compared to 1997 and, more importantly, earnings per share increased by 56%. 
Our net earnings for the fourth quarter, at $0.33 per share, exceeded our 
expectations as we again improved the gross margins in our touchscreen product 
line and maintained control over our discretionary expenses in spite of our 
drive to increase our engineering investments. During 1998, we also transformed 
our whiteboard product line from being a significant financial drain in 1997 to 
being essentially breakeven by the end of 1998.

Wes Davis, president and chief executive officer, stated that "MicroTouch is 
very excited about its growth prospects for 1999. During 1998 we implemented 
multiple engineering and sales/marketing initiatives on a global basis which 
will substantially strengthen our number one position in the public access 
market for touchscreens. In 1999, we intend to focus on the development of a 
next generation capacitive product line which will strengthen its tradition of 
leadership and offer signficant value enhancement to our customers. In 
addition, we are now positioned to enter the rapidly expanding market for 
touchscreens applied to portable consumer devices such as internet phones, 
paging devices, personal organizers and notebook computers. We believe that the 
touchscreen market will see a paradigm shift to this segment in the next 
several years and we intend to be the leading supplier in this growth segment. 
We anticipate that 1999 will be a strong year for the touchscreen industry and 
we are planning accordingly."

MicroTouch Systems, Inc. is the world's leading provider of complete computer 
touch-input solutions. Its touchscreen hardware and software technologies have 
consistently led the industry in numerous innovations and standards. Founded in 
1982, MicroTouch reported sales of $144.4 million in fiscal 1998. With its 
headquarters and ISO 9001-certified manufacturing plant in Methuen, Mass., 
MicroTouch also maintains manufacturing facilities in New York, the United 
Kingdom, Japan, Taiwan and Australia, along with sales offices and distributors 
in numerous other countries.

MicroTouch Web site: http://www.microtouch.com

                  Consolidated Sales/Earnings Summary

(in thousands)

                                Three Months           Twelve Months

                             Ended December 31,     Ended December 31,

                               1998      1997         1998      1997

                                 (unaudited)

Net sales                   $ 36,570   $ 33,301    $144,370   $128,481

Cost of sales                 22,124     23,788      88,950     83,553

Gross profit                  14,446      9,513      55,420     44,928

Operating expenses:

  Research and development     3,065      2,214      10,904      7,985

  Sales and marketing          5,379      5,019      21,235     18,765

  General and administrative   2,679      2,039      10,012      7,944

  Amortization of

   intangible assets             121        120         502        477

Total operating

 expenses                     11,244      9,392      42,654     35,171

Operating income               3,202        121      12,767      9,757

Other income (expense)           471       (293)      1,009        579

Arbitration costs               --         --          --          595

Income/(loss) before

 provision for income

 taxes                         3,673       (172)     13,776      9,741

Provision/(benefit)

 for income taxes              1,175       (189)      4,408      3,330

Net income (1)              $  2,498   $     17    $  9,368   $  6,411

Diluted earnings per

 share(1)                   $   0.33       --      $   1.20   $   0.77

 Weighted average common

  and common equivalent shares

  outstanding                  7,524      8,338       7,815      8,349

Basic earnings per share    $   0.34       --      $   1.22   $   0.81

 Weighted average

  common and common equivalent

  shares outstanding           7,404      8,005       7,672      7,941

(1)Excluding foreign exchange

   losses and special

   charges:

Net income                  $  2,388   $  1,996    $  9,599   $  8,999

Diluted earnings per share  $   0.32   $   0.24    $   1.23   $   1.08

                 Consolidated Condensed Balance Sheets

(in thousands)

                                                      December 31,

                                                     1998       1997

Assets

   Cash and marketable securities                 $ 37,662    $ 34,751

   Accounts receivable, net                         23,265      17,348

   Inventories                                      15,954      19,075

   Other current assets                              5,717       7,980

   Property and equipment, net                      17,452      13,308

   Other assets                                      1,958       2,375

Total Assets                                      $102,008    $ 94,837

Liabilities and Stockholders' Equity

   Current liabilities                            $ 23,790    $ 15,889

   Stockholders' equity                             78,218      78,948

Total Liabilities and Stockholders' Equity        $102,008    $ 94,837

This press release contains forward-looking statements that involve risks and 
uncertainties. The Company's actual results and other events may differ 
significantly from the results and events discussed in the forward-looking 
statements. Readers are cautioned not to place undue reliance on these forward-
looking statements which speak only as of the date hereof. The Company 
undertakes no obligation to publicly release the result of any revisions to 
these forward-looking statements which may be made to reflect events or 
circumstances occurring after the date hereof or to reflect the occurrence of 
unanticipated events.






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