SOURCE: Talon International

Talon International

August 13, 2012 16:05 ET

Talon International, Inc. Reports Second Quarter and Six Months Financial Results for 2012

LOS ANGELES, CA--(Marketwire - Aug 13, 2012) -  Talon International, Inc. (OTCQB: TALN), a leading global supplier of zippers, apparel fasteners, trim and interlining products, reported financial results for the quarter ended June 30, 2012.

Highlights

  • Sales for the Second Quarter 2012 totaled $13.2 million vs. $12.8 million in 2011.
  • Gross profit margin for the Second Quarter 2012 was 33.1%, up 1.2 percentage points from 2011.

Financial Results

Sales for the quarter ended June 30, 2012 were $13.2 million, an increase of $428,000 or 3.3% from the same quarter of 2011. Zipper sales for the quarter ended June 30, 2012 were $6.9 million as compared to $7.3 million for the same quarter in 2011, and Trim product sales for the quarter ended June 30, 2012 were $6.3 million as compared to $5.5 million for the same quarter in 2011. Sales for the six months ended June 30, 2012 were $21.9 million, a slight decrease of $55,000 compared to the same period in 2011. Zipper sales for the six months ended June 30, 2012 were $11.3 million as compared to $12.8 million for the same period in 2011, and Trim product sales for the six months ended June 30, 2012 were $10.6 million as compared to $9.2 million for the same period in 2011. The increase in sales for the quarter and the modest decline in sales for the first six months of 2012 evidenced increased sales to the majority of customers, and additional sales to new specialty apparel customers, partially offset by reduced sales of non-branded zippers to selected price sensitive mass merchandise and licensing customers, such as Wal-Mart and J.C. Penney. "While our total sales results for the second quarter and first half of 2012 only reflected modest results against the prior year's performance, there is strong evidence of an underlying success in our efforts to win market share with new specialty and image-driven brands. Growth from new nominations won in 2011 and 2012 added nearly 9% to our prior year results for the first half. Unfortunately these gains were overshadowed by reductions in industry-challenged customers such as J.C. Penney, where our sales to this mass merchandiser fell nearly $750,000 for the quarter and approximately $1.5 million for the first half of 2012," noted Lonnie Schnell, Talon's CEO.

Gross profit for the quarter ended June 30, 2012 was $4.4 million or 33.1% of sales as compared to $4.1 million, or 31.9% of sales for the same quarter in 2011. The increases of $295,000 and 1.2 percentage points were principally attributable to increased sales and an improved mix of sales to specialty retailers and higher-margin Trim product sales. Gross profit for the six months ended June 30, 2012 was $7.1 million, or 32.5% of sales, as compared to $7.0 million, or 31.6% of sales for the same period in 2011. The gross profit increases for the six months ended June 30, 2012 as compared to the same period in 2011 were principally attributable to the improved mix of sales to specialty retailers and higher-margin Trim product sales.

Operating expenses for the second quarter of 2012 and 2011 were $3.4 million and $3.1 million, respectively. Operating expenses for the first half of 2012 and 2011 were $6.6 million as compared to $6.2 million for the same period in 2011. The increases in operating spending are associated with increased spending in our sales efforts within the U.S., Europe and Asia; corporate advisory and consulting expenses; and legal fees associated with securing our patent and trademark filings worldwide. These spending increases were partially offset by lower non-cash compensation costs. Sales and marketing expenses for the quarter ended June 30, 2012 were $1.2 million as compared to $1.1 million for the same quarter in 2011. Sales and marketing expenses for the first half of 2012 were $2.3 million as compared to $2.0 million for the same period in 2011. General and administrative expenses for the quarter ended June 30, 2012 totaled $2.2 million compared to $2.0 million for the same period in 2011. General and administrative expenses for the six months ended June 30, 2012 totaled $4.4 million, reflecting an increase of $86,000 over the same period in 2011.

Provisions for income taxes for the three months ended June 30, 2012 were $284,000, as compared to $322,000 for the same period in 2011. For the six months ended June 30, 2012 a net benefit from income taxes of $7,000 was recorded, as compared to a provision for income taxes of $414,000 for the same period in 2011. The net income tax benefit for the six months ended June 30, 2012 included the reversal of a potential tax liability of $196,000 established in 2007 for foreign tax positions that might have been subject to reversal upon a regulatory review. During the first quarter of 2012, the time limit for assessment of the tax liability expired and the liability was removed.

The net income for the quarter ended June 30, 2012 was $671,000 as compared to a net income of $656,000 for the same quarter in 2011. The net income for the six months ended June 30, 2012 was $466,000 as compared to a net income of $255,000 for the same period in 2011.

Conference Call

Talon International will hold a conference call on Monday, August 13, 2012, to discuss its second quarter financial results for 2012. 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 the presentation.

To participate, 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, August 13, 2012
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
Domestic callers: 1-877-317-6789
International callers: 1-412-317-6789
Conference ID#: TALON

A replay of the call will be available after 7:30 p.m. Eastern Time on the same day and until September 10, 2012. The toll-free replay call-in number is 1-877-870-5176 for domestic callers and 1-858-384-5517 for international. Pin number 10017260.

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 major 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, Reebok and Juicy Couture. The company has offices and facilities in the United States, United Kingdom, Hong Kong, China, and Bangladesh.

 
TALON INTERNATIONAL, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
             
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2012     2011     2012     2011  
Net sales   $ 13,179,849     $ 12,752,281     $ 21,925,799     $ 21,980,474  
Cost of goods sold     8,821,120       8,688,943       14,796,314       15,026,583  
  Gross profit     4,358,729       4,063,338       7,129,485       6,953,891  
                                   
Sales and marketing expenses     1,166,549       1,065,487       2,263,472       1,964,047  
General and administrative expenses     2,217,822       1,996,713       4,365,481       4,279,211  
  Total operating expenses     3,384,371       3,062,200       6,628,953       6,243,258  
                                 
Income from operations     974,358       1,001,138       500,532       710,633  
                                 
Interest expense, net     19,723       23,193       41,760       41,633  
Income before provision for income taxes     954,635       977,945       458,772       669,000  
Provision for (benefit from) income taxes, net     283,501       321,620       (6,732 )     413,603  
Net income   $ 671,134     $ 656,325     $ 465,504     $ 255,397  
                                 
Series B Preferred Stock Liquidation Preference Increase     (775,190 )     (668,268 )     (1,550,380 )     (1,336,535 )
Loss applicable to Common Shareholders   $ (104,056 )   $ (11,943 )   $ (1,084,876 )   $ (1,081,138 )
                                 
Per share amounts:                                
Net income per share   $ 0.03     $ 0.03     $ 0.02     $ 0.01  
Available to Preferred Shareholders     (0.03 )     (0.03 )     (0.07 )     (0.06 )
Basic and diluted net income (loss) per share applicable to Common Shareholders   $ 0.00     $ 0.00     $ (0.05 )   $ (0.05 )
                                 
Weighted average number of common shares outstanding - Basic and diluted     21,900,808       20,367,154       21,752,456       20,329,503  
                                 
Net income   $ 671,134     $ 656,325     $ 465,504     $ 255,397  
Other comprehensive income (loss) -                                
  Foreign currency translation     29,320       (18,878 )     13,686       (21,659 )
Total comprehensive income   $ 700,454     $ 637,447     $ 479,190     $ 233,738  
                                 
 
 TALON INTERNATIONAL, INC.
 
CONSOLIDATED BALANCE SHEETS
             
    June 30,
2012
    December 31,
2011
 
    (Unaudited)        
Assets            
Current assets:            
  Cash and cash equivalents   $ 7,424,588     $ 5,749,341  
  Accounts receivable, net     4,076,217       3,777,771  
  Inventories, net     827,397       1,076,522  
  Prepaid expenses and other current assets     664,361       314,761  
Total current assets     12,992,563       10,918,395  
                 
Property and equipment, net     936,625       1,092,609  
Intangible assets, net     4,263,801       4,110,751  
Other assets     192,630       236,411  
Total assets   $ 18,385,619     $ 16,358,166  
                 
Liabilities, Preferred Stock and Stockholders' Equity (Deficit)                
Current liabilities:                
  Accounts payable   $ 8,205,573     $ 6,607,041  
  Accrued expenses     1,588,130       1,543,465  
  Notes payable to related parties     -       239,942  
  Other notes and current portion of capital lease obligations     2,656       73,148  
Total current liabilities     9,796,359       8,463,596  
                 
Capital lease obligations, net of current portion     2,025       10,461  
Deferred income taxes     914,037       751,148  
Other liabilities     182,136       379,803  
Total liabilities     10,894,557       9,605,008  
                 
Series B Convertible Preferred Stock, $0.001 par value; 407,160 shares authorized, issued and outstanding     22,222,118       20,671,738  
                 
Stockholders' Equity (Deficit):                
Series A Preferred Stock, $0.001 par value; 250,000 shares authorized; no shares issued or outstanding     -       -  
Common Stock, $0.01 par value, 100,000,000 shares authorized; 21,900,808 and 21,000,808 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively     21,901       21,001  
Additional paid-in capital     58,205,925       57,948,111  
Accumulated deficit     (73,034,797 )     (71,949,921 )
Accumulated other comprehensive income     75,915       62,229  
Total stockholders' equity (deficit)     (14,731,056 )     (13,918,580 )
Total liabilities, preferred stock and stockholders' equity (deficit)   $ 18,385,619     $ 16,358,166  
                 

Contact Information

  • Company Contact

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