BC Ferries releases second quarter Financial results



    VICTORIA, Nov. 28 /CNW/ - British Columbia Ferry Services Inc.
(BC Ferries) today released its second quarter financial results with net
earnings before extraordinary gain of $61.0 million and $75.4 million for the
three- and six-month periods ended September 30, 2007, down from $68.9 million
and $83.8 million for the three and six months ended September 30, 2006.
    "These earnings allow us to continue our extensive fleet and asset
renewal program to ensure the ongoing safety and reliability of our
operations," said BC Ferries' President and CEO, David L. Hahn. "Our
commitment to rebuilding our infrastructure is already showing positive
results with two new ships added to the fleet last year and significant
upgrades well underway at many of our terminals, including extensive
modifications to prepare for the arrival of our three new Super C-class
vessels entering service next year."
    For the six months ended September 30, 2007, $80.2 million was invested
in BC Ferries' fleet, terminals and information systems, including:
    
    -  $56.8 million in new vessels, vessel upgrades and modifications;
    -  $12.4 million in terminal marine structures;
    -  $8.5 million in terminal and building upgrades and equipment; and,
    -  $2.5 million in computer hardware and software development.
    

    For the three months ended September 30, 2007, total revenue increased
from $202.9 million to $220.2 million, while total expenses increased from
$134.0 million to $159.2 million, compared to the same period last year. The
increase in expenses was primarily due to a:
    
    -  $7.7 million increase in operations expenses, including a $5.0 million
       increase in wages and benefits;
    -  $7.3 million increase in maintenance costs, reflecting BC Ferries'
       ongoing significant investments in its fleet and other infrastructure;
       and
    -  $6.9 million increase in interest and amortization expenses resulting
       from new vessels and other assets entering service.
    

    Total revenue for the six months ended September 30, 2007 was
$379.9 million compared to $349.3 million for the six months ended September
30, 2006. Expenses for the six-month period were $304.5 million, up from
$265.5 million for the six months ended September 2006.
    At September 30, 2007, the balance in BC Ferries' deferred fuel cost
accounts was $13.5 million, down from $18.3 million at June 30, 2007. The
reduction is due to the highly seasonal nature of ferry travel whereby BC
Ferries carries the majority of its passengers during its second quarter. The
fuel deferral account balance is expected to rise again during the last two
quarters of the fiscal year.
    Despite the reduction in the deferred fuel cost accounts, BC Ferries
continues to be concerned about the high cost of fuel. The company has
implemented a wide variety of fuel reduction measures and is continuing to
look for ways to further reduce its fuel consumption.
    The full financial statements, including notes and Management's
Discussion and 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, 2007. 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)

    -------------------------------------------------------------------------
                                          September 30, 2007  March 31, 2007
                                                  (unaudited)
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents (note 2(c))      $   136,086     $   180,123
      Short-term investments (note 2(c))              27,212          16,046
      Accounts receivable                             23,032          19,050
      Prepaid expenses                                 8,356           5,879
      Inventories                                     15,985          16,492
      -----------------------------------------------------------------------
                                                     210,671         237,590

    Capital assets (note 3)                          966,452         918,824
    Deferred financing costs (note 1)                  1,175           9,580
    Regulatory assets (note 4)                        67,169          21,721
    Long-term land lease                              27,876          28,060
    -------------------------------------------------------------------------
                                                 $ 1,273,343     $ 1,215,775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities   $    37,397     $    72,511
      Short term debt                                      -          24,888
      Interest payable on long-term debt              12,722          12,663
      Accrued employee costs                          48,592          47,393
      Deferred revenue                                10,782          12,031
      Derivative liabilities (note 5)                 49,056               -
      Regulatory liabilities (note 4)                    165              90
      Current portion of accrued employee
       future benefits                                   800             800
      Current portion of obligation under
       capital lease                                     26               26
      -----------------------------------------------------------------------
                                                     159,540         170,402

    Accrued employee future benefits (note 6)         13,409          13,755
    Derivative liabilities (note 5)                    4,489           2,831
    Long-term debt (note 2)                          740,780         749,628
    Obligation under capital lease                        99             112
    Other long-term liabilities                           75               -
    -------------------------------------------------------------------------
                                                     918,392         936,728
    -------------------------------------------------------------------------

    Shareholders' equity:
      Share capital                                   75,478          75,478
      Retained earnings                              279,473         203,569
      -----------------------------------------------------------------------
                                                     354,951         279,047
    Commitments (note 3)
    -------------------------------------------------------------------------

                                                 $ 1,273,343     $ 1,215,775

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



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

    -------------------------------------------------------------------------
                                     Three months ended     Six months ended
                                         September 30          September 30
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------

    Revenue:
      Tariffs                     $ 138,035  $ 131,042  $ 233,097  $ 220,627
      Ferry service fees             36,837     31,467     68,037     58,573
      Federal-Provincial Subsidy
       Agreement                      6,464      6,328     12,928     12,655
      Retail                         27,797     25,104     47,266     42,673
      Other income                   11,031      8,933     18,597     14,758
      -----------------------------------------------------------------------
                                    220,164    202,874    379,925    349,286
    -------------------------------------------------------------------------

    Expenses:
      Operations                     90,989     83,271    172,883    158,972
      Maintenance                    20,743     13,373     42,159     31,251
      Administration                 12,367      9,793     23,574     22,430
      Cost of retail goods sold      10,144      9,675     17,447     16,516
      Amortization                   16,552     13,632     32,392     26,623
      -----------------------------------------------------------------------
                                    150,795    129,744    288,455    255,792
    -------------------------------------------------------------------------

    Earnings from operations         69,369     73,130     91,470     93,494

    Gain on foreign exchange             77        177        150        237
    Interest expense (note 7)        (8,285)    (4,378)   (16,074)    (9,876)
    Loss on disposal of capital
     assets                            (132)       (30)      (120)       (20)
    -------------------------------------------------------------------------
    Net earnings before
     extraordinary gain              61,029     68,899     75,426     83,835

    Extraordinary gain (note 8)           -          -          -     61,272

    -------------------------------------------------------------------------
    Net earnings                     61,029     68,899     75,426    145,107
    -------------------------------------------------------------------------

    Other comprehensive
     income (note 1(c))                   -          -          -          -

    -------------------------------------------------------------------------
    Net earnings and
     comprehensive income            61,029     68,899     75,426    145,107
    -------------------------------------------------------------------------

    Retained earnings, beginning
     of period                      218,444    175,758    203,569     99,550
    Adjustment to retained
     earnings (note 1(c))                 -          -        478          -
    -------------------------------------------------------------------------
    Restated balance, beginning
     of period                      218,444    175,758    204,047     99,550
    -------------------------------------------------------------------------

    Retained earnings, end of
     period                       $ 279,473  $ 244,657  $ 279,473  $ 244,657
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                     Three months ended     Six months ended
                                         September 30          September 30
                                       2007       2006       2007       2006
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net earnings before
       extraordinary gain         $  61,029  $  68,899  $  75,426  $  83,835
      Extraordinary gain (note 8)         -          -          -     61,272
      -----------------------------------------------------------------------
      Net earnings                   61,029     68,899     75,426    145,107
        Items not involving cash:
          Amortization               16,552     13,632     32,392     26,623
          Other non-cash charges        230        294        285        509
      Regulatory costs deferred       4,809     (1,221)     5,267     (2,432)
      Change in operating working
       capital                       (2,372)   (10,304)   (13,565)   (41,052)
      -----------------------------------------------------------------------
                                     80,248     71,300     99,805    128,755
    -------------------------------------------------------------------------

    Financing:
      Repayment of short-term
       loans                              -          -    (24,708)         -
      Deferred financing costs
       incurred                         (80)       (80)      (160)      (160)
      -----------------------------------------------------------------------
                                        (80)       (80)   (24,868)      (160)
    Investing:
      Proceeds from disposal of
       capital assets                    13          6         25         16
      Purchase of capital assets    (44,246)   (42,437)  (107,833)   (74,351)
      Purchase of short-term
       investments                      (78)         -    (11,166)         -
      Increase in lands under
       long-term lease                    -        (60)         -        (60)
      -----------------------------------------------------------------------
                                    (44,311)   (42,491)  (118,974)   (74,395)
    -------------------------------------------------------------------------

    Increase (decrease) in cash
     and cash equivalents            35,857     28,729    (44,037)    54,200

    Cash and cash equivalents,
     beginning of period            100,229     27,762    180,123      2,291

    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                $ 136,086  $  56,491  $ 136,086  $  56,491

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

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

    Supplemental cash flow
     information:
      Cash paid during the period
       for interest               $   6,284  $      26  $  21,446  $  15,262

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

    %SEDAR: 00020627E




For further information:

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


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