Mossimo Q2 Net Income Cut in Half on Lower Net Revenues

Mossimo, Inc. reported second quarter 2003 revenue of $6.9 million compared to $7.4 million for the same period last year. Included in the 2002 revenue was non-recurring revenue of $1.5 million, which had been previously deferred by the Company pending the results of a royalty audit that was completed last year. Excluding the non-recurring revenue, the Company reported a 16% increase in revenue in the second quarter of 2003 compared to 2002.

The Company also reported second quarter 2003 net earnings of $1.8 million, compared to $3.7 million for the same period last year, and diluted earnings per share were $0.12 compared to $0.23 for the same period last year. The non-recurring revenue increased the second quarter 2002 net earnings by $600,000, or $0.04 per diluted share. Recurring pre-tax net earnings were $3.1 million, or $0.20 per diluted share in the second quarter of 2003, compared to recurring pre-tax net earnings of $3.1 million, or $0.19 per diluted share in the second quarter of 2002.

Revenues for the six months ended June 30, 2003 were $12.7 million compared to $13.0 million in the same period last year, which also included the $1.5 million of non-recurring revenue recognized last year. The Company reported net earnings for the six months ended June 30, 2003 of $3.2 million, or $0.21 per diluted share, compared to net earnings of $6.7 million, or $0.43 per diluted share for the six months ended June 30, 2002. The non-recurring revenue also increased the first six months net earnings by $600,000, or $0.04 per diluted share in 2002. Recurring pre-tax net earnings were $5.4 million, or $0.34 per diluted share in the first six-months of 2003 compared to recurring pre-tax net earnings of $6.1 million, or $0.39 per diluted share in the first six-months of 2002.

The Company is now reporting income tax expense for book purposes after having recorded a deferred tax asset as of December 31, 2002 to recognize the income tax benefit of previous net operating losses. In accordance with FAS – 109, the income tax expense for book purposes is based on the expected blended effective rate for federal and state taxes of approximately 40%. While this income tax expense reduces net earnings, it is important to note that no cash taxes are expected to be paid, other than alternative minimum tax (AMT) and certain local and state taxes, if any, until the tax credits have been fully utilized.

Mossimo Giannulli, Chairman and Chief Executive Officer of Mossimo, Inc commented, “We were pleased with the performance of Mossimo branded product at both Target and Zellers during the period, which drove our 16% year-over-year increase in recurring revenue and allowed us to report pre-tax net earnings that were slightly ahead of expectations. Our results underscore the ongoing strength of the Mossimo brand in our core apparel and accessory categories along with positive reaction to new product extensions such as our home products in Canada introduced earlier this year.”

“Our solid results for the first half of fiscal 2003 bodes well for the remainder of the year,” concluded Mr. Giannulli. “We remain dedicated to capitalizing on the opportunities that we have created while executing a strategy that results in long term growth and increased shareholder value.”

                           
                             MOSSIMO, INC.
                   CONDENSED STATEMENTS OF EARNINGS
                 (In thousands, except per share data)
                               Unaudited

                                     Three Months       Six Months
                                    Ended June 30,     Ended June 30,
                                   ----------------  ----------------
                                     2003     2002     2003     2002
                                   -------  -------  -------  -------

REVENUE FROM LICENSE ROYALTIES
 AND DESIGN SERVICE FEES           $ 6,858  $ 7,404  $12,726  $12,994


OPERATING EXPENSES:
 Selling, general and
  administrative                     3,774    3,652    7,300    6,079
                                   -------  -------  -------  -------


Operating earnings                   3,084    3,752    5,426    6,915

OTHER EXPENSE:
 Interest expense, net                   9       98       23      219
                                   -------  -------  -------  -------

Earnings before income taxes         3,075    3,654    5,403    6,696

Provision for income taxes           1,230       --    2,160       --
                                   -------  -------  -------  -------

Net earnings                       $ 1,845  $ 3,654  $ 3,243  $ 6,696
                                   =======  =======  =======  =======
Earnings per common share:
 Basic                             $  0.12  $  0.24  $  0.21  $  0.44
                                   =======  =======  =======  =======

 Diluted                           $  0.12  $  0.23  $  0.21  $  0.43