M-Systems revenue up 115 percent in 4Q95; Loss for year reduced, rising sales forecast

Business Wire, Feb 13, 1996

TEL AVIV, Israel--(BUSINESS WIRE)--February 13, 1996--M-Systems Flash Disk Pioneers Ltd. (NASDAQ: FLSHF) today reported fourth quarter 1995 revenues of $2.583 million, an increase of 115 percent over the prior year's fourth quarter revenues of $1.204 million.

M-Systems reported a loss for the quarter of $602,000, down from a loss of $861,000 in the same quarter of 1994. Approximately half of the loss is due to M-Systems continuing support of its wholly owned subsidiary, EUROM Flash Ware Solutions Ltd. Eurom is expected to begin to generate revenues only in the second half of 1996.

Revenues for the year ended December 31, 1995, increased to $6.533 million, up from $4.786 million in 1994. M-Systems loss for the year was $2.753 million or $0.43 per share, compared with a loss of $3.145 million or $0.58 per share last year. $275,000 of the loss is attributable to a reserve set aside in the fourth quarter for an annual royalty to the Marketing Support Fund of Israel's Ministry of Industry and Trade in return for earlier grants. The Company set aside the reserve as a result of the increase in the Company's sales.

M-Systems President Dov Moran said of the results for the fourth quarter vindicate our belief that the Company would begin to translate its technical achievements and previously announced agreements into increasing sales and success, adding:

"We also are encouraged by the fact that the Company's improved financial results -- reflected both in the quarter's sharply increased sales and its decreased losses -- were accompanied by increased market recognition and new accomplishments, orders and strategic agreements (including those announced with Intel and SystemSoft) which should further bolster the Company's position in the growing Flash Disk solutions market."

M-Systems ended 1995 with a backlog of approximately $3.5 million in customer orders, the majority of which are to be filled in the first quarter of 1996. Mr. Moran said, however, that the Company will not be able to completely fill all of the orders due in the first quarter if it is unable to obtain sufficient flash memory components from Intel, the Company's principal flash supplier. Intel has informed M-Systems that it may temporarily be unable to meet all of the M-Systems sharply increased orders of flash components. Intel anticipates that any such supply limitations will be resolved by June 1996.

Mr. Moran said he believes that any such possible limitation on the further growth of sales will not extend past the second quarter of 1996 inasmuch as the Company is planning during that quarter to expand its product line to include products based on flash components from other suppliers.

M-Systems Flash Disk Pioneers develops, manufactures and markets a new generation of data storage solutions based on Flash memory. EUROM FLASHWARE SOLUTIONS, its subsidiary, is developing proprietary, advanced and highly-integrated components for use in voice recording and playback in portable applications, including cellular phones, organizers, and PDA's. -0-

                M-SYSTEMS FLASH  DISK PIONEERS LTD.