-- Sales for the full year 2008 totaled $48.2 million, vs. $40.5 million
in 2007.
-- Zipper product sales up 13% in Q4 2008 vs. Q4 2007; up 34% in FY2008
vs. FY2007.
-- Net loss totaled $8.4 million in 2008, vs. $4.9 million in 2007.
-- $5.4 million in certain significant charges in 2008 vs. $1.2 million
in 2007.
Financial Results
Sales for the full year 2008 totaled $48.2 million, an increase of $7.6
million from 2007 or 19%. Sales for the fourth quarter of 2008 totaled $8.4
million, a decrease of $467,000, or 5% from the same period in 2007. The
increase in sales for the full year reflected a 34% increase in Talon
zipper sales to $28.4 million in 2008 compared to $21.2 million in 2007.
For all of 2008 the Company reported Trim product sales of $19.5 million,
an increase of $849,000 or 4.5% over 2007, and Tekfit product sales of
$205,000, a decline of $476,000 from 2007. The increase in Zipper and Trim
product sales for the year is primarily attributable to the Company's
expanded presence within the global apparel industry and the approval of
Talon products by new brands and retailers. The decline in Tekfit product
sales for the year was primarily attributable to lower sales as the Company
rebuilds this product's acceptance following the expiration of revenues
from an exclusive sales contract.
Sales for the quarter ended December 31, 2008 reflect an increase in zipper
product sales of $481,000 or 13% over the same period in 2007, and an
increase in waistband product sales of $65,000. The sales increases were
offset by a decline in Trim product sales of $1.0 million. The increase in
zipper product sales for the quarter is a reflection of the expanded brand
approvals gained during the year, while the decline of Trim product sales
represents program reductions by major retailers in response to the global
economic decline in the fourth quarter of 2008.
For the full year 2008 a net loss of $8.4 million or ($0.41) per share was
reported by the Company, as compared to a net loss of $4.9 million or
($0.24) per share in 2007. For the fourth quarter of 2008, a net loss of
$4.7 million was reported, as compared to a net loss of $935,000 in same
period of 2007.
"Fiscal year 2008 was a year of significant improvements for the company,"
said Lonnie Schnell, Talon's CEO, "partially eclipsed by a severe economic
downturn in the fourth quarter of 2008 and its effect on our operations.
The overall financial results for the year were disappointing, as we saw
the economic decline late in the year severely impact our on-going efforts
to secure the maximum value from several of our legacy assets.
Consequently, we absorbed several unexpected charges during the year.
"Despite the severe economic decline late in 2008, before consideration of
several significant charges that were recorded in the year, the Company's
overall performance for the fourth quarter and the full year of 2008 showed
improvements over 2007."
For the full year 2008 the loss from operations of $5,962,000 includes
$5,360,000 in significant charges, including $4,636,000 in impairment
charges associated with property and equipment held for sale, slow-moving
inventory, marketable securities and a note receivable. In addition, the
2008 loss from operations includes $724,000 associated with severance paid
to former officers. For the full year 2007 the loss from operations of
$3,170,000 included $1,088,000 in charges associated with the write-off of
a note receivable from a former customer, and $127,000 in impairment
charges associated with a building held for sale.
The fourth quarter 2008 loss from operations of $3,986,000 includes
$3,096,000 in impairment charges associated with equipment held for sale,
slow-moving inventory and a note receivable. The fourth quarter of 2007
loss from operations of $380,000 included a net benefit of $913,000
resulting from a $1,040,000 benefit associated with a partial recovery of a
previous loss on a note receivable offset by a $127,000 impairment charge
associated with the building held for sale.
The 2008 significant charges in the fourth quarter and the year primarily
represent impairment charges occurring due to a decline in the fair-value
of associated equipment and inventory held for sale, in marketable
securities previously obtained in exchange for notes receivable, and in
notes receivable from related parties. These charges also include
severance costs associated with former officers.
Selling expenses for the full year 2008 were $3.1 million, essentially
equal to the selling expenses in 2007 despite an overall sales increase of
$7.6 million. General and administrative expenses for the full year 2008
were $12.0 million, as compared to $10.9 million in 2007. The increase of
$1.1 million in general and administrative expenses includes $724,000 in
severance charges paid to former officers, and a $474,000 charge for the
impairment of a note receivable. Selling expenses and general and
administrative expenses for the fourth quarter of 2008 were $738,000 and
$3,057,000, respectively, as compared to $964,000 and $3,188,000,
respectively for the same period in 2007.
Net interest expense for the fourth quarter and full year ended December
31, 2008 was $619,000 and $2,437,000, respectively, as compared to $542,000
and $1,680,000, respectively, for the fourth quarter and full year of 2007.
The increased interest cost in 2008 over 2007 was a primarily the result of
the new debt facility with CVC California, LLC (formerly Bluefin Capital,
LLC) entered into in June 2007, as well as the non-cash interest charges
associated with equity components issued in connection with this debt.
Conference Call
Talon International will hold a conference call on Thursday, April 9, 2009,
to discuss its fourth quarter and year-end 2008 financial results. Talon's
CEO Lonnie D. Schnell will host the call starting at 4:30 P.M. Eastern
Time. A question and answer session will follow their 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: Thursday, April 9, 2009 Time: 4:30 pm Eastern (1:30 pm Pacific) Domestic callers: 1-800-862-9098 International callers: 1-785-424-1051 Conference ID#: 7TALONA replay of the call will be available later that evening and will be accessible until May 15, 2009. The replay call-in number is 1-800-839-9303 for domestic callers and 1-402-220-6083 for international. Passcode not required. About 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 Wal-Mart, J.C. Penney, Abercrombie and Fitch, Juicy Couture, Ralph Lauren, Victoria's Secret, Target Stores, and Express. The company has offices and facilities in the United States, Hong Kong, China, India and the Dominican Republic.
TALON INTERNATIONAL, INC.
CONSOLIDATED INCOME STATEMENT
Quarter Ended Twelve Months Ended
December 31 December 31 December 31 December 31
2008 2007 2008 2007
----------- ----------- ----------- -----------
Total Net sales $ 8,392,841 $ 8,859,322 $48,170,980 $40,529,555
Cost of goods sold 6,653,939 6,000,409 35,553,857 28,422,820
----------- ----------- ----------- -----------
Gross profit 1,738,902 2,858,913 12,617,123 12,106,735
Selling expenses 738,108 963,968 3,103,529 3,125,634
General and
administrative
expenses 3,057,523 3,187,778 12,005,971 10,937,223
Impairment of
marketable security
and related note
receivable - (1,040,000) 1,040,000 1,087,653
Impairment loss on
fixed assets 1,929,506 126,904 2,429,506 126,904
----------- ----------- ----------- -----------
Total operating
expenses 5,725,137 3,238,650 18,579,006 15,277,414
Loss from operations (3,986,235) (379,737) (5,961,883) (3,170,679)
Interest expense, net 619,315 541,991 2,436,675 1,680,079
----------- ----------- ----------- -----------
Loss before income
taxes (4,605,550) (921,728) (8,398,558) (4,850,758)
Provision (benefit) for
income taxes 72,494 13,297 (39,772) 70,949
----------- ----------- ----------- -----------
Net income (loss) $(4,678,044) $ (935,025) $(8,358,786) $(4,921,707)
=========== =========== =========== ===========
Basic loss per share $ (0.23) $ (0.05) $ (0.41) $ (0.24)
=========== =========== =========== ===========
Diluted loss per share $ (0.23) $ (0.05) $ (0.41) $ (0.24)
=========== =========== =========== ===========
Basic weighted average
shares outstanding 20,291,433 19,336,638 20,291,433 20,155,563
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding 20,291,433 19,336,638 20,291,433 20,155,563
=========== =========== =========== ===========
TALON INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEET
Assets December 31 December 31
Current Assets: 2008 2007
------------ ------------
Cash and cash equivalents $ 2,399,717 $ 2,918,858
Marketable Securities, net of valuation
reserves - 1,040,000
Accounts receivable, net 3,856,613 3,504,351
Inventories, net 1,669,149 2,487,427
Prepaid expenses and other current assets 473,955 945,566
------------ ------------
Total current assets 8,399,434 10,896,202
Property and equipment, net 2,084,244 5,210,446
Fixed assets held for sale 407,655 700,000
Due from related parties 200,000 625,454
Other intangible assets, net 4,110,751 4,110,751
Other assets 400,494 140,782
------------ ------------
Total assets $ 15,602,578 $ 21,683,635
============ ============
Liabilities and Stockholders' Equity
Current liablities:
Accounts payable $ 7,674,768 $ 6,249,618
Other accrued expenses 2,675,756 2,759,868
Demand notes payable to related parties 222,264 213,091
Current portion of capital lease
obligations 182,444 323,317
Current portion of notes payable 144,064 299,108
------------ ------------
Total current liabilities 10,899,296 9,845,002
Capital lease obligations, less current portion 1,910 189,705
Notes payable, less current portion - 848,484
Revolver note payable 4,638,988 3,807,806
Term note payable, net of discount 8,067,428 7,014,301
Other long term liabilities 756,888 695,687
------------ ------------
Total liabilities 24,364,510 22,400,985
Stockholders' Equity:
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
December 31, 2008 and December 31, 2007 20,291 20,291
Additional paid-in-capital 54,769,072 54,510,161
Accumulated deficit (63,651,032) (55,292,246)
Accumulated other comprehensive income 99,737 44,444
------------ ------------
Total stockholders' equity (8,761,932) (717,350)
------------ ------------
Total liabilities and stockholders' equity $ 15,602,578 $ 21,683,635
============ ============
Contact Information: Company Contact: Talon International, Inc. Rayna Long Tel (818) 444-4128