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Coffee Holding Co., Inc. Reports Record Sales and Year End Results


Coffee Holding Co., Inc. Reports Record Sales and Year End Results

STATEN ISLAND, NY -- (Marketwire) -- 01/28/13 -- Coffee Holding Co., Inc. (NASDAQ: JVA) today announced its operating results for the year ended October 31, 2012. In this release, the Company:


 
--  Reports record net sales of $173,656,215 for the fiscal year ended
    October 31, 2012;
    
    
--  Reports sales growth of 18.3% for the fiscal year ended October 31,
    2012 compared to the fiscal year ended October 31, 2011;
    
    
--  Reports net income of $2,485,677, or $0.39 per share (basic) and $0.37
    per share (diluted) for the fiscal year ended October 31, 2012; and
    
    
--  Reports payment of $0.15 in quarterly dividends in fiscal 2012 as
    compared to $0.12 paid during fiscal 2011.

The Company had net income of $2,485,677, or $0.39 per share (basic) and $0.37 per share (diluted) for the year ended October 31, 2012 compared to a net income of $811,930, or $0.14 per share (basic and diluted) for the year ended October 31, 2011. The increase in net income primarily reflects an increase in our sales and gross margin.

Net sales totaled $173,656,215 for the fiscal year ended October 31, 2012, an increase of $26,901,050 or 18.3%, from $146,755,165 for the fiscal year ended October 31, 2011. The increase in net sales reflects an increase in pounds of coffee sold as we surpassed 55 million pounds sold in a fiscal year for the first time in the history of the Company.

Cost of sales for the fiscal year ended October 31, 2012 was $161,649,282, or 93.1% of net sales, as compared to $138,210,277, or 94.2%, of net sales for the fiscal year ended October 31, 2011. 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 and partially offset by our reduced realized losses and increased unrealized gains on hedging activities. Cost of sales includes purchases of approximately $31.9 million and $25.3 million in fiscal years 2012 and 2011, respectively, from a related party.

Total operating expenses increased $262,117, or 3.6%, to $7,607,269 for the fiscal year ended October 31, 2012 from $7,34 5,152 for the fiscal year ended October 31, 2011. Selling and administrative expenses increased $184,446, or 2.7%, to $6,900,199 for the year ended October 31, 2012 from $6,715,753 for 2011. The increase in selling and administrative expenses reflects several factors, including increases of approximately $120,000 in labor and related taxes, $42,000 in freight costs, $95,000 in insurance cost, $50,000 in travel/show and demo expense, $28,000 in office and computer related costs, and $31,000 in equipment maintenance, partially offset by a decrease of approximately $56,000 in professional fees, $28,000 in advertising costs, $30,000 in packaging development costs, $55,000 in commission expenses and $13,000 in charitable contributions.

"We are pleased to report what we believe to be extremely positive results to our shareholders. Even though coffee prices fell over 40% and coffee was the worst performing traded commodity according to the Standard & Poor's GSCI during calendar 2012, we increased our revenues by 18% for 2012 as a substantial increase in poundage offset lower and extremely volatile coffee prices during the year. More importantly, our efforts to improve our gross margin were rewarded as we were able to increase gross margins by 1% to 6.8% for the year. With our renewed focus on margins and brand development at the forefront of our initiatives for 2013, we believe a 9% gross margin for the year is achievable," said Andrew Gordon, President and Chief Executive Officer.

"During 2012, we saw major growth in sales of our flagship brand, Cafe Caribe, and we believe we will be able to build upon such growth during 2013. In addition, we made our first sales of green coffee into China, validating our belief that this can be a promising new avenue for revenue growth. Our wholesale green coffee and private label sales also remained strong in spite of the volatility in both the coffee market and the macro environment," added Mr. Gordon.

"In addition, our subsidiaries, OPTCO and Generations, continued to provide solid revenue growth during 2012. Unfortunately, in the case of OPTCO, the collapse in green coffee prices had a negative effect on its profitability, which negatively impacted our profitability as a whole. However, we believe the disposal of our high priced inventories at OPTCO combined with a more favorable green coffee market heading into 2013, will return our OPTCO subsidiary to the levels of profitability achieved in prior years. With our strong balance sheet and growing customer base, we expect to remain on the path of steady growth and profitability for the 2013 fiscal year," concluded Mr. Gordon.

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, including the Company's outlook for future margin performance. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. 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. Such statements may involve risks and uncertainties, including but not limited to those relating to product demand, pricing, market acceptance, hedging activities, 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 SUBSIDIARIES                  
                        CONSOLIDATED BALANCE SHEETS                         
                         OCTOBER 31, 2012 AND 2011                          
                                                                            
                                                     2012          2011     
                                                 ------------  ------------ 
                                                                            
                                 - ASSETS -                                 
CURRENT ASSETS:                                                             
Cash                                             $  7,568,583  $  4,244,335 
Accounts receivable, net of allowances of                                   
 $213,674 and $269,611 for 2012 and 2011,                                   
 respectively                                      12,633,128    16,021,581 
Inventories                                        11,303,581    13,475,855 
Prepaid green coffee                                  150,000       388,754 
Prepaid expenses and other current assets             704,013       275,679 
Prepaid and refundable income taxes                    62,763       377,972 
Deferred income tax asset                             702,655       896,400 
                                                 ------------  ------------ 
TOTAL CURRENT ASSETS                               33,124,723    35,680,576 
                                                                            
Machinery and equipment, at cost, net of                                    
 accumulated depreciation of $2,631,468 and                                 
 $2,191,566 for 2012 and 2011, respectively         1,791,754     1,661,759 
Customer list and relationships, net of                                     
 accumulated amortization of $18,750 and $11,250                            
 for 2012 and 2011, respectively                      131,250       138,750 
Trademarks                                            180,000       180,000 
Goodwill                                              440,000       440,000 
Equity method investments                           1,931,931             - 
Deposits and other assets                             648,094       677,606 
                                                 ------------  ------------ 
    TOTAL ASSETS                                 $ 38,247,752  $ 38,778,691 
                                                 ============  ============ 
                                                                            
                  - LIABILITIES AND STOCKHOLDERS' EQUITY -                  
CURRENT LIABILITIES:                                                        
Accounts payable and accrued expenses            $ 11,769,107  $ 12,379,414 
Line of credit                                        562,500     1,820,109 
Due to broker                                       1,367,389     1,867,558 
Income taxes payable                                   21,122           100 
                                                 ------------  ------------ 
TOTAL CURRENT LIABILITIES                          13,720,118    16,067,181 
                                                                            
Deferred income tax liabilities                        32,655        35,900 
Deferred rent payable                                 166,668       146,921 
Deferred compensation payable                         528,687       538,707 
                                                 ------------  ------------ 
TOTAL LIABILITIES                                  14,448,128    16,788,709 
                                                 ------------  ------------ 
STOCKHOLDERS' EQUITY:                                                       
Coffee Holding Co., Inc. 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, 6,456,316                                  
   shares issued; 6,372,309 shares outstanding                              
   for 2012 and 2011                                    6,456         6,456 
  Additional paid-in capital                       15,904,109    15,884,609 
  Contingent consideration                                  -        19,500 
  Retained earnings                                 7,979,247     6,268,326 
  Less: Treasury stock, 84,007 common shares, at                            
   cost for 2012 and 2011                            (272,133)     (272,133)
                                                 ------------  ------------ 
  Total Coffee Holding Co., Inc. Stockholders'                              
   Equity                                          23,617,679    21,906,758 
Noncontrolling interest                               181,945        83,224 
                                                 ------------  ------------ 
  TOTAL EQUITY                                     23,799,624    21,989,982 
                                                 ------------  ------------ 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 38,247,752  $ 38,778,691 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                 COFFEE HOLDING CO., INC. AND SUBSIDIARIES                  
                     CONSOLIDATED STATEMENTS OF INCOME                      
                FISCAL YEARS ENDED OCTOBER 31, 2012 AND 2011                
                                                                            
                                                     2012          2011     
                                                 ------------  ------------ 
                                                                            
NET SALES                                        $173,656,215  $146,755,165 
                                                                            
COST OF SALES (which include purchases of                                   
 approximately $31.9 million and $25.3 million                              
 in fiscal years 2012 and 2011, respectively,                               
 from a related party)                            161,649,282   138,210,277 
                                                 ------------  ------------ 
                                                                            
GROSS PROFIT                                       12,006,933     8,544,888 
                                                 ------------  ------------ 
                                                                            
OPERATING EXPENSES:                                                         
Selling and administrative                          6,900,199     6,715,753 
Officers' salaries                                    707,070       629,399 
                                                 -------
-----  ------------ 
      TOTAL                                         7,607,269     7,345,152 
                                                 ------------  ------------ 
INCOME FROM OPERATIONS                              4,399,664     1,199,736 
                                                 ------------  ------------ 
OTHER INCOME (EXPENSE):                                                     
Interest income                                        32,967       150,442 
Other income and losses                               (14,690)       14,848 
Loss from equity method investments                  (168,069)            - 
Interest expense                                     (195,093)     (289,521)
                                                 ------------  ------------ 
      TOTAL                                          (344,885)     (124,231)
                                                 ------------  ------------ 
                                                                            
INCOME BEFORE PROVISION FOR INCOME TAXES AND                                
NONCONTROLLING INTEREST IN SUBSIDIARY               4,054,779     1,075,505 
                                                                            
Provision for income taxes                          1,470,381       229,522 
                                                 ------------  ------------ 
                                                                            
NET INCOME BEFORE NONCONTROLLING INTEREST IN                                
 SUBSIDIARY                                         2,584,398       845,983 
Less: Net income attributable to the                                        
 noncontrolling interest in subsidiary                (98,721)      (34,053)
                                                 ------------  ------------ 
                                                                            
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO.,                              
 INC.                                            $  2,485,677  $    811,930 
                                                 ============  ============ 
                                                                            
Basic earnings per share                         $        .39  $        .15 
                                                 ============  ============ 
                                                                            
Diluted earnings per share                       $        .37  $        .14 
                                                 ============  ============ 
                                                                            
Dividends declared per share                     $        .12  $        .12 
                                                 ============  ============ 
                                                                            
Weighted average common shares outstanding:                                 
Basic                                               6,372,309     5,563,802 
                                                 ============  ============ 
Diluted                                             6,639,309     5,835,802 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                 COFFEE HOLDING CO., INC. AND SUBSIDIARIES                  
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                FISCAL YEARS ENDED OCTOBER 31, 2012 AND 2011                
                                                                            
                                                    2012           2011     
                                               -------------  ------------- 
OPERATING ACTIVITIES:                                                       
Net income                                     $   2,584,398  $     845,983 
Adjustments to reconcile net income to net                                  
 cash provided by (used in) operating                                       
 activities:                                                                
Depreciation and amortization                        447,404        433,199 
Unrealized (gain) loss on commodities               (500,169)     2,143,057 
Loss on equity method investments                    168,069              - 
Stock cancellation                                         -        (24,650)
Bad debt expense                                           -         72,533 
Deferred rent                                         19,747         22,165 
Deferred income taxes                                190,500       (822,500)
Changes in operating assets and liabilities:                                
Accounts receivable                                3,388,453     (7,241,742)
Inventories                                        2,172,274     (5,285,435)
Prepaid expenses and other current assets           (428,334)       227,173 
Prepaid green coffee                                 238,754        946,922 
Prepaid and refundable income taxes                  315,209       (368,451)
Accounts payable and accrued expenses               (610,307)     5,214,342 
Deposits and other assets                             19,492         19,488 
Income taxes payable                                  21,022       (234,644)
                                               -------------  ------------- 
Net cash provided by (used in) operating                                    
 activities                                        8,026,512     (4,052,560)
                                               -------------  ------------- 
                                                                            
INVESTING ACTIVITIES:                                                       
Purchases of equity method investments            (2,100,000)             - 
Purchases of machinery and equipment                (569,899)      (526,518)
                                               -------------  ------------- 
Net cash used in investing activities             (2,669,899)      (526,518)
                                               -------------  ------------- 
                                                                            
FINANCING ACTIVITIES:                                                       
  Advances under bank line of credit             134,801,724    128,456,096 
  Principal payments under bank line of                                     
   credit                                       (136,059,333)  (128,942,736)
  Proceeds from issuance of stock, net of                                   
   offering costs                                          -      8,331,790 
  Payment of dividend                               (774,756)      (694,658)
                                               -------------  ------------- 
Net cash (used in) provided by financing                                    
 activities                                       (2,032,365)     7,150,492 
                                               -------------  ------------- 
                                                                            
                                                                            
NET INCREASE IN CASH                               3,324,248      2,571,414 
                                                                            
CASH, BEGINNING OF PERIOD                          4,244,335      1,672,921 
                                               -------------  ------------- 
                                                                            
CASH, END OF PERIOD                            $   7,568,583  $   4,244,335 
                                               ===========
==  ============= 
                                                                            
                                                    2012           2011    
                                               -------------  -------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:                                 
  Interest paid                                $     208,064  $     289,866
                                               =============  =============
  Income taxes paid                            $     879,756  $   1,041,731
                                               =============  =============

Contact: Andrew Gordon President & CEO Telephone: (718) 832-0800

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