LOS ANGELES, CA -- (Marketwire) -- 08/13/12 -- Talon International, Inc. (OTCQB: TALN), a leading global supplier of zippers, apparel fasteners, trim and interlining products, reported financial results for the quarter ended June 30, 2012.
Highlights
- Sales for the Second Quarter 2012 totaled $13.2 million vs. $12.8 million in 2011.
- Gross profit margin for the Second Quarter 2012 was 33.1%, up 1.2 percentage points from 2011.
Financial Results
Sales for the quarter ended June 30, 2012 were $13.2 million, an increase of $428,000 or 3.3% from the same quarter of 2011. Zipper sales for the quarter ended June 30, 2012 were $6.9 million as compared to $7.3 million for the same quarter in 2011, and Trim product sales for the quarter ended June 30, 2012 were $6.3 million as compared to $5.5 million for the same quarter in 2011. Sales for the six months ended June 30, 2012 were $21.9 million, a slight decrease of $55,000 compared to the same period in 2011. Zipper sales for the six months ended June 30, 2012 were $11.3 million as compared to $12.8 million for the same period in 2011, and Trim product sales for the six months ended June 30, 2012 were $10.6 million as compared to $9.2 million for the same period in 2011. The increase in sales for the quarter and the modest decline in sales for the first six months of 2012 evidenced increased sales to the majority of customers, and additional sales to new specialty apparel customers, partially offset by reduced sales of non-branded zippers to selected price sensitive mass merchandise and licensing customers, such as Wal-Mart and J.C. Penney. "While our total sales results for the second quarter and first half of 2012 only reflected modest results against the prior year's performance, there is strong evidence of an underlying success in our efforts to win market share with new specialty and image-driven brands. Growth from new nominations won in 2011 and 2012 added nearly 9% to our prior year results for the first half. Unfortunately these gains were overshadowed by reductions in industry-challenged customers such as J.C. Penney, where our sales to this mass merchandiser fell nearly $750,000 for the quarter and approximately $1.5 million for the first half of 2012," noted Lonnie Schnell, Talon's CEO.
Gross profit for the quarter ended June 30, 2012 was $4.4 million or 33.1% of sales as compared to $4.1 million, or 31.9% of sales for the same quarter in 2011. The increases of $295,000 and 1.2 percentage points were principally attributable to increased sales and an improved mix of sales to specialty retailers and higher-margin Trim product sales. Gross profit for the six months ended June 30, 2012 was $7.1 million, or 32.5% of sales, as compared to $7.0 million, or 31.6% of sales for the same period in 2011. The gross profit increases for the six months ended June 30, 2012 as compared to the same period in 2011 were principally attributable to the improved mix of sales to specialty retailers and higher-margin Trim product sales.
Operating expenses for the second quarter of 2012 and 2011 were $3.4 million and $3.1 million, respectively. Operating expenses for the first half of 2012 and 2011 were $6.6 million as compared to $6.2 million for the same period in 2011. The increases in operating spending are associated with increased spending in our sales efforts within the U.S., Europe and Asia; corporate advisory and consulting expenses; and legal fees associated with securing our patent and trademark filings worldwide. These spending increases were partially offset by lower non-cash compensation costs. Sales and marketing expenses for the quarter ended June 30, 2012 were $1.2 million as compared to $1.1 million for the same quarter in 2011. Sales and marketing expenses for the first half of 2012 were $2.3 million as compared to $2.0 million for the same period in 2011. General and administrative expenses for the quarter ended June 30, 2012 totaled $2.2 million compared to $2.0 million for the same period in 2011. General and administrative expenses for the six months ended June 30, 2012 totaled $4.4 million, reflecting an increase of $86,000 over the same period in 2011.
Provisions for income taxes for the three months ended June 30, 2012 were $284,000, as compared to $322,000 for the same period in 2011. For the six months ended June 30, 2012 a net benefit from income taxes of $7,000 was recorded, as compared to a provision for income taxes of $414,000 for the same period in 2011. The net income tax benefit for the six months ended June 30, 2012 included the reversal of a potential tax liability of $196,000 established in 2007 for foreign tax positions that might have been subject to reversal upon a regulatory review. During the first quarter of 2012, the time limit for assessment of the tax liability expired and the liability was removed.
The net income for the quarter ended June 30, 2012 was $671,000 as compared to a net income of $656,000 for the same quarter in 2011. The net income for the six months ended June 30, 2012 was $466,000 as compared to a net income of $255,000 for the same period in 2011.
Conference Call
Talon International will hold a conference call on Monday, August 13, 2012, to discuss its second quarter financial results for 2012. 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, 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 13, 2012
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
Domestic callers: 1-877-317-6789
International callers: 1-412-317-6789
Conference ID#: TALON
A replay of the call will be available after 7:30 p.m. Eastern Time on the same day and until September 10, 2012. The toll-free replay call-in number is 1-877-870-5176 for domestic callers and 1-858-384-5517 for international. Pin number 10017260.
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 major apparel brands and manufacturers including Wal-Mart, Kohl's, J.C. Penney, Victoria's Secret, Tom Tailor, Abercrombie and Fitch, Polo Ralph Lauren, Phillips-Van Heusen, Reebok and Juicy Couture. The company has offices and facilities in the United States, United Kingdom, Hong Kong, China, and Bangladesh.
TALON INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2012 2011 2012 2011
------------ ------------ ------------ ------------
Net sales $ 13,179,849 $ 12,752,281 $ 21,925,799 $ 21,980,474
Cost of goods sold 8,821,120 8,688,943 14,796,314 15,026,583
------------ ------------ ------------ ------------
Gross profit 4,358,729 4,063,338 7,129,485 6,953,891
Sales and marketing
expenses 1,166,549 1,065,487 2,263,472 1,964,047
General and
administrative
expenses 2,217,822 1,996,713 4,365,481 4,279,211
------------ ------------ ------------ ------------
Total operating
expenses 3,384,371 3,062,200 6,628,953 6,243,258
------------ ------------ ------------ ------------
Income from
operations 974,358 1,001,138 500,532 710,633
Interest expense,
net 19,723 23,193 41,760 41,633
------------ ------------ ------------ ------------
Income before
provision for
income taxes 954,635 977,945 458,772 669,000
Provision for
(benefit from)
income taxes, net 283,501 321,620 (6,732) 413,603
------------ ------------ ------------ ------------
Net income $ 671,134 $ 656,325 $ 465,504 $ 255,397
Series B Preferred
Stock Liquidation
Preference Increase (775,190) (668,268) (1,550,380) (1,336,535)
------------ ------------ ------------ ------------
Loss applicable to
Common Shareholders $ (104,056) $ (11,943) $ (1,084,876) $ (1,081,138)
============ ============ ============ ============
Per share amounts:
Net income per share $ 0.03 $ 0.03 $ 0.02 $ 0.01
Available to
Preferred
Shareholders (0.03) (0.03) (0.07) (0.06)
------------ ------------ ------------ ------------
Basic and diluted
net income (loss)
per share
applicable to
Common Shareholders $ 0.00 $ 0.00 $ (0.05) $ (0.05)
============ ============ ============ ============
Weighted average
number of common
shares outstanding
- Basic and diluted 21,900,808 20,367,154 21,752,456 20,329,503
============ ============ ============ ============
Net income $ 671,134 $ 656,325 $ 465,504 $ 255,397
Other comprehensive
income (loss) -
Foreign currency
translation 29,320 (18,878) 13,686 (21,659)
------------ ------------ ------------ ------------
Total comprehensive
income $ 700,454 $ 637,447 $ 479,190 $ 233,738
============ ============ ============ ============
TALON INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2012 2011
------------- -------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,424,588 $ 5,749,341
Accounts receivable, net 4,076,217 3,777,771
Inventories, net 827,397 1,076,522
Prepaid expenses and other current assets 664,361 314,761
------------- -------------
Total current assets 12,992,563 10,918,395
Property and equipment, net 936,625 1,092,609
Intangible assets, net 4,263,801 4,110,751
Other assets 192,630 236,411
------------- -------------
Total assets $ 18,385,619 $ 16,358,166
============= =============
Liabilities, Preferred Stock and Stockholders'
Equity (Deficit)
Current liabilities:
Accounts payable $ 8,205,573 $ 6,607,041
Accrued expenses 1,588,130 1,543,465
Notes payable to related parties - 239,942
Other notes and current portion of capital
lease obligations 2,656 73,148
------------- -------------
Total current liabilities 9,796,359 8,463,596
Capital lease obligations, net of current
portion 2,025 10,461
Deferred income taxes 914,037 751,148
Other liabilities 182,136 379,803
------------- -------------
Total liabilities 10,894,557 9,605,008
------------- -------------
Series B Convertible Preferred Stock, $0.001
par value; 407,160 shares authorized, issued
and outstanding 22,222,118 20,671,738
Stockholders' Equity (Deficit):
Series A Preferred Stock, $0.001 par value;
250,000 shares authorized; no shares issued
or outstanding - -
Common Stock, $0.01 par value, 100,000,000
shares authorized; 21,900,808 and 21,000,808
shares issued and outstanding at June 30,
2012 and December 31, 2011, respectively 21,901 21,001
Additional paid-in capital 58,205,925 57,948,111
Accumulated deficit (73,034,797) (71,949,921)
Accumulated other comprehensive income 75,915 62,229
------------- -------------
Total stockholders' equity (deficit) (14,731,056) (13,918,580)
------------- -------------
Total liabilities, preferred stock and
stockholders' equity (deficit) $ 18,385,619 $ 16,358,166
============= =============
Company Contact
Talon International, Inc.
Rayna Hernandez
Tel (818) 444-4128
Email Contact
