Coffee Holding Co., Inc. Reports First Quarter Earnings

Coffee Holding Co., Inc. (AMEX: JVA) today announced its operating results for the quarter ended January 31, 2008. In this release, the Company: Reports net sales of $14,962,541 for the three months ended January 31, 2008; Reports sales growth of 18.4% for the three months ended January 31, 2008 compared to the three months ended January 31, 2007; Reports net income of $182,265 for the three months ended January 31, 2008; and Reports net income of $0.03 per share (basic and diluted) for the three months ended January 31, 2008. Net sales totaled $14,962,541 for the three months ended January 31, 2008, an increase of $2,327,429, or 18.4%, from $12,635,112 for the three months ended January 31, 2007. The increase in net sales reflects both increased amounts of green coffee and private label coffee sold as well as increased sales prices compared to the first quarter of fiscal 2007. Net income decreased by $127,419 to $182,265 for the three months ended January 31, 2008 from $309,684 for the three months ended January 31, 2007. The decrease in net income primarily resulted from increased cost of sales during the quarter that outpaced our increased net sales for the quarter. Increased cost of sales was also partially offset by decreased operating expenses and decreased other expense. Net income equaled $0.03 per share (basic and diluted) for the three months ended January 31, 2008 compared to $0.06 per share (basic and diluted) for the three months ended January 31, 2007. "Our first quarter’s results were in line with our expectations, as we were able to achieve an acceptable level of profitability on increased revenues,” said Andrew Gordon, President and Chief Executive Officer. "However, I believe that recent events in the outside commodity markets may adversely affect our bottom line in the near term. During the month of February, prices in all commodities, including Arabica and Robusta coffee, soared over 20% in a few weeks time. These price appreciations, which are not only inflationary but ‘bubble like’ in their current forms, have negatively impacted our profit margins for a significant portion of our business. While we have been able to obtain large price concessions from most of our customers, these price increases will not have a positive impact until late in our second quarter at the earliest. In addition, the volatility in the markets has prevented us from successfully implementing our hedging strategies. Until this volatility abates, I believe our ability to execute our past strategies will be hampered.” "Whether current conditions prove to be an aberration or a long term event we are not certain, but in light of these events we have begun the process of closely evaluating our overall business with an eye towards taking any steps necessary to maintain acceptable levels of profitability. Our balance sheet remains strong and we will continue to build on our core business base. I believe that our horizontally integrated business model will ultimately ensure our long term success in almost any business, economic or hostile market environment,” noted 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 through 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. CONDENSED CONSOLIDATED BALANCE SHEETS JANUARY 31, 2008 AND OCTOBER 31, 2007     January 31, 2008 October 31, 2007 (unaudited) - ASSETS - CURRENT ASSETS: Cash $ 1,089,041 $ 890,649 Commodities held at broker 3,082,871 3,468,530 Accounts receivable, net of allowances of $127,464 and $136,781 for 2008 and 2007, respectively 5,543,343 7,130,467 Inventories 4,709,513 4,472,097 Prepaid expenses and other current assets 483,649 502,240 Prepaid and refundable income taxes 108,712 236,406 Deferred income tax assets   270,000     279,000   TOTAL CURRENT ASSETS 15,287,129 16,979,389   Property and equipment, at cost, net of accumulated depreciation of $4,601,266 and $4,542,490 for 2008 and 2007, respectively 2,640,353 2,651,960 Deposits and other assets   742,016     765,368   TOTAL ASSETS $ 18,669,498   $ 20,396,717     - LIABILITIES AND STOCKHOLDERS’ EQUITY - CURRENT LIABILITIES: Accounts payable and accrued expenses $ 4,968,590 $ 6,791,690 Line of credit borrowings 889,253 897,191 Dividend payable 1,544,568 - Income taxes payable   7,005     9,161   TOTAL CURRENT LIABILITIES 7,409,416 7,698,042   Deferred income tax liabilities 127,500 145,000 Deferred compensation payable   380,559     351,332   TOTAL LIABILITIES   7,917,475     8,194,374     MINORITY INTEREST - -   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; 5,497,130 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 3,584,164 4,946,467 Less: Treasury stock, 32,700 and 14,900 common shares, at cost for 2008 and 2007, respectively   (164,694 )   (76,677 ) TOTAL STOCKHOLDERS’ EQUITY   10,752,023     12,202,343   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 18,669,498   $ 20,396,717   COFFEE HOLDING CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS THREE MONTHS ENDED JANUARY 31, 2008 AND 2007 (Unaudited)     2008 2007 NET SALES $ 14,962,541 $ 12,635,112   COST OF SALES   13,082,423     10,466,517     GROSS PROFIT   1,880,118     2,168,595     OPERATING EXPENSES: Selling and administrative 1,378,924 1,390,690 Writedown of amount due from dissolved joint venture - 242,000 Officers’ salaries   161,377     117,012   TOTALS   1,540,301     1,749,702     INCOME FROM OPERATIONS   339,817     418,893     OTHER INCOME (EXPENSE): Interest income 24,271 34,116 Equity in loss from dissolved joint venture - (63,939 ) Writedown of investment in dissolved joint venture - (33,000 ) Management fee income - 12,026 Interest expense   (29,006 )   (24,232 ) TOTALS   (4,735 )   (75,029 )   INCOME BEFORE INCOME TAXES AND MINORITY INTEREST IN SUBSIDIARY 335,082 343,864   Provision for income taxes   142,051     37,850     INCOME BEFORE MINORITY INTEREST 193,031 306,014   Minority interest in earnings (loss) of subsidiary   (10,766 )   3,670     NET INCOME 182,265 309,684   Retained earnings – beginning 4,946,467 4,009,151 Dividend declared   (1,544,568 )   -     RETAINED EARNINGS - ENDING $ 3,584,164   $ 4,318,835     Basic and diluted earnings per share $ .03   $ .06     Weighted average common shares outstanding: Basic   5,506,326     5,529,830   Diluted   5,576,326     5,599,830   COFFEE HOLDING CO., INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 2008 AND 2007 (Unaudited)     2008 2007 OPERATING ACTIVITIES: Net income $ 182,265 $ 309,684 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 119,572 60,630 Writedown of amount due from dissolved joint venture - 242,000 Loss from dissolved joint venture - 63,939 Writedown of investment in dissolved joint venture - 33,000 Deferred income taxes (8,500 ) (229,200 ) Changes in operating assets and liabilities: Commodities held at broker 385,659 1,375,961 Accounts receivable 1,587,124 1,916,454 Inventories (237,416 ) (561,482 ) Prepaid expenses and other assets 18,591 84,362 Prepaid and refundable income taxes 127,694 256,672 Accounts payable and accrued expenses (1,823,100 ) (867,450 ) Due from dissolved joint venture - (183,232 ) Deposits and other assets 41,813 (132,557 ) Income taxes payable   (2,156 )   -   Net cash provided by operating activities   391,546     2,368,781     INVESTING ACTIVITIES: Purchases of property and equipment   (107,965 )   (92,091 ) Net cash (used in) investing activities   (107,965 )   (92,091 )   FINANCING ACTIVITIES: Advances under bank line of credit 14,282,082 11,103,226 Principal payments under bank line of credit (14,290,020 ) (12,660,888 ) Purchase of treasury stock   (88,017 )   -   Net cash (used in) financing activities   (95,955 )   (1,557,662 )   MINORITY INTEREST   10,766     (3,670 )   NET INCREASE IN CASH 198,392 715,358   Cash, beginning of year   890,649     1,112,165     CASH, END OF PERIOD $ 1,089,041   $ 1,827,523     SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: Interest paid $ 19,515   $ 18,642   Income taxes paid $ 24,962   $ 3,550     NONCASH INVENTORY AND FINANCING ACTIVITIES: On January 31, 2008, the Company declared dividends in the amount of $1,544,568.