Mossimo, Inc. reported first quarter 2003 revenue of $5.9 million compared to $5.6 million for the same period last year. The Company reported first quarter net earnings of $1.4 million compared to net earnings of $3.0 million for the same period last year, and diluted earnings per share of $0.09 compared to diluted earnings per share of $0.20 for the same period last year. Pre-tax net earnings were $2.3 million, or $0.15 per diluted share in the first quarter of 2003, compared to pre-tax net earnings of $3.0 million, or $0.20 per diluted share in the first quarter of 2002. The comparison of quarterly data is impacted by the effective tax rate of 40% used in the first quarter of 2003 as compared to zero in the first quarter of 2002, in accordance with Financial Accounting Standards No. – 109 (FAS – 109). As a result, the incremental tax expense recorded in the current year’s first quarter was $930,000, or $0.06 per diluted share with no cash impact.

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 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) or relatively minimal amounts of local or state taxes, if any, until the tax credits have been fully utilized.

“Our accounting for income taxes and the expense recorded in first quarter has no impact on our operations, it’s simply a requirement under FAS – 109 for companies that experience a period of losses followed by anticipated earnings,” stated Manny Marrero, Chief Financial Officer of Mossimo, Inc.

Mossimo Giannulli, Chairman and Chief Executive Officer stated, “We are pleased with the ongoing success of our relationship with Target, highlighted by increased penetration within their existing doors and we anticipate future growth in this channel as Target continues to open new stores. In addition, our full launch in Zellers, which included apparel, accessories and the debut of Mossimo branded home products, has been well received and we are excited about the opportunities that exist within this business. We remain committed to unlocking the full potential of our agreements with both Target and Zellers and 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



                                              For The Three Months
                                                 Ended March 31,
                                                 ---------------
                                               2003          2002
                                           ------------  ------------


REVENUE FROM LICENCE ROYALTIES AND
     DESIGN SERVICE FEES                   $      5,868  $      5,590

OPERATING EXPENSES:
    Selling, general and administrative           3,526         2,427
                                           ------------  ------------

Operating earnings                                2,342         3,163

OTHER EXPENSE:
    Interest expense, net                            14           121
                                           ------------  ------------

Earnings before income taxes                      2,328         3,042

Provision for income taxes                          930            --
                                           ------------  ------------

Net earnings                               $      1,398  $      3,042