Mossimo reported fourth quarter 2003 revenue increased 15%
to $3.0 million compared to $2.6 million for the same period last
year. The Company reported fourth quarter 2003 net earnings of
$693000, compared to net earnings of $5.4 million for the same period
last year, and diluted earnings per share were $0.04 for the fourth
quarter of 2003 compared to diluted earnings per share of $0.34 for
the same period last year. The large variation in the earnings and
diluted earnings per share between 2003 and 2002 was due to the
recording of a deferred tax asset as of December 31, 2002 to recognize
the income tax benefit of previous net operating losses amounting to
$6.4 million. Pre-tax net loss for the fourth quarter of 2003 was
$12,000, or $0.00 per diluted share, compared to a pre-tax net loss of
$1,050,000, or $0.07 per diluted share for the fourth quarter of 2002.
The pretax losses in the fourth quarter of 2003 and 2002 of $12,000
and $1,050,000 respectively, included charges to record legal fees of
$413,000 and $600,000, respectively, related to the ongoing dispute
with Cherokee.
The Company reported fiscal 2003 revenues of $19.9 million
compared to revenues of $19.9 million in fiscal 2002. 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 in 2002. Excluding the non-recurring revenue,
the Company reported an 8.2% increase in revenues for fiscal 2003
compared to fiscal 2002. The Company reported net earnings of $4.6
million, or $0.29 per diluted share for fiscal 2003, compared to net
earnings of $13.7 million, or $0.87 per diluted share for fiscal 2002.
The large variation in the earnings and diluted earnings per share
between 2003 and 2002 was due to the recording of a deferred tax asset
as of December 31, 2002 to recognize the income tax benefit of
previous net operating losses amounting to $6.4 million. Pre-tax net
earnings were $6.4 million or $0.41 per diluted share in 2003,
compared to pre-tax net earnings of $7.3 million, or $0.46 per diluted
share in 2002. The pre-tax earnings in 2003 and 2002 of $6.4 million
and $7.3 million, respectively included charges to record legal fees
of $ 643,000 and $ 600,000 respectively, related to the ongoing
dispute with Cherokee.
Mossimo Giannulli, Chairman and Chief Executive Officer stated,
“We are pleased to end the year on a solid note. Throughout fiscal
2003 we continued to make positive strides across our businesses and
strengthen our infrastructure to support future expansion. At Target
we fine-tuned our merchandising initiatives, broadened our product mix
and increased our penetration in all doors. We also successfully
executed a full launch of apparel and accessories in all 320 Zellers
stores and extended our category reach with the debut of home
products. Our partnerships remain sound we are committed to further
leveraging the lifestyle nature of our brand.”
The Company also announced that it has signed a licensing
agreement with Intermoda Fashion Group (IFG) to manufacture and
distribute Mossimo branded apparel, footwear and accessories in
Mexico. The product will be sold through better specialty and
department stores.
Edwin Lewis, Vice Chairman and President stated, “This new
partnership will allow us to focus on our core strength in design
while benefiting from IFG's expertise in manufacturing and marketing
product throughout Mexico. We believe that there is great potential
for the Mossimo brand in this new market and we are encouraged about
the prospects for growth.”
The Company also announced that it acquired Modern Amusement Inc.,
a designer and distributor of premium branded west coast-lifestyle
apparel and accessories. Founded in Costa Mesa, California by Jeff
Yokoyama, privately-held Modern Amusement offers a full line of men's
apparel, footwear and accessories, targeted to the 18 to 35 year old
market. The brand is predominantly distributed in better specialty and
department stores such as Fred Segal, Urban Outfitters and
Bloomingdale's.
Prior to Modern Amusement, Mr. Yokoyama was one of the original
founders of Maui & Sons, a global licensor, supplier and distributor
of beach-inspired active wear, hard goods and accessories. He is also
recognized for creating Pirate Surf, a surf/skate apparel line
distributed in the mass retail channel. Mr. Yokoyama will remain on as
Head Designer and will report directly to Edwin Lewis.
Mr. Giannulli, commented, “This acquisition represents another
important step in our ongoing effort to further diversify our
operations and create additional sources of growth for the future. At
the same time, we remain committed to providing Target and Zellers
with the highest level of service and we are dedicated to capitalizing
on the many opportunities that lie ahead.”
Mr. Lewis further stated, “We are extremely excited about Modern
Amusement as it represents a fresh, timely and under penetrated brand
with tremendous growth opportunity. The early feedback from retailers
has been extremely positive and with our industry knowledge and
expertise, we are confident we can build Modern Amusement into a
powerful lifestyle brand over time.”
Mr. Giannulli concluded, “We continue to make progress to further
build our platform for the future. We move ahead reinvigorated about
our business and focused on executing our strategic plan.”
In March 2000, the Company entered into a major, multi-product
trademark license and design services agreement with Target
Corporation (NYSE:TGT). As a result of the Target Agreement, the
Company now operates as a licensor and a design studio, and no longer
manufactures sources or directly markets its products.
MOSSIMO, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
UnauditedFor the Three For the Years
Months Ended Ended
December 31, December 31,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------REVENUE FROM LICENSE ROYALTIES
AND DESIGN SERVICE FEES $ 2,993 $ 2,600 $19,895 $19,881OPERATING EXPENSES 3032 3,635 13,477 12,525
-------- -------- -------- --------Operating earnings (loss) (39) (1,035) 6,418 7,356
OTHER INCOME (EXPENSE):
Other income (expense), net -- (38) -- 181
Interest income (expense), net 27 23 23 (276)
-------- -------- -------- --------Earnings (loss) before income
taxes (12) (1,050) 6,441 7,261
Provision (benefit) for income
taxes (705) (6,404) 1,875 (6,404)
-------- -------- -------- --------Net earnings $ 693 $ 5,354 $ 4,566 $13,665
======== ======== ======== ========Earnings per common share:
Basic $ 0.04 $ 0.35 $ 0.29 $ 0.89
======== ======== ======== ========Diluted $ 0.04 $ 0.34 $ 0.29 $ 0.87
======== ======== ======== ========Weighted average common shares
outstanding:Basic 15,613 15,483 15,613 15,409
======== ======== ======== ========Diluted 15,658 15,694 15,658 15,648
======== ======== ======== ========
