BC Ferries releases year-end results



    VICTORIA, June 11 /CNW/ - British Columbia Ferry Services Inc. (BC
Ferries) today released its financial results for the year ended March 31,
2009.
    Consolidated net earnings were $9.0 million for the year ended March 31,
2009, compared to net earnings of $37.1 million the previous year. As
expected, BC Ferries earnings reflect increased amortization and financing
costs as a result of the acquisition of new vessels. With the ship replacement
program complete for the major routes and well underway for the northern
routes, capital expenditures will be significantly lower for the next few
years.
    Revenues for the year increased from $640.7 million to $681.8 million,
while operating expenses increased from $569.6 million to $624.1 million. The
increase in expenses includes a $40.9 million increase in fuel costs, the
majority of which was previously included in deferral accounts rather than in
expense, and a $26.3 million increase in amortization costs. In addition,
financing costs increased by $17.0 million.
    "This past fiscal year we saw a decrease in traffic due to the current
global economy, reduced tourism, rising unemployment, higher fuel prices last
summer, and significant weather events in December and January," said David L.
Hahn, BC Ferries' President and CEO. "All of these factors have negatively
impacted commercial and discretionary travel, which is certainly a concern for
us." Vehicle and passenger traffic decreased 5.2 per cent and 4.9 per cent
respectively, year over year. "We implemented an aggressive cost management
program to align our expenses with our reduced revenues."
    Capital expenditures for the year ended March 31, 2009 totalled $493.9
million compared to $452.5 million the year prior. New vessels, and vessel
upgrades and modifications account for $424.4 million of the capital projects.
This level of expenditure reflects significant investments in BC Ferries'
fleet, terminals and information systems to increase customer service and
operating efficiency.
    During the fiscal year ended March 31, 2009, three new vessels, the
Coastal Inspiration, Coastal Celebration and Island Sky all entered service,
and BC Ferries took possession of a fourth new ship, the Northern Expedition.
    "The Super C-class vessels came in at least $25.0 million under budget,
which is a major accomplishment," said Hahn. "We are extremely pleased with
all of the new vessels we've added to the fleet, which will serve our
customers well for many decades to come."
    Fourth quarter revenues increased from $124.2 million to $128.5 million
compared to the same quarter in the prior year, while total expenses during
the same period increased from $154.7 million to $166.9 million. BC Ferries
reported a fourth quarter net loss of $38.4 million compared to a net loss of
$30.5 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 historically are reduced by
net losses in the last two quarters of the fiscal year.
    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 is one of the largest ferry operators in the world based on
passengers transported annually and transportation infrastructure, and 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)

    -------------------------------------------------------------------------
                                                            As at March 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                    $    12,376   $   116,319
      Restricted cash and cash equivalents              37,266        14,090
      Short-term investments                               153        17,040
      Accounts receivable                               12,883        14,463
      Prepaid expenses                                   8,132         7,285
      Inventories                                       16,835        17,055
      Derivative assets                                      -        18,144
      Regulatory assets                                  4,775         4,775
      -----------------------------------------------------------------------
                                                        92,420       209,171
    Capital assets                                   1,703,442     1,303,644
    Deferred financing costs                                 -           669
    Assets held for sale                                   435             -
    Regulatory assets                                   11,687         7,729
    Long-term land lease                                33,896        29,238
    -------------------------------------------------------------------------
                                                   $ 1,841,880   $ 1,550,451
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities     $    41,153   $    91,263
      Short-term debt                                   17,956             -
      Interest payable on long-term debt                18,395        15,718
      Accrued employee costs                            51,923        53,213
      Deferred revenue                                  15,783        15,108
      Derivative liabilities                               923             -
      Regulatory liabilities                             2,858         3,558
      Current portion of long-term debt                  9,000             -
      Current portion of accrued employee
       future benefits                                     800           800
      Current portion of obligations under
       capital lease                                       541           690
      -----------------------------------------------------------------------
                                                       159,332       180,350

    Accrued employee future benefits                    12,047        13,020
    Regulatory liabilities                                   -        16,833
    Long-term debt                                   1,356,239     1,028,872
    Obligations under capital lease                        537           719
    Other long-term liabilities                            153            76
    -------------------------------------------------------------------------
                                                     1,528,308     1,239,870
    -------------------------------------------------------------------------
    Shareholders' equity:
      Share capital                                     75,478        75,478
      Retained earnings                                238,094       235,103
      -----------------------------------------------------------------------
                                                       313,572       310,581
    Commitments
    Contingent liabilities
    -------------------------------------------------------------------------
                                                   $ 1,841,880   $ 1,550,451
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                                        Years ended March 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Revenue:
      Tariffs                                      $   429,063   $   382,229
      Ferry service fees                               124,485       122,702
      Federal-Provincial Subsidy Agreement              26,294        25,856
      Retail                                            78,060        79,235
      Other income                                      23,898        30,707
      -----------------------------------------------------------------------
                                                       681,800       640,729
    -------------------------------------------------------------------------

    Expenses:
      Operations                                       375,805       334,743
      Maintenance                                       77,124        88,412
      Administration                                    49,197        49,765
      Cost of retail goods sold                         28,929        29,936
      Amortization                                      93,088        66,793
      -----------------------------------------------------------------------
                                                       624,143       569,649
    -------------------------------------------------------------------------

    Earnings from operations                            57,657        71,080

    Gain on foreign exchange                               244           130
    Interest expense                                   (50,111)      (33,127)
    Gain (loss) on disposal of capital assets            1,239          (989)
    -------------------------------------------------------------------------
    Net earnings                                         9,029        37,094

    Other comprehensive income                               -             -

    -------------------------------------------------------------------------
    Net earnings and comprehensive income                9,029        37,094
    -------------------------------------------------------------------------

    Retained earnings, beginning of year               235,103       203,569
    Adjustment to retained earnings                          -           478
    -------------------------------------------------------------------------
    Restated balance, beginning of year                235,103       204,047
    -------------------------------------------------------------------------

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

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

    Retained earnings, end of year                 $   238,094   $   235,103
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                                        Years ended March 31,
                                                          2009          2008
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net earnings                                 $     9,029   $    37,094
      Items not involving cash:
        Amortization                                    93,088        66,793
        Other non-cash charges                            (733)        1,522
      Long-term regulatory costs deferred               (6,039)       10,503
      Change in operating working capital               (6,783)        8,717
      -----------------------------------------------------------------------
                                                        88,562       124,629
    -------------------------------------------------------------------------

    Financing:
      Dividends paid on preferred shares                (6,038)       (6,038)
      Proceeds from issuance of bonds and other
       long-term debt                                  338,000       290,000
      Proceeds from (repayment of) short-term loans     17,956       (24,888)
      Repayment of capital lease obligations              (775)         (835)
      Deferred financing costs incurred                 (1,704)       (1,787)
      -----------------------------------------------------------------------
                                                       347,439       256,452
    -------------------------------------------------------------------------

    Investing:
      Proceeds from disposal of capital assets           1,697            51
      Purchase of capital assets                      (530,269)     (428,292)
      Increase in lands under long-term lease           (5,083)       (1,560)
      Increase in restricted cash                      (23,176)       (6,836)
      Proceeds from (purchase of) short-term
       investments                                      16,887          (994)
      -----------------------------------------------------------------------
                                                      (539,944)     (437,631)
    -------------------------------------------------------------------------

    (Decrease) in cash and cash equivalents           (103,943)      (56,550)

    Cash and cash equivalents, beginning of year       116,319       172,869

    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year         $    12,376   $   116,319
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %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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