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Talon International : Talon International Reports Fourth Quarter and Year-End 2008 Financial Results

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  Published in House and Home on Wednesday, April 8th 2009 at 14:04 GMT, Last Modified on 2009-04-08 14:07:42 by Market Wire

LOS ANGELES, CA--(Marketwire - April 8, 2009) - 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, 2008.

Highlights

 -- Sales for the full year 2008 totaled $48.2 million, vs. $40.5 million in 2007. -- Zipper product sales up 13% in Q4 2008 vs. Q4 2007; up 34% in FY2008 vs. FY2007. -- Net loss totaled $8.4 million in 2008, vs. $4.9 million in 2007. -- $5.4 million in certain significant charges in 2008 vs. $1.2 million in 2007. 

Financial Results

Sales for the full year 2008 totaled $48.2 million, an increase of $7.6 million from 2007 or 19%. Sales for the fourth quarter of 2008 totaled $8.4 million, a decrease of $467,000, or 5% from the same period in 2007. The increase in sales for the full year reflected a 34% increase in Talon zipper sales to $28.4 million in 2008 compared to $21.2 million in 2007. For all of 2008 the Company reported Trim product sales of $19.5 million, an increase of $849,000 or 4.5% over 2007, and Tekfit product sales of $205,000, a decline of $476,000 from 2007. The increase in Zipper and Trim product sales for the year is primarily attributable to the Company's expanded presence within the global apparel industry and the approval of Talon products by new brands and retailers. The decline in Tekfit product sales for the year was primarily attributable to lower sales as the Company rebuilds this product's acceptance following the expiration of revenues from an exclusive sales contract.

Sales for the quarter ended December 31, 2008 reflect an increase in zipper product sales of $481,000 or 13% over the same period in 2007, and an increase in waistband product sales of $65,000. The sales increases were offset by a decline in Trim product sales of $1.0 million. The increase in zipper product sales for the quarter is a reflection of the expanded brand approvals gained during the year, while the decline of Trim product sales represents program reductions by major retailers in response to the global economic decline in the fourth quarter of 2008.

For the full year 2008 a net loss of $8.4 million or ($0.41) per share was reported by the Company, as compared to a net loss of $4.9 million or ($0.24) per share in 2007. For the fourth quarter of 2008, a net loss of $4.7 million was reported, as compared to a net loss of $935,000 in same period of 2007.

"Fiscal year 2008 was a year of significant improvements for the company," said Lonnie Schnell, Talon's CEO, "partially eclipsed by a severe economic downturn in the fourth quarter of 2008 and its effect on our operations. The overall financial results for the year were disappointing, as we saw the economic decline late in the year severely impact our on-going efforts to secure the maximum value from several of our legacy assets. Consequently, we absorbed several unexpected charges during the year.

"Despite the severe economic decline late in 2008, before consideration of several significant charges that were recorded in the year, the Company's overall performance for the fourth quarter and the full year of 2008 showed improvements over 2007."

For the full year 2008 the loss from operations of $5,962,000 includes $5,360,000 in significant charges, including $4,636,000 in impairment charges associated with property and equipment held for sale, slow-moving inventory, marketable securities and a note receivable. In addition, the 2008 loss from operations includes $724,000 associated with severance paid to former officers. For the full year 2007 the loss from operations of $3,170,000 included $1,088,000 in charges associated with the write-off of a note receivable from a former customer, and $127,000 in impairment charges associated with a building held for sale.

The fourth quarter 2008 loss from operations of $3,986,000 includes $3,096,000 in impairment charges associated with equipment held for sale, slow-moving inventory and a note receivable. The fourth quarter of 2007 loss from operations of $380,000 included a net benefit of $913,000 resulting from a $1,040,000 benefit associated with a partial recovery of a previous loss on a note receivable offset by a $127,000 impairment charge associated with the building held for sale.

The 2008 significant charges in the fourth quarter and the year primarily represent impairment charges occurring due to a decline in the fair-value of associated equipment and inventory held for sale, in marketable securities previously obtained in exchange for notes receivable, and in notes receivable from related parties. These charges also include severance costs associated with former officers.

Selling expenses for the full year 2008 were $3.1 million, essentially equal to the selling expenses in 2007 despite an overall sales increase of $7.6 million. General and administrative expenses for the full year 2008 were $12.0 million, as compared to $10.9 million in 2007. The increase of $1.1 million in general and administrative expenses includes $724,000 in severance charges paid to former officers, and a $474,000 charge for the impairment of a note receivable. Selling expenses and general and administrative expenses for the fourth quarter of 2008 were $738,000 and $3,057,000, respectively, as compared to $964,000 and $3,188,000, respectively for the same period in 2007.

Net interest expense for the fourth quarter and full year ended December 31, 2008 was $619,000 and $2,437,000, respectively, as compared to $542,000 and $1,680,000, respectively, for the fourth quarter and full year of 2007. The increased interest cost in 2008 over 2007 was a primarily the result of the new debt facility with CVC California, LLC (formerly Bluefin Capital, LLC) entered into in June 2007, as well as the non-cash interest charges associated with equity components issued in connection with this debt.

Conference Call

Talon International will hold a conference call on Thursday, April 9, 2009, to discuss its fourth quarter and year-end 2008 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 9, 2009 Time: 4:30 pm Eastern (1:30 pm Pacific) Domestic callers: 1-800-862-9098 International callers: 1-785-424-1051 Conference ID#: 7TALON 

A replay of the call will be available later that evening and will be accessible until May 15, 2009. The replay call-in number is 1-800-839-9303 for domestic callers and 1-402-220-6083 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 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 the Dominican Republic.

 TALON INTERNATIONAL, INC. CONSOLIDATED INCOME STATEMENT Quarter Ended Twelve Months Ended December 31 December 31 December 31 December 31 2008 2007 2008 2007 ----------- ----------- ----------- ----------- Total Net sales $ 8,392,841 $ 8,859,322 $48,170,980 $40,529,555 Cost of goods sold 6,653,939 6,000,409 35,553,857 28,422,820 ----------- ----------- ----------- ----------- Gross profit 1,738,902 2,858,913 12,617,123 12,106,735 Selling expenses 738,108 963,968 3,103,529 3,125,634 General and administrative expenses 3,057,523 3,187,778 12,005,971 10,937,223 Impairment of marketable security and related note receivable - (1,040,000) 1,040,000 1,087,653 Impairment loss on fixed assets 1,929,506 126,904 2,429,506 126,904 ----------- ----------- ----------- ----------- Total operating expenses 5,725,137 3,238,650 18,579,006 15,277,414 Loss from operations (3,986,235) (379,737) (5,961,883) (3,170,679) Interest expense, net 619,315 541,991 2,436,675 1,680,079 ----------- ----------- ----------- ----------- Loss before income taxes (4,605,550) (921,728) (8,398,558) (4,850,758) Provision (benefit) for income taxes 72,494 13,297 (39,772) 70,949 ----------- ----------- ----------- ----------- Net income (loss) $(4,678,044) $ (935,025) $(8,358,786) $(4,921,707) =========== =========== =========== =========== Basic loss per share $ (0.23) $ (0.05) $ (0.41) $ (0.24) =========== =========== =========== =========== Diluted loss per share $ (0.23) $ (0.05) $ (0.41) $ (0.24) =========== =========== =========== =========== Basic weighted average shares outstanding 20,291,433 19,336,638 20,291,433 20,155,563 =========== =========== =========== =========== Diluted weighted average shares outstanding 20,291,433 19,336,638 20,291,433 20,155,563 =========== =========== =========== =========== TALON INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEET Assets December 31 December 31 Current Assets: 2008 2007 ------------ ------------ Cash and cash equivalents $ 2,399,717 $ 2,918,858 Marketable Securities, net of valuation reserves - 1,040,000 Accounts receivable, net 3,856,613 3,504,351 Inventories, net 1,669,149 2,487,427 Prepaid expenses and other current assets 473,955 945,566 ------------ ------------ Total current assets 8,399,434 10,896,202 Property and equipment, net 2,084,244 5,210,446 Fixed assets held for sale 407,655 700,000 Due from related parties 200,000 625,454 Other intangible assets, net 4,110,751 4,110,751 Other assets 400,494 140,782 ------------ ------------ Total assets $ 15,602,578 $ 21,683,635 ============ ============ Liabilities and Stockholders' Equity Current liablities: Accounts payable $ 7,674,768 $ 6,249,618 Other accrued expenses 2,675,756 2,759,868 Demand notes payable to related parties 222,264 213,091 Current portion of capital lease obligations 182,444 323,317 Current portion of notes payable 144,064 299,108 ------------ ------------ Total current liabilities 10,899,296 9,845,002 Capital lease obligations, less current portion 1,910 189,705 Notes payable, less current portion - 848,484 Revolver note payable 4,638,988 3,807,806 Term note payable, net of discount 8,067,428 7,014,301 Other long term liabilities 756,888 695,687 ------------ ------------ Total liabilities 24,364,510 22,400,985 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, 2008 and December 31, 2007 20,291 20,291 Additional paid-in-capital 54,769,072 54,510,161 Accumulated deficit (63,651,032) (55,292,246) Accumulated other comprehensive income 99,737 44,444 ------------ ------------ Total stockholders' equity (8,761,932) (717,350) ------------ ------------ Total liabilities and stockholders' equity $ 15,602,578 $ 21,683,635 ============ ============