SOURCE: Talon International

Talon International

August 14, 2009 16:15 ET

Talon International Reports Second Quarter 2009 Financial Results

LOS ANGELES, CA--(Marketwire - August 14, 2009) - Talon International, Inc. (OTCBB: TALN), a leading global supplier of zippers, apparel fasteners, trim and interlining products, reported financial results for the second quarter ended June 30, 2009.

Summary

--  Sales for the 2nd Quarter 2009 totaled $12.6 million, vs. $17.0
    million in 2008.
--  Net income for the 2nd Quarter totaled $75,000 in 2009, vs. $598,000
    in 2008.
--  Net loss year-to-date totaled $1.1 million in 2009, vs. a net loss of
    $1.2 million in 2008.
    

Financial Results

"The global economic recession continued to significantly restrict consumer spending through the second quarter of 2009 and this translated into much lower demand for our zipper and trim products," said Lonnie Schnell, Talon's CEO. "Although the initial panic within the apparel industry seems to have subsided, and encouraging signs are emerging, consumers remain cautious about their spending and the retail brands continue to limit their buying and lower their inventory levels."

Sales for the second quarter of 2009 totaled $12.6 million, a decrease of $4.4 million or 26% from 2008. The decrease in sales for the quarter was a direct result of the impact of the economic decline on the apparel industry and the corresponding lower demand for the apparel products that brand suppliers purchase from the Company. For the second quarter of 2009 the Company reported Talon® zipper sales of $7.7 million as compared to $11.4 million for the same period in 2008. Trim product sales for the second quarter of 2009 were $4.9 million, as compared to $5.5 million for the same period in 2008, and Tekfit product sales for the second quarter were $23,000 compared to $36,000 in 2008.

Sales for the six months ended June 30, 2009 were $19.1 million as compared to $27.0 million for the same period in 2008, a decrease of $7.9 million or 29%. Talon® zipper sales for the first six months of 2009 totaled $11.0 million as compared to $17.1 million in the prior year. Trim product sales for the first six months of 2009 were $8.0 million, a decrease of $1.9 million from the same period in 2008. Tekfit product sales for the first six months of 2009 were $37,000 compared to $44,000 for the first six months of 2008.

For the second quarter of 2009 net income of $75,000 or $0.01 per share was reported by the Company, as compared to net income of $598,000 or $0.03 per share for the second quarter in 2008. For the six-months ended June 30, 2009 the Company reported a net loss of $1.1 million or a loss of $0.05 per share, as compared to a net loss of $1.2 million or $0.06 per share for the six months ended June 30, 2008.

"The cost reduction actions we implemented late in 2008 in response to the economic decline have substantially lessened the impact of the significantly lower revenues in 2009," said Schnell. "For the first six months of 2009, the benefits of these actions helped deliver expense reductions that more than offset the effects of the recession on our sales levels. As the apparel industry recovers, these actions along with our continued emphasis on new nominations, new product development and our commitment to superior customer service we believe will yield measurable improvements in earnings compared to the prior year."

Selling expenses for the second quarter of 2009 were $531,000, reflecting a reduction of $237,000 compared to the same period in 2008. General and administrative expenses for the second quarter of 2009 were $2.2 million, as compared to $3.1 million for the second quarter of 2008. The decrease of $0.9 million in general and administrative expenses is principally attributable to reductions in our global workforce to align our costs with current sales levels.

The net income for the second quarter and net loss for the first six months of 2009 includes net interest expense of $661,000 and $1,298,000, respectively. The interest expense for 2009 reflects an increase of $18,000 and $105,000 for the second quarter and six months ended June 30, 2009, respectively, as compared to net interest expense for the same periods in 2008. The increased interest cost in 2009 over 2008 was primarily the result of slightly increased borrowings under the debt facility with CVC California, LLC (formerly Bluefin Capital, LLC).

Conference Call

Talon International will hold a conference call on Monday, August 17, 2009, to discuss its second quarter 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 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: Monday, August 17, 2009
Time: 4:30 pm Eastern (1:30 pm Pacific)
Domestic callers: 1-800-894-5910
International callers: 1-785-424-1052
Conference ID#: 7TALON

A replay of the call will be available later that evening and will be accessible until September 17, 2009. The replay call-in number is 1-800-723-0479 for domestic callers and 1-402-220-2650 for international. Pass code 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, 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 Bangladesh.

                        TALON INTERNATIONAL, INC.
                  Consolidated Statements of Operations
                                (Unaudited)



                    Three Months Ended June 30, Six Months Ended June 30,
                    --------------------------- --------------------------
                         2009         2008          2009          2008
                    ------------- ------------  ------------  ------------
Net sales           $  12,583,765 $ 17,020,629  $ 19,099,519  $ 27,006,118
Cost of goods sold      9,022,318   12,119,725    13,553,905    19,347,249
                    ------------- ------------  ------------  ------------
  Gross profit          3,561,447    4,900,904     5,545,614     7,658,869

Selling expenses          531,365      767,865     1,046,909     1,487,828
General and
 administrative
 expenses               2,198,037    3,082,164     4,201,830     6,430,400
                    ------------- ------------  ------------  ------------
  Total operating
   expenses             2,729,402    3,850,029     5,248,739     7,918,228

Income (loss) from
 operations               832,045    1,050,875       296,875      (259,359)
Interest expense,
 net                      661,087      643,130     1,298,038     1,192,644
                    ------------- ------------  ------------  ------------
Income (loss)
 before provision
 for (benefit from)
 income taxes             170,958      407,745    (1,001,163)   (1,452,003)
Provision for
 (benefit from)
 income taxes              96,103     (190,412)      102,510      (211,416)
                    ------------- ------------  ------------  ------------
  Net Income (loss) $      74,855 $    598,157  $ (1,103,673) $ (1,240,587)
                    ============= ============  ============  ============
Basic income (loss)
 per share          $        0.01 $       0.03  $      (0.05) $      (0.06)
                    ============= ============  ============  ============
Diluted income
 (loss) per share   $        0.01 $       0.03  $      (0.05) $      (0.06)
                    ============= ============  ============  ============

Weighted average
 number of common
 shares outstanding:
  Basic                20,291,433   20,291,433    20,291,433    20,291,433
                    ============= ============  ============  ============
  Diluted              20,291,433   20,291,433    20,291,433    20,291,433
                    ============= ============  ============  ============




                         TALON INTERNATIONAL, INC.
                        Consolidated Balance Sheets

                                                  June 30,    December 31,
                                                    2009          2008
                                                ------------  ------------
Assets                                          (Unaudited)
Current Assets:
  Cash and cash equivalents                     $  2,215,007  $  2,399,717
  Accounts receivable, net                         5,409,918     3,856,613
  Inventories, net                                 1,935,198     1,669,149
  Prepaid expenses and other current assets          651,744       473,955
                                                ------------  ------------
Total current assets                              10,211,867     8,399,434

Property and equipment, net                        2,144,479     2,084,244
Fixed assets held for sale                           407,009       407,655
Due from related parties                             200,000       200,000
Intangible assets, net                             4,110,751     4,110,751
Other assets                                         288,761       400,494
                                                ------------  ------------
Total assets                                    $ 17,362,867  $ 15,602,578
                                                ============  ============


Liabilities and Stockholders' Deficit
Current liabilities:
  Accounts payable                              $  8,930,217  $  7,674,768
  Accrued legal costs                                540,679       383,075
  Other accrued expenses                           2,465,014     2,292,681
  Revolver note payable                            4,990,483             -
  Term note payable, net of discounts              9,112,891             -
  Demand notes payable to related parties            225,810       222,264
  Current portion of capital lease obligations        95,014       182,444
  Current portion of notes payable                    46,427       144,064
                                                ------------  ------------
Total current liabilities                         26,406,535    10,899,296

Capital lease obligations, net of current
 portion                                               8,704         1,910
Revolver note payable, net of current portion              -     4,638,988
Term notes payable, net of discounts and
 current portion                                           -     8,067,428
Other long term liabilities                          718,925       756,888
                                                ------------  ------------
Total liabilities                                 27,134,164    24,364,510
                                                ------------  ------------

Commitments and contingencies (Note 13)

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 June 30, 2009
   and December 31, 2008                              20,291        20,291
  Additional paid-in capital                      54,859,305    54,769,072
  Accumulated deficit                            (64,754,705)  (63,651,032)
  Accumulated other comprehensive income             103,812        99,737
                                                ------------  ------------
Total stockholders' deficit                       (9,771,297)   (8,761,932)
                                                ------------  ------------
Total liabilities and stockholders' deficit     $ 17,362,867  $ 15,602,578
                                                ============  ============

Contact Information

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