SOURCE: Talon International

Talon International

March 29, 2010 16:03 ET

Talon International, Inc. Reports Fourth Quarter and Year-End 2009 Financial Results

LOS ANGELES, CA--(Marketwire - March 29, 2010) - Talon International, Inc. (OTCBB: TALN), a leading global supplier of zippers, apparel fasteners, trim and interlining products, reported financial results for the fourth quarter and year ended December 31, 2009.

Highlights

--  Income from Operations was $289,000 in 2009, vs. a Loss from Operations
    of ($6.0) million in 2008.
--  Sales for the full year 2009 totaled $38.7 million, vs. $48.2 million
    in 2008.
--  Sales increased 9% in Q4 2009 vs. Q4 2008.

Financial Results

Sales of Zipper and Trim products declined for the year 2009 as compared to 2008 by approximately 20% mainly due to the impact of the global recession on the apparel industry and the related lower demand for Talon products. "Given the severe sales challenges to our industry and to our company, we were nevertheless pleased by our financial results overall, as we began realizing the benefits of emphasizing new customer and product developments along with the expense reduction actions we took at the beginning of 2009," said Lonnie Schnell, Talon's Chief Executive Officer.

Sales for 2009 totaled $38.7 million, representing a decline of $9.5 million or 20% from 2008. Sales for the fourth quarter of 2009 totaled $9.1 million, which was an increase of $757,000 or 9% from the same period in 2008. Zipper product sales were $21.3 million in 2009 compared to $28.4 million in 2008. For 2009 the Company reported Trim product sales of $17.3 million compared to $19.5 million for 2008. Tekfit product sales for 2009 were $61,000, reflecting a decline of $144,000 from 2008.

Sales for the quarter ended December 31, 2009 reflected an increase in Zipper product sales of $320,000 or 8% over the same period in 2008, and an increase in Trim product sales of $489,000 or 12% over the fourth quarter of 2008. The sales increases were partially offset by a decline in Tekfit product sales of $52,000. The fourth quarter 2009 sales increase reflects modest improvements in the industry buying trends as retailers restocked for early spring, and as orders began to emerge from new customers and program nominations gained during 2009.

Gross margin for 2009 were 29.2% of sales as compared to 26.2% of sales for 2008. The Talon Zipper group for 2009 reflected gross margins of 22.3% of sales as compared to 19.9% for the year in 2008. Gross margin in the Trim product group for 2009 was 37.8% of sales compared to 35.2% of sales for 2008. For the fourth quarter of 2009 total gross margin was 30.8% of sales, compared with 20.7% of sales for 2008. The gross margin increases as a percent of sales are the result of improved sales mix by product group, lower inventory obsolescence costs, and improved purchase and delivery costs throughout.

Sales and marketing expenses for 2009 decreased $1.3 million as compared to 2008 and decreased as a percentage of sales by 1.3% to 7.0%. General and administrative expenses for 2009 were $8.3 million, or 21.5% of sales, as compared to $11.1 million, or 23.1% of sales, in 2008. The reduction in Sales and Marketing and General and Administrative expenses was principally the result of reduced staffing, lower sales volume, and reduced facility and professional service costs. Total operating expenses for the year 2009 were $11.0 million, or $7.6 million lower than operating expenses for the year 2008. Operating expenses in 2008 included impairment charges against marketable securities and property and equipment of $3.5 million. There were no impairment charges in calendar year 2009.

"While 2009 was a challenging year for virtually all businesses, it also presented opportunities to sharpen our focus and deepen our relationships with many select customers and suppliers. Consequently, not only were we able to weather the severe economic storm of 2009, we strengthened our core business and improved overall operating results despite the sharp revenue decline," stated Mr. Schnell.

For 2009 income from operations was $289,000 as compared to a loss from operations in 2008 of $5,962,000. The fourth quarter ended December 31, 2009 reflected a loss from operations of $209,000 as compared to a loss from operations for the same period in 2008 of $3,986,000. The loss from operations in 2008 included impairment charges for the year and the quarter ended December 31, 2008 of $3,470,000 and $1,930,000, respectively.

A net loss of $2.7 million or ($0.13) per share was reported for the year 2009, as compared to a net loss of $8.4 million or ($0.41) per share in 2008. For the fourth quarter of 2009, a net loss of $0.9 million was reported, as compared to a net loss of $4.7 million in the same period of 2008.

Conference Call

Talon International will hold a conference call on Monday, March 29, 2010, to discuss its fourth quarter and year-end 2009 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: Monday, March 29, 2010
Time: 4:30 pm Eastern (1:30 pm Pacific)
Domestic callers: 1-800-895-0231
International callers: 1-785-424-1054
Conference ID#: 7TALON

A replay of the call will be available later that evening and will be accessible until May 15, 2010. The replay call-in number is 1-800-677-7320 for domestic callers and 1-402-220-0666 for international. Passcode not required.

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 global economic conditions, pricing pressures and other competitive factors, our ability to reduce costs, and the unanticipated loss of major customers, and the level of acceptance of the company's products by retailers and consumers. 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.

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, Kohl's, J.C. Penney, Victoria's Secret, Tom Tailor, Abercrombie and Fitch, Polo Ralph Lauren, Phillips-Van Heusen, American Eagle and Juicy Couture. The company has offices and facilities in the United States, Hong Kong, China, and Bangladesh.



                        TALON INTERNATIONAL, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS


                        Three Months Ended         Twelve Months Ended
                           December 31,                December 31,
                    --------------------------  --------------------------
                           (Unaudited)                  (Audited)
                    --------------------------  --------------------------
                        2009          2008          2009          2008
                    ------------  ------------  ------------  ------------

Net sales           $  9,149,507  $  8,392,841  $ 38,675,790  $ 48,170,980


Cost of goods sold     6,333,250     6,653,939    27,363,216    35,553,857
                    ------------  ------------  ------------  ------------

  Gross profit         2,816,257     1,738,902    11,312,574    12,617,123

Sales and marketing
 expenses                678,000       918,000     2,712,814     3,982,124

General and
 administrative
 expenses              2,346,964     2,877,631     8,310,684    11,127,376

Impairment loss on
 marketable
 securities and
 related note
 receivable                    -             -             -     1,040,000

Impairment loss on
 property and
 equipment                     -     1,929,506             -     2,429,506
                    ------------  ------------  ------------  ------------
  Total operating
   expenses            3,024,964     5,725,137    11,023,498    18,579,006
                    ------------  ------------  ------------  ------------

Income (loss) from
 operations             (208,707)   (3,986,235)      289,076    (5,961,883)

Interest expense,
 net                     746,380       619,315     2,727,919     2,436,675
                    ------------  ------------  ------------  ------------
Net loss before
 provision for
 (benefit from)
 income taxes           (955,087)  (4,605,550)    (2,438,843)   (8,398,558)

Provision for
 (benefit from)
 income taxes            (12,939)       72,494       254,134       (39,772)
                    ------------  ------------  ------------  ------------

Net loss            $   (942,148) $ (4,678,044) $ (2,692,977) $ (8,358,786)
                    ============  ============  ============  ============


Basic and diluted
 net loss per
 share              $      (0.05) $      (0.23) $      (0.13) $      (0.41)
                    ============  ============  ============  ============

Weighted average
 number of common
 shares Outstanding
 - Basic and
 diluted              20,291,433    20,291,433    20,291,433    20,291,433
                    ============  ============  ============  ============





                         TALON INTERNATIONAL, INC.
                        CONSOLIDATED BALANCE SHEETS
                                (AUDITED)


                                              December 31,    December 31,
                                                  2009            2008
                                              ------------    ------------
Assets
Current Assets:
  Cash and cash equivalents                   $  2,264,606    $  2,399,717
  Accounts receivable, net                       3,021,642       3,856,613
  Inventories, net                               1,679,302       1,669,149
  Prepaid expenses and other current assets        240,554         473,955
                                              ------------    ------------
Total current assets                             7,206,104       8,399,434

Property and equipment, net                      2,280,586       2,491,899
Note receivable from related party, net                  -         200,000
Intangible assets, net                           4,110,751       4,110,751
Other assets                                       236,386         400,494
                                              ------------    ------------
Total assets                                  $ 13,833,827    $ 15,602,578
                                              ============    ============

Liabilities and Stockholders' Deficit
Current liabilities:
  Accounts payable                            $  6,337,368    $  7,674,768
  Accrued expenses                               2,678,659       2,617,166
  Revolver note payable                          4,988,988               -
  Term notes payable, net of discounts           9,876,114               -
  Notes payable to related parties                 265,871         222,264
  Current portion of long term obligations         115,336         385,098
                                              ------------    ------------
Total current liabilities                       24,262,336      10,899,296

Revolver note payable, net of current portion            -       4,638,988
Term notes payable, net of discounts and
 current portion                                         -       8,067,428
Capital lease obligations, net of current
 portion                                            23,477           1,910
Other liabilities                                  726,875         756,888
                                              ------------    ------------
Total liabilities                               25,012,688      24,364,510
                                              ------------    ------------

Commitments and contingencies

Stockholders' 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 December 31, 2009
   and 2008                                         20,291          20,291
  Additional paid-in capital                    55,070,568      54,769,072
  Accumulated deficit                          (66,344,009)    (63,651,032)
  Accumulated other comprehensive income            74,289          99,737
                                              ------------    ------------
Total stockholders' deficit                    (11,178,861)     (8,761,932)
                                              ------------    ------------
Total liabilities and stockholders' deficit   $ 13,833,827    $ 15,602,578
                                              ============    ============

Contact Information

  • Company Contact
    Talon International, Inc.
    Rayna Hernandez
    Tel (818) 444-4128
    Email Contact