USA: Talon International reports decline in Q3 sales

NEW YORK: Talon International, Inc., a global supplier of apparel fasteners, trim and interlining products to manufacturers of fashion apparel, specialty retailers, mass merchandisers, brand licensees and major retailers, reported financial results for Q3, 2007. 

Sales for the three months ended September 30, 2007 were $9.0 million, reflecting a decline of approximately $4.4 million from the same period of 2006. Sales for the nine months ended September 30, 2007 were $31.7 million, a decline from the same period in 2006 by $6.6 million. The sales decrease for both the quarter and nine months from the prior year principally resulted from a decline in waistband product sales as a result of the expiration of an exclusive sales contract for these products in 2006.

Sales of waistband products were $43,000 for the three months ended September 30, 2007 as compared to $3.6 million for the same period in 2006, and waistband product sales for the nine months ended September 30, 2007 were $681,000 as compared to $8.0 million for the same nine month period in 2006. Sales of the waistband products will continue to be minimal for the balance of 2007 as new customer programs are continuing to be developed for future production. Sales of waistband products for all of 2006 were approximately $9.5 million.

Talon zipper sales for the nine months ended September 30, 2007 were $17.5 million, reflecting a $4.1 million gain, or a 31% increase, over the same nine-month period in 2006. For the three months ended September 30, 2007 Talon zipper sales were $4.2 million, as compared to $4.1 million the same period in 2006. Sales for the nine months ended September 30, 2007 increased over the prior year as a result of the company's expansion into multiple areas throughout China and Southeast Asia. Sales for the three months ended September 30, 2007 as compared to the same period in the prior year, increased at a lesser rate than for the nine months due in part to additional China VAT taxes and export quotas imposed on garment manufacturers during the quarter ended September 30, 2007, and which resulted in manufacturers accelerating some requirements into the previous quarter and shifting production to Asian factories outside China.

Trim product sales for the nine months ended September 30, 2007 were $13.5 million as compared to $17.0 million for the same period in 2006. Sales of Trim products for the three months ended September 30, 2007 were $4.7 million as compared with $5.7 million for the same period in 2006. The Trim product sales decline for the nine months ended September 30, 2007 from the prior year is primarily the result of the following: approximately $700,000 in revenues recognized in 2006 that resulted from the restatement of a 2005 agreement; the result of approximately $2.0 million in sales within Mexico during 2006, which operations we exited during the third quarter of 2006; and from fewer and smaller programs with our customers in 2007 as compared to 2006. Trim sales for the three months ended September 30, 2007 declined from the same period in 2006 principally as a result of the decline in sales within Mexico by approximately $700,000 and from fewer trim programs in 2007.

For the third quarter ended September 30, 2007, the company reported a net loss of $3.7 million, or a net loss of $0.18 per share, as compared to net income of $339,000, or $0.02 per diluted share, for the same period in 2006. For the nine months ended September 30, 2007, the company reported a net loss of $4.0 million, or a net loss of $0.21 per share, as compared to a net income of $264,000, or $0.01 per share, for the same period in 2006.

The net loss for the three and nine months ended September 30, 2007 includes an impairment charge of $2.1 million for a note receivable from 2006 that defaulted in September 2007. The net loss for the three and nine months ended September 30, 2007 as compared with the same periods in 2006 is principally attributable to the decline in overall revenues, offset in part by improvements in other components of gross margin.

Operating expenses for the nine months ended September 30, 2007 were $12.0 million (which included the impairment charge of $2.1 million), or approximately $2.0 million more than the operating expenses for same period in 2006. Operating expense for the three months ended September 30, 2007 were $5.6 million (including the impairment charge of $2.1 million), which was approximately $2.1 million more than the operating expenses for the same period in 2006. "Operating costs are closely controlled and we concentrate our spending increases to support our expansion plans and continually seek cost reductions in our service and administrative costs worldwide," said Forte.

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 waist-bands 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.


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Added: November 21, 2007 Source: Agencies
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