EXHIBIT 99.1
FOR IMMEDIATE RELEASE
TAG-IT PACIFIC, INC. ANNOUNCES FIRST QUARTER 2004 RESULTS
LOS ANGELES--(BUSINESS WIRE)--May 13, 2004--Tag-It Pacific, Inc. (AMEX:TAG -
NEWS), a full-service outsourced trim management department for manufacturers of
fashion apparel, today announced financial results for its first quarter ended
March 31, 2004.
For the quarter, net sales were $10.2 million, a 29 percent decrease compared to
$14.4 million for the same quarter last year. Selling expense were $772,000, a
6.9 percent decrease from $829,000 for the first quarter last year. General and
Administrative expenses increased 5.9 percent to $2.86 million compared to $2.70
million for the first quarter of last year. General and Administrative expenses
included a one-time charge of approximately $400,000 related to the final
residual costs associated with the restructuring of the Company's operations
during 2003. The Company reported a net loss of $552,030, or ($0.04) per share,
compared to net income of $360,868, or $0.03 per share, for the first quarter of
2003. Exclusive of the extraordinary expense related to the restructuring and
other one-time expenses, the Company's General and Administrative Expenses would
have decreased 13.7 percent to $2.33 million, and the company would have
reported a slight loss for the quarter.
The decrease in net sales was primarily due to a decrease in trim-related sales
of approximately $6.1 million from Tag-It's Tlaxcala, Mexico, operations under
the Company's Managed Trim Solution(TM) trim package program. During the fourth
quarter of 2003, management implemented a plan to restructure certain business
operations, including the reduction of the Company's reliance on two significant
customers, which contributed 51.4 percent of the revenues for Q1 2003. These two
customers contributed approximately 10% of first quarter revenues for the first
quarter of 2004.
Colin Dyne, Chief Executive Officer of Tag-It Pacific, commented, "The first
quarter of 2004 was a period of transition for Tag-It as we experienced the
effects of diversifying our customer base while successfully rolling out
TrimNet(TM), our robust, proprietary Oracle-based ERP system. Our efforts were
successful, in that we are no longer reliant on a single customer for the
majority of our sales and we have replaced approximately $20 million in
annualized revenues with multiple new customers. Our TrimNet expansion has been
virtually flawless, with three customers already online, including two signed
during the first quarter. Operationally, we were able to offset related
decreases in sales by increasing sales under both our TekFit stretch waistband
division and TrimNet solutions to new and existing customers while increasing
zipper sales under our Talon brand name in Asia. In summary, we have made
significant progress in diversifying our customer base, replacing revenue from a
single customer with new revenue from multiple customers, and we have refocused
our resources on profitable, growing areas of our business in order to
strengthen our competitive position."
Highlights during the quarter included:
o As announced separately today, Tag-It signed a contract with a
large manufacturer of private-label jeans in Mexico and
Central America. Tag-It will provide all of the trim needs for
a single large manufacturing location, which is expected to
add $6-8 million in revenues for the coming 12 months. The
opportunity exists to expand its offerings to additional
manufacturing facilities owned and operating by this customer,
this increasing the revenue potential over time.
o Added 12 new customers in our Talon Zipper division,
augmenting organic growth opportunities in this division.
o Since the completion of the quarter, the Company obtained a
commitment from two major retailers, each with more than $5
billion in annual revenues, to implement Tag-It's TekFit
product into their denim collections. Management expects to
begin shipping these products by the fourth quarter of 2004,
with annualized sales for these two customers representing
approximately $10 million in revenues for 2005.
Tag-It's new TrimNet system is a state-of-the-art, Internet-based trim
management system that includes product development, online catalogs, trim
bill-of-materials and order management. TrimNet is unlike anything offered in
the industry.
Mr. Dyne continued, "TrimNet allows us to seamlessly deliver enhanced global
trim management support to large customers, controlling all aspects of our
clients' trim supply chain. This capability has been well received, and we have
added two significant customers during the second quarter. One of these
customers is fully implemented, with the other going live in June. We believe
the opportunity exists to expand this business to additional manufacturing
facilities, improving revenue streams and allowing us to leverage our capacity
across a broader base."
"We firmly believe in our business model, and are confident in near-term
success. When we implement a new customer, there can be a transition period as
our solutions are deployed to the new customers and this transition period can
vary based on the complexity of the operation, the number of manufacturing
facilities in our customer's operations and the diversity of the former
suppliers our customers utilized. We have brought on several new meaningful
customers, validating our business plan, but this transition period has delayed
our bottom-line progress by approximately one to two quarters."
ABOUT TAG-IT PACIFIC, INC.
Tag-It specializes in the distribution of a full range of trim items to
manufacturers of fashion apparel, specialty retailers and mass merchandisers.
Tag-It acts as a full-service outsourced trim management department for
manufacturers of fashion apparel such as Abercrombie & Fitch, Tarrant Apparel
Group, Kentucky Apparel 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. In addition, Tag-It
distributes zippers under its Talon brand name to manufacturers for apparel
brands and retailers such as Levi Strauss & Co., Wal-Mart, JC Penny and Tropical
Sportswear, among others. 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. These
products are marketed 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. Examples of forward-looking statements in this
press release include the benefits of our new TrimNet system, and the
anticipated increase in revenue from new and existing customers. 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
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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)
March 31, December 31,
2004 2003
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Accounts Receivable $ 21,227 $ 19,253
Inventories $ 18,800 $ 17,097
Total Current Assets $ 51,136 $ 55,726
Total Assets $ 63,060 $ 67,770
Line of Credit $ 4,686 $ 7,096
Accounts Payable and Accrued Expenses $ 7,381 $ 9,552
Total Current Liabilities $ 14,978 $ 19,260
Total Liabilities $ 16,288 $ 21,312
Convertible Redeemable preferred stock
Series C $ - $ 2,895
Total Stockholders' Equity $ 46,772 $ 43,564
Total Liabilities and Equity $ 63,060 $ 67,770
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TAG-IT PACIFIC, INC.
Consolidated Statements of Income
(all numbers (excluding EPS) in $000's)
Three Months Ended
March 31,
2004 2003
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Net sales $ 10,160 $ 14,359
Cost of goods sold 7,168 10,059
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Gross profit 2,992 4,300
Selling expenses 772 829
General and administrative expenses 2,857 2,699
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Total operating expenses 3,629 3,528
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(Loss) income from operations (637) 772
Interest expense, net 187 321
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(Loss) income before income taxes (824) 451
(Benefit) provision for income taxes (272) 90
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Net (loss) income $ (552) $ 361
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Less: Preferred stock dividends (30) (47)
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Net (loss) income to common shareholders $ (582) $ 314
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Basic (loss) earnings per share $ (0.04) $ 0.03
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Diluted (loss) earnings per share $ (0.04) $ 0.03
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Weighted average number of common shares
outstanding:
Basic 14,922 9,423
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Diluted 14,922 9,686
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CONTACT:
Tag-It Pacific, Inc.
Jonathan Markiles, 818-444-4100
info@tagitpacific.com
www.haydenir.com
or
Investor Relations Contact:
Hayden Communications, Inc.
Matthew Hayden, 858-456-4533
Fax: 843-361-0758
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