Swiss Water Decaffeinated Coffee Income Fund Reports First Quarter 2008 Results

VANCOUVER, BC, May 12, 2008/CNW/ Swiss Water Decaffeinated Coffee Income Fund (“the Fund”) today reported financial results for the three months ended March 31, 2008. The three-month period represents the first quarter of its 2008 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

(1) EBITDA, adjusted distributable cash and adjusted distributable cash per unit are non-GAAP financial measures. Definitions of these terms can be found in SWDCC’s Management’s Discussion and Analysis to be posted on SEDAR on or before May 12, 2008.

During the first quarter of 2008, SWDCC’s revenues grew by 15.7% over the same period of 2007. This was related to an 18.4% rise in processing volumes during the quarter, which was partially due to a modest backlog from Q4 2007. The backlog related to a customer’s coffee supply issue which has now been corrected. Processing volumes were also driven by increased demand from new and existing customers. This growth was partially offset by lower toll volumes compared to Q1 2007.

As the relative value of the Canadian dollar rose throughout 2007, the US dollar was significantly weaker during the first quarter of 2008 than it was during the same quarter last year. Due to the lower foreign exchange realized, and a shift in product mix to lower revenue business, SWDCC’s processing revenue rates decreased by 14% compared to the same period last year.

During the first quarter of 2008, SWDCC’s gross profit increased by 9.0% over Q1 2007. The growth was related to the 18.4% year-over-year increase in first quarter sales volumes, partially offset by lower foreign exchange and higher coffee costs. First quarter 2008 EBITDA was $2.2 million, up by 8.5% over Q1 2007, for the same reasons discussed above.

During the first quarter of 2008, SWDCC’s net income grew by 8.8% compared to Q1 2007. This was primarily due to the business results described above as well as the recording of a future tax recovery, which arose from applying lower corporate tax rates to future tax liabilities based on periods the temporary differences are expected to reverse.

During the three months ended March 31, 2008, the Fund also generated an increase in adjusted distributable cash, which grew by 15.6% from $1.9 million in Q1 2007 to $2.2 million. Distributions to unitholders in the first quarter of 2008 were maintained at the level set in March 2007, when the distribution was increased by 5.9% to $0.075 per unit per month, or $0.90 per unit on an annualized basis. In the first quarter of 2008, the Fund generated adjusted distributable cash of $2.2 million, and paid $1.5 million in distributions to unitholders.

“During the first quarter, we met our volume expectations and were generally pleased with the gains made in most segments of our business. The difficulty experienced by a major customer in delivering its coffee for tolling in Q4 2007 has now been corrected. We have also seen growth from new and existing customers in all segments except our Toll business. We expect our year-over-year volumes to increase from the levels achieved in 2007 although some segments of our toll business, and specifically the higher revenue segment, will decline from the levels achieved in 2007. ,” said Frank Dennis, President and CEO of SWDCC and a Trustee of the Fund. “Our Q1 2008 volume growth is evidence that rising consumer interest in knowing how their food is processed will be a strong business driver for us. Our planned Q2 2008 launch of a multi-media campaign to clearly communicate the advantages of the Swiss Water® Process will leverage this opportunity. The campaign will highlight our ability to provide consumers with decaffeinated coffee that has not been exposed to chemical solvents such as Methylene Chloride or Ethyl Acetate, as used in approximately 80% of decaffeinated coffee now available to consumers.”

A more detailed discussion of the Fund’s financial results can be found in its first quarter Management’s Discussion and Analysis, which is to be posted with the Fund’s audited financial statements on SEDAR (www.sedar.com) on or before May 12, 2008.

Company Profile

SWDCC is the world’s only consumer-branded chemical free coffee decaffeinator, and is certified organic by the OCIA (Organic Crop Improvement Association).

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 59% of SWDCC’s revenue comes from the US, 26% from Canada and the balance from international markets, including the United Kingdom, Japan and Australia. Consistent with most global, commodity based businesses, the bulk of the Fund’s revenues are earned in US dollars as noted above.

For more information, please contact:

Stan Thompson, Chief Financial Officer
Swiss Water Decaffeinated Coffee Company Inc.,
Phone: 604.444.8780    Fax: 604.420.8711
Email: sthompson@swisswater.com
Website: www.swisswater.com