EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Tag-It Pacific, Inc.
JONATHAN MARKILES
818-444-4100
info@tagitpacific.com
TAG-IT PACIFIC, INC. REPORTS 3rd QUARTER FY 2003 RESULTS - RECORDS CONTINUED
IMPROVED SALES DIVERSIFICATION AND GROSS MARGIN
Los Angeles, Ca. August 14, 2003 --Tag-It Pacific, Inc. (AMEX: TAG) today
reports that for the 3rd quarter of fiscal 2003, net sales increased $118,000, a
0.7% increase over 3rd quarter sales for 2002. Gross profit for the quarter
increased to 25.7% from 24.0% for the same period last year. Net income for the
quarter was $95,000 with earnings per share equal to 0 cents.
Colin Dyne, CEO of Tag-It Pacific, Inc. commented: "We are pleased with the
Company's continued sales growth, which we are achieving in conjunction with a
diversification of our sales base and a reduction of our reliance on our largest
customer, Tarrant Apparel Group. This trend is particularly positive for us as
we continue to expand our customer base and are starting to see improved gross
margins from our new sales. During the quarter, we acquired a significant amount
of machinery that is critical to our TALON formed wire metal zipper production.
The acquisition of this machinery will put TALON in a position not to be reliant
on a single source of supply for this product and will enable us to continue
with the expansion of our TALON brand as a market leader.
"Our SG&A expenses for the 3rd quarter were negatively impacted by severance
expenses related to staff reductions which were made in anticipation of changes
to our customer base. We also incurred additional expenses relating to the
implementation of our new ERP system and the upcoming launch of TRIMNETTM, our
new generation Trim Management software system."
ABOUT TAG-IT PACIFIC: Tag-It specializes in the distribution of a full
range of trim items to manufacturers of fashion apparel and licensed consumer
products, and specialty retailers and mass merchandiser brands. Tag-It acts as a
full service outsourced trim management department for manufacturers of fashion
apparel such as Tarrant Apparel Group and Azteca Production International.
Tag-it also serves as a specified supplier of trim items to specific brands,
brand licensees and retailers, including Levi Strauss & Co., Abercrombie &
Fitch, Express, The Limited, Miller's Outpost and Lerner, among others. Tag-It
has positioned itself as a fully integrated single-source supplier of a full
range of trim items for manufacturers of fashion apparel. The Company's business
focuses on servicing all of the trim requirements of its customers at the
manufacturing and retail brand level of the fashion apparel industry. Tag-It
offers customers its MANAGED TRIM SOLUTION(TM), an Internet-based, virtual trim
department, covering the complete management of ordering, production, inventory
management and just-in-time distribution of their trim and packaging
requirements.
ABOUT TALON INTERNATIONAL: Talon International, a wholly-owned
subsidiary of Tag-it Pacific, distributes zippers under its TALON brand name to
apparel brands and manufacturers such as VF Corporation, Tropical Sportswear,
Levi Strauss & Co., Abercrombie & Fitch, Target Stores, Wal-Mart, Express, among
others. In December 2001, Tag-it purchased the TALON trademark and trade names.
TALON is a 100-year-old brand, which is well known for quality and product
innovation. TALON was the original pioneer of the formed wire metal zipper for
the jeans industry and is a specified zipper brand for manufacturers in the
sportswear and outerwear markets. We have introduced a completely revised high
quality line of zippers, broadened distribution to Asia, Mexico and Central
America, negotiated with new
distributors and initiated a new sales and marketing effort for this brand.
TALON is promoted both within our trim packages, as well as a stand-alone
product line. TALON enjoys tremendous brand recognition and brand equity in the
apparel industry worldwide.
ABOUT TEKFIT: In 2002, Tag-it created a new division under the TEKFIT
brand name. This division develops and sells apparel components that utilize the
patented Pro-Fit technology, including a stretch waistband. We market these
products to the same customers targeted by our MANAGED TRIM SOLUTION and TALON
zipper divisions.
FORWARD LOOKING STATEMENTS:
With the exception of the historical information, this press release contains
forward-looking statements, as referenced in the Private Securities Litigation
Reform Act. Forward-looking statements are inherently unreliable and actual
results may differ materially. Factors which could cause actual results to
differ materially from these forward-looking statements include the
unanticipated loss of one or more major customers, economic conditions, the
availability and cost of financing, the risk of a softening of customer
acceptance of the Company's products, risks of introduction by competitors of
trim management systems with similar or better functionality than our Managed
Trim Solution, pricing pressures and other competitive factors, potential
fluctuations in quarterly operating results, our management of potential growth
and the risks of expansion into new business areas. These and other risks are
more fully described in the Company's filings with the Securities and Exchange
Commission including the Company's most recently filed Annual Report on Form
10-K and Quarterly Report on Form 10-Q, which should be read in conjunction
herewith for a further discussion of important factors that could cause actual
results to differ materially from those in the forward-looking statements. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
TAG-IT PACIFIC, INC.
Selected Balance Sheet Items
(all numbers in $000's)
September December
30, 2003 31, 2002
------- -------
Accounts Receivable .................................... $23,039 $20,512
Inventories ............................................ $22,978 $23,105
Total Current Assets ................................... $48,022 $44,805
Total Assets ........................................... $60,169 $54,055
Line of Credit ......................................... $13,265 $15,934
Accounts Payable and Accrued Expenses .................. $12,084 $10,401
Total Current Liabilities ............................. $28,412 $29,985
Total Liabilities ..................................... $30,895 $32,693
Convertible Redeemable preferred stock Series C ........ $ 2,895 $ 2,895
Total Stockholders' Equity ............................. $26,379 $18,467
Total Liabilities and Equity .......................... $60,169 $54,055
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TAG-IT PACIFIC, INC.
Consolidated Statements of Income
(all numbers (excluding EPS) in $000's)
Three Months Ended Six Months Ended
September 30, September 30,
-------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net sales ...................... $ 16,468 $ 16,350 $ 51,558 $ 45,468
Cost of goods sold ............. 12,238 12,424 37,564 33,931
-------- -------- -------- --------
Gross profit ................ 4,230 3,926 13,994 11,537
Selling expenses ............... 968 473 3,043 1,446
General and administrative
expenses .................... 2,831 2,649 8,469 7,246
-------- -------- -------- --------
Total operating expenses .... 3,799 3,122 11,512 8,692
-------- -------- -------- --------
Income from operations ......... 431 804 2,482 2,845
Interest expense, net .......... 307 345 971 913
-------- -------- -------- --------
Income before income taxes ..... 124 459 1,511 1,932
Provision for income taxes ..... 29 115 306 488
-------- -------- -------- --------
Net income ..................... $ 95 $ 344 $ 1,205 $ 1,444
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Less: Preferred stock dividends (50) (47) (144) (137)
-------- -------- -------- --------
Net income to common
shareholders ................ $ 45 $ 297 $ 1,061 $ 1,307
======== ======== ======== ========
Basic earnings per share ....... $ 0.00 $ 0.03 $ 0.10 $ 0.14
======== ======== ======== ========
Diluted earnings per share ..... $ 0.00 $ 0.03 $ 0.10 $ 0.14
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Weighted average number of
common shares outstanding:
Basic ....................... 11,437 9,310 10,364 9,203
======== ======== ======== ========
Diluted ..................... 12,245 9,615 10,810 9,500
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