-- 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
2006
-- $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: http://viavid.net/dce.aspx?sid=00004EF6
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.
CONSOLIDATED STATEMENTS OF OPERATIONS
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
administrative
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
outstanding:
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
------------ ------------
Assets
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 Investor Relations Scott Liolios or Scott Kitcher Liolios Group, Inc. Tel (949) 574-3860