SOURCE: Talon International

April 15, 2008 16:58 ET

Talon International Reports Fourth Quarter and Year-End 2007 Financial Results

LOS ANGELES, CA--(Marketwire - April 15, 2008) - 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, 2007.


--  Sales for the full year 2007 totaled $40.5 million, vs. $48.8 million
    in 2006
--  Net loss totaled $4.9 million in 2007, vs. net income of $309,000 in
--  $1.8 million in non-recurring charges in 2007
--  Zipper product sales up 4% in Q4 2007 vs. Q4 2006; up 25% in FY2007
    vs. FY2006

Financial Results

Sales for the full year 2007 totaled $40.5 million, a decline of $8.3 million from 2006. Sales for the fourth quarter 2007 were $8.9 million, a decrease of $1.6 million from the same period in 2006. The decline in sales for both the quarter and the year was primarily attributable to a decrease in waistband product sales following the expiration in late 2006 of an exclusive sales contract. Waistband product sales for the full year 2007 were $682,000, as compared to $9.3 million in 2006. There were no sales of waistband products in the fourth quarter 2007, as compared to $1.4 million for the same period in 2006.

For the full year 2007 a net loss of $4.9 million or ($0.24) per share was reported, as compared to net income of $309,000 or $0.02 per share in 2006. For the fourth quarter, net loss of $0.9 million was reported, as compared to net income of $45,000 in 2006.

"Fiscal year 2007 was a year of significant change and challenges for the company," said Lonnie Schnell, who was appointed Talon's CEO in February 2008. "The overall financial results for the year were disappointing, as several aspects of our business did not develop at the rate anticipated. We also absorbed several unexpected non-recurring charges. However, our overall business strategy remains sound; our products are superior; and our long-term growth opportunities are substantial."

"The loss of sales from the Tekfit product line had a significant impact on the company in 2007," said Schnell. "While we anticipated a sharp decline in this business in 2007 following the end of our exclusive contract in 2006, the sales cycle for this product to new customers has been much longer than expected. We remain confident and optimistic about the long-term potential for this product, although we remain cautious about its potential contribution in 2008."

Talon zipper product sales for the fourth quarter and year ended December 31, 2007 increased 4% and 25%, respectively, as compared to of the fourth quarter and full year of 2006. The improvement is attributable to the company's expansion of its global footprint throughout Southeast Asia and winning new nominations from major brand retailers. Said Schnell, "We are pleased with the growth in our Talon zipper products for 2007, and believe there is strong growth potential for these products as apparel makers welcome Talon as a global supplier with a reputation for superior quality."

Sales of Talon Trim products declined for the fourth quarter and year ended December 31, 2007 by 9% and 17%, respectively, as compared to the fourth quarter and full year of 2006. This was primarily attributable to fewer and reduced customer programs initiated by the brands throughout the year.

Operating expenses for the full year 2007 were $15.3 million, an increase of $2.1 million over 2006. The increase in operating expenses included $1.8 million in non-recurring charges, including a reserve for the impairment of a note receivable of $1.1 million, an impairment charge for the building held for sale of $0.1 million, and professional service costs associated with inactive contracts of $0.6 million.

Operating expenses in the fourth quarter of 2007 were $3.2 million, as compared to $3.1 million for the same period in 2006. Operating expenses for the fourth quarter included a net benefit from non-recurring items of $0.4 million, which was offset by a cost increase of $0.5 million principally associated with increased sales staffing worldwide.

Net interest expense for the fourth quarter and full year ended December 31, 2007 was $542,000 and $1,680,000, respectively, as compared to $236,000 and $988,000, respectively, for the fourth quarter and full year of 2006.

The increased interest cost in 2007 over 2006 was a result of the new debt facility with Bluefin Capital entered into in June 2007, as well as the non-cash interest charges associated with the stock and warrants issued in connection with this debt.

Conference Call

Talon International will hold a conference call on Thursday, April 17, 2008, to discuss its fourth quarter and year-end 2007 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 17, 2008

Time: 4:30 pm Eastern (1:30 pm Pacific)

Domestic callers: 1-800-895-1085

International callers: 1-785-424-1055

Conference ID#: 7TALON

Internet Simulcast and replay:

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 later that evening and will be accessible until May 15, 2008. The replay call-in number is 1-800-753-8546 for domestic callers and 1-402-220-0685 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 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 and is expanding into Eastern Europe, Indonesia and Vietnam.

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 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.

                             Quarter Ended              Year Ended
                              December 31,              December 31,
                        ------------------------  ------------------------

                            2007         2006         2007         2006
                        ===========  ===========  ===========  ===========

Net sales               $ 8,859,321  $10,573,755  $40,529,555  $48,825,002
Cost of goods sold        6,000,408    7,223,155   28,422,820   34,356,034
                        -----------  -----------  -----------  -----------
   Gross profit           2,858,913    3,350,600   12,106,735   14,468,968

Selling expenses            963,968      646,257    3,125,634    2,777,772
General and
 expenses                 3,307,721    2,962,826   10,877,374   10,872,887
Bad debt expenses
 (recoveries)                 6,961     (506,660)     186,753     (513,347)
Reserve for impairment
 of note receivable      (1,040,000)           -    1,087,653            -
                        -----------  -----------  -----------  -----------
   Total operating
    expenses              3,238,650    3,102,423   15,277,414   13,137,312

Income (loss) from
 operations                (379,737)     248,177   (3,170,679)   1,331,656
Interest expense, net       541,991      235,748    1,680,079      988,453
                        -----------  -----------  -----------  -----------
Income (loss) before
 income taxes              (921,728)      12,429   (4,850,758)     343,203
Provision for income
 taxes                       13,297      (32,521)      70,949       33,900
                        -----------  -----------  -----------  -----------
   Net Income (loss)    $  (935,025) $    44,950  $(4,921,707) $   309,303
                        ===========  ===========  ===========  ===========

Basic income (loss) per
 share                  $     (0.05) $      0.00  $     (0.24) $      0.02
                        ===========  ===========  ===========  ===========
Diluted income (loss)
 per share              $     (0.05) $      0.00  $     (0.24) $      0.02
                        ===========  ===========  ===========  ===========

Weighted average number
 of common shares
   Basic                 19,336,638   18,377,484   20,155,563   18,377,484
                        ===========  ===========  ===========  ===========
   Diluted               19,336,638   18,955,796   20,155,563   18,955,796
                        ===========  ===========  ===========  ===========

                        TALON INTERNATIONAL, INC.
                       CONSOLIDATED BALANCE SHEETS

                                                December 31,  December 31,
                                                    2007          2006
                                                ------------  ------------
Current Assets:
   Cash and cash equivalents                    $  2,918,858  $  2,934,673
   Marketable Securities                           1,040,000             -
   Accounts receivable, net                        3,504,351     4,664,766
   Note receivable                                         -     1,378,491
   Inventories, net                                2,487,427     3,051,220
   Prepaid expenses and other current assets         945,566       541,034
                                                ------------  ------------
Total current assets                              10,896,202    12,570,184

Property and equipment, net                        5,210,446     5,623,040
Fixed Assets held for sale                           700,000       826,904
Note receivable, less current portion                      -     1,420,969
Due from related parties                             625,454       675,137
Other intangible assets, net                       4,110,751     4,139,625
Other assets                                         551,054       437,569
                                                ------------  ------------
Total assets                                    $ 22,093,907  $ 25,693,428
                                                ============  ============

Liabilities and Stockholders’ Equity
Current liabilities:
   Accounts payable                             $  6,603,929  $  4,006,241
   Accrued legal costs                               498,846       427,917
   Other accrued expenses                          2,646,662     3,359,267
   Demand notes payable to related parties            85,176       664,970
   Current portion of capital lease obligations      323,317       432,728
   Current portion of notes payable                  299,108     1,107,207
   Current portion of secured convertible
    promissory notes                                       -    12,472,622
                                                ------------  ------------
Total current liabilities                         10,457,038    22,470,952

Capital lease obligations, less current portion      189,705       474,733
Notes payable, less current portion                  848,484     1,061,514
Revolver note payable                              3,807,806             -
Term note payable, net of discount                 7,424,573             -
Other long term liabilities                           83,651             -
Total liabilities                                 22,811,257    24,007,199
                                                ------------  ------------

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, 2007;
   18,466,433 at December 31, 2006                    20,291        18,466
  Additional paid-in capital                      54,510,161    51,792,502
  Accumulated deficit                            (55,292,246)  (50,124,739)
  Accumulated other comprehensive
   income-foreign currency                            44,444             -
                                                ------------  ------------
Total stockholders’ equity                          (717,350)    1,686,229
                                                ------------  ------------
Total liabilities and stockholders’ equity      $ 22,093,907  $ 25,693,428
                                                ============  ============

Contact Information

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

    Investor Relations
    Scott Liolios or Scott Kitcher
    Liolios Group, Inc.
    Tel (949) 574-3860