BC Ferries releases first quarter results



    VICTORIA, Aug. 20 /CNW/ - British Columbia Ferry Services Inc. (BC
Ferries) announced its first quarter results today. Net losses were $3.6
million for the three months ended June 30, 2009 compared to net earnings of
$8.4 million in the first quarter of the previous fiscal year. In the first
quarter, vehicle traffic was down 1.0 per cent and passenger traffic was down
0.4 per cent compared to the same period last year.
    In the first quarter, revenues increased by 3.7 per cent to $178.3
million, with total expenses increasing 11.3 per cent to $181.9 million,
compared to the first quarter last fiscal year. The increase in expenses was
largely due to an increase of $11.2 million in amortization and interest
expenses for new vessels and a $5.4 million increase in maintenance costs
reflecting variations in vessel refit schedules.
    "As expected, our earnings from operations were down this past quarter,
which reflect increased amortization and financing costs for new vessels.
Although our earnings decreased, cash provided by operations remains strong,"
said David L. Hahn, BC Ferries' President and CEO. "I'm pleased that we are
now reaping the benefits of the efficiencies and cost containment initiatives
we implemented last fall."
    During the first quarter, BC Ferries invested $17.0 million in capital
assets. Capital expenditures included $6.3 million in new vessels and vessel
upgrades; $5.2 million in terminal building upgrades and equipment; $4.0
million in information technology; and $1.5 million in terminal marine
structures.
    Significant events during or subsequent to the first quarter include the
return to service of the Queen of New Westminster after a $52 million upgrade
and the decommissioning of the Queen of Vancouver and the Queen of Prince
Rupert. Additionally the new northern vessel, the Northern Expedition
commenced service on the Port Hardy - Prince Rupert route; and fares were
reduced as fuel rebates were increased from 5 per cent to 8 per cent on the
minor routes.
    Fuel rebates will be further increased on the minor routes to 10 per cent
effective September 1, 2009.
    The decrease in economic activity, international tourism and higher level
of unemployment negatively impact discretionary travel as well as the
commercial market. BC Ferries continues to review and update its financial and
operating plans to weather the reduced traffic levels and current economic
downturn, in order to continue to have a viable, profitable future.
    BC Ferries maintains a strong investment-grade credit rating. Our credit
ratings at June 30, 2009 were A low (DBRS) and A- (Standard & Poor's) and both
rating agencies have assessed our rating outlook as positive.
    Full financial statements, including notes and Management's Discussion &
Analysis, are filed on SEDAR and will be available at www.sedar.com.

    BC Ferries is one of the largest ferry operators in the world based on
passengers transported annually and transportation infrastructure, and carried
20.7 million passengers and 8.1 million vehicles during the fiscal year ended
March 31, 2009. BC Ferries provides frequent year-round ferry transportation
services to the West Coast of Canada on 25 routes, currently supported by 36
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, 2009       March 31,
                                                   (unaudited)          2009
    -------------------------------------------------------------------------

    Assets
    Current assets:
      Cash and cash equivalents                  $     15,393   $     12,402
      Restricted cash and short-term investments       37,240         37,240
      Other short-term investments                        153            153
      Accounts receivable                              15,054         12,883
      Prepaid expenses                                  9,560          8,132
      Inventories                                      18,436         16,835
      Derivative assets                                 5,844              -
      Regulatory assets                                 4,775          4,775
      -----------------------------------------------------------------------
                                                      106,455         92,420

    Property, plant and equipment                   1,668,669      1,683,576
    Intangible assets                                  22,333         19,866
    Assets held for sale                                3,216            435
    Regulatory assets                                   1,001         11,687
    Long-term land lease                               33,782         33,896
    -------------------------------------------------------------------------
                                                 $  1,835,456   $  1,841,880
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities   $     32,514   $     41,153
      Short-term debt                                  19,990         17,956
      Interest payable on long-term debt               15,374         18,395
      Accrued employee costs                           50,521         51,923
      Deferred revenue                                 18,774         15,783
      Derivative liabilities                               41            923
      Regulatory liabilities                            9,356          2,858
      Current portion of long-term debt                 9,000          9,000
      Current portion of accrued employee
       future benefits                                    800            800
      Current portion of obligations under
       capital lease                                      496            541
      -----------------------------------------------------------------------
                                                      156,866        159,332

    Accrued employee future benefits                   11,617         12,047
    Long-term debt                                  1,356,473      1,356,239
    Obligations under capital lease                       427            537
    Other long-term liabilities                           103            153
    -------------------------------------------------------------------------
                                                    1,525,486      1,528,308
    -------------------------------------------------------------------------
    Shareholders' equity:
      Share capital                                    75,478         75,478
      Retained earnings                               234,492        238,094
      -----------------------------------------------------------------------
                                                      309,970        313,572
    -------------------------------------------------------------------------
                                                 $  1,835,456   $  1,841,880
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    BRITISH COLUMBIA FERRY SERVICES INC.
    Consolidated Statements of Earnings (Loss), Comprehensive Income
    and Retained Earnings (unaudited)
    (expressed in thousands)

    -------------------------------------------------------------------------
                                                  For the three months ended
                                                June 30, 2009  June 30, 2008
    -------------------------------------------------------------------------

    Revenue:
      Tariffs                                    $    108,043   $    107,995
      Ferry service fees                               38,234         31,648
      Federal-Provincial Subsidy Agreement              6,731          6,573
      Retail                                           19,889         19,693
      Other income                                      5,358          6,001
      -----------------------------------------------------------------------
                                                      178,255        171,910
    -------------------------------------------------------------------------

    Expenses:
      Operations                                      100,460         98,751
      Maintenance                                      23,702         18,335
      Administration                                    7,446          9,068
      Cost of retail goods sold                         7,533          7,174
      Amortization                                     26,955         20,254
      -----------------------------------------------------------------------
                                                      166,096        153,582
    -------------------------------------------------------------------------

    Earnings from operations                           12,159         18,328

    Gain on foreign exchange                                3             97
    Interest expense                                  (15,765)       (11,270)
    Gain on disposal of property, plant and equipment       1          1,201
    -------------------------------------------------------------------------
    Net (loss) earnings                                (3,602)         8,356

    Other comprehensive income                              -              -

    -------------------------------------------------------------------------
    Net (loss) earnings and comprehensive income       (3,602)         8,356
    -------------------------------------------------------------------------

    Retained earnings, beginning of period            238,094        235,103

    -------------------------------------------------------------------------
    Retained earnings, end of period             $    234,492   $    243,459
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    BRITISH COLUMBIA FERRY SERVICES INC.
    Consolidated Statements of Cash Flows (unaudited)
    (expressed in thousands)

    -------------------------------------------------------------------------
                                                  For the three months ended
                                                June 30, 2009  June 30, 2008
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net (loss) earnings                        $     (3,602)  $      8,356
      Items not involving cash:
        Amortization                                   26,955         20,254
        Other non-cash charges                           (716)          (972)
      Long-term regulatory costs deferred               2,725           (996)
      Change in non-cash operating working capital     (1,794)       (21,749)
      -----------------------------------------------------------------------
                                                       23,568          4,893
    -------------------------------------------------------------------------

    Financing:
      Proceeds from issuance of bonds                       -         90,000
      Proceeds from short-term loans                    2,034              -
      Repayment of capital lease obligations             (155)          (128)
      Deferred financing costs incurred                     -           (240)
      -----------------------------------------------------------------------
                                                        1,879         89,632
    -------------------------------------------------------------------------

    Investing:
      Proceeds from disposal of property, plant
       and equipment and intangible assets                  4          1,409
      Purchase of property, plant and equipment
       and intangible assets                          (22,460)      (194,823)
      Purchase of short-term investments                    -         (9,617)
      -----------------------------------------------------------------------
                                                      (22,456)      (203,031)
    -------------------------------------------------------------------------

    Increase (decrease) in cash and cash equivalents    2,991       (108,506)

    Cash and cash equivalents, beginning of period     12,402        116,321

    -------------------------------------------------------------------------
    Cash and cash equivalents, end of  period    $     15,393   $      7,815
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %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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