Tag-It Pacific Inc declares Q2 financial results

23 Aug '05

4 min read

The charges related to the inventory obsolescence reserve and the reserve for doubtful accounts, as well as additional reserves of $1.5 million to primarily reflect an increase in the Company's legal accruals, charges related to the Company's Pro-Fit litigation and a reduction in certain other assets, totaled $9.5 million. The reduction in the Company's net deferred tax asset increased the provision for income taxes by $1.0 million. Exclusive of these charges, the Company would have reported a net loss of approximately $806,000 or $0.04 per basic and fully diluted share after incurring legal costs associated with the Pro-fit litigation of approximately $700,000. A reconciliation of these non-GAAP financial results to the GAAP results is provided in this release.

For the six-month period, the Company reported revenue of $31.5 million, a 25.7 percent increase compared to the $25.1 million reported for the first six months of fiscal 2004. Cost of goods sold were $26.3 million, up 44.5 percent compared to the $18.2 million reported for the same period last year, inclusive of the charges. Gross profit for the six months was $5.2 million, or 16.6 percent of sales, compared to $6.9 million, or 27.4 percent of sales, for the first six months of last year. Total operating expenses were $16.1 million, inclusive of the charges described above and the legal expenses and costs related to the Talon expansion, a 126.5 percent increase compared to the $7.1 million reported for the first six months of last year.

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