BC Ferries Releases first quarter results



    VICTORIA, BC, Aug. 28 /CNW/ - British Columbia Ferry Services Inc. (BC
Ferries) announced its first quarter results today. Net earnings were $8.4
million for the three months ended June 30, 2008 compared to $14.4 million
during the first quarter in the previous year.
    In the first quarter ended June 30, 2008, revenues increased 7.6 per cent
to $171.9 million with total expenses increasing 12.4 per cent to $163.5
million, compared to the first quarter last year. The increase in expenses was
largely due to a $10.4 million increase in fuel expenses, as well as a $7.9
million increase in interest and amortization expenses reflecting BC Ferries'
ongoing significant investments in its fleet and other infrastructure.
    During the quarter, BC Ferries invested $190.0 million in its capital
assets. Capital expenditures included $171.8 million in new vessels, vessel
upgrades and modifications; $8.3 million in marine structures; $7.5 million in
terminal and building upgrades and equipment; and $2.4 million in computer
hardware and software development.
    "We are continuing our fleet renewal program with more than $145 million
invested in new ships during the quarter," said BC Ferries President and CEO,
David L. Hahn. "In addition to ongoing construction on the Island Sky and
Northern Expedition, the Coastal Inspiration entered service on the Duke
Point - Tsawwassen run and the Coastal Celebration arrived in B.C. These are
major milestones for BC Ferries and a significant component of our commitment
to provide an outstanding travel experience for our customers."
    Although there has been some moderation recently in the price of fuel, BC
Ferries continues to be concerned about the impact of fuel costs on customers'
travel decisions. The combination of the high price of motor vehicle fuel and
recently implemented fuel surcharges could result in a decline in travel in
the future. The company is implementing various measures to reduce its costs
over the remainder of the fiscal year.
    Full financial statements, including notes and Management's Discussion &
Analysis, are filed on SEDAR and will be available at www.sedar.com.

    BC Ferries, one of the largest ferry operators in the world based on
passengers transported annually and transportation infrastructure, carried
more than 21 million passengers and 8 million vehicles during the fiscal year
ended March 31, 2008. BC Ferries provides frequent year-round ferry
transportation services to the West Coast of Canada on 25 routes, currently
supported by 37 vessels and 47 terminals, and also manages other remote routes
through contracts with independent operators.

    This release contains historical information and may contain certain
forward-looking statements that relate to future events or future performance.
These forward-looking statements are based upon management's current
expectations and assumptions as to a number of factors, including, the risks,
uncertainties and other factors as described in BC Ferries' Management's
Discussion & Analysis and certain of the other BC Ferries' documents available
at www.sedar.com. These forward-looking statements are based upon information
currently available to management and BC Ferries assumes no obligation to
update or revise them to reflect new events or circumstances. If management's
expectations and assumptions prove to be incorrect, or factors change, then
actual results could differ materially from the forward-looking information
contained in this release.



    
    BRITISH COLUMBIA FERRY SERVICES INC.
    Consolidated Balance Sheets
    (expressed in thousands)
    -------------------------------------------------------------------------
                                                        June 30,    March 31,
                                                           2008         2008
                                                     (unaudited)
    -------------------------------------------------------------------------
    Assets

    Current assets:
      Cash and cash equivalents                     $    21,903  $   130,409
      Short-term investments                             26,657       17,040
      Accounts receivable                                17,520       14,463
      Prepaid expenses                                   14,899        7,285
      Inventories                                        18,552       17,055
      Derivative assets                                  21,863       18,144
      Regulatory assets                                   4,775        4,775
      -----------------------------------------------------------------------
                                                        126,169      209,171

    Capital assets                                    1,474,570    1,303,644
    Deferred financing costs                                  -          669
    Regulatory assets                                       834        7,729
    Long-term land lease                                 29,141       29,238
    -------------------------------------------------------------------------
                                                    $ 1,630,714  $ 1,550,451
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities      $    78,318  $    91,263
      Interest payable on long-term debt                 14,336       15,718
      Accrued employee costs                             52,365       53,213
      Deferred revenue                                   19,816       15,108
      Regulatory liabilities                                  -        3,558
      Current portion of accrued employee future
       benefits                                             800          800
      Current portion of obligations under capital
       leases                                               647          690
      -----------------------------------------------------------------------
                                                        166,282      180,350

    Accrued employee future benefits                     12,805       13,020
    Regulatory liabilities                               13,855       16,833
    Long-term debt                                    1,118,123    1,028,872
    Obligations under capital leases                        636          719
    Other long-term liabilities                              76           76
    -------------------------------------------------------------------------
                                                      1,311,777    1,239,870
    -------------------------------------------------------------------------
    Shareholders' equity:
      Share capital                                      75,478       75,478
      Retained earnings                                 243,459      235,103
      -----------------------------------------------------------------------
                                                        318,937      310,581

    -------------------------------------------------------------------------
                                                    $ 1,630,714  $ 1,550,451
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BRITISH COLUMBIA FERRY SERVICES INC.
    Consolidated Statements of Earnings, Comprehensive Income and Retained
    Earnings (unaudited)
    (expressed in thousands)
    -------------------------------------------------------------------------
                                                  For the three months ended
                                                        June 30,     June 30,
                                                           2008         2007
    -------------------------------------------------------------------------

    Revenue:
      Tariffs                                       $   107,995  $    95,062
      Ferry service fees                                 31,648       31,200
      Federal-Provincial Subsidy Agreement                6,573        6,464
      Retail                                             19,693       19,668
      Other income                                        6,001        7,367
      -----------------------------------------------------------------------
                                                        171,910      159,761
    -------------------------------------------------------------------------

    Expenses:
      Operations                                         95,920       81,894
      Maintenance                                        18,335       21,416
      Administration                                     11,899       11,207
      Cost of retail goods sold                           7,174        7,303
      Amortization                                       20,254       15,840
      -----------------------------------------------------------------------
                                                        153,582      137,660
    -------------------------------------------------------------------------

    Earnings from operations                             18,328       22,101

    Gain on foreign exchange                                 97           73
    Interest expense                                    (11,270)      (7,789)
    Gain on disposal of capital assets                    1,201           12
    -------------------------------------------------------------------------
    Net earnings                                          8,356       14,397

    Other comprehensive income                                -            -

    -------------------------------------------------------------------------
    Net earnings and comprehensive income                 8,356       14,397
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Retained earnings, beginning of period              235,103      203,569
    Adjustment to retained earnings                           -          478
    -------------------------------------------------------------------------
    Restated balance, beginning of period               235,103      204,047
    -------------------------------------------------------------------------
    Retained earnings, end of period                $   243,459  $   218,444
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BRITISH COLUMBIA FERRY SERVICES INC.
    Consolidated Statements of Cash Flows (unaudited)
    (expressed in thousands)
    -------------------------------------------------------------------------
                                                  For the three months ended
                                                        June 30,     June 30,
                                                           2008         2007
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net earnings                                  $     8,356   $   14,397
      Items not involving cash:
        Amortization                                     20,254       15,840
        Other non-cash charges                             (782)          55
      Regulatory costs deferred                            (996)         892
      Change in operating working capital               (21,150)     (11,627)
      -----------------------------------------------------------------------
                                                          5,682       19,557
    -------------------------------------------------------------------------

    Financing:
      Proceeds from issuance of long-term debt           90,000            -
      Repayment of short-term loans                           -      (24,708)
      Repayment of capital lease obligations               (128)           -
      Deferred financing costs incurred                    (240)         (80)
      -----------------------------------------------------------------------
                                                         89,632      (24,788)
    -------------------------------------------------------------------------

    Investing:
      Proceeds from disposal of capital assets            1,409           12
      Purchase of capital assets                       (195,612)     (63,587)
      Purchase of short-term investments                 (9,617)     (11,088)
      -----------------------------------------------------------------------
                                                       (203,820)     (74,663)
    -------------------------------------------------------------------------

    Decrease in cash and cash equivalents              (108,506)     (79,894)

    Cash and cash equivalents, beginning of period      130,409      180,123
    -------------------------------------------------------------------------

    Cash and cash equivalents, end of period        $    21,903  $   100,229
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------

    Supplemental cash flow information:
      Cash paid during the period for interest      $    15,027  $    15,125

    Non-cash transactions:
      Capital assets acquired under capital lease   $        68  $         -

    -------------------------------------------------------------------------
    

    %SEDAR: 00020627E




For further information:

For further information: Media Contact: BC Ferries, Media Relations,
Victoria: (250) 978-1267; Customer Contact: Victoria: (250) 386-3431,
Toll-free: 1-888-BCFERRY (1-888-223-3779)


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