COFFEE HOLDING CO INC - FORM 8-K - EX-99.1 - PRESS RELEASE - March 17, 2011

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8-K - CURRENT REPORT - COFFEE HOLDING CO INCjva_8k.htm
Exhibit 99.1
 
 
Coffee Holding Co., Inc. Reports Results for the Three Months Ended January 31, 2011

STATEN ISLAND, N.Y., March 17, 2011 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (“Coffee Holding”) (Nasdaq:JVA) today announced its operating results for the three months ended January 31, 2011.  In this release, the Company:
 
●
Reports net sales of $25,641,093 for the three months ended January 31, 2011 and $21,359,151 for the three months ended January 31, 2010;
 
●
Reports sales growth of 20% for the three months ended January 31, 2011 compared to the three months ended January 31, 2010; and
 
●
Reports net income of $1,041,072, or $0.19 per share (basic and diluted), for the three months ended January 31, 2011 compared to net income of $557,978, or $0.10 per share (basic and diluted), for the three months ended January 31, 2010.
 
Results of Operations
 
The Company had net income of $1,041,072, or $0.19 per share (basic and diluted), for the three months ended January 31, 2011 compared to net income of $557,978, or $0.10 per share (based and diluted), for the three months ended January 31, 2010.  The increase in net income primarily reflects increased gross profit.
 
Net sales totaled $25,641,093 for the three months ended January 31, 2011, an increase of $4,281,942, or 20% from $21,359,151 for the three months ended January 31, 2010.  The increase in net sales reflects higher sales prices compared to the first quarter of fiscal 2010 as well as additional poundage sold due to the addition of our OPTCO subsidiary.
 
Cost of sales for the three months ended January 31, 2011 was $22,560,399 or 87.9% of net sales, as compared to $18,721,421 or 87.7% of net sales for the three months ended January 31, 2010.  The increase in cost of sales reflects the increased cost of green coffee.
 
Total operating expenses increased by $97,188, or 6.11%, to $1,686,096 for the three months ended January 31, 2011 as compared to operating expenses of $1,588,908 for the three months ended January 31, 2010.  The increase in operating expenses was due to increases in selling and administrative expense of $67,221 and an increase in officers’ salaries of $30,001.  The added expenses were justified due to the high level of business during this period.
 
“In spite of commodity pressure and dramatically increased coffee prices during the quarter, we were still able to almost double our net income as compared to the same period last year.  Our horizontal integrated business structure combined with our hedging policies helped us to significantly alleviate these higher costs as evidenced by our cost of sales only slightly increasing by 0.02 % during a time when the underlying commodity increased by over one dollar per pound. as the fundamentals in the coffee market led to higher futures prices.  With the national brands and our other competitors increasing their prices,  but not to the full effect of the increase in the futures market, we remained under financial constraints on a portion of our private label sales; yet we were able to absorb much of those margin pressures through other areas of our business.  We anticipate this trend will continue and we have just implemented another round of price increases which should be reflected in the results of our upcoming quarter even as coffee prices continue to climb to over thirty year highs.”

“We remain upbeat regarding our overall business and believe we are well positioned to continue to improve both our top and bottom lines during these challenging times,” said Andrew Gordon, President & CEO.

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 April 18, 2011.  The dividend will be paid on May 2, 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.

 
 
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COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JANUARY 31, 2011 AND OCTOBER 31, 2010
 
   
January 31,
2011
    
October 31,
2010
  
   
(unaudited)
        
- ASSETS -
  
CURRENT ASSETS:
            
Cash and cash equivalents
   $ 2,869,014     $ 1,672,921  
Commodities held at broker
     121,062       275,499  
Accounts receivable, net of allowances of  $197,078 for 2011 and 2010
     10,446,733       8,852,372  
Inventories
     6,914,163       8,190,420  
Prepaid green coffee
     363,733       1,335,676  
Prepaid expenses and other current assets
     383,303       502,852  
Prepaid and refundable income taxes
     132,662       9,521  
Deferred income tax asset
     169,500       328,000  
       TOTAL CURRENT ASSETS
     21,400,170       21,167,261  
Machinery and equipment, at cost, net of accumulated depreciation of $5,256,784 and  $5,147,593 for 2011 and 2010, respectively
     1,584,255       1,560,940  
Customer list and relationships, net of accumulated amortization of $5,625 and $3,750 for 2011 and 2010, respectively
     144,375       146,250  
Trademarks
     180,000       180,000  
Goodwill
     440,000       440,000  
Deposits and other assets
     746,446       699,029  
       TOTAL ASSETS
   $ 24,495,246     $ 24,193,480  
- LIABILITIES AND STOCKHOLDERS’ EQUITY -
  
CURRENT LIABILITIES:
                
Accounts payable and accrued expenses
   $ 7,282,297     $ 7,124,072  
Line of credit
     1,816,859       2,306,749  
Income taxes payable
     198,203       234,744  
Contingent liability
     41,000       41,000  
Deferred income tax liabilities
     18,000       73,300  
      TOTAL CURRENT LIABILITIES
     9,338,359       9,779,865  
Deferred income tax liabilities
     -       216,700  
Deferred rent payable
     130,297       124,756  
Deferred compensation payable
     592,931       540,642  
      TOTAL LIABILITIES
     10,079,587       10,661,963  
STOCKHOLDERS’ 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 2010
     5,580       5,580  
  Additional paid-in capital
     7,581,973       7,581,973  
  Contingent consideration
     39,000       39,000  
  Retained earnings
     7,025,137       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. and OPTCO Stockholders’ Equity
     14,356,429       13,482,346  
Noncontrolling interest
     59,230       49,171  
       TOTAL EQUITY
     14,415,659       13,531,517  
                             TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 24,495,246     $ 24,193,480  


 
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COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JANUARY 31, 2011 AND 2010
(Unaudited)

   
2011
    
2010
  
NET SALES
   $ 25,641,093     $ 21,359,151  
                 
COST OF SALES (which includes purchases of approximately $4.8 million and $6.6 million for the three months ended January 31, 2011 and 2010, respectively from a related party)
     22,560,399       18,721,421  
                 
GROSS PROFIT
     3,080,694       2,637,730  
                 
OPERATING EXPENSES:
                
Selling and administrative
     1,506,246       1,439,025  
Officers’ salaries
     179,850       149,849  
            TOTAL
     1,686,096       1,588,874  
                 
INCOME FROM OPERATIONS
     1,394,598       1,048,856  
                 
OTHER INCOME (EXPENSE):
                
Interest income
     160,586       1,319  
Interest expense
     (112,636 )     (53,415 )
    TOTALS
     47,950       (52,096 )
                 
INCOME BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST IN SUBSIDIARIES
     1,442,548       996,760  
                 
Provision for income taxes
     391,417       441,262  
                 
                 
NET INCOME BEFORE NONCONTROLLING INTEREST IN SUBSIDIARIES
     1,051,131       555,498  
Less: Net loss (income) attributable to the noncontrolling interest
     (10,059 )     2,480  
                 
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC.
   $ 1,041,072     $ 557,978  
                 
Basic and diluted earnings per share
   $ .19     $ .10  
                 
Dividends declared per share
   $ .03     $ -  
                 
Weighted average common shares outstanding:
                
Basic
     5,490,823       5,440,823  
Diluted
     5,500,823       5,440,823  

See notes to Condensed Consolidated Financial Statements.

 
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COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 2011 AND 2010
(Unaudited)

   
2011
    
2010
  
OPERATING ACTIVITIES:
            
Net income
   $ 1,051,131     $ 555,498  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     111,066       111,002  
Unrealized loss on commodities
     154,437       262,862  
Bad debt expense
     -       13,500  
Deferred rent
     5,541       6,422  
Deferred income taxes
     (113,500 )     (38,500 )
Changes in operating assets and liabilities:
                
Accounts receivable
     (1,594,361 )     544,213  
Inventories
     1,276,257       (149,585 )
Prepaid expenses and other current assets
     119,549       (12,701 )
Prepaid green coffee
     971,943       -  
Prepaid and refundable income taxes
     (123,141 )     (4,288 )
Accounts payable and accrued expenses
     158,225       (1,241,583 )
Deposits and other assets
     4,872       25,787  
Income taxes payable
     (36,541 )     (51,803 )
                     Net cash provided by operating activities
     1,985,478       20,784  
                 
INVESTING ACTIVITIES:
                
Purchases of machinery and equipment
     (132,506 )     (80,994 )
                     Net cash used in investing activities
     (132,506 )     (80,994 )
                 
FINANCING ACTIVITIES:
                
Advances under bank line of credit
     20,690,112       22,465,558  
Principal payments under bank line of credit
     (21,180,002 )     (21,832,633 )
Payment of dividend
     (166,989 )     -  
                      Net cash (used in) provided by financing activities
     (656,879 )     632,925  
                 
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS
     1,196,093       572,715  
                 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
     1,672,921       970,327  
                 
CASH AND CASH EQUIVALENTS, END OF PERIOD
   $ 2,869,014     $ 1,543,042  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
                
Interest paid
   $ 116,675     $ 63,366  
Income taxes paid
   $ 659,773     $ 483,772  
 
CONTACT:         Coffee Holding Co., Inc.
                             Andrew Gordon, President & CEO
                             (718) 832-0800
 
 
 
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COFFEE HOLDING CO INC Reports