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Press release from GlobeNewswire (a Nasdaq OMX company)

Coffee Holding Co., Inc. Reports Results for the Three and Nine Months Ended July 31, 2011

Tuesday, September 13, 2011

Coffee Holding Co., Inc. Reports Results for the Three and Nine Months Ended July 31, 201106:00 EDT Tuesday, September 13, 2011STATEN ISLAND, N.Y., Sept. 13, 2011 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. ("Coffee Holding") (Nasdaq:JVA) today announced its operating results for the three and nine months ended July 31, 2011. In this release, the Company: Reports net sales of $98,737,976 for the nine months ended July 31, 2011 and $35,764,866 for the three months ended July 31, 2011 compared to net sales of $60,309,228 for the nine months ended July 31, 2010 and $19,032,770 for the three months ended July 31, 2010; Reports sales growth of 88% for the three months ended July 31, 2011 compared to the three months ended July 31, 2010; and Reports net income of $168,236, or $0.03 per share (basic and diluted) for the three months ended July 31, 2011 compared to net income of $424,091, or $0.08 per share (basic and diluted) for the three months ended July 31, 2010.Results of Operations The Company had net income of $168,236, or $0.03 per share (basic and diluted), for the three months ended July 31, 2011 compared to net income of $424,091 or $0.08 per share (basic and diluted), for the three months ended July 31, 2010. The decrease in net income primarily reflects unrealized losses on the Company's option positions of $1,202,443, which were marked to the market at the end of the quarter. The Company had net income of $2,397,265, or $0.44 per share (basic and diluted) for the nine months ended July 31, 2011 compared to net income of $1,782,517 or $0.33 per share (basic and diluted), for the nine months ended July 31, 2010. The increase in net income primarily reflects increased gross profit. Net sales totaled $35,764,866 for the three months ended July 31, 2011, an increase of $16,732,096, or 88%, from $19,032,770 for the three months ended July 31, 2010. The increase in net sales reflects higher sales prices compared to the third quarter of fiscal 2010 as well as additional poundage sold due to the addition of our subsidiary, OPTCO, and additional sales to our largest green coffee customer and three largest private label customers. Net sales totaled $98,737,976 for the nine months ended July 31, 2011, an increase of $38,428,748, or 64%, from $60,309,228 for the nine months ended July 31, 2010. The increase in net sales reflects higher sales prices compared to the second quarter of fiscal 2010 as well as additional poundage sold due to the addition of the Company's subsidiary, OPTCO, as well as additional sales of green coffee to new customers and increased private label sales. Cost of sales for the three months ended July 31, 2011 was $33,670,406 or 94.2% of net sales, as compared to $16,574,355 or 87.1% of net sales for the three months ended July 31, 2010. The increase in cost of sales reflects the increased cost of green coffee, as well as unrealized losses on the Company's option positions of $1,202,443, which were marked to market at the end of the quarter. Cost of sales for the nine months ended July 31, 2011 was $89,963,400 or 91.1% of net sales, as compared to $52,655,415 or 87.3% of net sales for the nine months ended July 31, 2010. The increase in cost of sales reflects the increased cost of green coffee, as well as a greater percentage of sales of green coffee versus roasted coffee sales, as well as the unrealized losses relating to the Company's option positions, which were marked to market at the end of the quarter. Total operating expenses increased by $78,661, or 4.7%, to $1,754,024 for the three months ended July 31, 2011 as compared to operating expenses of $1,675,363 for the three months ended July 31, 2010. The increase in operating expenses was due to increases in selling and administrative expense due to a higher level of business during this period. Total operating expenses increased by $679,129, or 14.9%, to $5,229,089 for the nine months ended July 31, 2011 as compared to operating expenses of $4,549,960 for the nine months ended July 31, 2010. The increase in operating expenses was due to increases in selling and administrative expense resulting from increased trade shows and traveling activities. "This quarter posed many challenges for the Company as market conditions in the coffee industry continued to be volatile. Even with these challenges, the Company continued to deliver growth and good operating results. Our revenues grew 88% during a period in which both outside economic factors, as well as a declining coffee market, worked in tandem against us. Our horizontally integrated business model was an important factor in helping us meet and overcome these headwinds. Although our gross margins declined in the specialty green coffee areas, our sales of private label partially offset that decline as we grew our business in dollars with our five largest accounts as well as increasing our cases sold in three out of these five accounts. Unfortunately, coffee futures fell unexpectedly at the very end of the quarter putting many of our hedging positions underwater. An unrealized loss of $1.2 million (the value of our option positions held as of July 31, 2011) is reflected in our cost of sales, but this loss remains unrealized and could change during our fourth quarter. Without this unrealized loss, our gross margins remained at traditional levels. We remain focused on continued revenue growth and believe that we are taking the necessary steps to achieve the growth necessary to make us a more vital player within this industry," said Mr. Andrew Gordon, President and CEO of Coffee Holding Co.Quarterly Dividend The Company's previously announced quarterly cash dividend of $0.03 per share will be paid to stockholders of record as of the close of business on October 17, 2011. The dividend will be paid on October 31, 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, coffee prices, pricing of our products, 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 SHEETSJULY 31, 2011 AND OCTOBER 31, 2010         July 31, 2011 October 31, 2010   (unaudited)  - ASSETS --    CURRENT ASSETS:     Cash and cash equivalents $ 3,772,322  $ 1,672,921 Commodities held at broker -- 275,499 Accounts receivable, net of allowances of $197,078 for 2011 and 201013,107,671 8,852,372 Inventories13,125,081 8,190,420 Prepaid green coffee1,167,153 1,335,676 Prepaid expenses and other current assets264,761 502,852 Prepaid and refundable income taxes81,390 9,521 Deferred income tax asset555,150 55,659TOTAL CURRENT ASSETS32,073,528 20,894,920 Machinery and equipment, at cost, net of accumulated depreciation of $5,465,207 and $5,147,593 for 2011 and 2010, respectively1,662,538 1,560,940 Customer list and relationships, net of accumulated amortization of $9,375 and $3,750 for 2011 and 2010, respectively140,625 146,250 Trademarks180,000 180,000 Goodwill440,000 440,000 Deferred income tax asset68,600 -- Deposits and other assets750,370 699,029TOTAL ASSETS $ 35,315,661  $ 23,921,139- LIABILITIES AND STOCKHOLDERS' EQUITY --    CURRENT LIABILITIES:     Accounts payable and accrued expenses $ 10,899,650  $ 7,124,072 Line of credit6,712,086 2,306,749 Due to broker879,058 -- Income taxes payable629,518 234,744 Contingent liability -- 41,000TOTAL CURRENT LIABILITIES19,120,312 9,706,565 Deferred income tax liabilities -- 17,659 Deferred rent payable141,380 124,756 Deferred compensation payable606,599 540,642TOTAL LIABILITIES19,868,291 10,389,622STOCKHOLDERS' EQUITY:     Coffee Holding Co., Inc. stockholders' equity:     Preferred stock, par value $.001 per share; 10,000,000 shares authorized; 0 issued -- -- Common stock, par value $.001 per share; 30,000,000 shares authorized, 5,579,830 shares issued; 5,490,823 shares outstanding for 2011 and 20105,580 5,580 Additional paid-in capital7,581,973 7,581,973 Contingent consideration39,000 39,000 Retained earnings8,047,352 6,151,054 Less: Treasury stock, 89,007 common shares, at cost for 2011 and 2010(295,261) (295,261) Total Coffee Holding Co., Inc. Stockholders' Equity15,378,644 13,482,346 Noncontrolling interest68,726 49,171TOTAL EQUITY15,447,370 13,531,517TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 35,315,661  $ 23,921,139    COFFEE HOLDING CO., INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited)             Nine Months Ended July 31,Three Months Ended July 31,   2011 20102011 2010NET SALES $ 98,737,976  $ 60,309,228 $ 35,764,866  $ 19,032,770           COST OF SALES (including $18.5 and $15.3 million of related party costs for the nine months ended July 31, 2011 and 2010, respectively. Including $6.8 and $3.7 million for the three months ended July 31, 2011 and 2010, respectively.)89,963,400 52,655,41533,670,406 16,574,355           GROSS PROFIT8,774,576 7,653,8132,094,460 2,458,415           OPERATING EXPENSES:         Selling and administrative4,749,540 4,100,4101,604,175 1,525,513 Officers' salaries479,549 449,550149,849 149,850TOTALS5,229,089 4,549,9601,754,024 1,675,363           INCOME FROM OPERATIONS3,545,487 3,103,853340,436 783,052           OTHER INCOME (EXPENSE)         Interest income131,628 8,71320,297 6,062 Interest expense(195,477) (145,927)(76,817) (51,297)TOTALS(63,849) (137,214)(56,520) (45,235)           INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN SUBSIDIARIES3,481,638 2,966,639283,916 737,817            Provision for income taxes1,064,817 1,181,865106,161 303,935           NET INCOME2,416,821 1,784,774177,755 433,882 Less: net (income) loss attributable to the noncontrolling interest(19,556) (2,257)(9,519) (9,791)           NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. $ 2,397,265  $ 1,782,517 $ 168,236  $ 424,091            Basic and diluted earnings per share $ .44  $ .33 $ .03  $ .08            Dividends declared per share $ .09 $ -- $ .03 $ --            Weighted average common shares outstanding:         Basic5,490,823 5,454,7425,490,823 5,482,127 Diluted5,500,823 5,464,7425,500,823 5,492,127    COFFEE HOLDING CO., INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSNINE MONTHS ENDED JULY 31, 2011 AND 2010(Unaudited)         2011 2010OPERATING ACTIVITIES:     Net income $ 2,416,821  $ 1,784,774 Adjustments to reconcile net income to net cash (used in) provided by operating activities:     Depreciation and amortization323,239 345,949 Unrealized loss (gain) on commodities1,154,557 (553,819) Bad debt expense-- 13,400 Deferred rent16,624 19,267 Deferred income taxes(585,750) 98,500 Changes in operating assets and liabilities:     Accounts receivable(4,255,299) 3,414,186 Inventories(4,934,661) (1,187,852) Prepaid expenses and other current assets238,091 (4,776) Prepaid green coffee168,523 (1,656,300) Prepaid and refundable income taxes(71,869) 4,548 Accounts payable and accrued expenses3,734,577 (1,836,075) Deposits and other assets14,616 35,532 Income taxes payable394,774 (216,979)Net cash (used in) provided by operating activities(1,385,757) 260,355       INVESTING ACTIVITIES:     Purchases of assets of OPTCO -- (2,259,924) Purchases of machinery and equipment(419,212) (253,421)Net cash used in investing activities(419,212) (2,513,345)       FINANCING ACTIVITIES:     Advances under bank line of credit96,021,666 65,316,659 Principal payments under bank line of credit(91,616,329) (64,048,367) Payment of dividend(500,967) (166,989)Net cash provided by financing activities3,904,370 1,101,303              NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS2,099,401 (1,151,687)       CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD1,672,921 1,367,933       CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,772,322  $ 216,246    COFFEE HOLDING CO., INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSNINE MONTHS ENDED JULY 31, 2011 AND 2010(Unaudited)         2011 2010SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:     Interest paid $ 179,857  $ 157,566 Income taxes paid $ 1,317,698  $ 1,218,474       SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:     On May 17, 2010, Coffee Holding Co., Inc. acquired substantially all of the assets of Organic Products Trading Company, Inc. ("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