BC Ferries releases third quarter results



    VICTORIA, Feb. 27 /CNW/ - British Columbia Ferry Services Inc.
(BC Ferries) today released its third quarter results for fiscal 2007/08. The
company reported a net loss of $7.8 million for the three months ended
December 31, 2007, compared to a net loss of $1.8 million in the same quarter
last year. Net earnings before extraordinary gain for the nine-month period
ended December 30, 2007 were $67.7 million, down from $82.0 million for the
same period in the previous year.
    Due to the seasonality of ferry travel, BC Ferries typically generates
higher net earnings in the first and second quarters, which are subsequently
reduced by net losses in the last two quarters of its fiscal year. The company
utilizes the third and fourth quarters to perform upgrades, maintenance and
refits and to undertake mandatory inspections on the majority of its vessels.
    For the three months ended December 31, 2007, total revenue increased by
$8.0 million to $136.5 million while total expenses increased $14.0 million to
$144.3 million, compared to the same period last year. Revenues for the nine
months ended December 31, 2007 increased $38.7 million to $516.5 million with
expenses in the same period increasing $53.0 million to $448.8 million,
compared to the nine months ended December 31, 2006.
    Capital expenditures in the three months ended December 31, 2007 totalled
$172.0 million and $251.9 million in the nine months ended December 31, 2007.
During the third quarter ended December 31, 2007, $146.2 million was invested
in BC Ferries' three new Super C-class vessels, the Coastal Renaissance,
Coastal Inspiration and Coastal Celebration.
    "Taking possession of the Coastal Renaissance in December was a major
milestone for BC Ferries as we start to see the results of our significant
capital investments," said BC Ferries' President & CEO David L. Hahn. "The
Super Cs are the centerpiece of our fleet revitalization program that will see
26 new ships in less than 15 years - the largest vessel replacement program in
our company's history."
    The Coastal Renaissance will enter service in March 2008 on the Departure
Bay - Horseshoe Bay route, with the second and third Super Cs, the Coastal
Inspiration and Coastal Celebration, entering service between the Lower
Mainland and Vancouver Island in the summer and fall of 2008, respectively.
    Capital expenditures for the nine-month period ended December 31, 2007
also included $32.0 million in terminal upgrades, including marine structures,
building upgrades and equipment. Over the next five years, BC Ferries plans to
invest $237 million in building and marine structures at its terminals.
    "We're undertaking significant upgrades at our terminals to improve the
efficiency of our operations and our customers' travel experience," said Hahn.
"Current projects include adding new ticket booths at Swartz Bay and Departure
Bay, where we are also expanding the holding compound and adding a new retail
building."
    BC Ferries continues to invest all of its retained earnings into its
asset renewal program. As the capital projects are completed and come into
service, amortization and financing costs will increase. The company expects
this will cause a decrease in its future earnings in the near term.
    BC Ferries' 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)

    -------------------------------------------------------------------------
                                                     December 31,   March 31,
                                                            2007        2007
                                                      (unaudited)
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                       $   27,758  $  180,123
      Short-term investments                              27,244      16,046
      Accounts receivable                                 15,620      19,050
      Prepaid expenses                                     6,049       5,879
      Inventories                                         17,212      16,492
      Regulatory assets                                    3,581           -
      -----------------------------------------------------------------------
                                                          97,464     237,590

    Capital assets                                     1,122,005     918,824
    Deferred financing costs                               1,270       9,580
    Regulatory assets                                     37,063      21,721
    Long-term land lease                                  27,784      28,060
    -------------------------------------------------------------------------
                                                      $1,285,586  $1,215,775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities        $   42,965  $   72,511
      Short term debt                                     39,918      24,888
      Interest payable on long-term debt                   8,453      12,663
      Accrued employee costs                              49,769      47,393
      Deferred revenue                                    13,168      12,031
      Derivative liabilities                              26,340           -
      Regulatory liabilities                               1,150          90
      Current portion of accrued employee
       future benefits                                       800         800
      Current portion of obligation under
       capital lease                                          28          26
      -----------------------------------------------------------------------
                                                         182,591     170,402

    Accrued employee future benefits                      13,265      13,755
    Derivative liabilities                                 1,488       2,831
    Long-term debt                                       740,888     749,628
    Obligation under capital lease                            91         112
    Other long-term liabilities                               75           -
    -------------------------------------------------------------------------
                                                         938,398     936,728
    -------------------------------------------------------------------------

    Shareholders' equity:
      Share capital                                       75,478      75,478
      Retained earnings                                  271,710     203,569
      -----------------------------------------------------------------------
                                                         347,188     279,047
    -------------------------------------------------------------------------
                                                      $1,285,586  $1,215,775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                         December 31             December 31
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------

    Revenue:
      Tariffs                 $   79,711  $   75,233  $  312,808  $  295,860
      Ferry service fees          26,855      25,703      94,892      84,276
      Federal-Provincial
       Subsidy Agreement           6,464       6,327      19,392      18,982
      Retail                      17,067      15,916      64,673      58,893
      Other income                 6,463       5,360      24,720      19,815
      -----------------------------------------------------------------------
                                 136,560     128,539     516,485     477,826
    -------------------------------------------------------------------------

    Expenses:
      Operations                  77,826      72,558     250,709     231,530
      Maintenance                 23,482      21,853      65,641      53,104
      Administration              12,524      11,459      36,098      33,889
      Cost of retail goods sold    6,551       6,349      23,998      22,865
      Amortization                16,538      13,748      48,930      40,371
      -----------------------------------------------------------------------
                                 136,921     125,967     425,376     381,759
    -------------------------------------------------------------------------

    (Loss) earnings from
     operations                     (361)      2,572      91,109      96,067

    Gain on foreign exchange           2          29         152         266
    Interest expense              (7,336)     (4,454)    (23,410)    (14,331)
    (Loss) gain on disposal of
     capital assets                  (68)         13        (188)         (7)
    -------------------------------------------------------------------------
    Net (loss) earnings before
     extraordinary gain           (7,763)     (1,840)     67,663      81,995

    Extraordinary gain                 -           -           -      61,272

    -------------------------------------------------------------------------
    Net (loss) earnings           (7,763)     (1,840)     67,663     143,267
    -------------------------------------------------------------------------

    Other comprehensive income         -           -           -           -

    -------------------------------------------------------------------------
    Net (loss) earnings and
     comprehensive income         (7,763)     (1,840)     67,663     143,267
    -------------------------------------------------------------------------

    Retained earnings,
     beginning of period         279,473     244,657     203,569      99,550
    Adjustment to retained
     earnings                          -           -         478           -
    -------------------------------------------------------------------------
    Restated balance,
     beginning of period         279,473     244,657     204,047      99,550
    -------------------------------------------------------------------------

    Retained earnings,
     end of period            $  271,710  $  242,817  $  271,710  $  242,817
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                         December 31             December 31
                                    2007        2006        2007        2006
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net (loss) earnings
       before extraordinary
       gain                   $   (7,763) $   (1,840) $   67,663  $   81,995
      Extraordinary gain               -           -           -      61,272
      -----------------------------------------------------------------------
      Net (loss) earnings         (7,763)     (1,840)     67,663     143,267
        Items not involving
         cash:
          Amortization            16,538      13,748      48,930      40,371
          Other non-cash
           charges                   476        (395)        761         114
      Regulatory costs deferred    4,390        (616)      9,657      (3,048)
      Change in operating
       working capital             5,496      15,670      (8,069)    (25,382)
      -----------------------------------------------------------------------
                                  19,137      26,567     118,942     155,322
    -------------------------------------------------------------------------

    Financing:
      Deferred financing
       costs incurred                (95)        (79)       (255)       (239)
      Amounts drawn from
       credit facility            39,836      41,515      15,128      41,515
      -----------------------------------------------------------------------
                                  39,741      41,436      14,873      41,276
    -------------------------------------------------------------------------

    Investing:
      (Costs of) proceeds
       from disposal of
       capital assets                (39)         12         (14)         28
      Purchase of capital
       assets                   (167,135)   (102,498)   (274,968)   (176,849)
      Purchase of short-term
       investments                   (32)          -     (11,198)          -
      Increase in lands under
       long-term lease                 -           -           -         (60)
      -----------------------------------------------------------------------
                                (167,206)   (102,486)   (286,180)   (176,881)
    -------------------------------------------------------------------------

    (Decrease) increase in
     cash and cash equivalents  (108,328)    (34,483)   (152,365)     19,717

    Cash and cash equivalents,
     beginning of period         136,086      56,491     180,123       2,291

    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period            $   27,758  $   22,008  $   27,758  $   22,008
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

    Supplemental cash flow
     information:
      Cash paid during the
       period for interest    $   15,135  $   15,167  $   36,581  $   30,429
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    
    %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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