FOR IMMEDIATE RELEASE
Contact: Andrew Gordon, President & CEO
Telephone: (718) 832-0800
Coffee Holding Co., Inc. Reports Second Quarter and Six Month Earnings
BROOKLYN, New York - June 14, 2007. Coffee Holding Co., Inc. (AMEX:JVA) today announced its operating results for the three and six months ended April 30, 2007. In this release, the Company:
| | · | Reports sales growth of 18.2% for the quarter; |
| | · | Reports a $623,122 increase in net income for the quarter; and |
| | · | Reports net income of $0.06 per share for the quarter. |
Net income equaled $338,888, or $.06 per share (basic and diluted), for the three months ended April 30, 2007 compared to a net loss of $284,234, or ($0.05) per share (basic and diluted), for the three months ended April 30, 2006. Net income equaled $648,592, or $.12 per share (basic and diluted), for the six months ended April 30, 2007 compared to net income of $235,404, or $0.04 per share (basic and diluted), for the six months ended April 30, 2006. The increase primarily reflects increased gross profit and was partially offset by increased operating expenses.
Net sales totaled $14,194,373 for the three months ended April 30, 2007, an increase of $2,183,445 or 18.2% from $12,010,928 for the three months ended April 30, 2006. Net sales totaled $26,829,485 for the six months ended April 30, 2007, an increase of $973,712 or 3.8% from $25,855,773 for the six months ended April 30, 2006. The increase in green coffee sales reflects higher sales of green coffee and private label coffee compared to the second quarter of fiscal year 2006.
“We are obviously pleased with our results for the quarter as operating margins returned to more historical levels. The price increases implemented at the beginning of 2007 were crucial in achieving these historical margins along with a favorable position in the green coffee markets were keys to a profitable quarter,” said Andrew Gordon, President and Chief Executive Officer.
“I am always pleased when we are able to grow our business at the rate we have (18.8% for the quarter) while maintaining normal operating margins. In doing so, we continue to meet the challenges of an ever increasing volatile economic environment and we hope to keep to improving our margins while growing our sales over the balance of fiscal 2007. With some exciting new business on the West Coast as well as our first substantial business with our Joint Venture - Generations Coffee Co. to begin in the immediate future, we believe our goals will be achievable.”
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.
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 30, 2007 AND OCTOBER 31, 2006
| | | April 30, 2007 | | October 31, 2006 | |
| | | (unaudited) | | | |
- ASSETS - | |
CURRENT ASSETS: | | | | | |
| Cash | | $1,677,825 | | $1,112,165 | |
| Commodities held at broker | | 3,428,114 | | 4,330,489 | |
| Accounts receivable, net of allowance for doubtful accounts of $420,349 for 2007 and 2006 | | 4,589,560 | | 6,534,848 | |
| Inventories | | 3,938,672 | | 2,899,543 | |
| Prepaid expenses and other current assets | | 744,693 | | 328,544 | |
| Prepaid and refundable taxes | | 6,710 | | 302,003 | |
| Deferred tax asset | | | 452,000 | | | 221,000 | |
| TOTAL CURRENT ASSETS | | | 14,837,574 | | | 15,728,592 | |
| | | | | | | | |
| Property and equipment, at cost, net of accumulated depreciation of $4,317,727 and $4,159,274 for 2007 and 2006, respectively | | | 2,458,544 | | | 2,138,951 | |
| Investment in joint venture | | | 281,858 | | | 408,798 | |
| Due from joint venture, less reserve of $242,000 for 2007 | | | 220,030 | | | 73,658 | |
| Deposits and other assets | | | 349,335 | | | 631,859 | |
TOTAL ASSETS | | $ | 18,147,341 | | $ | 18,981,858 | |
| | | | | | | | |
- LIABILITIES AND STOCKHOLDERS' EQUITY - |
CURRENT LIABILITIES: | | | | | | | |
| Accounts payable and accrued expenses | | $ | 4,052,468 | | $ | 4,828,689 | |
| Income taxes payable | | | 74,707 | | | - | |
| Line of credit borrowings | | | 1,703,952 | | | 2,542,881 | |
| TOTAL CURRENT LIABILITIES | | | 5,831,127 | | | 7,371,570 | |
| | | | | | | | |
| Deferred income tax liabilities | | | 9,750 | | | 12,300 | |
| Deferred compensation payable | | | 316,169 | | | 256,284 | |
| TOTAL LIABILITIES | | | 6,157,046 | | | 7,640,154 | |
| | | | | | | | |
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 and outstanding for 2007 and 2006, respectively | | | 5,530 | | | 5,530 | |
| Additional paid-in capital | | | 7,327,023 | | | 7,327,023 | |
| Retained earnings | | | 4,657,742 | | | 4,009,151 | |
| TOTAL STOCKHOLDERS' EQUITY | | | 11,990,295 | | | 11,341,704 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 18,147,341 | | $ | 18,981,858 | |
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX AND THREE MONTHS ENDED APRIL 30, 2007 AND 2006
(Unaudited)
| | | Six Months Ended April 30, | | Three Months Ended April 30, | |
| | | 2007 | | 2006 | | 2007 | | 2006 | |
NET SALES | | $ | 26,829,485 | | $ | 25,855,773 | | $ | 14,194,373 | | $ | 12,010,928 | |
| | | | | | | | | | | | | | |
COST OF SALES | | | 22,553,727 | | | 22,667,636 | | | 12,087,210 | | | 11,148,234 | |
| | | | | | | | | | | | | | |
GROSS PROFIT | | | 4,275,758 | | | 3,188,137 | | | 2,107,163 | | | 862,964 | |
| | | | | | | | | | | | | | |
OPERATING EXPENSES: | | | | | | | | | | | | | |
| Selling and administrative | | | 2,846,734 | | | 2,502,295 | | | 1,456,044 | | | 1,219,458 | |
| Writedown of amount due from joint venture | | | 242,000 | | | - | | | - | | | - | |
| Bad debt expense | | | 31,195 | | | - | | | 31,195 | | | - | |
| Officers’ salaries | | | 234,449 | | | 272,180 | | | 117,437 | | | 136,205 | |
TOTALS | | | 3,354,378 | | | 2,774,475 | | | 1,604,676 | | | 1,355,663 | |
| | | | | | | | | | | | | | |
INCOME (LOSS) FROM OPERATIONS | | | 921,380 | | | 413,662 | | | 502,487 | | | (492,969 | ) |
| | | | | | | | | | | | | | |
OTHER INCOME (EXPENSE) | | | | | | | | | | | | | |
| Interest income | | | 66,576 | | | 57,289 | | | 32,460 | | | 26,723 | |
| Equity in loss of joint venture | | | (93,939 | ) | | (5,322 | ) | | (30,000 | ) | | (5,322 | ) |
| Writedown of investment in joint venture | | | (33,000 | ) | | - | | | - | | | - | |
| Management fee income | | | 12,046 | | | - | | | - | | | - | |
| Interest expense | | | (56,406 | ) | | (38,225 | ) | | (32,174 | ) | | (22,766 | ) |
| Impairment loss - leasehold improvements | | | (31,892 | ) | | - | | | (31,892 | ) | | - | |
| | | | (136,615 | ) | | 13,742 | | | (61,606 | ) | | (1,365 | ) |
| | | | | | | | | | | | | | |
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST IN SUBSIDIARY | | | 784,765 | | | 427,406 | | | 440,881 | | | (494,334 | ) |
| | | | | | | | | | | | | | |
| Benefit (provision) for income taxes | | | (140,050 | ) | | (192,000 | ) | | (102,200 | ) | | 210,100 | |
| | | | | | | | | | | | | | |
INCOME (LOSS) BEFORE MINORITY INTEREST | | | 644,715 | | | - | | | 338,681 | | | - | |
| | | | | | | | | | | | | | |
| Minority interest in subsidiary | | | 3,877 | | | - | | | 207 | | | - | |
| | | | | | | | | | | | | | |
NET INCOME (LOSS) | | $ | 648,592 | | $ | 235,404 | | $ | 338,888 | | $ | (284,234 | ) |
| | | | | | | | | | | | | | |
| Basic and diluted earnings (loss) per share | | $ | .12 | | $ | .04 | | $ | .06 | | $ | (.05 | ) |
| | | | | | | | | | | | | | |
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED APRIL 30, 2007 AND 2006
(Unaudited)
| | | 2007 | | 2006 | |
OPERATING ACTIVITIES: | | | | | |
| Net income | | $ | 648,592 | | $ | 235,404 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
| Depreciation and amortization | | | 165,478 | | | 227,907 | |
| Writedown of amount due from joint venture | | | 242,000 | | | - | |
| Loss from joint venture | | | 93,939 | | | 5,322 | |
| Writedown of investment in joint venture | | | 33,000 | | | - | |
| Deferred taxes | | | (233,550 | ) | | 29,300 | |
| Impairment loss | | | 31,892 | | | - | |
| Changes in operating assets and liabilities: | | | | | | | |
| Commodities held at broker | | | 902,375 | | | 14,443 | |
| Accounts receivable | | | 1,703,288 | | | 899,654 | |
| Inventories | | | (1,039,129 | ) | | 950,421 | |
| Prepaid expenses and other current assets | | | (416,149 | ) | | (116,866 | ) |
| Prepaid and refundable income taxes | | | 295,293 | | | (104,607 | ) |
| Accounts payable and accrued expenses | | | (776,221 | ) | | (502,758 | ) |
| Due from joint venture | | | (146,372 | ) | | - | |
| Deposits and other assets | | | 14,021 | | | (19,675 | ) |
| Income taxes payable | | | 74,707 | | | (217,064 | ) |
Net cash provided by operating activities | | | 1,593,164 | | | 1,401,485 | |
| | | | | | | | |
INVESTING ACTIVITIES: | | | | | | | |
| Purchases of property and equipment | | | (188,575 | ) | | (113,756 | ) |
| Security deposits | | | - | | | (2,500 | ) |
| Investment in joint ventures | | | - | | | (450,501 | ) |
Net cash (used in) investing activities | | | (188,575 | ) | | (566,757 | ) |
| | | | | | | | |
FINANCING ACTIVITIES: | | | | | | | |
| Advances under bank line of credit | | | 23,967,150 | | | 20,737,183 | |
| Principal payments under bank line of credit | | | (24,806,079 | ) | | (20,920,638 | ) |
| Principal payments of obligations under capital leases | | | - | | | (1,329 | ) |
Net cash (used in) financing activities | | | (838,929 | ) | | (184,784 | ) |
| | | | | | | | |
NET INCREASE IN CASH | | | 565,660 | | | 649,944 | |
| | | | | | | | |
| Cash, beginning of year | | | 1,112,165 | | | 735,468 | |
| | | | | | | | |
CASH, END OF PERIOD | | $ | 1,677,825 | | $ | 1,385,412 | |
| | | | | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | | | | | | | |
| Interest paid | | $ | 43,351 | | $ | 16,873 | |
| Income taxes paid | | $ | - | | $ | 185,000 | |
| | | | | | | | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES: | | | | | | | |
| | | | | | | | |
| The Company utilized its deposit for the purchase of machinery and equipment | | $ | 328,388 | | | - | |
