-- Talon zipper sales up 37% vs. Q2 2007
-- Net sales for the quarter $17.0 million, up 26% vs. Q2 2007
-- Net income of $0.6 million, up 22% vs. Q2 2007
Second Quarter 2008 Financial Results
Net sales for the second quarter of 2008 were $17.0 million, an increase of
26% from $13.6 million in the second quarter of 2007. The revenue reflects
continued growth within Southeast Asia and within new brands and program
sales of Talon Zipper and Trim products. Talon Zipper sales increased $3.1
million, or 37%, to $11.4 million in the quarter, as compared to the same
period a year ago. Talon Trim sales increased $0.6 million, or 12%, to $5.5
million as compared to the same period a year ago. Tekfit waistband sales
were as anticipated, $0.2 million less than in the same period in 2007.
Net sales for the six months ended June 30, 2008 were $27.0 million, an
increase of 19% from $22.6 million for the same period in 2007. Talon
zipper sales for the first six months of 2008 increased $4.1 million or 31%
more than in 2007. Trim product sales for the first six months of 2008 were
$9.9 million or $900,000 greater than the same period in 2007; an increase
of 10%. Tekfit product sales for the first six months of 2008 were $44,000,
a decline of $594,000 from Tekfit sales of $638,000 for the first six
months of 2007.
"Our gain in sales for the second quarter and year to date exceeded our
expectations," said Lonnie Schnell, Talon's CEO. "The improvement is
principally the result of new brand programs within the US and with our
sales expansion within Southeast Asia, particularly China, for our Zipper
and Trim products. The demand for a quality global supply alternative
within the zipper market is strong, and Talon represents the leading
solution for a growing number of major brand retailers. Additionally, the
refocusing of our sales force that we announced in March is beginning to
reflect the synergies we expected within all of our product lines."
"As anticipated, Tekfit sales were lower year over year," continued
Schnell. "However, we are beginning to see modest results from our sales
and marketing efforts over the last year, with a growing interest in, and
adoption of the technology, by new customers."
Gross profit for the second quarter of 2008 totaled $4.9 million or 29% of
sales, as compared to $4.1 million or 30% of sales in same quarter in 2007.
Gross profit for the six months ended June 30, 2008 was $7.7 million, an
increase of $829,000 over the same period in 2007. The increase in gross
profit for the quarter and the six months was attributable to higher
overall sales volumes, partially offset by higher manufacturing costs,
increased freight and delivery charges, and customer accommodations on
deliveries.
Operating expenses for the second quarter were $3.9 million, as compared to
$3.2 million for the same period in 2007. Operating expenses for the six
months ended June 30, 2008 were $7.9 million, as compared to $6.6 million
for the same period in 2007. Cost increases for the second quarter and the
six-months were generally associated with employee costs and business
expenses in connection with the company's growth and expansion, as well as
increases in professional and legal fees, and stock-based compensation
charges. For the first six-months of 2008, operating expenses also included
charges of $724,000 associated with the severance of former executives.
The net income for the second quarter of 2008 was $598,000 or $0.03 per
share as compared to a net income of $490,000 or $0.02 per share for the
same period in 2007. For the six-months ended June 30, 2008 the Company
reported a net loss of $1.2 million or a loss of $0.06 per share, as
compared to a net loss of $305,000, or a net loss of $0.02 per share for
the six months ended June 30, 2007.
The net income for the second quarter and net loss for the first six months
of 2008 includes net interest expense of $643,000 and $1,193,000,
respectively. The interest expense for 2008 reflects an increase of
$377,000 and $702,000, for the second quarter and six months ended June 30,
2008, respectively, as compared to net interest expense for the same
periods in 2007. The increase in interest costs is primarily associated
with the Bluefin Capital debt facility entered into in June 2007. Non-cash
charges for the second quarter and first six months of 2008 associated with
Talon stock issued in connection with the debt facility represent $308,000
and $554,000 of the interest costs in each of the periods, respectively.
Cash on hand at June 30, 2008 was $3.7 million as compared with $2.9
million at December 31, 2007. Cash provided by operating activities for the
six months ended June 30, 2008 was $1.2 million as compared to $1.7 million
in the same period in 2007.
Conference Call
Talon International will hold a conference call on Tuesday, August 19,
2008, to discuss these second quarter 2008 financial results. Talon CEO
Lonnie D. Schnell will host the call starting at 5:00 p.m. Eastern Time. A
question and answer session will follow the presentation.
To participate in the call, dial the appropriate number 5-10 minutes prior
to the start time, request the Talon International conference call and
provide the conference ID.
Date: Tuesday, August 19, 2008 Time: 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) Domestic callers: 1-800-862-9098 International callers: 1-785-424-1051 Conference ID#: 7TALON Internet Simulcast and replay: http://viavid.net/dce.aspx?sid=0000535DIf you have any difficulty connecting with the conference call or webcast, please contact the Liolios Group at 949-574-3860. A replay of the call will be available after 7:30 p.m. Eastern Time and until September 19, 2008:
Toll-free replay number: 1-800-283-8486 International replay number: 1-402-220-0869About Talon International, Inc. Talon International, Inc. is a global supplier of apparel fasteners, trim and interlining products to manufacturers of fashion apparel, specialty retailers, mass merchandisers, brand licensees and major retailers. Talon manufactures and distributes zippers and other fasteners under its Talon® brand, known as the original American zipper invented in 1893. Talon also designs, manufactures, engineers, and distributes apparel trim products and specialty waistbands under its trademark names, Talon, Tag-It and TekFit, to more than 60 apparel brands and manufacturers including Levi Strauss & Co., Juicy Couture, Ralph Lauren, Victoria's Secret, Target Stores, Wal-Mart, and Express. The company has offices and facilities in the United States, Hong Kong, China, India and the Dominican Republic. Forward-Looking Statements This news release contains forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statement. These statements are based upon, among other things, assumptions made by, and information currently available to, management, including management's own knowledge and assessment of the company's industry, competition and capital requirements, and the potential for growth in zipper sales and other products. Factors which could cause actual results to differ materially from these forward-looking statements include our ability to manage an international expansion, the level of acceptance of the company's products by retailers and consumers, pricing pressures and other competitive factors, our ability to reduce costs, and the unanticipated loss of major customers. 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.
TALON INTERNATIONAL, INC.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2008 2007 2008 2007
------------ ------------ ------------ ------------
Net sales $ 17,020,629 $ 13,566,981 $ 27,006,118 $ 22,657,099
Cost of goods sold 12,119,725 9,484,488 19,347,249 15,827,411
------------ ------------ ------------ ------------
Gross profit 4,900,904 4,082,493 7,658,869 6,829,688
Selling expenses 767,865 841,326 1,487,828 1,547,561
General and
administrative
expenses 3,082,164 2,406,192 6,430,400 5,017,780
------------ ------------ ------------ ------------
Total operating
expenses 3,850,029 3,247,518 7,918,228 6,565,341
Income (loss) from
operations 1,050,875 834,975 (259,359) 264,347
Interest expense, net 643,130 265,858 1,192,644 490,574
------------ ------------ ------------ ------------
Income (loss) before
provision for
income taxes 407,745 569,117 (1,452,003) (226,227)
Provision for
(benefit from)
income taxes (190,412) 78,624 (211,416) 78,624
------------ ------------ ------------ ------------
Net Income (loss) $ 598,157 $ 490,493 $ (1,240,587) $ (304,851)
============ ============ ============ ============
Basic income (loss)
per share $ 0.03 $ 0.03 $ (0.06) $ (0.02)
============ ============ ============ ============
Diluted income
(loss) per share $ 0.03 $ 0.02 $ (0.06) $ (0.02)
============ ============ ============ ============
Weighted average
number of common
shares outstanding:
Basic 20,291,433 18,590,884 20,291,433 18,562,151
============ ============ ============ ============
Diluted 20,291,433 20,058,682 20,291,433 18,562,151
============ ============ ============ ============
TALON INTERNATIONAL, INC.
Consolidated Balance Sheets
June 30, 2008 December 31,
(Unaudited) 2007
------------ ------------
Assets
Current Assets:
Cash and cash equivalents $ 3,741,404 $ 2,918,858
Marketable securities available
for sale 540,000 1,040,000
Accounts receivable, net 7,077,382 3,504,351
Inventories, net 2,673,647 2,487,427
Prepaid expenses and other
current assets 790,749 945,566
------------ ------------
Total current assets 14,823,182 10,896,202
Property and equipment, net 4,809,710 5,210,446
Fixed assets held for sale 687,955 700,000
Due from related parties 649,278 625,454
Other intangible assets, net 4,110,751 4,110,751
Other assets 190,795 140,782
------------ ------------
Total assets $ 25,271,671 $ 21,683,635
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 11,297,188 $ 6,603,929
Accrued legal costs 237,665 498,846
Other accrued expenses 2,841,258 2,646,662
Demand notes payable to
related parties 85,176 85,176
Current portion of capital
lease obligations 282,796 323,317
Current portion of notes payable 263,869 299,108
------------ ------------
Total current liabilities 15,007,952 10,457,038
Capital lease obligations,
less current portion 50,069 189,705
Notes payable, less current portion 736,613 848,484
Revolver note payable 4,160,710 3,807,806
Term notes payable, net of discounts
of $2,933,300 and $2,485,700 7,441,705 7,014,301
Other long term liabilities 83,651 83,651
------------ ------------
Total liabilities 27,480,700 22,400,985
------------ ------------
Stockholders' Equity (Deficit):
Preferred stock Series A, $0.001
par value; 250,000 shares authorized;
no shares issued or outstanding - -
Common stock, $0.001 par value,
100,000,000 shares authorized;
20,291,433 shares issued and outstanding
at June 30, 2008 and December 31, 2007 20,291 20,291
Additional paid-in capital 54,646,042 54,510,161
Accumulated deficit (56,532,833) (55,292,246)
Accumulated other comprehensive
income (loss) (342,529) 44,444
------------ ------------
Total stockholders' equity (deficit) (2,209,029) (717,350)
------------ ------------
Total liabilities and stockholders' equity $ 25,271,671 $ 21,683,635
============ ============
Contact Information: Company Contact Talon International, Inc. Rayna Hernandez Tel (818) 444-4128 Investor Relations Scott Kitcher Liolios Group, Inc Tel (949) 574-3860