MOSS Mossimo

Mossimo, Inc. (NASDAQ: MOSS) today announced financial results for the first quarter ended March 31, 2006. In connection with its negotiations with Iconix Brand Group, Inc. (NASDAQ: ICON), the Company amended and restated its license agreement with Target to extend the term through January 31, 2010 and transferred certain expenses associated with the license to Target. In exchange Target received a one time non-refundable rebate of $6 million in royalties earned to date for contract year 2006 and a reduction of 40 basis points in the royalties for contract years 2007 and beyond. The Company may charge Target for certain expenses incurred in contract year 2006, up to the amount of the rebate. Mossimo, Inc. reported first quarter 2006 total net revenues were $4.9 million compared to $8.7 million for the same period last year. The Company reported a first quarter net loss of $1.17 million, which included a non-recurring charge of $6 million, compared to net earnings of $1.8 million for the same period last year. Including the charge, first quarter 2006 diluted loss per share was $0.07 compared to diluted earnings per share of $0.12 for the same period last year. Edwin Lewis, President and Co-Chief Executive Officer stated, "We were pleased with the pace of our business during the quarter, as we registered meaningful gains in our both men's and women's business at Target. With regard to Modern Amusement, we experienced better full-price selling compared to a year ago, and while there is still work to be done, we are encouraged by our recent progress." Founded in 1987, Mossimo, Inc. is a designer, licensor and distributor of men's, women's, boys' and girls' apparel, footwear, and other fashion accessories such as jewelry, watches, handbags and belts. The matters discussed in this news release with respect to operations and future results, and the benefits thereof, are forward-looking statements that involve risks and uncertainties, including the demand for the Company's products in Target stores, changes in consumer demands and preferences, shifting trends in the overall retail and apparel market, competition from other lines, changes in consumer spending patterns and general economic conditions, and uncertainties generally associated with product introductions and apparel retailing. Forward-looking statements are not guarantees and involve known and unknown risks and uncertainties, any of which could cause actual results to vary materially from anticipated results. Operating results stated herein are not necessarily indicative of results that may be expected in future periods. More information on risk factors, which could affect the Company's financial results, is included in the Company's Forms 10-K and 10Q, periodically filed with the Securities and Exchange Commission. -0- *T MOSSIMO, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) (Unaudited) March 31, December 31, ------------ ------------ 2006 2005 ------------ ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 17,273 $ 19,658 Restricted cash 732 726 Accounts receivable, net 10,296 4,372 Merchandise inventory 122 101 Deferred income taxes 5,290 4,004 Prepaid expenses and other current assets 481 388 ------------ ------------ Total current assets 34,194 29,249 PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation and amortization 867 893 DEFERRED INCOME TAXES 1,622 1,923 TRADENAME 87 90 OTHER ASSETS 43 79 ------------ ------------ $ 36,813 $ 32,234 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,628 $ 884 Accrued liabilities 7,014 503 Accrued commissions 1,081 388 Accrued bonuses 787 3,458 ------------ ------------ Total current liabilities 10,510 5,233 DEFERRED RENT 124 128 ------------ ------------ Total liabilities 10,634 5,361 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, par value $.001; authorized shares 3,000,000; no shares issued or outstanding - - Common stock, par value $.001; authorized shares 30,000,000; issued and outstanding 15,908,775 at March 31, 2006 and 15,828,754 at December 31, 2005 15 15 Additional paid-in capital 40,702 40,222 Accumulated deficit (14,538) (13,364) ------------ ------------ Net stockholders' equity 26,179 26,873 ------------ ------------ $ 36,813 $ 32,234 ============ ============ *T -0- *T MOSSIMO, INC. CONSOLIDATED STATEMENTS OF EARNINGS (IN THOUSANDS, EXCEPT PER SHARE DATA) (Unaudited) For the Three Months March 31, -------------------------- 2006 2005 ------------ ------------ Revenue from license royalties and design service fees $ 2,561 $ 7,354 Product sales 2,378 1,310 ------------ ------------ Total revenues 4,939 8,664 Operating expenses: Cost of product sales 1,297 1,038 Selling, general and administrative 5,778 4,575 ------------ ------------ Total operating expenses 7,075 5,613 ------------ ------------ Operating earnings (loss) (2,136) 3,051 Interest income 194 30 ------------ ------------ Earnings (loss) before income taxes (1,942) 3,081 Income taxes (768) 1,260 ------------ ------------ Net earnings (loss) $ (1,174) $ 1,821 ============ ============ Net earnings (loss) per common share: Basic $ (0.07) $ 0.12 ============ ============ Diluted $ (0.07) $ 0.12 ============ ============ Weighted average common shares outstanding: Basic 15,889 15,738 ============ ============ Diluted 15,889 15,757 ============ ============ *T