Swiss Water Decaffeinated Coffee Income Fund Reports Third Quarter Results

    TRADING SYMBOL: The Toronto Stock Exchange - SWS.UN

    VANCOUVER, Nov. 5 /CNW/ - Swiss Water Decaffeinated Coffee Income Fund
("the Fund") today reported financial results for the three and nine months
ended September 30, 2007. The three-month period represents the third quarter
of its 2007 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 $000s except per unit amounts          3 months ended  9 months ended
                                               September 30    September 30
                                               2007    2006    2007    2006

    Sales                                      7,705   6,124  22,384  23,484
    Gross profit                               2,541   2,112   7,940   8,929
    EBITDA(1)                                  1,518   1,113   4,939   5,792
    Net income                                 1,240     596   4,343   4,034
    Adjusted distributable cash(1)             1,606     960   4,827   5,329
    Distributions paid                         1,502   1,418   4,422   4,254
    Per unit amounts:
    Net Income per unit                        0.186   0.089   0.651   0.604
    Adjusted distributable cash
     generated per unit(1)                     0.241   0.144   0.723   0.798
    Distributions paid per unit(1)             0.225   0.212   0.662   0.637

    (1)  EBITDA, adjusted distributable cash and adjusted distributable cash
         per unit are non-GAAP financial measures that are defined in the
         third quarter Management's Discussion and Analysis to be posted on
         SEDAR on or before November 5, 2007.

    During the third quarter of 2007, SWDCC's revenues grew by 25.8% over the
same period of 2006. Processing volumes rose 35% during the quarter,
substantially narrowing the year-over-year decrease in the company's sales
volumes from 15.3% at June 30, 2007 to 2.2% at September 30, 2007. Sales
volumes for the third quarter were stronger across all segments of the
business and included initial orders from a new significant customer.
Additionally, much of the backlog of late arriving customer coffee from Brazil
and Colombia experienced in Q2 2007 was processed in Q3 2007.
    SWDCC's revenue performance was affected by the continued strengthening
of the Canadian dollar relative to the US dollar. Sales revenues generated in
US dollars represented approximately 83% of the company's total revenues in
the third quarter and 82% of its total revenues in the nine months ended
September 30, 2007. While SWDCC enters into foreign exchange contracts to
reduce its estimated net exposure to currency fluctuations on a 12-month
rolling basis, these contracts only manage to dampen, not eliminate, the
negative effect of a continually strengthening Canadian dollar. As the
majority of sales are earned in US dollars, the nine-month processing revenue
rates were down by 10%, due to the stronger Canadian dollar.
    The year-over-year increase in third quarter sales volumes helped boost
SWDCC's gross profit, which rose by 20.3% over the third quarter of 2006. For
the first nine months of 2007, gross profit fell by 11.1% compared to the same
period last year. This was due to the negative impact of the strengthening
Canadian dollar which reduced currency exchange realized from US dollar sales,
the slight decrease in year-over-year processing volumes and higher labour and
distribution costs. Third quarter EBITDA was up by 36%, while nine-month
EBITDA fell by 15%.
    During the third quarter of 2007, SWDCC's net income grew by 108% over
the previous year. This was due to increased margins on higher volumes and the
recording of unrealized derivative gains, partially offset by lower tax
    On a year-over-year basis, the company's nine-month net income was up by
7.7% as 2% lower volumes and lower tax recoveries were more than offset by the
recording of unrealized derivative gains.
    Distributions to unitholders in the third quarter were maintained at the
level set in March 2007, when the per-unit monthly distribution was increased
by 5.9% to $0.075. On an annualized basis, the new level of monthly
distributions equals $0.90 per unit. In the third quarter, the Fund generated
adjusted distributable cash of $1.6 million, and paid $1.5 million in
distributions to unitholders. In the first nine months of 2007, adjusted
distributable cash of $4.8 million was generated and $4.4 million was paid to
    "We are pleased with our solid performance and the gains we've made this
quarter," said Frank Dennis, President and CEO of SWDCC and a Trustee of the
Fund. "Our 2007 volumes are close to the record levels achieved in 2006 and
showing potential to surpass them by the end of the year. While we believe the
strong Canadian dollar will continue to put pressure on our margins in the
coming months, we also feel favourable market conditions will ultimately
support the growth of our business with existing and new customers."
    A more detailed discussion of the Fund's financial results can be found
in its third quarter Management's Discussion and Analysis, which is to be
posted with the financial statements on SEDAR ( on or before
November 5, 2007.

    Company Profile

    SWDCC is the world's only consumer branded chemical-free coffee
decaffeinator, and is certified organic by the OCIA (Organic Crop Improvement
    SWDCC decaffeinates customer-owned coffees, including organically
certified coffees, for a toll fee. The company also purchases high-quality
green coffees from more than 10 different countries, decaffeinates them and
markets them to the green coffee trade. These two revenue streams are known as
the company's "toll" and "non-toll" businesses, respectively.
    Approximately 65% of SWDCC's revenue comes from the US, about 25% from
Canada and the balance from international markets, including the United
Kingdom, Japan and Australia.

    %SEDAR: 00017658E

For further information:

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

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