BC Ferries releases year-end results



    VICTORIA, June 12 /CNW/ - British Columbia Ferry Services Inc. (BC
Ferries) today released its financial results for the year ended March 31,
2008.
    Consolidated net earnings were $37.1 million for the year ended March 31,
2008, compared to net earnings of $48.8 million before an extraordinary gain
the previous year. The decline in net earnings is attributable to the
significant cost of new assets that came into service during the year.
    As BC Ferries continues to invest all of its retained earnings into the
largest asset renewal program in its history, amortization and financing costs
will continue to increase. Consequently, the company expects its future
earnings will continue to decrease in the near term, before improving. This is
consistent with the company's long-term financial plan.
    Revenues for the year increased from $596.3 million to $640.7 million,
while operating expenses increased from $528.4 million to $569.6 million. The
increase in expenses includes $5.3 million for new safety and training
initiatives.
    Fourth quarter revenues increased from $119.0 million to $124.2 million
compared to the same quarter in the prior fiscal year, while total expenses
during the same period increased from $152.2 million to $154.7 million. The
company reported a fourth quarter net loss of $30.5 million compared to a net
loss of $33.2 million during the same quarter 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.
    Capital expenditures for the year ended March 31, 2008 totalled
$452.5 million, compared to $262.6 million the year prior. Expenditures
included $382.8 million for new vessels, vessel upgrades and vessel
modifications, as well as $54.5 million for terminal upgrades.
    "This past year, we made significant capital investments in our fleet,
including almost $320 million of a $542 million project for our three new
Super C-class ships," said BC Ferries President & CEO David L. Hahn. "These
new ships, which are on time and considerably under budget, will provide a
world-class travel experience for our customers for decades to come."
    The first new ship in the series, the Coastal Renaissance, began service
on March 8, 2008 on the Departure Bay - Horseshoe Bay route, with the Coastal
Inspiration beginning service later this month on the Duke Point - Tsawwassen
run and the Coastal Celebration entering service on the Swartz Bay -
Tsawwassen route this fall.
    "In addition to our major fleet renewal program, we are continuing to
invest in our terminals to replace aging marine structures and ensure we are
providing the best in safety and service for our customers," said Hahn. "This
past year, we began a $9 million terminal expansion project at Swartz Bay and
continued a $41 million project at Departure Bay to expand the holding
compound and add the new Nanaimo Quay, which will open this summer to offer
our customers a wide range of food and retail options."
    BC Ferries continues to be concerned about the unprecedented level of
fuel prices and the resulting impact on the cost of operating the system and
on customers' travel decisions. If oil prices remain at record high levels, BC
Ferries anticipates the need for fuel surcharges to be implemented in the near
future.
    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, 2008. BC Ferries provides frequent year-round ferry
transportation services to the West Coast of Canada on 25 routes, currently
supported by 37 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)
    -------------------------------------------------------------------------
                                                             As at March 31,
                                                           2008         2007
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                      $  130,409   $  180,123
      Short-term investments                             17,040       16,046
      Accounts receivable                                16,234       19,050
      Prepaid expenses                                    7,285        5,879
      Inventories                                        17,055       16,492
      Derivative assets                                  16,373            -
      Regulatory assets                                   4,775            -
      -----------------------------------------------------------------------
                                                        209,171      237,590

    Capital assets                                    1,303,644      918,824
    Deferred financing costs                                669        9,580
    Regulatory assets                                     7,729       21,721
    Long-term land lease                                 29,238       28,060
    -------------------------------------------------------------------------
                                                     $1,550,451   $1,215,775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities       $   91,263   $   72,511
      Short-term debt                                         -       24,888
      Interest payable on long-term debt                 15,718       12,663
      Accrued employee costs                             53,213       47,393
      Deferred revenue                                   15,108       12,031
      Regulatory liabilities                              3,558           90
      Current portion of accrued employee future
       benefits                                             800          800
      Current portion of obligations under capital
       leases                                               690           26
      -----------------------------------------------------------------------
                                                        180,350      170,402

    Accrued employee future benefits                     13,020       13,755
    Derivative liabilities                                    -        2,831
    Regulatory liabilities                               16,833            -
    Long-term debt                                    1,028,872      749,628
    Obligations under capital leases                        719          112
    Other long-term liabilities                              76            -
    -------------------------------------------------------------------------
                                                      1,239,870      936,728
    -------------------------------------------------------------------------
    Shareholders' equity:
      Share capital                                      75,478       75,478
      Retained earnings                                 235,103      203,569
      -----------------------------------------------------------------------
                                                        310,581      279,047
    -------------------------------------------------------------------------
                                                     $1,550,451   $1,215,775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                                        Years ended March 31,
                                                           2008         2007
    -------------------------------------------------------------------------

    Revenue:
      Tariffs                                        $  382,229   $  363,228
      Ferry service fees                                122,702      108,396
      Federal-Provincial Subsidy Agreement               25,856       25,309
      Retail                                             79,235       72,028
      Other income                                       30,707       27,318
      -----------------------------------------------------------------------
                                                        640,729      596,279
    -------------------------------------------------------------------------

    Expenses:
      Operations                                        334,743      309,121
      Maintenance                                        88,412       84,886
      Administration                                     49,765       50,615
      Cost of retail goods sold                          29,936       28,226
      Amortization                                       66,793       55,515
      -----------------------------------------------------------------------
                                                        569,649      528,363
    -------------------------------------------------------------------------

    Earnings from operations                             71,080       67,916

    Gain on foreign exchange                                130          344
    Interest expense                                    (33,127)     (19,292)
    Loss on disposal of capital assets                     (989)        (183)

    -------------------------------------------------------------------------
    Net earnings before extraordinary gain               37,094       48,785

    Extraordinary gain                                        -       61,272

    -------------------------------------------------------------------------
    Net earnings                                         37,094      110,057

    Other comprehensive income                                -            -

    -------------------------------------------------------------------------
    Net earnings and comprehensive income                37,094      110,057
    -------------------------------------------------------------------------

    Retained earnings, beginning of year                203,569       99,550
    Adjustment to retained earnings                         478            -
    -------------------------------------------------------------------------
    Restated balance, beginning of year                 204,047       99,550
    -------------------------------------------------------------------------

    Preferred share dividend                             (6,038)      (6,038)

    -------------------------------------------------------------------------
    Retained earnings, end of year                   $  235,103   $  203,569
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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


    -------------------------------------------------------------------------
                                                        Years ended March 31,
                                                           2008         2007
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net earnings before extraordinary gain         $   37,094   $   48,785
      Extraordinary gain                                      -       61,272
      -----------------------------------------------------------------------
      Net earnings                                       37,094      110,057
      Items not involving cash:
        Amortization                                     66,793       55,515
        Other non-cash charges                            1,522       (1,897)
      Long-term regulatory costs deferred                11,622        3,893
      Change in operating working capital                 6,630       (7,108)
      -----------------------------------------------------------------------
                                                        123,661      160,460
    -------------------------------------------------------------------------

    Financing:
      Dividends paid on preferred shares                 (6,038)      (6,038)
      Deferred financing costs incurred                  (1,787)      (1,895)
      Repayment of capital lease obligations               (835)           -
      Proceeds from issuance of bonds and other
       long-term debt                                   290,000      250,000
      Proceeds from short-term loans                     39,836      203,843
      Repayment of short-term loans                     (64,544)    (179,135)
      -----------------------------------------------------------------------
                                                        256,632      266,775
    -------------------------------------------------------------------------

    Investing:
      Proceeds from disposal of capital assets               51           31
      Purchase of capital assets                       (427,504)    (248,316)
      Increase in lands under long-term lease            (1,560)         (60)
      Purchase of short-term investments                   (994)      (1,058)
      -----------------------------------------------------------------------
                                                       (430,007)    (249,403)
    -------------------------------------------------------------------------

    (Decrease) increase in cash and cash
     equivalents                                        (49,714)     177,832

    Cash and cash equivalents, beginning of year        180,123        2,291

    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year           $  130,409   $  180,123
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00020627E




For further information:

For further information: BC Ferries, Communications, Victoria: (250)
978-1267


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