SUNNYVALE, Calif.–(BUSINESS WIRE)–Jan. 23, 2003–Monolithic
System Technology, Inc. (MoSys) (Nasdaq:MOSY) today reported financial
results for its fourth quarter and fiscal year ended December 31,

Fiscal Year 2002 Highlights

  • Revenues from intellectual property increased 162% over last

  • Net income increased by 77% over fiscal year 2001

  • Launched 1T-SRAM-Q(TM) technology with new Folded Area
    Capacitor(TM) (FAC(TM)) achieving four times the density of
    traditional SRAMs

  • Completed the acquisition of ATMOS Corporation including its
    compiler technology and synergistic engineering talent

  • Announced 1T-SRAM(R) memory compiler for the leading foundries

  • Announced additional alliances and licensing agreements with
    Phillips, Motorola, National Semiconductor, Hitachi, UMC and

  • Announced 1T-SRAM-R(TM) technology with ultra high reliability
    and low manufacturing cost

  • 1T-SRAM-R(TM) technology named among the “Top Products” of
    2002 by EDN Magazine

  • Over fifty million integrated circuits utilizing 1T-SRAM
    technologies have now been shipped by MoSys’ licensees through

Fourth Quarter Results

Total net revenue in the quarter was $7.9 million, representing a
18% increase from the $6.7 million of net revenue for the same period
a year ago. Total net revenue consisted of $3.3 million from
licensing, $4.0 million in royalties and approximately $600,000 in
product revenue. Licensing revenue increased by 94% from $1.7 million
in the fourth quarter 2001. Royalty revenue increased by 111% from
$1.9 million in the fourth quarter of 2001. Product revenue, however,
decreased 81% from the product revenue recorded in the same quarter
last year.

The gross margin percentage in the fourth quarter of 2002 was 87%,
up from 75% in the same quarter a year ago.

Net income for the quarter was $4.1 million representing 52% of
total revenue, or $0.13 per share, compared to $2.8 million, or $0.09
fully diluted earnings per share in the same period last year. Net
income for the quarter included a one-time benefit of approximately
$1,300,000, or $0.04 fully diluted earnings per share, in reduction of
the company’s tax provision due to the use of available tax credits.
Fourth quarter fully diluted earnings per share were computed using

Fiscal 2002 Results

For fiscal year 2002, net revenue increased to $27.8 million,
which represents a 24% increase from the $22.5 million reported in
fiscal 2001. The revenue growth was due to the strength of the
company’s licensing business, which saw revenues from licensing, and
royalties increase 162% to $24.9 million from $9.5 million in 2001.

Net income in 2002 was $12.4 million, up 77% from net income of
$7.0 million reported in 2001. Net income in the year was equal to 45%
of net revenue. Fully diluted earnings per share in the year were
$0.40 compared to $0.25 in the prior year. Fully diluted 2002 earnings
per share were computed using 31,275,000 shares.

“Our strong financial performance in the quarter is a direct
result of the value our customers realize from our technologies,” said
Dr. Fu-Chieh Hsu, CEO of MoSys. “Although the overall environment
remains challenging, customers continue to license our technologies in
order to bring leading edge products to market and maintain a
competitive advantage in the marketplace.”

Commenting on the results for 2002, Dr. Hsu further stated, “Our
77% increase in net income over last year, including a 162% increase
in total licensing and royalty net revenue, reflects the strength of
our technology and its increasing acceptance in the marketplace.
Additionally, during the year we expanded our customer base,
introduced 1T-SRAM-Q and new enhancements of our core technology, and
completed our acquisition of ATMOS Corporation.”

Business Outlook

MoSys’ President and Chief Executive Officer Dr. Fu-Chieh Hsu and
Chief Financial Officer Mark Voll will update their business outlook
and give guidance for the first quarter of 2003 during their earnings
conference call at 2:15 p.m. PT on January 23, 2003.

Fourth Quarter and FY 2002 Financial Results Web cast/Conference

The MoSys management team will host a live web cast and conference
call to discuss Q4 and FY 2002 financial results beginning at 2:15
p.m. (PT) on Thursday, January 23, 2003. Investors and other
interested parties may listen to the live web cast by visiting the
investor relations section of the MoSys website at A
replay of the conference call will be available for 48 hours beginning
at 5 p.m. PT. The replay number is 1-800-633-8284 with a pass code of
21099138. A web cast replay will also be available on the company’s


Founded in 1991, MoSys develops, licenses and markets innovative
memory technologies for semiconductors. MoSys patented 1T-SRAM
technologies offer a combination of high density, low power
consumption, high speed and low cost unmatched by other available
memory technologies. The single transistor bit cell used in 1T-SRAM
technology results in technology achieving much higher density than
traditional four or six transistor SRAMs while using the same standard
logic manufacturing processes. 1T-SRAM technology also offers the
familiar, refresh-free interface and high performance for random
address access cycles associated with traditional SRAMs. In addition,
this technology can reduce operating power consumption by a factor of
four compared with traditional SRAM technology, contributing to making
it an ideal technology for embedding large memories in System on Chip
(SoC) designs. 1T-SRAM technologies are in volume production both in
SoC products at MoSys’ licensees as well as in MoSys’ standalone
memories. MoSys is headquartered at 1020 Stewart Drive, Sunnyvale,
California 94085. More information is available on MoSys’ website at


This press release may contain forward-looking statements about
the Company including, without limitation, benefits and performance
expected from use of the Company’s 1T-SRAM technology.

Forward-looking statements are based on certain assumptions and
expectations of future events that are subject to risks and
uncertainties. Actual results and trends may differ materially from
historical results or those projected in any such forward-looking
statements depending on a variety of factors. These factors include
but are not limited to, customer acceptance of our 1T-SRAM technology,
proving our technology in high-volume production of licensees’
integrated circuits, the level of commercial success of licensees’
products such as the Nintendo GAMECUBE and cell phone hand sets, ease
of integration of our 1T-SRAM with other semiconductor functions, ease
of manufacturing and yields of devices incorporating our 1T-SRAM, our
ability to enhance the 1T-SRAM technology or develop new technologies,
the level of intellectual property protection provided by our patents,
the vigor and growth of markets served by our licensees and customers,
the impact of the Company’s recent acquisition of ATMOS Corporation on
future operating results and operations of the Company and other risks
identified in the Company’s most recent annual report on Form 10-K
filed with the Securities and Exchange Commission, as well as other
reports that MoSys files from time to time with the Securities and
Exchange Commission. MoSys undertakes no obligation to update publicly
any forward-looking statement for any reason, except as required by
law, even as new information becomes available or other events occur
in the future.

1T-SRAM(R) is a MoSys trademark registered in the U.S. Patent and
Trademark Office. All other trade, product, or service names
referenced in this release may be trademarks or registered trademarks
of their respective holders.

               (In thousands, except per share amounts)

                          Three Months Ended     Twelve Months Ended
                              December 31,          December  31,
                            2002        2001       2002        2001
                          --------   --------    --------    --------
                        (unaudited) (unaudited)
Net Revenue
  Product                 $    599   $  3,186    $  2,924    $ 12,991
  Licensing                  3,263      1,666      10,523       6,053
  Royalty                    3,993      1,895      14,344       3,446
                          --------   --------    --------    --------
        Total                7,855      6,747      27,791      22,490
                          --------   --------    --------    --------

Cost of Net Revenue
  Product                      373      1,538       1,668       5,776
  Licensing                    631        186       1,730         633
                          --------   --------    --------    --------
        Total                1,004      1,724       3,398       6,409
                          --------   --------    --------    --------
Gross Profit                 6,851      5,023      24,393      16,081
                          --------   --------    --------    --------

Operating Expenses:
  Research and
   development               2,099      1,202       6,586       4,420
  Selling, general and
   administrative            1,513      1,132       4,950       4,686
   compensation expense        171        263         656       1,435
                          --------   --------    --------    --------
        Total operating
         expenses            3,783      2,597      12,192      10,541
                          --------   --------    --------    --------

  Income from operations     3,068      2,426      12,201       5,540
  Interest and other
   income                      347        492       1,539       1,818
                          --------   --------    --------    --------

  Income before income
   taxes                     3,415      2,918      13,740       7,358
  Provision for income
   taxes                       691       (146)     (1,373)       (367)
                          --------   --------    --------    --------

Net Income                $  4,106   $  2,772    $ 12,367    $  6,991
                          ========   ========    ========    ========

Net Income Per Share
  Basic                   $   0.14   $   0.09    $   0.41    $   0.35
                          ========   ========    ========    ========
  Diluted                 $   0.13   $   0.09    $   0.40    $   0.25
                          ========   ========    ========    ========

Shares Used in Computing
 Net Income Per Share
        Basic               30,213     29,380      29,902      19,709
        Diluted             31,309     31,550      31,275      28,390

                            (in thousands)

                                            Dec. 31,       Dec. 31,
                                              2002           2001
                                            --------       --------

Current Assets
  Cash, cash equivalents and short-term
   investments                              $ 68,433        $ 84,293
  Accounts receivable - net                      943             343
  Unbilled contract receivable                   693            --
  Inventories                                  1,037           1,693
  Prepaid expenses and other assets            4,475           1,506
                                            --------        --------
        Total Current Assets                  75,581          87,835

Long-term investments                         11,400            --
Property and Equipment                         3,352           1,668
Goodwill                                      12,326            --
Other Assets                                     431              93
                                            --------        --------
        Total Assets                         103,090          89,596
                                            ========        ========

Liabilities and Shareholders' Equity:
Current Liabilities:
  Accounts payable                          $     82        $    254
  Accrued expenses and other
   liabilities                                 2,418           1,820
  Deferred revenue                             1,779           3,418
                                            --------        --------
  Total Current Liabilities                    4,279           5,492

  Long-term liabilities                          114            --

  Common stock and additional paid
   in capital                                 97,150          94,924
  Retained Earnings (Accumulated deficit)      1,547         (10,820)
                                            --------        --------
Total Shareholders' Equity                    98,697          84,104
                                            --------        --------

  Total Liability and Shareholders'
   Equity                                   $103,090        $ 89,596
                                            ========        ========