M-Systems Reports First Quarter 2003 Results


Q1 Revenues $22.1 Million, 7% higher than previous quarter revenues and 93% higher than Q1 2002 revenues

M-Systems (Nasdaq: FLSH), a leader in flash-based data storage products, today announced financial results for the first quarter ended March 31, 2003.


For the first quarter ended March 31, 2003, revenues were $22.1 million, representing an increase of 7 percent compared to revenues of $20.7 million in the fourth quarter of 2002, and 93 percent compared to revenues of $11.4 million in the first quarter of 2002. M-Systems reported a net loss for the first quarter ended March 31, 2003 of $0.7 million, or $(0.02) per share, compared to a net loss of $0.9 million, or $(0.03) per share in the fourth quarter of 2002, and a net loss of $2.3 million, or $(0.08) per share in the first quarter of 2002. Gross margins for the quarter were 32.6 percent, compared to 31.2 percent in the fourth quarter of 2002 and 33.4 percent in the first quarter of 2002.


Commenting on the results, Dov Moran, President and CEO of M-Systems, said: "We are extremely happy with the results of the first quarter, in which we were able to exceed our expectations with respect to both sales and net loss. We are even more satisfied with the progress we made this quarter across our main product lines. DiskOnKey was able to extend its momentum, showing growth from the fourth quarter to the first, despite the first quarter traditionally being weaker, and the Mobile DiskOnChip continues to be designed into more cellular phones and PDAs (Personal Digital Assistants). Many of these new design wins for the Mobile DiskOnChip are expected to go into production this year. In addition, the Mobile DiskOnChip is being designed into reference designs, which will serve as a base for development for many other mobile devices that are expected to hit the market at the end of this year and during 2004. We feel that with the new design wins and reference designs, we have built a solid foundation that will enable us to achieve additional growth in revenues, which will bring us closer to sustained profitability".


Mr. Moran will discuss M-Systems' financial results and other matters discussed in this press release in a group conference call at 10:00 a.m. U.S. EDT, today, April 15, 2003. Those who wish to participate may call: (973) 582-2737. The call will also be available live on the Internet at www.kcsa.com and www.m-sys.com. Following the call, the webcast will be archived for a period of 30 days. There will be a replay available from approximately 12:00 p.m. EDT, April 15, 2003, until April 21, 2003, at 11:59 p.m. To listen to the replay, please call (973) 341-3080. To access the replay, users will need to enter the following code: 3836995.