M-Systems Reports Second Quarter 2002 Results

7/24/2002 - M-Systems (Nasdaq: FLSH) today announced earnings for the second quarter of 2002.

For the quarter ended June 30, 2002, revenues were $14.7 million, compared to revenues of $11.4 million in the previous quarter and revenues of $9.4 million in the second quarter of 2001. The Company reported a net loss for the quarter ended June 30, 2002, of $1.4 million, or $(0.05) per share, compared to a net loss of $2.3 million, or $(0.08) per share, in the previous quarter. This compares to a pro forma net loss of $3.4 million, or $(0.13) per share, for the second quarter of 2001, and compares to a net loss for that quarter, including inventory write-down and capital loss, of $22.3 million, or $(0.83) per share. Gross margins decreased to 31 percent from 33 percent in the previous quarter and were unchanged from the gross margins in the second quarter of 2001, on a pro forma basis.

In commenting on the second quarter, Dov Moran, president of M-Systems, said, "We are pleased that despite the continued difficult economic environment, M-Systems is able to report its fourth consecutive quarter of increased revenues, while continuing to decrease its loss. The growth in revenues occurred in all our product lines and particularly, as mentioned in our earlier announcement, in the DiskOnKey. We look forward to continued improvements in our business in the quarters to come".

Mr. Moran will discuss the Company's financial results and other matters discussed herein in a group conference call at 11:00 a.m. U.S. EDT, today, July 22, 2002. Those who wish to participate may call 1-973-872-3462. There will be a replay available from 1:00 p.m. EDT, July 22, 2002, until 11:59 p.m., July 24, 2002. Please call 1-973-341-3080, PIN #3378778. The Company invites you to listen to the call live over the web by going to the following site: http://www.kcsa.com

About M-Systems
M-Systems (Nasdaq: FLSH) is a leader and innovator of flash-based data storage products known as flash disks. M-Systems' flash disks provide the functionality of a mechanical hard drive in a silicon chip. M-Systems' products are based on its patented TrueFFS® technology and target applications in a vast array of markets, including connected devices, mobile and telecom. M-Systems' products include the DiskOnChip®, DiskOnKeyTM and Fast Flash Disk (FFD) product families. For more information, please contact M-Systems at www.m-sys.com

This press release includes forward-looking statements as defined in the private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties which may cause actual results to vary significantly. These risks include, but are not limited to, risks related to: the effect of global economic conditions in general and conditions in the Company's industry and target markets in particular, shifts in supply and demand, market acceptance, the impact of competitive products and pricing, product development, commercialization and technological difficulties, and capacity and supply constraints including dependence on flash component suppliers; changes in the Company's and its customers' inventory levels; timely product and technology development/upgrades and the ability to manage changes in market conditions as needed; market acceptance of new products and continuing product demand; the impact of competitive products and pricing on the Company's and its customers' products and markets; development, release and sales of new products by strategic suppliers and customers; development and growth of anticipated markets for the Company's and its customers' products; and other risk factors detailed in the Company's most recent annual report and its other filings with the Securities and Exchange Commission. The Company assumes no obligation to update the Information in this release. Reference to the Company's website above does not constitute incorporation of any of the information thereon into this press release.

You may register to receive M-Systems' future press releases or to download a complete Digital Investor KitTM including press releases, regulatory filings and corporate materials by clicking on the "Digital Investor KitTM" icon at www.kcsa.com

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