For Immediate Release


October 23, 1997, Methuen, Mass. -- MicroTouch Systems, Inc. (NASDAQ: MTSI) today announced that revenues for the third quarter of 1997 increased by 36% to $32.8 million, a new Company record. The $32.8 million compares to $24.1 million for the third quarter of 1996. MicroTouch's net income for the third quarter of 1997 also reached a record level, amounting to $2.4 million ($0.28 per share), a 56% increase as compared to earnings of $1.5 million ($0.19 per share) for the third quarter of 1996.

For the nine months ended September 30, 1997, MicroTouch's revenue increased 40% to $95.2 million, compared with $68.0 million for the same period of fiscal 1996. Net income (before a special, one-time, non-recurring pretax charge of $595,000 for the final settlement of the Nissha arbitration matter) for the first nine months of 1997 totaled $6.8 million ($0.81 per share) as compared to earnings of $4.4 million ($0.54 per share) for the same period in 1996. Including the one-time arbitration charge, which was recorded during the second quarter, MicroTouch's nine-month net income for 1997 amounted to $6.4 million, or $0.77 per share, an increase of 70% as compared to earnings of $3.8 million, or $0.47 per share, for the same period last year. "The third quarter of 1997 represented our eighth consecutive quarter in which we recorded a sequential increase in revenues and operating earnings," said Geoff Clear, vice president - finance and administration. "The new record in revenues was achieved in spite of the usual seasonal slowness in some of our North American and European markets. International sales accounted for 49% of revenues as our operations in Europe, Japan and the Asia Pacific region all recorded new highs in quarterly revenues. Our new relationship with IBM is off to a smooth start here in the U.S. as we have identified a substantial level of pent-up demand, along with new applications and customers, that should contribute meaningful revenues in the next several quarters. During the coming months we expect to work with IBM to expand the existing relationship to the European and Asia Pacific markets as well."

"Our Business Products Division continues to increase its corporate dealer channel for Ibid‘, our breakthrough electronic PC-based whiteboard," said Wes Davis, MicroTouch president and chief executive officer. "During this past quarter, we expanded our distribution to include 37 VARs and computer dealers representing 106 sales locations. In addition, Ingram Micro has signed an agreement to make Ibid whiteboards available to another 50,000 computer resellers in the United States and abroad. The market has shown enthusiastic response to our new, larger whiteboards, the Ibid 300 and 400, which we announced at the end of the third quarter. The whiteboard operation contributed increased revenues in the third quarter and we are pleased with the progress for this business during the past quarter."

MicroTouch Systems, Inc. is the world leader in touchscreen technology and related software. Its touchscreen products incorporate the world's two most popular touch technologies, analog capacitive and resistive membrane, as well as a host of innovative touch solutions. The Facturaš Kiosks division of MicroTouch is the largest kiosk manufacturer in the US. Additionally, MicroTouch's Business Products Division markets Ibidš, a digital whiteboard that connects to your PC and saves everything you write.

Founded in 1982, MicroTouch reported sales of $95.0 million in 1996, and was named among America's Top 100 Fastest Growing Companies by Fortune. With its headquarters and primary 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.

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This press release contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including, without limitation, changes in competitive market positions, the potential for delays in the completion of design and engineering programs, and the pace of development of emerging markets. The forward-looking statements should be considered in light of these risks and uncertainties.