SOURCE: Coffee Holding Co., Inc.

January 26, 2007 09:00 ET

Coffee Holding Co., Inc. Reports Year End Earnings

BROOKLYN, NY -- (MARKET WIRE) -- January 26, 2007 -- Coffee Holding Co., Inc. (AMEX: JVA) today announced its operating results for the year ended October 31, 2006. In this release, the Company:

--  Reports sales growth of 23.2% for 2006 compared to 2005;
    
--  Reports net income of $700,082 for the year ended October 31, 2006;
    and
    
--  Reports net income of $0.13 per share (basic and diluted) for the year
    ended October 31, 2006.
    
Net income decreased $485,053, or 40.9%, to $700,082 or $.13 per share for the year ended October 31, 2006 compared to $1,185,135 or $.25 per share for the year ended October 31, 2005. The decrease in net income primarily reflects increased cost of sales due to higher commodity costs and greater operating expenses and a loss by our Café La Rica joint venture, partially offset by increased net sales. We believe the initial loss by Café La Rica, which was formed in March 2006, is consistent with the typical initial performance of a start-up venture of this type.

Net sales totaled $51,171,202 for the year ended October 31, 2006, an increase of $9,625,857 or 23.2% from $41,545,345 for the year ended October 31, 2005. The increase in net sales reflects a 10.4% increase in coffee pounds sold due to increased sales of our branded and specialty green coffees. Sales of our Café Caribe brand increased once again and sales of our second Hispanic espresso, Café Supremo, increased 48%. Increases in coffee prices also contributed to the increase in net sales.

Cost of sales for the year ended October 31, 2006 was $43,575,963 or 85.2% of net sales, as compared to $33,875,973 or 81.5% of net sales for the year ended October 31, 2005. The increase in cost of sales reflects higher packaging costs associated with the increase in net sales of approximately $300,000 and increased purchases of green coffee in the amount of approximately $5.8 million. The increase in green coffee purchases resulted from increased pounds sold and higher green coffee prices during the period. The average indicator price for Robusta coffee, the main component for our leading espresso brands (Café Caribe and Café Supremo), increased 104% by August 2006 compared to August of 2005. This indicator price was the highest seen in the last seven years as measured by the International Coffee Organization. By September 2006, prices had achieved further gains, trading to their highest levels in eight years. For competitive reasons, we were not able to pass these price increases through to our customers. As a result, these increases had the effect of diminishing our profit margins significantly on our leading espresso lines as there were no lower priced coffees to substitute into our blends. In October 2006, national brands reacted to these price increases, raising list prices by $0.12 per unit, and we too were able to increase our prices as well.

"Although this year presented us with some very unique challenges which affected our bottom line, we are pleased to report we believe the worst is behind us," said Andrew Gordon, President and Chief Executive Officer. "We still remained profitable once again while growing our revenues by over 23% to $51 million; the first time in company history we have passed the half century mark in sales. Now, with our Sarbanes-Oxley costs mostly behind us, and oil trading near twenty month lows, Robusta prices having stabilized and the implementation of a major price increase to our customers, we believe margins will improve back to historical levels in the coming quarters. Overall, we remain positive moving into the new fiscal year as our position within the coffee industry continues to expand."

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 through 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. AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEETS
                        OCTOBER 31, 2006 AND 2005


                                                    2006           2005
                                                ------------   ------------

                  - ASSETS -
CURRENT ASSETS:
   Cash                                         $  1,112,165   $    735,468
   Commodities held at broker                      4,330,489      2,994,394
   Accounts receivable, net of allowance for
    doubtful accounts of $420,300 for 2006 and
    2005, respectively                             6,534,848      5,159,576
   Inventories                                     2,899,543      4,496,578
   Prepaid expenses and other current assets         328,544        272,541
   Prepaid and refundable income taxes               302,003         11,629
   Deferred income tax assets                        221,000        318,600
                                                ------------   ------------
TOTAL CURRENT ASSETS                              15,728,592     13,988,786

Property and equipment, at cost, net of
 accumulated depreciation of $4,159,274 and
 $3,727,524 for 2006 and 2005, respectively        2,138,951      2,379,952
Investment in joint venture                          408,798              -
Due from joint venture                                73,658              -
Deposits and other assets                            631,859        176,575
                                                ------------   ------------
TOTAL ASSETS                                    $ 18,981,858   $ 16,545,313
                                                ============   ============

      - LIABILITIES AND STOCKHOLDERS' EQUITY -
CURRENT LIABILITIES:
  Accounts payable and accrued expenses         $  4,828,689   $  4,431,577
  Current portion of obligations under capital
   lease                                                   -          1,329
  Line of credit borrowings                        2,542,881      1,063,167
  Income taxes payable – current                           -        218,864
                                                ------------   ------------
TOTAL CURRENT LIABILITIES                          7,371,570      5,714,937

Deferred income tax liabilities                       12,300         53,700
Deferred compensation payable                        256,284        135,054
                                                ------------   ------------
TOTAL LIABILITIES                                  7,640,154      5,903,691
                                                ------------   ------------

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 and
    5,529,830 shares issued and outstanding for
    2006 and 2005, respectively                        5,530          5,530
   Additional paid-in capital                      7,327,023      7,327,023
   Retained earnings                               4,009,151      3,309,069
                                                ------------   ------------
TOTAL STOCKHOLDERS' EQUITY                        11,341,704     10,641,622
                                                ------------   ------------
   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 18,981,858   $ 16,545,313
                                                ============   ============



                  COFFEE HOLDING CO., INC. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF INCOME
                YEARS ENDED OCTOBER 31, 2006, 2005 AND 2004


                                      2006          2005          2004
                                  ------------  ------------  ------------

NET SALES                         $ 51,171,202  $ 41,545,345  $ 28,030,389

COST OF SALES                       43,575,963    33,875,973    20,927,506
                                  ------------  ------------  ------------

GROSS PROFIT                         7,595,239     7,669,372     7,102,883
                                  ------------  ------------  ------------

OPERATING EXPENSES:
  Selling and administrative         5,585,787     4,854,018     4,746,895
  Bad debt expense                      29,093       270,000        30,914
  Officers' salaries                   616,052       574,245       622,573
                                  ------------  ------------  ------------
      TOTALS                         6,230,932     5,698,263     5,400,382
                                  ------------  ------------  ------------

INCOME FROM OPERATIONS               1,364,307     1,971,109     1,702,501
                                  ------------  ------------  ------------

OTHER INCOME (EXPENSE)
 Interest income                       128,967        50,363        11,966
 Other income                           65,310             -             -
 Equity in loss of joint venture      (176,911)            -             -
 Management fee income                  44,403             -             -
 Interest expense                     (130,101)     (110,684)     (145,930)
                                  ------------  ------------  ------------
      TOTALS                           (68,332)      (60,321)     (133,964)
                                  ------------  ------------  ------------

INCOME BEFORE INCOME TAXES AND
 MINORITY INTEREST IN SUBSIDIARY     1,295,975     1,910,788     1,568,537

 Minority interest in subsidiary         6,166             -             -
 Provision for income taxes            602,059       725,653       693,195
                                  ------------  ------------  ------------

NET INCOME                        $    700,082  $  1,185,135  $    875,342
                                  ============  ============  ============

Basic and diluted earnings per
 share                            $        .13  $        .25  $        .22
                                  ============  ============  ============

Weighted average common shares
 outstanding:

      Basic                          5,599,830     4,721,327     3,999,650
                                  ============  ============  ============
      Diluted                        5,599,830     4,776,757     3,999,650
                                  ============  ============  ============



                  COFFEE HOLDING CO., INC. AND SUBSIDIARY
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                YEARS ENDED OCTOBER 31, 2006, 2005 AND 2004


                                         2006         2005         2004
                                     -----------  -----------  -----------
OPERATING ACTIVITIES:
  Net income                         $   700,082  $ 1,185,135  $   875,342
  Adjustments to reconcile net
   income to net cash (used in)
   provided by operating
   activities:
     Depreciation                        431,750      373,106      363,612
     Bad debt expense                      5,421      270,000       30,914
     Deferred income taxes                56,200     (173,200)     (27,200)
     Loss from joint venture             176,911            -            -
   Changes in operating assets and
    liabilities:
     Commodities held at broker       (1,336,095)  (2,120,493)      20,222
     Accounts receivable              (1,380,693)  (1,423,821)  (1,881,986)
     Inventories                       1,597,035   (2,238,289)    (476,865)
     Prepaid expenses and other
       current assets                    (56,003)     563,558     (244,963)
     Prepaid and refundable income
       taxes                            (290,374)     (11,629)           -
     Due from joint venture              (73,658)           -            -
     Accounts payable and accrued
      expenses                           397,112     (227,259)   2,797,389
     Income tax payable                 (218,864)      58,864      160,000
     Deposits and other assets          (328,388)    (135,054)           -
                                     -----------  -----------  -----------
   Net cash (used in) provided by
    operating activities                (319,564)  (3,879,082)   1,616,465
                                     -----------  -----------  -----------

INVESTING ACTIVITIES:
    Purchases of property and
     equipment                          (190,749)    (466,122)  (1,039,479)
    Investment in joint venture         (585,709)           -            -
    Security deposits                          -       (8,025)     (16,700)
                                     -----------  -----------  -----------
      Net cash used in investing
       activities                       (776,458)    (474,147)  (1,056,179)
                                     -----------  -----------  -----------

FINANCING ACTIVITIES:
    Principal payments on term loan            -     (252,000)     (84,000)
    Net proceeds from initial public
     offering                                  -    6,436,016            -
    Advances under bank line of
     credit                           41,847,244   27,754,052   28,108,814
    Principal payments under bank
     line of credit                  (40,367,530) (29,375,930) (27,715,835)
    Payments to related parties                -            -      (79,646)
    Principal payments of
     obligations under capital
     leases                               (1,329)    (115,586)    (221,306)
                                     -----------  -----------  -----------
      Net cash provided by financing
       activities                      1,478,385    4,446,552        8,027
                                     -----------  -----------  -----------

MINORITY INTEREST                         (5,666)           -            -
                                     -----------  -----------  -----------

NET INCREASE IN CASH                     376,697       93,323      568,313

 Cash, beginning of year                 735,468      642,145       73,832
                                     -----------  -----------  -----------

CASH, END OF YEAR                    $ 1,112,165  $   735,468  $   642,145
                                     ===========  ===========  ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 DATA:
  Interest paid                      $   121,844  $   103,286  $   145,930
                                     ===========  ===========  ===========
  Income taxes paid                  $   831,503  $   460,744  $   370,850
                                     ===========  ===========  ===========

On June 10, 2005, 10,000 shares of restricted stock valued at $24,650 were
issued for services to be rendered.

Contact Information

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