Coffee Holding Co., Inc. Reports Year End Results


BROOKLYN, N.Y., Jan. 29, 2009 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (AMEX:JVA) today announced its operating results for the year ended October 31, 2008. In this release, the Company:



 * Reports a net loss of ($2,597,294), or ($0.47) per share (basic and
   diluted) for the year ended October 31, 2008

 * Reports net sales of $71,186,312 for the year ended October 31,
   2008; and

 * Reports sales growth of 24.1% for the year ended October 31, 2008
   compared to the year ended October 31, 2007.

We had a net loss of ($2,597,294), or ($0.47) per share (basic and diluted) for the year ended October 31, 2008 compared to net income of $937,316 or $.17 per share (basic and diluted) for the year ended October 31, 2007. The decrease in net income primarily reflects hedging losses when the price of coffee surged to a ten year high and subsequently collapsed during February and October 2008.

Net sales totaled $71,186,312 for the year ended October 31, 2008, an increase of $13,820,472 or 24.1% from $57,365,840 for the year ended October 31, 2007. The increase in net sales reflects a 7.5% increase in coffee pounds sold from 36.5 million pounds in 2007 to 39.2 million pounds in 2008. The increase in pounds of coffee sold is the result of increased sales of our branded, private label and specialty green coffees. Sales of our flagship Hispanic espresso brands, Cafe Caribe and Cafe Supremo, increased once again. Higher coffee prices during 2008 also contributed to the increase in net sales.

Cost of sales for the year ended October 31, 2008 was $68,762,310 or 96.6% of net sales, as compared to $49,071,384 or 85.5% of net sales for the year ended October 31, 2007. 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 higher green coffee prices and losses on options and futures contracts. Green coffee purchases increased $13,740,062 from $43,301,605 to $57,041,667 due to the increase in green coffee prices and private label and green coffee sales volumes. Net losses on options and futures contracts, a component of cost of sales, totaled $3,068,450 for the year ended October 31, 2008 compared to net gains of $2,692,020 for the year ended October 31, 2007. We believe these losses resulted from a surge in commodities prices due to the U.S. weaker dollar and a significant increase in market speculation. We do not expect future trading losses going forward. The increase in cost of sales as a percentage of net sales also reflects higher green coffee prices which could not fully be passed along to customers through sales price increases. Gross profit as a percentage of net sales decreased to 3.41% for the year ended October 31, 2008 from 14.45% for the year ended October 31, 2007. The decrease in our margins is attributable to higher green coffee prices that we were unable to pass on to our customers as well as net losses on options and futures contracts.

Total operating expenses decreased $479,828 or 7% to $6,362,534 for the year ended October 31, 2008 from $6,842,362 for the fiscal year ended October 31, 2007 due to decreases in selling and administrative expenses and a decrease of $192,860 in a write-down in amounts due from our Cafe La Rica joint venture (which was dissolved in October 2007 after settlement of the litigation). Selling and administrative expenses decreased $312,329 or 5.2% to $5,714,032 for the year ended October 31, 2008 from $6,026,361 for 2007.

"The global economic crisis which expanded in late 2008 undermined our fiscal results as coffee prices turned sharply lower just prior to the end of our 4th Quarter. The financial crisis heightened the volatility in the futures market to a level which could not have been anticipated and was not experienced in the long history of our company. The end result, due to capital and liquidity issues, was that we were forced to abandon trading positions which in the past would be both protective and profitable for our operating needs," said Andrew Gordon, President and Chief Executive Officer.

"We believe that, although the worst might not be over for both the economy and the financial markets, in the case of coffee, fundamentals should prevail in 2009. Our overall business remains healthy, our balance sheet remains strong and our revenues continue to grow, even at a time when we have become more selective as to the type of customer with which we wish to do business in this high risk counterparty environment. We believe the worst is now behind us and we look forward to a clean slate in 2009," Mr. Gordon added.

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. 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 SUBSIDIARY
                     CONSOLIDATED BALANCE SHEETS
                      OCTOBER 31, 2008 AND 2007

                                                2008          2007
                                            ------------  ------------
                - ASSETS -
 CURRENT ASSETS:
  Cash and cash equivalents                 $    963,298  $    890,649
  Commodities held at broker                     342,269     3,468,530
  Accounts receivable, net of allowances of
   $141,915 and $136,781 for 2008 and 2007,
   respectively                                9,067,797     7,130,467
  Inventories                                  5,046,554     4,472,097
  Prepaid expenses and other current assets      284,900       502,240
  Prepaid and refundable income taxes          1,025,935       236,406
  Deferred income tax assets                     923,877       279,000
                                            ------------  ------------

 TOTAL CURRENT ASSETS                         17,654,630    16,979,389

 Property and equipment, at cost, net of
  accumulated depreciation of $5,020,573 and
  $4,542,490 for 2008 and 2007, respectively   2,804,053     2,651,960
 Deposits and other assets                       542,893       766,268
                                            ------------  ------------

 TOTAL ASSETS                               $ 21,001,576  $ 20,397,617
                                            ============  ============

  - LIABILITIES AND STOCKHOLDERS' EQUITY -
 CURRENT LIABILITIES:
  Accounts payable and accrued expenses     $  9,120,124  $  6,717,143
  Line of credit borrowings                    3,522,207       897,191
  Income taxes payable                                --         9,161
                                            ------------  ------------

 TOTAL CURRENT LIABILITIES                    12,642,331     7,623,495

 Deferred income tax liabilities                  86,000       145,000
 Deferred rent payable                            69,959        74,547
 Deferred compensation payable                   352,637       351,332
                                            ------------  ------------

 TOTAL LIABILITIES                            13,150,927     8,194,374
                                            ------------  ------------

 MINORITY INTEREST                                 3,226           900
                                            ------------  ------------

 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; 5,445,516 shares
   outstanding for 2008 and 5,514,930 shares
   outstanding in 2007                             5,530         5,530
  Additional paid-in capital                   7,327,023     7,327,023
  Retained earnings                              804,605     4,946,467
  Less: Treasury stock, 84,314 and 14,900
  common shares, at cost in 2008 and 2007       (289,735)      (76,677)
                                            ------------  ------------

 TOTAL STOCKHOLDERS' EQUITY                    7,847,423    12,202,343
                                            ------------  ------------
   TOTAL LIABILITIES AND STOCKHOLDERS'
    EQUITY                                  $ 21,001,576  $ 20,397,617
                                            ============  ============


               COFFEE HOLDING CO., INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF OPERATIONS
                YEARS ENDED OCTOBER 31, 2008 AND 2007

                                                2008          2007
                                            ------------  ------------
 NET SALES                                  $ 71,186,312  $ 57,365,840

 COST OF SALES                                68,762,310    49,071,384
                                            ------------  ------------

 GROSS PROFIT                                  2,424,002     8,294,456
                                            ------------  ------------

 OPERATING EXPENSES:
  Selling and administrative                   5,714,032     6,026,361
  Writedown of amount due from dissolved
   joint venture                                      --       192,860
  Bad debt expense                                37,575        38,990
  Officers' salaries                             610,927       584,151
                                            ------------  ------------
                                               6,362,534     6,842,362
                                            ------------  ------------
 TOTALS

 INCOME (LOSS) FROM OPERATIONS                (3,938,532)    1,452,094
                                            ------------  ------------

 OTHER INCOME (EXPENSE)
  Interest income                                 46,209       131,537
  Other income                                     9,331            --
  Equity in loss from dissolved joint
   venture                                            --       (91,340)
  Management fee income                               --        12,026
  Writedown of investment in dissolved
   joint venture                                      --       (33,000)
  Interest expense                              (142,087)     (109,260)
                                            ------------  ------------
                                                 (86,547)      (90,037)
                                            ------------  ------------
 TOTALS

 INCOME (LOSS) BEFORE INCOME TAXES AND
  MINORITY INTEREST IN SUBSIDIARY             (4,025,079)    1,362,057


    Benefit (provision) for income taxes       1,430,110      (418,175)
                                            ------------  ------------

 INCOME (LOSS) BEFORE MINORITY INTEREST       (2,594,969)      943,882

  Minority interest in loss of subsidiary         (2,325)       (6,566)
                                            ------------  ------------


 NET INCOME (LOSS)                          $ (2,597,294) $    937,316
                                            ============  ============

 Basic and diluted earnings (loss) per
  share                                     $       (.47) $        .17
                                            ============  ============

 Weighted average common shares outstanding:

  Basic                                        5,476,173     5,525,408
                                            ============  ============
  Diluted                                      5,476,173     5,595,408
                                            ============  ============


               COFFEE HOLDING CO., INC. AND SUBSIDIARY
      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                YEARS ENDED OCTOBER 31, 2008 AND 2007

                                Common Stock         Treasury Stock
                            --------------------  --------------------
                               $.001 Par Value
                            ------------------------------------------
                            Number of             Number of
                              Shares     Amount     Shares     Amount
                            ---------  ---------  ---------  ---------
 Balance, 10/31/06          5,529,830  $   5,530         --  $      --

 Treasury stock at cost       (14,900)        --     14,900    (76,677)

 Net income                        --         --         --         --
                            ---------  ---------  ---------  ---------

 Balance, 10/31/07          5,514,930      5,530     14,900    (76,677)

 Treasury stock at cost       (69,414)        --     69,414   (213,058)

 Dividend                          --         --         --         --

 Net loss                          --         --         --         --
                            ---------  ---------  ---------  ---------

 Balance, 10/31/08          5,445,516  $   5,530     84,314  $(289,735)
                            =========  =========  =========  =========

                                  Additional
                                  Paid - in     Retained
                                   Capital      Earnings      Total
                                 -----------  -----------  -----------

 Balance, 10/31/06               $ 7,327,023  $ 4,009,151  $11,341,704

 Treasury stock at cost                   --           --      (76,677)

 Net income                               --      937,316      937,316
                                 -----------  -----------  -----------

 Balance, 10/31/07                 7,327,023    4,946,467   12,202,343

 Treasury stock at cost                   --           --     (213,058)

 Dividend                                 --   (1,544,568)  (1,544,568)

 Net loss                                 --   (2,597,294)  (2,597,294)
                                 -----------  -----------  -----------

 Balance, 10/31/08               $ 7,327,023  $   804,605  $ 7,847,423
                                 ===========  ===========  ===========


               COFFEE HOLDING CO., INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                YEARS ENDED OCTOBER 31, 2008 AND 2007
                                                2008          2007
                                            ------------  ------------
 OPERATING ACTIVITIES:
  Net income (loss)                         $ (2,597,294) $    937,316
  Adjustments to reconcile net income to
   net cash provided by (used in) operating
   activities:
    Depreciation                                 541,204       383,216
    Writeoff of leasehold improvements                --        38,918
    Bad debt expense                              37,575        38,990
    Deferred rent                                 (4,588)       (4,588)
    Deferred income taxes                       (703,877)       74,700
    Loss from dissolved joint venture                 --        91,340
    Writedown of investment in dissolved
     joint venture                                    --        33,000
    Writedown of amount due from dissolved
     joint venture                                    --       192,860
    Minority interest                              2,326         6,566
   Changes in operating assets and
    liabilities:
    Commodities held at broker                 3,126,261       861,959
    Accounts receivable                       (1,974,905)     (634,609)
    Inventories                                 (574,457)   (1,572,554)
    Prepaid expenses and other current
     assets                                      239,144      (173,696)
    Prepaid and refundable income taxes         (789,529)       65,597
    Due from dissolved joint venture                  --      (110,505)
    Deposits, other assets and other            (138,939)      (45,027)
    Accounts payable and accrued expenses      2,402,981     1,967,589
    Income tax payable                            (9,161)        9,161
                                            ------------  ------------

 Net cash provided by (used in) operating
  activities                                    (443,259)    2,160,233
                                            ------------  ------------

 INVESTING ACTIVITIES:
  Purchases of property and equipment
  including equipment deposit                   (341,982)     (659,382)
  Security deposits                               (9,500)           --
                                            ------------  ------------

 Net cash used in investing activities          (351,482)     (659,382)
                                            ------------  ------------

 FINANCING ACTIVITIES:
  Advances under bank line of credit          60,576,960    49,127,817
  Principal payments under bank line of
   credit                                    (57,951,944)  (50,773,507)
  Payment of dividend                         (1,544,568)           --
  Purchase of treasury stock                    (213,058)      (76,677)
                                            ------------  ------------

 Net cash provided by (used in) financing
  activities                                     867,390    (1,722,367)
                                            ------------  ------------


 NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                     72,649      (221,516)

  Cash and cash equivalents, beginning of
   year                                          890,649     1,112,165
                                            ------------  ------------

 CASH AND CASH EQUIVALENTS, END OF YEAR     $    963,298  $    890,649
                                            ============  ============

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
  Interest paid                             $    127,082  $    117,758
                                            ============  ============
  Income taxes paid                         $     33,477  $    287,480
                                            ============  ============
 NONCASH INVESTING AND FINANCING ACTIVITIES:

 During 2007, the Company received equipment valued at $275,761
 originally contributed to the now dissolved joint venture.


            

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