BC Ferries releases third quarter results

VICTORIA, Feb. 26 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) today released its third quarter results for fiscal 2009/10. The company reported a net loss of $20.4 million for the three months ended December 31, 2009, compared to a net loss of $14.6 million in the same quarter last year. Net earnings for the nine-month period ended December 31, 2009 were $40.2 million, down from $47.5 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.

As expected, expenses increased primarily due to amortization costs of new and refurbished ships and interest costs on new borrowing to finance these vessels. These increases were planned and anticipated in BC Ferries' newbuild program.

For the second consecutive quarter, there was an improvement in both vehicle and passenger traffic over the same period in the prior year, with increases of 4.2 per cent and 2.8 per cent respectively. For the first nine months ended December 31, 2009, vehicle traffic was 2.5 per cent higher and passenger traffic was 1.3 per cent higher than the first nine months of fiscal 2009.

"We are optimistic about the rebound in traffic and we anticipate the limited recovery in local discretionary travel levels to continue which, along with our aggressive cost management initiatives, will help us achieve our profit targets for the year" said David L. Hahn, BC Ferries' President and CEO.

For the three months ended December 31, 2009, total revenue increased by$10.5 million to $159.9 million. Revenues for the nine months ended December 31, 2009 increased $36.6 million to $590.0 million.

For the three months ended December 31, 2009, total expenses increased $16.3 million to $180.3 million, compared to the same period last year, with expenses in the nine month period ended December 31, 2009 increasing $43.9 million to $549.8 million, compared to the nine months ended December 31, 2008. Total expenses for the three months ended December 31, 2009 reflect an $11.3 million increase ($33.5 million increase for the nine months ended December 31, 2009) in amortization and interest expense. These increases reflect new vessels and other new assets which have entered service.

"We continue to review and update our financial and operating plans in response to the current economic conditions in order to manage the company in a fiscally prudent manner," said Hahn. On December 14, 2009, BC Ferries was advised by the credit rating agency DBRS Limited (DBRS) that they upgraded BC Ferries' long-term rating to A from A (low). DBRS acknowledged BC Ferries' tight management of service offerings and expenses as an important factor contributing to this upgrade. On February 24, 2010, credit rating agency Standard & Poor's upgraded BC Ferries' long-term credit rating to "A+" from "A-"

Other notable events included the expansion of self-ticketing kiosks at Departure Bay and Duke Point terminals on December 1, 2009. On December 15, 2009, BC Ferries released the results of its August 2009 Customer Satisfaction Tracking Survey indicating that a record 92 per cent of customers report being satisfied with their overall trip experience. On January 25, 2010, fuel rebates were reduced from 10 per cent to 5 per cent on average on the 18 minor routes due to higher fuel prices. Fuel rebates are not currently in place on the major and northern routes.

BC Ferries has completed the first phase of its SailSafe program, which is a partnership initiative with the BC Ferry & Marine Workers' Union to achieve world class safety performance. The number of lost time injuries was down 25 per cent and work days lost to injury were down 36 per cent for the period January through December 2009 compared to the year prior.

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 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)

    -------------------------------------------------------------------------
                                                    December 31,   March 31,
                                                        2009         2009
                                                    (unaudited)
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                     $    50,206  $    12,402
      Restricted cash and short-term investments         37,240       37,240
      Other short-term investments                        7,678          153
      Accounts receivable                                15,797       12,883
      Prepaid expenses                                    5,609        8,132
      Inventories                                        17,493       16,835
      Derivative assets                                   1,507            -
      Regulatory assets                                   4,775        4,775
      -----------------------------------------------------------------------
                                                        140,305       92,420

    Property, plant and equipment                     1,645,640    1,683,576
    Intangible assets                                    24,252       19,866
    Assets held for sale                                    400          435
    Regulatory assets                                         -       11,687
    Long-term land lease                                 33,552       33,896
    -------------------------------------------------------------------------
                                                    $ 1,844,149  $ 1,841,880
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities      $    33,093  $    41,153
      Short-term debt                                         -       17,956
      Interest payable on long-term debt                 15,601       18,395
      Accrued employee costs                             50,590       51,923
      Deferred revenue                                   13,778       15,783
      Derivative liabilities                                 40          923
      Regulatory liabilities                                  -        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    433          541
      -----------------------------------------------------------------------
                                                        123,335      159,332

    Accrued employee future benefits                     11,510       12,047
    Regulatory liabilities                                2,677            -
    Long-term debt                                    1,352,450    1,356,239
    Obligations under capital lease                         223          537
    Other long-term liabilities                             178          153
    -------------------------------------------------------------------------
                                                      1,490,373    1,528,308
    -------------------------------------------------------------------------

    Shareholders' equity:
      Share capital                                      75,478       75,478
      Retained earnings                                 278,298      238,094
      -----------------------------------------------------------------------
                                                        353,776      313,572

    -------------------------------------------------------------------------
                                                    $ 1,844,149  $ 1,841,880
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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
                              2009         2008         2009         2008
    -------------------------------------------------------------------------

    Revenue:
      Tariffs             $    96,792  $    91,611  $   366,171  $   351,600
      Ferry service fees       33,614       29,090      117,462       98,549
      Federal-Provincial
       Subsidy Agreement        6,731        6,573       20,193       19,720
      Retail                   17,067       16,784       65,831       63,675
      Other income              5,684        5,299       20,309       19,806
      -----------------------------------------------------------------------
                              159,888      149,357      589,966      553,350
    -------------------------------------------------------------------------

    Expenses:
      Operations               95,278       93,008       305,813     300,592
      Maintenance              22,781       20,780        60,613      55,592
      Administration            7,812        7,546        22,274      25,015
      Cost of retail goods
       sold                     6,389        6,340        24,272      23,202
      Amortization             29,508       23,403        85,211      66,100
      -----------------------------------------------------------------------
                              161,768      151,077       498,183     470,501
    -------------------------------------------------------------------------

    (Loss) Earnings from
     operations                (1,880)      (1,720)       91,783      82,849

    Gain on foreign exchange       37           33            74         253
    Interest expense          (17,246)     (12,068)      (50,318)    (35,894)
    (Loss) gain on disposal
     and write-down of
     capital assets            (1,310)        (889)       (1,335)        250
    -------------------------------------------------------------------------
    Net (loss) earnings       (20,399)     (14,644)       40,204      47,458

    Other comprehensive income      -            -            -            -

    -------------------------------------------------------------------------
    Net (loss) earnings and
     comprehensive income     (20,399)     (14,644)      40,204       47,458

    Retained earnings,
     beginning of period      298,697      297,205      238,094      235,103
    -------------------------------------------------------------------------

    Retained earnings, end
     of period            $   278,298  $   282,561  $   278,298  $   282,561
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                              Three months ended        Nine months ended
                                 December 31               December 31
                              2009         2008         2009         2008
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net (loss) earnings $   (20,399) $   (14,644) $    40,204  $    47,458
      Items not involving
       cash:
        Amortization           29,508       23,403       85,211       66,100
        Other non-cash
         charges                1,604        1,433        1,355          349
      Long-term regulatory
       costs deferred           2,098       (3,488)       8,352       (2,747)
      Change in non-cash
       operating working
       capital                  6,591        1,518      (14,392)     (24,527)
      -----------------------------------------------------------------------
                               19,402        8,222      120,730       86,633
    -------------------------------------------------------------------------

    Financing:
      Proceeds from issuance
       of long-term debt            -      140,000            -      230,000
      Establishment of debt
       service reserve              -       (4,350)           -       (6,575)
      Repayment of long-term
       debt                         -            -       (4,500)           -
      Proceeds from (repayment
       of) short-term loans         -       42,000      (17,956)      52,974
      Repayment of capital
       lease obligations         (125)        (204)        (422)        (534)
      Deferred financing
       costs incurred               -         (708)           -         (951)
      -----------------------------------------------------------------------
                                 (125)     176,738      (22,878)     274,914
    -------------------------------------------------------------------------

    Investing:
      Proceeds from disposal
       of property, plant and
       equipment and intangible
       assets                   1,843           59        1,847        1,440
      Purchase of property,
       plant and equipment
       and intangible assets  (18,454)     (61,454)     (54,370)    (344,529)
      (Purchase of) proceeds
       from short-term
       investments             (7,500)       2,513       (7,525)      (2,480)
      -----------------------------------------------------------------------
                              (24,111)     (58,882)     (60,048)    (345,569)
    -------------------------------------------------------------------------

    (Decrease) increase in
     cash and cash equivalents (4,834)     126,078       37,804       15,978

    Cash and cash equivalents,
     beginning of period       55,040        6,229       12,402      116,329

    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period        $    50,206  $   132,307  $    50,206  $   132,307
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

%SEDAR: 00020627E

SOURCE British Columbia Ferry Services Inc.

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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