SOURCE: Coffee Holding Co., Inc.

June 13, 2008 08:45 ET

Coffee Holding Co., Inc. Reports Second Quarter and Six Month Results

BROOKLYN, NY--(Marketwire - June 13, 2008) - Coffee Holding Co., Inc. (AMEX: JVA) today announced its operating results for the three and six months ended April 30, 2008. In this release, the Company:

--  Reports net sales of $18,169,441 for the quarter and $33,131,982 for
    the six months ended April 30, 2008;
    
--  Reports sales growth of 28.0% for the quarter and 23.5% for the six
    months ended April 30, 2008 compared to the three and six month periods
    ended April 30, 2007; and
    
--  Reports net losses of $2,044,178 for the quarter and $1,861,913 for
    the six months ended April 30, 2008.
    

Net sales totaled $18,169,441 for the three months ended April 30, 2008, an increase of $3,975,068, or 28.0%, from $14,194,373 for the three months ended April 30, 2007. Net sales totaled $33,131,982 for the six months ended April 30, 2008, an increase of $6,302,497, or 23.5%, from $26,829,485 for the six months ended April 30, 2007. The increase in net sales for each period reflects increased amounts of green coffee, branded coffee and private label coffee sold as well as increased sales prices compared to the three and six month periods of 2007.

The Company had a net loss of $2,044,178, or $0.37 per share (basic and diluted), for the three months ended April 30, 2008 compared to net income of $338,888, or $0.06 per share (basic and diluted), for the three months ended April 30, 2007. For the six months ended April 30, 2008, the Company had a net loss of $1,861,913, or $0.34 per share (basic and diluted), compared to net income of $648,592, or $0.12 per share (basic and diluted), for the 2007 period. The losses for the three and six month periods ended April 30, 2008 were due to sharp increases in cost of sales that resulted from higher coffee prices and losses on options and futures contracts. As a result, cost of sales exceeded net sales for the quarter ended April 30, 2008 and were 99.4% of net sales for the six months ended April 30, 2008. Net losses on options and futures contracts equaled $2,082,679 for the second quarter of fiscal 2008 and $1,489,236 for the six months ended April 30, 2008.

Commenting on the Company's losses on options and futures contracts, President and Chief Executive Officer Andrew Gordon said, "The increased investment by index funds in crop futures during the first few months of 2008 placed a major financial strain on commercial participants in many markets, including coffee. The price spike and subsequent market crash saw coffee prices surge over $0.35 (26%) and then collapse within a five week period. This spike prevented many companies, including ourselves, from adequately managing risk during this time. We were unable to defend our hedge and pricing positions due to the excess speculation involved in our market. The end result was a significant loss on our hedge positions as well as an inadequately priced physical coffee position. Fortunately, both our hedging losses as well as high priced physicals have been washed through our income statement during this period."

"Going forward, we anticipate a return to 'business as usual' for our company," said Mr. Gordon. "We continue to see our revenues increase annually and we have a record of profitability during ten of the last twelve quarters since going public. Our balance sheet remains strong even after having paid out a $0.28 per share cash dividend in February as well as the extraordinary loss incurred during this past fiscal period. We stand behind our stock and believe its current market price is by no means representative of its true value. For that reason, we will continue as a company to buy our stock back as part of our publicly announced share repurchase program at every available opportunity."

"Finally, our much anticipated rollout of Entenmann's branded coffee products occurred during this last quarter. Although we experienced significant onetime costs in packaging development and slotting (product placement) in conjunction with the rollout, those costs were neither excessive nor unanticipated. More importantly, the initial results both in sales and consumer feedback on the product line are extremely positive and give us a strong indication as to how successful Entenmann's coffee will be in the marketplace over the next several years."

"We realize the results for this period obviously are unacceptable to both our management and our shareholder base," concluded Mr. Gordon. "In our 38 years of existence, we have never underperformed and incurred losses of this magnitude. We firmly believe we will never see a repeat of this performance again. We look forward to a fresh start this upcoming quarter."

About Coffee Holding

Coffee Holding is a leading integrated wholesale coffee roaster and dealer in the United States and one of the few coffee companies that offers a broad array of coffee products across the entire spectrum of consumer tastes, preferences and price points. Coffee Holding has been a family operated business for three generations and has remained profitable through varying cycles in the coffee industry and the economy. The Company's private label and branded coffee products are sold throughout the United States, Canada and abroad to supermarkets, wholesalers, and individually owned and multi unit retail customers.

Any statements that are not historical facts contained in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. It is possible that the assumptions made by management for purposes of such statements may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. Such statements may involve risks and uncertainties, including but not limited to those relating to product demand, pricing, market acceptance, the effect of economic conditions, intellectual property rights, the outcome of competitive products, risks in product development, the results of financing efforts, the ability to complete transactions, and other factors discussed from time to time in the Company's Securities and Exchange Commission filings. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made.

                         COFFEE HOLDING CO., INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                    APRIL 30, 2008 AND OCTOBER 31, 2007


                                                  April 30,   October 31,
                                                    2008          2007
                                                ------------  ------------
                                                (unaudited)     (audited)
                               - ASSETS -
CURRENT ASSETS:
   Cash                                         $  1,617,413  $    890,649
   Commodities held at broker                        832,218     3,468,530
   Accounts receivable, net of allowance for
    doubtful accounts of $127,464 and $136,781
    for 2008 and 2007, respectively                5,651,787     7,130,467
   Inventories                                     4,471,463     4,472,097
   Prepaid expenses and other current assets         346,740       502,240
   Prepaid and refundable taxes                      267,462       236,406
   Deferred income tax asset                       1,331,000       279,000
                                                ------------  ------------
TOTAL CURRENT ASSETS                              14,518,083    16,979,389

Property and equipment, at cost, net of
 accumulated depreciation of $4,731,184 and
 $4,542,490 for 2008 and 2007, respectively        2,953,925     2,651,960
Deposits and other assets                            489,066       765,368
                                                ------------  ------------
      TOTAL ASSETS                              $ 17,961,074  $ 20,396,717
                                                ============  ============

                 - LIABILITIES AND STOCKHOLDERS' EQUITY -
CURRENT LIABILITIES:
   Accounts payable and accrued expenses        $  6,326,167  $  6,791,690
   Line of credit borrowings                       2,556,762       897,191
   Income taxes payable                                    -         9,161
                                                ------------  ------------
TOTAL CURRENT LIABILITIES                          8,882,929     7,698,042

Deferred income tax liabilities                       27,000       145,000
Deferred compensation payable                        394,020       351,332
                                                ------------  ------------
TOTAL LIABILITIES                                  9,303,949     8,194,374
                                                ------------  ------------

MINORITY INTEREST                                          -             -

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, par value $.001 per share;
    10,000,000 shares authorized; none issued              -             -
   Common stock, par value $.001 per share;
    30,000,000 shares authorized, 5,529,830
    shares issued; 5,480,216 shares outstanding
    for 2008 and 5,514,930 shares outstanding
    in 2007                                            5,530         5,530
   Additional paid-in capital                      7,327,023     7,327,023
   Retained earnings                               1,539,986     4,946,467
   Less: Treasury stock, 49,614 and 14,900
    common shares, at cost for 2008 and 2007,
    respectively                                    (215,414)      (76,677)
                                                ------------  ------------
TOTAL STOCKHOLDERS' EQUITY                         8,657,125    12,202,343
                                                ------------  ------------
      TOTAL LIABILITIES AND STOCKHOLDERS'
       EQUITY                                   $ 17,961,074  $ 20,396,717
                                                ============  ============





                         COFFEE HOLDING CO., INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)


                            Six Months Ended        Three Months Ended
                                April 30,                 April 30,
                            2008         2007         2008         2007
                        -----------  -----------  -----------  -----------
NET SALES               $33,131,982  $26,829,485  $18,169,441  $14,194,373

COST OF SALES            32,925,925   22,553,727   19,843,502   12,087,210
                        -----------  -----------  -----------  -----------

GROSS PROFIT (LOSS)         206,057    4,275,758   (1,674,061)   2,107,163
                        -----------  -----------  -----------  -----------

OPERATING EXPENSES:
    Selling and
     administrative       2,919,356    2,877,929    1,540,432    1,487,239
    Writedown of amount
     due from dissolved
     joint venture                -      242,000            -            -
    Officers' salaries      299,700      234,449      138,323      117,437
                        -----------  -----------  -----------  -----------
TOTALS                    3,219,056    3,354,378    1,678,755    1,604,676
                        -----------  -----------  -----------  -----------
INCOME (LOSS) FROM
 OPERATIONS              (3,012,999)     921,380   (3,352,816)     502,487
                        -----------  -----------  -----------  -----------

OTHER INCOME (EXPENSE)
  Interest income            34,328       66,576       10,057       32,460
  Dividend income             9,331            -        9,331            -
  Equity in loss from
   dissolved joint
   venture                        -      (93,939)           -      (30,000)
  Writedown of
   investment in
   dissolved joint
   venture                        -      (33,000)           -            -
  Management fee income           -       12,046            -            -
  Impairment loss -
   leasehold
   improvements                   -      (31,892)           -      (31,892)
  Interest expense          (61,432)     (56,406)     (32,426)     (32,174)
                        -----------  -----------  -----------  -----------
                            (17,773)    (136,615)     (13,038)     (61,606)
                        -----------  -----------  -----------  -----------
INCOME (LOSS) BEFORE
 BENEFIT FROM (PROVISION)
 FOR INCOME TAX EXPENSE
 AND MINORITY INTEREST
 IN SUBSIDIARY           (3,030,772)     784,765   (3,365,854)     440,881

  Benefit (provision)
   for income tax
   expense                1,169,949     (140,050)   1,312,000     (102,200)
                        -----------  -----------  -----------  -----------

INCOME (LOSS) BEFORE
 MINORITY INTEREST       (1,860,823)     644,715   (2,053,854)     338,681

  Minority interest in
   earnings (loss) of
   subsidiary                (1,090)       3,877        9,676          207
                        -----------  -----------  -----------  -----------

NET INCOME (LOSS)        (1,861,913)     648,592   (2,044,178)     338,888

Retained earnings-
 beginning                4,946,467    4,009,150    3,584,164    4,318,854
Dividend declared        (1,544,568)           -            -            -
                        -----------  -----------  -----------  -----------
RETAINED EARNINGS -
 ENDING                 $ 1,539,986  $ 4,657,742  $ 1,539,986  $ 4,657,742
                        ===========  ===========  ===========  ===========

Basic and diluted
 earnings (loss) per
 share                  $      (.34) $       .12  $      (.37) $       .06
                        ===========  ===========  ===========  ===========

Weighted average common
 shares outstanding:
    Basic                 5,497,254    5,529,830    5,497,254    5,529,830
                        ===========  ===========  ===========  ===========
    Diluted               5,497,254    5,599,830    5,497,254    5,529,830
                        ===========  ===========  ===========  ===========





                         COFFEE HOLDING CO., INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 SIX MONTHS ENDED APRIL 30, 2008 AND 2007
                                (Unaudited)


                                                    2008          2007
                                                ------------  ------------
OPERATING ACTIVITIES:
   Net (loss) income                            $ (1,861,913) $    648,592
   Adjustments to reconcile net income to net
    cash provided by operating activities:
         Depreciation and amortization               262,086       165,478
         Writedown of amount due from dissolved
          joint venture                                    -       242,000
         Loss from dissolved joint venture                 -        93,939
         Writedown of investment in dissolved
          joint venture                                    -        33,000
         Deferred income taxes                    (1,170,000)     (233,550)
         Impairment loss                                   -        31,892
      Changes in operating assets and
       liabilities:
         Commodities held at broker                2,636,312       902,375
         Accounts receivable                       1,478,680     1,703,288
         Inventories                                     634    (1,039,129)
         Prepaid expenses and other current
          assets                                     155,500      (416,149)
         Prepaid and refundable income taxes         (31,056)      295,293
         Accounts payable and accrued expenses      (465,523)     (776,221)
         Due from dissolved joint venture                  -      (146,372)
         Deposits and other assets                    20,940        17,898
         Income taxes payable                         (9,161)       74,707
                                                ------------  ------------
Net cash provided by operating activities          1,016,499     1,597,041
                                                ------------  ------------

INVESTING ACTIVITIES:
   Purchases of property and equipment              (267,091)     (188,575)
                                                ------------  ------------
Net cash used in investing activities               (267,091)     (188,575)
                                                ------------  ------------

FINANCING ACTIVITIES:
   Advances under bank line of credit             30,855,020    23,967,150
   Principal payments under bank line of credit  (29,195,449)  (24,806,079)
   Payment of dividend                            (1,544,568)            -
   Purchase of treasury stock                       (138,737)            -
                                                ------------  ------------
Net cash used in financing activities                (23,734)     (838,929)
                                                ------------  ------------

MINORITY INTEREST                                      1,090        (3,877)
                                                ------------  ------------

NET INCREASE IN CASH                                 726,764       565,660

   Cash, beginning of year                           890,649     1,112,165
                                                ------------  ------------

CASH, END OF PERIOD                             $  1,617,413  $  1,677,825
                                                ============  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
   Interest paid                                $     58,557  $     43,351
                                                ============  ============
   Income taxes paid                            $     12,255  $          -
                                                ============  ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
 ACTIVITIES:
   The Company utilized its deposit for the
    purchase of machinery and equipment         $    296,960  $    328,388
                                                ============  ============

Contact Information

  • Contact:
    Andrew Gordon
    President & CEO
    Telephone: (718) 832-0800