Swiss Water Decaffeinated Coffee Income Fund Reports 2009 Fourth Quarter and
Annual Results

Swiss Water Decaffeinated Coffee Income Fund will hold a conference call and webcast to discuss 2009 annual financial results and corporate developments on Thursday, March 25, 2010 at 8:00 am Pacific Time (11:00 am Eastern Time).

To participate, please dial 1-888-231-8191 (toll free) or 647-427-7450 (GTA and international) approximately five minutes before the call. A replay will be available through April 8, 2010 at 1-800-642-1687 (toll free) or 416-849-0833 (GTA and international) passcode: 55984195. In addition, a live and archived webcast, as well as an mp3 download, can be accessed at:

TRADING SYMBOL: The Toronto Stock Exchange - SWS.UN

VANCOUVER, March 24 /CNW/ - Swiss Water Decaffeinated Coffee Income Fund ("the Fund") today reported financial results for the three months and year ended December 31, 2009. The three-month period represents the fourth quarter of its 2009 fiscal year. The Fund holds all of the outstanding securities of Swiss Water Decaffeinated Coffee Company, Inc. ("SWDCC" or "the company") and its results are dependent on the operating results of SWDCC.

    Operating Results

    In $000's except per
     unit amounts                     3 Months Ended          Year Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    Sales                          $  8,635   $  8,994   $ 31,160   $ 32,606
    Gross profit                      1,201      2,029      5,520      7,265
    EBITDA(1)                           790      1,995      3,388      7,011
    Net income (loss)                   324    (19,635)     2,668    (16,011)
    Adjusted distributable cash(1)    1,085      1,370      2,962      6,516
    Distributions paid                  601      1,501      4,206      6,007
    Per unit amounts:
    Net income (loss) per unit        0.049     (2.941)     0.400     (2.399)
    Adjusted distributable cash
     generated per unit(1)            0.163      0.205      0.444      0.976
    Distributions paid per unit(1)    0.090      0.225      0.630      0.900
    (1) EBITDA, adjusted distributable cash and adjusted distributable cash
        per unit are non-GAAP financial measures that are defined in the
        Management's Discussion and Analysis to be posted on SEDAR on or
        before March 25, 2010.

SWDCC's coffee processing volumes decreased during both the three and 12 months ended December 31, 2009, falling by 8% in the fourth quarter and by 15% for the full year. In both periods, the declines were related to challenges faced by the coffee industry as a whole, including: weak economic conditions, reduced demand for higher-priced drinks in the away-from-home coffee market, tight commercial credit, reduced availability of premium-grade coffees from key coffee origins, and higher prices for premium Arabica coffees.

On the positive side, SWDCC continued to see strength in the geographic markets where it has invested in building consumer awareness of the SWISS WATER(R) Process and its benefits. Business with commercial roasters also grew during 2009, reflecting the company's efforts to increase its exposure to the important at-home (grocery) market. This market is a key sales channel, representing approximately 80% of total coffee consumption. In addition, while SWDCC's annual processing volumes were down from 2008 levels, the company saw a gradual improvement throughout the year. This trend is evident when processing volumes are viewed sequentially. Volumes were down by 25% in the first quarter, 19% in the second quarter, 9% in the third quarter and 8% in the fourth quarter, compared to the same periods in 2008.

Fourth quarter revenues totaled $8.6 million, a decrease of $0.4 million, or 4%, from the same period in 2008. For the full year, revenues totaled $31.2 million, a decline of $1.4 million, or 4%, from 2008. While the decreases were primarily related to the lower processing volumes, SWDCC's revenues did not decline at the same rate as its volumes due to more favourable foreign exchange rates. During 2009, approximately 73% of the company's sales were generated in US dollars. As the US dollar was significantly stronger year-over-year during the first nine months of 2009, SWDCC realized higher foreign exchange on its US sales. This had a positive impact on the company's revenue during the first three quarters.

Gross profit was down by 41% in the fourth quarter and 24% for the full 2009 year. In both cases, the decrease in profitability resulted from lower sales volumes, together with an increase in the cost of goods sold. During the fourth quarter, cost of goods sold increased by 6.7%, due to higher coffee costs. In addition, SWDCC made a strategic decision to eliminate aged inventories in order to improve product freshness. This resulted in a $0.2 million writedown of aged inventories during the quarter. For the full year, cost of goods sold rose by 1.2%, mainly because the stronger US dollar increased the cost of materials.

During the fourth quarter of 2009, SWDCC recorded net income of $0.3 million, compared to a net loss of $19.6 million for the same period last year. For the full year, net income totaled $2.7 million, compared to a net loss of $16.0 million in 2008. In both cases, the difference was primarily related to an impairment charge of $20.3 million being recorded in Q4 2008, after it was determined that the carrying value of SWDCC's goodwill and proprietary process technology exceeded their respective fair values. No such charge was recorded in 2009.

Net income for both 2009 periods was also affected by net gains on derivative instruments, which the company employs to help manage the effect of changes in commodity coffee prices and US dollar exchange rates. During the fourth quarter, SWDCC recorded a net gain on derivative instruments of $0.2 million, compared to a net loss of $1.3 million for the same period in 2008. For the full year, the company recorded a net gain on derivative financial instruments of $2.4 million, compared to a net loss of $0.4 million in 2008.

In recent years, SWDCC has increased its strategic investment in consumer advertising, launching a multi-media campaign designed to build consumer awareness of the benefits of its proprietary, chemical free decaffeination process. This campaign was first launched in a regional market in 2008, then extended to a market roughly three times larger in 2009. As a result, consumer promotion and advertising expenditures increased year-over-year, totaling $2.0 million in 2009, up from $1.2 million in 2008. To date, the campaign has generated strong sales growth in the initial market, with positive results expected from the second market beginning in 2010.

In June 2009, monthly distributions to SWDCC unitholders were decreased by 60% to $0.03 per unit ($0.36 per unit annually) from the previous level of $0.075 per unit ($0.90 per unit annually). This decision was made in response to the company's lower production volumes and increased investment in consumer advertising, and in order to maintain a conservative capital structure.

During the fourth quarter, the Fund generated adjusted distributable cash of $1.1 million, and paid $0.6 million in distributions to unitholders. For the full year, $3.0 million of adjusted distributable cash was generated and $4.2 million was paid to unitholders. This resulted in a payout ratio of 55% for the fourth quarter and 142% for the year. While the Fund distributed more cash than it generated in 2009, this was due to the higher distribution amount paid in the first part of the year, before distributions were reduced. After lowering the monthly distribution, the payout ratio in the second half of the year dropped to 80% of adjusted distributable cash - a level the Fund's Trustees believe to be sustainable going forward.

"As we enter 2010, the worst of the recent economic crisis seems to be over, and customer and consumer confidence is improving. In addition, our ongoing investment in geographically focused advertising programs and our efforts to increase our exposure within the important "at-home" coffee market are generating positive results," said Frank Dennis, President and CEO of SWDCC and a Trustee of the Fund. "As a result, we are cautiously optimistic that we will be able to grow our annual sales and processing volumes in 2010."

A more detailed discussion of the Fund's financial results can be found in its 2009 Management's Discussion and Analysis, which is to be posted with the Fund's audited consolidated financial statements for 2009 on SEDAR ( on or before March 25, 2010.

Company Profile

The Fund owns Swiss Water Decaffeinated Coffee Company Inc. (SWDCC), a premium green coffee decaffeinator located in Burnaby, British Columbia, Canada. SWDCC decaffeinates customer-owned coffees, including organically certified coffees, for a fee - its "toll" business; and also purchases high-quality green coffees, decaffeinates them and markets them to the green coffee trade - its "non-toll" business. The SWISS WATER(R) Process is a proprietary 100% chemical free decaffeination process that does not use methylene chloride or ethyl acetate. The SWISS WATER(R) Process is the world's only consumer branded decaffeination process and the company supports the brand through ongoing consumer research and focused consumer advertising.

Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements may include such words as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance as well as management's current estimates, but which are based on numerous assumptions and may prove to be incorrect. These statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties, including, but not limited to, risks related to processing volumes and sales growth, operating results, supply of coffee, general industry conditions, commodity price risks, technology, competition, foreign exchange rates, general economic conditions.

The forward-looking statements and financial outlook information contained herein are made as of the date of this press release and are expressly qualified in their entirety by this cautionary statement. Except to the extent required by applicable securities law, the Fund undertakes no obligation to publicly update or revise any such statements to reflect any change in management's expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those described herein.

%SEDAR: 00017658E


For further information: For further information: Sherry Tryssenaar, Chief Financial Officer, Swiss Water Decaffeinated Coffee Company Inc., Phone: (604) 444-8780, Fax: (604) 420-8711, Email:, Website:

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