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Press release from GlobeNewswire (a Nasdaq OMX company)

Coffee Holding Co., Inc. Reports Year End Results

Monday, January 31, 2011

Coffee Holding Co., Inc. Reports Year End Results06:00 EST Monday, January 31, 2011BROOKLYN, N.Y., Jan. 31, 2011 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (Nasdaq:JVA) today announced its operating results for the fiscal year ended October 31, 2010. In this release, the Company: Reports net income of $2,389,361, or $0.44 per share (basic and diluted) for the fiscal year ended October 31, 2010;   Reports net sales of $83,491,967 for the fiscal year ended October 31, 2010; and   Reports sales growth of 12.1% for the fiscal year ended October 31, 2010 compared to the fiscal year ended October 31, 2009. The Company had net income of $2,389,361, or $0.44 per share (basic and diluted), for the fiscal year ended October 31, 2010 compared to a net income of $3,291,066, or $0.60 per share (basic and diluted) for the fiscal year ended October 31, 2009. Results for the fiscal year ended October 31, 2009 include a one-time gain of $1,205,796, or $0.36 cents per share, on the sale of the Company's Brooklyn, New York facility.   Net sales totaled $83,491,967 for the fiscal year ended October 31, 2010, an increase of $9,040,294, or 12.1%, from $74,451,673 for the fiscal year ended October 31, 2009.  The increase in net sales reflects higher coffee prices during fiscal year 2010 as compared to fiscal year 2009, the addition of the OPTCO operations and an increase in poundage sold as the Company eclipsed the 40 million pound level for the first time in its history. Cost of sales for the fiscal year ended October 31, 2010 was $72,931,626, or 87.3% of net sales, as compared to $64,439,494, or 86.6%, of net sales for the fiscal year ended October 31, 2009. Cost of sales consists primarily of the cost of green coffee and packaging materials and realized and unrealized gains or losses on hedging activity. The increase in cost of sales reflects the increased cost of green coffee.  Cost of sales includes purchases of approximately $19.3 million and $16.7 million in fiscal years 2010 and 2009, respectively, from a related party.  Total operating expenses increased $155,547, or 2.4%, to $6,544,597 for the fiscal year ended October 31, 2010 from $6,389,050 for the fiscal year ended October 31, 2009 due to a slight increase in selling and administrative expense, partially offset by a slight decrease in officers' salaries.  Selling and administrative expenses increased $183,746, 2.9%, to $5,809,397 for the year ended October 31, 2010 from $5,625,651 for 2009.  The slight increase in selling and administrative expenses reflects several factors, including increases of approximately $20,000 in advertising costs, $33,000 in insurance cost, $153,000 in professional services, $20,000 in office expenses and $118,000 in travel/show and demo costs, partially offset by decreases of approximately $103,000 in salaries, $50,000 in utilities and $16,000 in moving costs. "We are pleased to report another year of positive results to our loyal shareholder base. Our continued growth as one of the leading specialty coffee dealers together with our acquisition of OPTCO in 2010 was the driving force behind a 12% increase in sales which led to an increased income from operations as compared to 2009. We believe we remain well positioned within the industry to take advantage of the coffee consumers' desire for a better cup of coffee. Our shift in our sales mix reflects this as approximately 60% of our revenues are now derived from higher end specialty coffee sales which are comprised of top quality Arabica coffees as well as our increased penetration into the fast growing organic coffee market aided by our OPTCO transaction," said Andrew Gordon, the Company's President and Chief Executive Officer.    "Sales of private label and our own brands continue to play an important role in our Company's growth. Although we have less private label business now than in past years, our current core customer base represents a solid loyal platform from which to build upon at a time when the volatility and steep rise in the green coffee market has made this end of the business an area where selectivity is vital for profitability," commented Mr. Gordon. "We also have rolled out additional new flavors on our Entenmann's bagged coffee line which is where we have had our greatest success with this brand.  We believe the future of specialty retail coffee is not only looking up for our wholesale customer base, but for our own higher end marketed brands (S&W and Entenmann's) as well," said Mr. Gordon. "Although we continue to expect continued volatility and high prices in the Arabica coffee (commodity) market, we believe we are well positioned for continued growth and profitability in 2011," added Mr. Gordon. The Company's previously announced quarterly cash dividend of $0.03 per share will be paid on January 31, 2011 to stockholders of record as of the close of business on January 17, 2011. 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. We have based these forward-looking statements upon information available to management as of the date of this release and management's expectations and projections about certain future events. 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 SUBSIDIARIESCONSOLIDATED BALANCE SHEETSOCTOBER 31, 2010 AND 2009  2010 2009    ASSETS   CURRENT ASSETS:    Cash and cash equivalents$ 1,672,921 $ 1,773,373 Commodities held at broker275,499  77,306 Accounts receivable, net of allowances of $197,078 for 2010 and $165,078 for 20098,852,372  10,174,221 Inventories 8,190,420  4,800,143 Prepaid green coffee1,335,676 -- Prepaid expenses and other current assets 502,852  419,740 Prepaid and refundable income taxes 9,521  36,068 Deferred income tax asset 328,000  286,000TOTAL CURRENT ASSETS21,167,261  17,566,851      Machinery and equipment, at cost, net of accumulated depreciation of $5,147,593 and $4,681,558 for 2010 and 2009, respectively 1,560,940  1,648,214 Customer list and relationships, net of accumulated amortization of $3,750 for 2010 146,250 -- Trademarks180,000 -- Goodwill440,000 -- Deposits and other assets 699,029  588,573 TOTAL ASSETS$  24,193,480 $ 19,803,638      LIABILITIES AND STOCKHOLDERS' EQUITY   CURRENT LIABILITIES:    Accounts payable and accrued expenses$ 7,124,072 $ 6,655,916 Line of credit 2,306,749  791,628 Income taxes payable 234,744  453,512 Contingent liability41,000 -- Deferred income tax liabilities73,300  121,000 TOTAL CURRENT LIABILITIES9,779,865  8,022,056      Deferred income tax liabilities216,700  14,500 Deferred rent payable124,756  99,067 Deferred compensation payable540,642  489,782TOTAL LIABILITIES10,661,963  8,625,405STOCKHOLDERS' EQUITY:          Preferred stock, par value $.001 per share; 10,000,000 shares authorized; none issued --   --  Common stock, par value $.001 per share; 30,000,000 shares authorized, 5,579,830 and 5,529,830 shares issued for 2010 and 2009, respectively; 5,490,823 and 5,440,823 shares outstanding for 2010 and 2009, respectively 5,580  5,530 Additional paid-in capital 7,581,973  7,327,023 Contingent consideration 39,000 -- Retained earnings 6,151,054  4,095,671 Less: Treasury stock, 89,007 common shares, at cost for 2010 and 2009 (295,261)  (295,261) Total Coffee Holding Co., Inc. and OPTCO Stockholders' Equity 13,482,346  11,132,963 Noncontrolling interest 49,171  45,270TOTAL EQUITY 13,531,517  11,178,233TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$ 24,193,480 $ 19,803,638            COFFEE HOLDING CO., INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFISCAL YEARS ENDED OCTOBER 31, 2010 AND 2009    2010 2009NET SALES$ 83,491,967 $74,451,673    COST OF SALES (which include purchases of approximately $19.3 million and $16.7 million in fiscal years 2010 and 2009, respectively, from a related party) 72,931,626  64,439,494    GROSS PROFIT 10,560,341  10,012,179    OPERATING EXPENSES:    Selling and administrative 5,809,397  5,625,651 Officers' salaries 735,200  763,399TOTAL6,544,597 6,389,050      INCOME FROM OPERATIONS 4,015,744 3,623,129OTHER INCOME (EXPENSE):    Interest income 94,355  9,191 Other income and gains --  5,700 Gain on sale of manufacturing facility --  2,107,501 Interest expense (237,348)  (253,092)TOTAL  (142,993)  1,869,300     INCOME BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST IN SUBSIDIARIES 3,872,751  5,492,429      Provision for income taxes 1,479,489  2,159,319     NET INCOME BEFORE NONCONTROLLING INTEREST IN SUBSIDIARIES 2,393,262  3,333,110 Less: Net income attributable to the noncontrolling interest in subsidiaries (3,901)  (42,044)     NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. $ 2,389,361 $ 3,291,066      Basic and diluted earnings per share$ .44 $ .60      Weighted average common shares outstanding:    Basic 5,463,837  5,441,462 Diluted 5,468,439  5,441,462    COFFEE HOLDING CO., INC. AND SUBSIDIARYCONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY   FISCAL YEARS ENDED OCTOBER 31, 2010 AND 2009         Additional     Non-         Paid - in Retained Contingent Controlling     Common Stock Treasury Stock Capital Earnings Consideration Interest Total   $.001 Par Value         Number of   Number of          Shares Amount Shares Amount                                Balance, 10/31/08  5,445,516 $ 5,530  84,314 ($289,735)  7,327,023 $ 804,605 $ 0 $ 0  $ 7,847,423             Stock repurchase  (4,693)  --   4,693  (5,526)  --   --   --  --    (5,526)                     Net income  --   --   --   --   --  3,291,066  --   --   3,291,066                     Non-Controlling Interest  --   --   --   --   --   --     --  45,270 45,270                     Balance, 10/31/09  5,440,823 $ 5,530  89,007 $ (295,261) $ 7,327,023 $ 4,095,671 $ --  $ 45,270 $ 11,178,233                           Stock issued  50,000  50  --   --   254,950  --       255,000                     OPTCO --   -- -- -- -- -- 39,000 -- 39,000                     Dividend            (333,978)     (333,978)                     Net income  --   --   --   --   --   2,389,361  --   --   2,389,361                     Non-Controlling Interest  --   --   --   --   --   --   --  3,901 3,901                     Balance, 10/31/10  5,490,823 $ 5,580  89,007 ($ 295,261) $ 7,581,973 $ 6,151,054 $ 39,000 $  49,171  $ 13,531,517    COFFEE HOLDING CO., INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFISCAL YEARS ENDED OCTOBER 31, 2010 AND 2009    2010 2009OPERATING ACTIVITIES:    Net income $ 2,393,262 $ 3,333,110 Adjustments to reconcile net income to net cash provided by operating activities:    Depreciation and amortization 469,787  537,375 Gain on sale of manufacturing facility --  (2,107,501) Unrealized gain on commodities (198,193)  (329,187) Other gains --  (5,700) Bad debt expense 17,618  95,294 Deferred rent 25,689  29,108 Deferred income taxes 112,500  687,377 Changes in operating assets and liabilities:    Accounts receivable 1,304,231  (1,201,718) Inventories (1,580,353)  246,411 Prepaid expenses and other current assets (83,112)  (134,840) Prepaid green coffee (1,335,676)  -- Prepaid and refundable income taxes 26,547  989,867 Accounts payable and accrued expenses 468,156  (2,464,207) Deposits and other assets (59,596)  91,464 Income taxes payable (218,768)  453,512Net cash provided by operating activities 1,342,092  220,365     INVESTING ACTIVITIES:    Purchase of assets of OPTCO – net cash paid (2,259,924)  -- Proceeds from the sale of equipment --  30,000 Proceeds from the sale of manufacturing facility --  2,906,473 Purchases of machinery and equipment (363,763)  (204,808)Net cash (used in) provided by investing activities (2,623,687)  2,731,665     FINANCING ACTIVITIES:    Advances under bank line of credit 84,750,863  76,276,346 Principal payments under bank line of credit (83,235,742)  (75,484,718) Payoff of previous bank line of credit --  (3,522,207) Payment of dividend (333,978) -- Purchase of treasury stock --  (5,526)Net cash provided by (used in) financing activities 1,181,143  (2,736,105)          NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (100,452)  215,925     Cash and cash equivalents, beginning of PERIOD 1,773,373  1,557,448     CASH AND CASH EQUIVALENTS, END OF PERIOD$ 1,672,921 $ 1,773,373    COFFEE HOLDING CO., INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFISCAL YEARS ENDED OCTOBER 31, 2010 AND 2009   2010  2009SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:    Interest paid$ 241,371 $ 250,266 Income taxes paid$ 1,585,757 $ 737,494 Income taxes (refunded)$  $ (703,123)     SUPPLEMENTAL DISCLOSURE OF INVESTING ACTIVITIES:    On May 17, 2010, the Coffee Holding Co., Inc. acquired substantially all of the assets of OPTCO:    Assets acquired:    Inventory$ 1,809,924 $ -- Equipment 15,000  -- Customer list and relationships 150,000  -- Trademarks 180,000  -- Goodwill 440,000  -- Total assets acquired: 2,594,924  -- Purchase of assets funded by:    Contingent liability 41,000  -- Contingent consideration 39,000  -- Common stock, par value $.001 per share, 50,000 shares 50  -- Additional paid-in capital 254,950  --   335,000  --      Net cash paid$ 2,259,924 $ --CONTACT: Coffee Holding Co., Inc. Andrew Gordon, President & CEO (718) 832-0800