-- Zipper product sales up 19% vs. Q1 2007
-- Net sales totaled $10.0 million, up 10% vs. Q1 2007
-- Net loss of $1.8 million, including severance charges of $724,000, vs.
net loss of $795,000 in Q1 2007
First Quarter 2008 Financial Results
Net sales for the first quarter of 2008 were $10.0 million, an increase of
10% from $9.1 million in the first quarter of 2007. The increase in revenue
reflects continuous improvements in the sales of Talon Zipper and Trim
products. Talon Zipper sales increased $0.9 million, or 19%, to $5.6
million in the quarter, as compared to the same period a year ago. Talon
Trim sales increased $0.4 million, or 10%, to $4.4 million as compared to
the same period a year ago.
The increase in Talon Zipper and Trim sales were partly offset by an
anticipated decline in Tekfit sales of $0.4 million from the same period in
2007. The decline in Tekfit product sales is due to the termination in
October 2006 of an exclusive contract for this product.
"Our improvement in sales this quarter, which were also up 12% over the
previous quarter, is in line with expectations and is the result of our
expanded footprint throughout Southeast Asia and having won new nominations
from major brand retailers for our Zipper and Trim products," said Lonnie
Schnell, Talon's CEO. "As also anticipated, the decline in Tekfit revenue
shows that the sales cycle for this product to new customers continues to
be long. Overall, we continued to effectively build upon our strengths and
are looking forward to sustained growth through 2008."
Gross profit for the first quarter of 2008 totaled $2.8 million or 27% of
sales, as compared to $2.7 million or 30% of sales in same quarter in 2007.
Gross profit attributable to the sales increase was mainly offset by higher
product costs and additional charges associated with product deliveries and
customer accommodations.
Said Schnell: "Product cost pressures were significant in the first
quarter, as we introduced a substantial new retail brand to our zipper
customer list and dealt with challenging delivery schedules. Despite the
cost pressures, we believe cost reduction opportunities exist that will
allow us to achieve margin improvements in the future."
Operating expenses for the first quarter were $4.1 million, as compared to
$3.3 million for the same period in 2007. Operating expenses in the first
quarter 2008 include $724,000 of costs associated with executive
severances. Increases in employee costs generally associated with the
company's growth and expansion were principally offset by reductions in
legal, administrative and professional fees.
The net loss for the first quarter of 2008 also includes net interest
expense of $550,000, an increase of $368,000 as compared to net interest
expense for the same period in 2007 of $182,000. Approximately $166,000 of
the increase represents non-cash interest charges associated with the stock
and warrants issued in connection with the new debt facility entered into
in June 2007 with Bluefin Capital. The remainder of the increase is
attributable to the higher interest cost on the Bluefin facility as
compared to the promissory notes in place during the first half of 2007.
Conference Call
Talon International will hold a conference call on Thursday, May 15, 2008,
to discuss these first quarter 2008 financial results. Talon 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 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, May 15, 2008
Time: 4:30 p.m. Eastern (1:30 p.m. Pacific)
Domestic callers: 1-800-895-1085
International callers: 1-785-424-1055
Conference ID#: 7TALON
Internet Simulcast and replay: http://viavid.net/dce.aspx?sid=000050F6
If 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 June 15, 2008:
Toll-free replay number: 1-800-839-3011
International replay number: 1-402-220-7231
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 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 March 31,
----------------------------
2008 2007
------------- -------------
Net sales $ 9,985,489 $ 9,090,117
Cost of goods sold 7,227,524 6,386,502
------------- -------------
Gross profit 2,757,965 2,703,615
Selling expenses 719,963 706,235
General and administrative expenses 3,348,236 2,611,042
------------- -------------
Total operating expenses 4,068,199 3,317,277
------------- -------------
Loss from operations (1,310,234) (613,662)
Interest expense, net 549,514 181,682
------------- -------------
Loss before income taxes (1,859,748) (795,344)
Provision (benefit) for income taxes (21,004) -
------------- -------------
Net loss $ (1,838,744) $ (795,344)
============= =============
Basic loss per share $ (0.09) $ (0.04)
============= =============
Diluted loss per share $ (0.09) $ (0.04)
============= =============
Weighted average number of common shares
outstanding:
Basic 20,291,433 18,533,100
============= =============
Diluted 20,291,433 18,533,100
============= =============
TALON INTERNATIONAL, INC.
Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
2008 2007
------------- ------------
Assets
Current Assets:
Cash and cash equivalents $ 1,774,819 $ 2,918,858
Marketable Securities 380,000 1,040,000
Accounts receivable, net 4,939,373 3,504,351
Inventories, net 2,866,212 2,487,427
Prepaid expenses and other current assets 359,587 945,566
------------- ------------
Total current assets 10,319,991 10,896,202
Property and equipment, net 5,039,564 5,210,446
Fixed assets held for sale 700,000 700,000
Due from related parties 637,255 625,454
Other intangible assets, net 4,110,751 4,110,751
Other assets 545,048 551,054
------------- ------------
Total assets $ 21,352,609 $ 22,093,907
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 7,958,249 $ 6,603,929
Accrued legal costs 161,757 498,846
Other accrued expenses 2,739,076 2,646,662
Demand notes payable to related parties 85,176 85,176
Current portion of capital lease
obligations 290,071 323,317
Current portion of notes payable 281,631 299,108
------------- ------------
Total current liabilities 11,515,960 10,457,038
Capital lease obligations, less current
portion 118,227 189,705
Notes payable, less current portion 793,007 848,484
Revolver note payable 4,507,806 3,807,806
Term note payable, net of discount 7,393,282 7,424,573
Other long term liabilities 83,651 83,651
------------- ------------
Total liabilities 24,411,933 22,811,257
------------- ------------
Stockholders' Equity:
Common stock, $0.001 par value, 100,000,000
shares authorized; 20,291,433 shares
issued and outstanding at March 31, 2008
and at December 31, 2007 20,291 20,291
Additional paid-in capital 54,655,511 54,510,161
Accumulated deficit (57,130,990) (55,292,246)
Accumulated other comprehensive (loss)
income (604,136) 44,444
------------- ------------
Total stockholders' deficit (3,059,324) (717,350)
------------- ------------
Total liabilities and stockholders' equity $ 21,352,609 $ 22,093,907
============= ============
Contact Information: Company Contact Talon International, Inc. Rayna Long Tel (818) 444-4128 Investor Relations Scott Liolios Scott Kitcher Liolios Group, Inc. Tel (949) 574-3860