EX-99.1 2 v052343_ex99-1.htm
FOR IMMEDIATE RELEASE
Contact: Andrew Gordon, President & CEO
Telephone: (718) 832-0800

Coffee Holding Co., Inc. Reports Third Quarter and Nine Month Earnings

BROOKLYN, New York - September 7, 2006. Coffee Holding Co., Inc. (AMEX:JVA) today announced its operating results for the three and nine months ended July 31, 2006. In this release, the Company:

 
Ÿ
Reports sales growth of 10.0% for the quarter and 30.0% for the nine month period;

 
Ÿ
Reports a $627,000 increase in net income for the quarter and a $138,000 decrease in net income for the nine month period; and

 
Ÿ
Reports net income of $0.03 per share for the quarter and $0.08 per share for the nine months ended July 31, 2006.

Net sales totaled $11.9 million for the three months ended July 31, 2006, an increase of $1.1 million, or 10.0%, from $10.8 million for the quarter ended July 31, 2005. Net sales for the nine months ended July 31, 2006 equaled $37.7 million, an increase of $8.7 million, or 30.0%, from $29.0 million during the nine months ended July 31, 2005. The increase in net sales for the three and nine month periods was due to an increase in pounds of coffee sold due to increased sales of the Company’s private label, branded and specialty green coffees.

Net income was $179,000, or $0.03 per share, for the three months ended July 31, 2006 compared to a net loss of $448,000, or ($0.08) per share, for the three months ended July 31, 2005. The increase in net income primarily reflects an increase in gross profit and decreased operating expenses. Net income decreased by $138,000 to $415,000, or $0.08 per share for the nine months ended July 31, 2006 compared to $553,000, or $.12 per share, for the nine months ended July 31, 2005. The decrease in net income reflects increased cost of sales and lower margins on the Company’s branded and private label products due to market conditions. A loss by the Company’s Café La Rica joint venture also negatively impacted net income for the three and nine month periods ended July 31, 2006.

“Although outside market conditions and the overall economic landscape continue to present challenges, we are pleased with our quarterly results,” said Andrew Gordon, President and Chief Executive Officer. “Our second quarter results were unacceptable therefore it was important to return to profitability this quarter. The fact that we did so in what traditionally has been our toughest quarter gives me confidence going forward that we are sticking to the game plan and getting the job done.”

“Since the Café La Rica joint venture is a start-up operation that has been in existence for only a few months, we are not surprised or concerned by its early results which negatively impacted our earnings. Rather, we are pleased that our Florida sales numbers are significantly higher and that our leading brand Café Caribe can now be found on the shelves of every major grocery chain in the state. This had been one of our goals from both the outset of our initial public offering and the formation of the joint venture.”

 
 
 

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 BALANCE SHEETS
JULY 31, 2006 AND OCTOBER 31, 2005

   
July 31, 2006
  
October 31, 2005
  
   
(unaudited)
      
- ASSETS -
  
CURRENT ASSETS:
              
Cash
  
$
3,039,506
  
$
735,468
  
Due from brokers
    
3,170,874
    
2,994,394
  
Accounts receivable, net of allowance for doubtful accounts of $425,770 and $420,349 for 2006 and 2005, respectively
    
5,067,933
    
5,159,576
  
Inventories
    
4,214,884
    
4,496,578
  
Prepaid expenses and other current assets
    
568,832
    
284,170
  
Deferred tax asset
    
245,000
    
318,600
  
TOTAL CURRENT ASSETS
    
16,307,029
    
13,988,786
  
               
Property and equipment, at cost, net of accumulated depreciation of $4,056,485 and $3,727,524 for 2006 and 2005, respectively
    
2,208,631
    
2,379,952
  
Investment in joint ventures
    
614,394
    
-
 
Deposits and other assets
    
366,669
    
176,575
 
 TOTAL ASSETS
  
$
19,496,723
  
$
16,545,313
  
               
- LIABILITIES AND STOCKHOLDERS' EQUITY -
CURRENT LIABILITIES:
              
Accounts payable and accrued expenses
  
$
4,625,829
  
$
4,431,577
  
Line of credit borrowings
    
3,562,549
    
1,063,167
  
Current portion of obligations under capital lease
    
-
   
1,329
  
Income taxes payable - current
    
-
   
218,864
  
TOTAL CURRENT LIABILITIES
    
8,188,378
    
5,714,937
  
               
Deferred compensation payable
    
225,669
    
135,054
  
Income taxes payable - deferred
    
26,200
    
53,700
  
TOTAL LIABILITIES
    
8,440,247
    
5,903,691
  
               
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 2006 and 2005, respectively
    
5,530
    
5,530
  
Additional paid-in capital
    
7,327,023
    
7,327,023
  
Retained earnings
    
3,723,923
    
3,309,069
  
TOTAL STOCKHOLDERS' EQUITY
   
11,056,476
    
10,641,622
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
19,496,723
  
$
16,545,313
  


 
 
 

COFFEE HOLDING CO., INC.
CONDENSED STATEMENTS OF OPERATIONS
NINE AND THREE MONTHS ENDED JULY 31, 2006 AND 2005
(Unaudited)
 
   
Nine Months Ended
July 31,
  
Three Months Ended
July, 31
  
   
   
2006
  
2005
  
2006
  
2005
  
NET SALES
  
$
37,714,354
  
$
29,016,190
  
$
11,858,581
  
$
10,782,680
  
                           
COST OF SALES
    
32,584,566
    
23,657,607
    
9,916,930
    
9,749,222
  
                           
GROSS PROFIT
    
5,129,788
    
5,358,583
    
1,941,651
    
1,033,458
  
                           
OPERATING EXPENSES:
                          
Selling and administrative
    
3,916,707
    
3,801,669
    
1,414,412
    
1,420,090
  
Bad debt expense
    
5,421
    
270,000
    
5,421
    
270,000
  
Officers' salaries
    
408,155
    
399,271
    
135,975
    
135,975
  
TOTALS
    
4,330,283
    
4,470,940
    
1,555,808
    
1,826,065
  
                           
INCOME (LOSS) FROM OPERATIONS
    
799,505
    
887,643
    
385,843
    
(792,607
)
                           
OTHER INCOME (EXPENSE)
                          
Interest income
    
90,907
    
25,426
    
33,618
    
18,219
  
Equity in loss of joint venture
    
(74,611
)
  
-
   
(69,289
)
  
-
 
Interest expense
    
(80,951
)
  
(88,130
)
  
(42,726
)
  
(24,908
)
     
(64,655
)
  
(62,704
)
  
(78,397
)
  
(6,689
)
                           
INCOME (LOSS) BEFORE INCOME TAXES
    
734,850
    
824,939
    
307,446
    
(799,296
)
                           
(Provision) benefit for income taxes
    
(319,996
)
  
(272,179
)
  
(127,996
)
  
351,421
  
                           
NET INCOME (LOSS)
  
$
414,854
  
$
552,760
  
$
179,450
  
$
(447,875
)
                           
Basic and diluted earnings (loss) per share
  
$
.08
  
$
.12
  
$
.03
  
$
(.08
)
 

 
 
 

COFFEE HOLDING CO., INC.
CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 2006 AND 2005
(Unaudited)

   
2006
  
2005
  
OPERATING ACTIVITIES:
              
Net income
  
$
414,854
  
$
552,760
  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
              
Depreciation and amortization
    
328,962
    
281,409
  
Bad debts
    
5,421
    
270,000
  
Deferred taxes
    
46,100
    
(77,000
)
Loss from joint venture
    
74,611
    
-
 
Changes in operating assets and liabilities:
              
Due from brokers
    
(176,480
)
  
(1,281,036
)
Accounts receivable
    
86,222
    
(334,705
)
Inventories
    
281,694
    
(1,301,542
)
Prepaid expenses and other current assets
    
(284,662
)
  
266,425
  
Accounts payable and accrued expenses
    
194,252
    
(1,977,786
)
Other assets
    
(99,479
)
  
-
 
Income taxes payable
    
(218,864
)
  
(160,000
)
Net cash provided by (used in) operating activities
    
652,631
    
(3,761,475
)
               
INVESTING ACTIVITIES:
              
Purchases of property and equipment
    
(157,641
)
  
(357,936
)
Security deposits
    
-
   
(8,025
)
Investment in joint ventures
    
(689,005
)
  
-
 
Net cash (used in) investing activities
    
(846,646
)
  
(365,961
)
               
FINANCING ACTIVITIES:
              
Principal payments on term loan
    
-
   
(252,000
)
Advances under bank line of credit
    
31,322,458
    
17,315,427
  
Net proceeds from IPO
    
-
   
6,436,016
  
Principal payments under bank line of credit
    
(28,823,076
)
  
(18,672,311
)
Principal payments of obligations under capital leases
    
(1,329
)
  
(107,699
)
Net cash provided by financing activities
    
2,498,053
    
4,719,433
  
               
NET INCREASE IN CASH
    
2,304,038
    
591,997
  
               
Cash, beginning of year
    
735,468
    
642,145
  
               
CASH, END OF PERIOD
  
$
3,039,506
  
$
1,234,142
  
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
              
Interest paid
  
$
36,034
  
$
81,495
  
Income taxes paid
  
$
269,784
  
$
297,145