BC Ferries releases year-end results



    VICTORIA, June 7 /CNW/ - British Columbia Ferry Services Inc. (BC
Ferries) today announced its financial results for the year ended March 31,
2007.
    Consolidated net earnings before an extraordinary gain were $48.8 million
for the year ended March 31, 2007, compared to net earnings of $49.9 million
the previous year. In addition, the company reported an extraordinary gain of
$61.3 million in the first quarter of fiscal 2007, resulting from insurance
proceeds following the loss of the Queen of the North. When taking the
extraordinary gain into account, net earnings for the year ended March 31,
2007 were $110.1 million.
    Revenues for fiscal 2007 increased from $579.2 million to $596.3 million,
while expenses increased from $504.1 million to $528.4 million.
    Fourth quarter revenues increased by $9.3 million compared to the same
quarter in the prior fiscal year, while operating expenses increased by
$18.3 million, resulting in a fourth quarter net loss of $33.2 million
compared to a net loss of $24.8 million during the same quarter the previous
year. Due to the seasonality of ferry travel, BC Ferries typically generates
higher net earnings in the spring and summer quarters, which are subsequently
reduced by net losses in the last two quarters of its fiscal year.
    "Throughout the year we continued to invest all of our retained earnings
in our infrastructure to ensure the ongoing safety and reliability of our
operations," said BC Ferries' President and CEO, David L. Hahn. "In total, we
invested more than $262 million in our fleet, terminal, information systems
and facilities - almost double what we invested the previous year."
    Operating expenses increased by $24.3 million for the year ended
March 31, 2007, compared to the previous year, while capital expenditures for
the same period totalled $262.6 million, compared to $136.0 million the year
prior. Capital expenditures included:

    
    -   $206.0 million for new vessels, vessel upgrades and modifications,
        including the purchase of the Northern Adventure, comprehensive mid-
        life upgrades to the Queen of Alberni and Queen of Surrey, and the
        replacement of propulsion systems and safety upgrades to the Quinsam,
        Quinitsa and Queen of Capilano;
    -   $38.0 million in marine structures, including upgrades to berths at
        Horseshoe Bay and Departure Bay and the construction of a new berth
        at Swartz Bay terminal;
    -   $11.6 million in terminal and building upgrades and equipment; and
    -   $6.9 million in computer hardware and software development to improve
        communications technology and enhance customer service in areas such
        as automated ticketing, retail and food service management and
        security of customer credit card information.
    

    "This past year was an exciting time for BC Ferries as we began to see
the results of the largest vessel replacement strategy in the history of the
company," said Hahn. "We added two new vessels to our fleet and began
construction on three new Super C-class ferries and a 125-car ship." By the
summer of 2009, BC Ferries will have added seven new vessels to the fleet -
the first wave of a replacement strategy that will see 26 new ferries in
service over the next 15 years.
    The cost of fuel remains an ongoing concern for BC Ferries, despite the
introduction of a third fuel surcharge authorized by the BC Ferry Commissioner
in June 2006 and a one-time $7.0 million ferry transportation fee payment from
the provincial government that was applied against the deferred fuel cost
accounts. "While we have achieved considerable reductions in fuel consumption,
the balance in our deferral account was still $18.8 million by the end of the
fiscal year," said Hahn. "Without the payment from the provincial government,
the balance in the deferred cost account would have grown to $25.8 million by
year end."
    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, 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 and Analysis for the fiscal year ended March 31, 2007, and certain
of the other BC Ferries' documents available at www.sedar.com. These
forward-looking statements are made as of today's date and 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)

    -------------------------------------------------------------------------
                                                             As at March 31,
                                                           2007         2006
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                     $   180,123  $     2,291
      Short-term investments                             16,046       14,988
      Accounts receivable                                19,050       21,227
      Prepaid expenses                                    5,879        6,702
      Inventories                                        16,492       17,885
      -----------------------------------------------------------------------
                                                        237,590       63,093

    Capital assets                                      918,824      711,248
    Deferred financing costs                              9,580        8,183
    Regulatory assets                                    21,721       22,783
    Long-term land lease                                 28,060       28,370

    -------------------------------------------------------------------------
                                                    $ 1,215,775  $   833,677
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities      $    72,511  $    69,326
      Short-term debt                                    24,888            -
      Interest payable on long-term debt                 12,663       12,251
      Accrued employee costs                             47,393       44,810
      Deferred revenue                                   12,031       14,000
      Regulatory liabilities                                 90          958
      Current portion of accrued employee future
       benefits                                             800          800
      Current portion of obligations under capital
       lease                                                 26           25
      -----------------------------------------------------------------------
                                                        170,402      142,170

    Accrued employee future benefits                     13,755       16,737
    Unrealized losses on derivative instruments           2,831            -
    Long-term debt                                      749,628      499,604
    Obligations under capital lease                         112          138
    -------------------------------------------------------------------------
                                                        936,728      658,649
    -------------------------------------------------------------------------

    Shareholders' equity:
      Share capital                                      75,478       75,478
      Retained earnings                                 203,569       99,550
      -----------------------------------------------------------------------
                                                        279,047      175,028

    -------------------------------------------------------------------------
                                                    $ 1,215,775  $  833,677
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                                        Years ended March 31,
                                                           2007         2006
    -------------------------------------------------------------------------

    Revenue:
      Tariffs                                       $   363,228  $   353,624
      Ferry service fees                                108,396      108,223
      Federal-Provincial Subsidy Agreement               25,309       24,890
      Retail                                             71,719       68,749
      Other income                                       27,627       23,676
      -----------------------------------------------------------------------
                                                        596,279      579,162
    -------------------------------------------------------------------------

    Expenses:
      Operations                                        309,121      291,771
      Maintenance                                        84,886       81,081
      Administration                                     50,615       51,181
      Cost of retail goods sold                          28,226       26,977
      Amortization                                       55,515       53,106
      -----------------------------------------------------------------------
                                                        528,363      504,116
    -------------------------------------------------------------------------

    Earnings from operations                             67,916       75,046

    Gain on foreign exchange                                344          249
    Interest expense                                    (19,292)     (25,128)
    Loss on disposal and write-down of capital
     assets                                                (183)        (302)

    -------------------------------------------------------------------------
    Net earnings before extraordinary gain               48,785       49,865

    Extraordinary gain                                   61,272            -

    -------------------------------------------------------------------------
    Net earnings                                        110,057       49,865

    Retained earnings, beginning of year                 99,550       55,723
    Preferred share dividend                             (6,038)      (6,038)

    -------------------------------------------------------------------------
    Retained earnings, end of year                  $   203,569  $    99,550
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                                        Years ended March 31,
                                                           2007         2006
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net earnings before extraordinary gain        $    48,785  $    49,865
      Extraordinary gain                                 61,272            -
      -----------------------------------------------------------------------
      Net earnings                                      110,057       49,865
      Items not involving cash:
        Amortization                                     55,515       53,106
        Other non-cash charges                           (1,897)       1,079
      Regulatory costs deferred                           3,893      (14,783)
      Change in operating working capital                (7,108)       9,485
      -----------------------------------------------------------------------
                                                        160,460       98,752
    -------------------------------------------------------------------------

    Financing:
      Dividends paid on preferred shares                 (6,038)      (6,038)
      Deferred financing costs incurred                  (1,895)        (692)
      Proceeds from issuance of bonds                   250,000            -
      Proceeds from short-term loans                    203,843            -
      Repayment of short-term loans                    (179,135)           -
      -----------------------------------------------------------------------
                                                        266,775       (6,730)
    -------------------------------------------------------------------------

    Investing:
      Proceeds from disposal of capital assets               31            7
      Purchase of capital assets                       (248,316)    (130,181)
      Increase in lands under long-term lease               (60)      (1,147)
      (Purchase) redemption of short-term
       investments                                       (1,058)          66
      -----------------------------------------------------------------------
                                                       (249,403)    (131,255)
    -------------------------------------------------------------------------

    Increase (decrease) in cash and cash equivalents    177,832      (39,233)

    Cash and cash equivalents, beginning of year          2,291       41,524

    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year          $   180,123  $     2,291
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00020627E




For further information:

For further information: Media Contact: BC Ferries, Media Relations
Victoria, (250) 978-1267


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