Lexar Reports Fourth Quarter and Fiscal Year 2005 Results

Lexar Media, Inc. (Nasdaq:LEXR), a world leader in
advanced digital media technologies, today reported financial results
for the fourth quarter and year ended December 31, 2005. As previously
announced, Lexar's scheduled conference call to be held at 5:00 p.m.
EST today has been cancelled.
   Total fourth quarter revenues of $239.1 million increased 27% from
$188.5 million in the same period last year and increased 26% from
$189.4 million in the preceding quarter. License and royalty revenues
increased to $9.7 million for the fourth quarter compared to $1.2
million in the same period last year and $4.5 million in the previous
quarter. Net loss was $23.8 million, or $0.29 per diluted share. This
compares to a net loss of $63.3 million, or $0.80 per diluted share,
in the same period last year and net income of $2.1 million, or $0.02
per diluted share, in the third quarter of 2005.
   Revenues for the year ended December 31, 2005 were $852.7 million,
a 25% increase from $681.7 million for the year ended December 31,
2004. Net loss was $36.2 million, or $0.45 per diluted share in 2005,
as compared to a net loss of $75.5 million, or $0.96 per diluted share
in 2004.

   Corporate Highlights

   Lexar recently:

   --  Announced that it has entered into a definitive merger
        agreement with Micron Technology, Inc. and a wholly owned
        subsidiary of Micron. The merger agreement provides that, upon
        the terms and subject to the conditions provided in the merger
        agreement, Micron's subsidiary will merge with and into Lexar,
        with Lexar being the surviving corporation of the merger. As a
        result of the merger: (i) Lexar will become a wholly owned
        subsidiary of Micron; and (ii) each outstanding share of
        Lexar's common stock will be converted into the right to
        receive 0.5625 shares of Micron common stock and Micron will
        assume stock options held by employees of Lexar at the closing
        date with a per share exercise price of $9.00 or lower.

   --  Announced at the Photo Marketing Association International
        Show (PMA):
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        --  Lexar(R) Smart Download, an intelligent acquisition
            plug-in module that will allow photographers to rapidly
            download and manage images directly from their memory
            cards via Adobe(R) Bridge;

        --  several applications developed for the Company's
            innovative digital photography workflow ActiveMemory(TM)
            System (AMS);

        --  its unique LockTight(TM) system that enables card level
            security, is being localized and will be available to a
            greater number of security-conscious photographers
            worldwide; and

        --  it has doubled the speed rating of its popular
            Professional 8GB CompactFlash(R) memory card to 90X.
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   --  Partnered with Corel Corporation using Lexar ActiveMemory
        System to provide customers with a unique automated solution
        for transforming photos as they are downloaded from a memory
        card.

   --  Strengthened its executive management team with the
        appointment of Chief Financial Officer Michael Scarpelli, who
        was the former CFO of HPL Technologies (acquired by Synopsys,
        Inc.), and the appointment of Chief Operating Officer Mark
        Adams, who was formerly vice president of sales and marketing
        at Creative Labs, Inc.

   --  Introduced its new Professional CompactFlash 133X (CF) and
        Secure Digital(TM) (SD) flash memory cards designed to deliver
        optimal performance in all digital SLR cameras.

   --  Announced that its LockTight technology will be supported in
        the new Nikon D200 digital SLR camera, providing advanced
        features including security functionality and shooting in
        burst mode.

   --  Introduced new KODAK High Performance memory cards designed
        for digital camera owners who require high-speed processing
        for rapid-fire still shooting, high frame rate video capture
        and fast computer transfer.

   --  Announced the inclusion of Google applications, including
        Picasa, Google Toolbar and Google Desktop Search applications,
        to select USB flash drives and the inclusion of digital
        imaging software from Corel Corporation to select flash memory
        cards in Lexar's Professional, Platinum and Value lines.

   --  Introduced at the 2006 International Consumer Electronics
        Show:
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        --  a wide range of flash memory cards designed to maximize
            the functionality and performance of advanced mobile
            phones and handheld multimedia devices;

        --  an enhanced version of its Platinum line of flash memory
            cards;

        --  PowerToGo, a portable working environment to increase
            mobility for its USB flash drive line; and

        --  a unique storage capacity meter for its USB flash drive
            line, integrating an innovative electronic paper display
            initially available on Lexar's JumpDrive Mercury.
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   About Lexar Media, Inc.

   Lexar is a leading marketer and manufacturer of NAND flash memory
products including memory cards, USB flash drives, card readers and
ATA controller technology for the digital photography, consumer
electronics, industrial and communications markets. The company holds
over 96 issued or allowed controller and system patents, and licenses
its technology to companies including Olympus Corporation, Samsung
Electronics Co., Ltd., SanDisk Corporation and Sony Corporation. Lexar
sells its memory cards worldwide and through an exclusive agreement,
also sells memory cards under the Kodak(R) brand. Headquartered in
Fremont, California, Lexar has operations in countries around the
world. More information is available at www.lexar.com

   Cautionary Note Regarding Forward-Looking Statements

   This news release contains forward-looking information within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934 and is subject to the safe
harbor created by those sections. These forward-looking statements
include statements related to projections about our business and
financial outlook, including statements regarding our proposed
acquisition by Micron and the features and anticipated benefits of our
new products. These forward-looking statements involve a number of
risks and uncertainties that could cause actual results to differ
materially from those anticipated by these forward-looking statements.
These risks include: competitive pricing pressures, our operating
results and gross margins are difficult to predict and may fluctuate
significantly; our planned acquisition by Micron may not close or the
closing may be delayed; our customers or suppliers may not react
positively to Micron's proposed acquisition of us; the cost of flash
memory is a significant part of our products' cost structure, and if
we are unable to obtain sufficient quantities of flash memory in a
timely manner and at competitive prices, we may not be able to
manufacture and deliver products to satisfy our customers'
requirements, compete effectively in the market or maintain our
targeted gross margins or market share; future average selling prices
may continue to erode due to excess industry capacity and extreme
price competition which may impact our margins and our ability to
maintain our position at our retail accounts; many of our retail
customers and distributors have price protection which could require
us to make large payments if we reduce prices; if we are unable to
manage our inventory levels, our operating results will be negatively
impacted; if we are unable to anticipate demand and pricing of our
products or effectively manage distributor channels and relationships
and changes in market conditions, our operating results will be
harmed; our licensing revenues may fluctuate significantly as the
payments from our recent agreement with Samsung will be made over a
short period of time and we may be unable to secure new license or
royalty revenue; increased competition in the digital media market may
lead to a decrease in our revenues and market share; if we are unable
to achieve or maintain our technology leadership position or to obtain
rights to develop and manufacture new form factors on acceptable
terms, our gross margins and revenues would likely decline
significantly; and we are involved in litigation, and may become
involved in additional litigation, the outlook of which is highly
uncertain, that could divert management's time and attention, be
time-consuming and expensive to defend and limit our access to
important technology. Readers should also refer to the risk factors
described in our filings with the Securities and Exchange Commission,
including our Quarterly Report on Form 10-Q for our fiscal quarter
ended September 30, 2005, filed with the Securities and Exchange
Commission on November 9, 2005. We assume no obligation to update the
forward-looking information contained in this news release.

   Lexar and the Lexar logo are trademarks of Lexar Media, Inc. All
other brand or product names are trademarks or registered trademarks
of their respective holders.
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                  LEXAR MEDIA, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)
                              (unaudited)


                               Three Months Ended  Twelve Months Ended
                               ------------------- -------------------
                                  December 31,        December 31,
                                 2005      2004      2005      2004
                               --------- --------- --------- ---------

Net revenues:
  Product revenues             $229,316  $187,350  $836,686  $674,605
  License and royalty revenues    9,744     1,175   $16,037    $7,066
                               --------- --------- --------- ---------
    Total net revenues          239,060   188,525   852,723   681,671
Cost of product revenues        225,362   210,216   755,170   644,857
                               --------- --------- --------- ---------
Gross margin                     13,698   (21,691)   97,553    36,814
                               --------- --------- --------- ---------

Operating expenses:
  Research and development        3,533     3,360   $13,051   $10,530
  Sales and marketing            17,543    25,652   $68,273   $67,000
  General and administrative     11,705    12,036   $44,120   $32,281
                               --------- --------- --------- ---------
Total operating expenses         32,781    41,048   125,444   109,811
                               --------- --------- --------- ---------

  Loss from operations          (19,083)  (62,739)  (27,891)  (72,997)

Total other expense                (843)     (623)   (2,824)   (1,180)
                               --------- --------- --------- ---------

    Loss before income taxes    (19,926)  (63,362)  (30,715)  (74,177)

Income taxes                     (3,841)       16   $(5,473)  $(1,353)
                               --------- --------- --------- ---------

    Net loss                   $(23,767) $(63,346) $(36,188) $(75,530)
                               ========= ========= ========= =========

Net loss per common share:
  Basic                          $(0.29)   $(0.80)   $(0.45)   $(0.96)
  Diluted                        $(0.29)   $(0.80)   $(0.45)   $(0.96)

Shares used in computing net
 loss per common share 
 calculation:
  Basic                          80,804    79,205    80,119    78,869
  Diluted                        80,804    79,205    80,119    78,869

 
                 LEXAR MEDIA, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)
                              (unaudited)

                                ASSETS

                                                   December  December
                                                      31,       31,
                                                     2005      2004
                                                   --------- ---------

Current assets:
  Cash, cash equivalents and short-term 
   investments                                     $171,318   $35,443
  Restricted cash                                     5,000     5,000
  Accounts receivable, net                          103,396   170,365
  Inventories                                       117,055   177,655
  Prepaid expenses and other current assets           9,197    12,799
                                                   --------- ---------
           Total current assets                     405,966   401,262

  Property and equipment, net                        10,823    10,305
  Intangibles and other assets, net                   2,928       429
                                                   --------- ---------
           Total assets                            $419,717  $411,996
                                                   ========= =========


                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued liabilities         $182,932  $233,370
  Deferred license revenue and product margin        25,236    23,759
  Short-term bank borrowings                         54,723    40,000
                                                   --------- ---------
           Total current liabilities                262,891   297,129

  Deferred license revenue, net of current portion    4,000       173
  Senior convertible notes payable                   70,000         -
                                                   --------- ---------
           Total liabilities                        336,891   297,302

  Total stockholders' equity                         82,826   114,694
                                                   --------- ---------
           Total liabilities and stockholders'
            equity                                 $419,717  $411,996
                                                   ========= =========
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