BC Ferries releases first quarter results



    VICTORIA, Aug. 23 /CNW/ - British Columbia Ferry Services Inc. (BC
Ferries) released its first quarter results today with net earnings of
$14.4 million for the three months ended June 30, 2007. Net earnings in the
same quarter last year were $14.9 million before an extraordinary gain of
$61.3 million resulting from insurance proceeds following the loss of the
Queen of the North.
    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.
    During the three months ended June 30, 2007, revenues increased by
9.2 per cent to $159.8 million, while total expenses increased by
10.6 per cent to $145.4 million, compared to the first quarter last year.
Increases in operations expenses were largely due to a $6.3 million increase
in wages and benefits, as well as a $5.1 million increase in interest and
amortization expenses reflecting BC Ferries ongoing significant investments in
its fleet and other infrastructure.
    In the same period, $33.9 million was invested in vessels, terminals and
information systems to increase operating efficiencies and improve customer
service. "We invest all of our retained earnings in our vessels, terminals and
infrastructure to revitalize our assets and ensure we are providing the best
and safest travel experience for our customers," said BC Ferries' President
and CEO, David L. Hahn. Capital expenditures included:

    
    -   $23.0 million in new vessels, vessel upgrades and modifications;
    -   $6.9 million in marine structures;
    -   $3.3 million in terminal and building upgrades and equipment; and
    -   $0.6 million in computer hardware and software development.
    

    The cost of fuel continues to be a major concern for BC Ferries. Despite
the addition of fuel surcharges approved by the British Columbia Ferries
Commissioner beginning in June 2005, the balance in the deferred fuel cost
accounts totalled $18.3 million at June 30, 2007.
    Full financial statements, including notes and Management's Discussion &
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)

    -------------------------------------------------------------------------
                                              June 30, 2007   March 31, 2007
                                                 (unaudited)
    -------------------------------------------------------------------------

    Assets

    Current assets:
      Cash and cash equivalents                 $   100,229      $   180,123
      Short-term investments                         27,134           16,046
      Accounts receivable                            27,421           19,050
      Prepaid expenses                               12,615            5,879
      Inventories                                    16,595           16,492
      -----------------------------------------------------------------------
                                                    183,994          237,590

    Capital assets                                  937,095          918,824
    Deferred financing costs                          1,096            9,580
    Regulatory assets                                59,430           21,721
    Derivative assets                                 1,360                -
    Long-term land lease                             27,968           28,060
    -------------------------------------------------------------------------
                                                $ 1,210,943      $ 1,215,775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities  $    44,992      $    72,511
      Short-term debt                                     -           24,888
      Interest payable on long-term debt              8,279           12,663
      Accrued employee costs                         47,478           47,393
      Deferred revenue                               16,322           12,031
      Derivative liabilities                         42,357                -
      Regulatory liabilities                          2,347               90
      Current portion of accrued employee
       future benefits                                  800              800
      Current portion of obligation under
       capital lease                                     26               26
      -----------------------------------------------------------------------
                                                    162,601          170,402

    Accrued employee future benefits                 13,632           13,755
    Derivative liabilities                                -            2,831
    Long-term debt                                  740,683          749,628
    Obligation under capital lease                      105              112
    -------------------------------------------------------------------------
                                                    917,021          936,728
    -------------------------------------------------------------------------

    Shareholders' equity:
      Share capital                                  75,478           75,478
      Retained earnings                             218,444          203,569
      -----------------------------------------------------------------------
                                                    293,922          279,047

    -------------------------------------------------------------------------
                                                $ 1,210,943      $ 1,215,775
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                                 For the three months ended
                                              June 30, 2007    June 30, 2006
    -------------------------------------------------------------------------

    Revenue:
      Tariffs                                   $    95,062      $    89,585
      Ferry service fees                             31,200           27,106
      Federal-Provincial Subsidy Agreement            6,464            6,327
      Retail                                         19,469           17,569
      Other income                                    7,566            5,825
      -----------------------------------------------------------------------
                                                    159,761          146,412
    -------------------------------------------------------------------------

    Expenses:
      Operations                                     81,894           75,701
      Maintenance                                    21,416           17,878
      Administration                                 11,207           12,637
      Cost of retail goods sold                       7,303            6,841
      Amortization                                   15,840           12,991
      -----------------------------------------------------------------------
                                                    137,660          126,048
    -------------------------------------------------------------------------

    Earnings from operations                         22,101           20,364

    Gain on foreign exchange                             73               60
    Interest expense                                 (7,789)          (5,498)
    Gain on disposal of capital assets                   12               10
    -------------------------------------------------------------------------
    Net earnings before extraordinary gain           14,397           14,936

    Extraordinary gain                                    -           61,272
    -------------------------------------------------------------------------
    Net earnings and comprehensive income            14,397           76,208
    -------------------------------------------------------------------------

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

    Retained earnings, end of period            $   218,444      $   175,758
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    -------------------------------------------------------------------------
                                                 For the three months ended
                                              June 30, 2007    June 30, 2006
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net earnings before extraordinary gain    $    14,397      $    14,936
      Extraordinary gain                                  -           61,272
      -----------------------------------------------------------------------
      Net earnings                                   14,397           76,208

      Items not involving cash:
        Amortization                                 15,840           12,991
        Other non-cash charges                           55              215
      Regulatory costs deferred                         458           (1,211)
      Change in operating working capital           (11,193)         (30,748)
      -----------------------------------------------------------------------
                                                     19,557           57,455
    -------------------------------------------------------------------------

    Financing:
      Repayment of short-term loans                 (24,708)               -
      Deferred financing costs incurred                 (80)             (80)
      -----------------------------------------------------------------------
                                                    (24,788)             (80)
    -------------------------------------------------------------------------

    Investing:
      Proceeds from disposal of capital assets           12               10
      Purchase of capital assets                    (63,587)         (31,914)
      Purchase of short-term investments            (11,088)               -
      -----------------------------------------------------------------------
                                                    (74,663)         (31,904)
    -------------------------------------------------------------------------

    (Decrease) increase in cash and cash
     equivalents                                    (79,894)          25,471

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

    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period    $   100,229      $    27,762
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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

    Supplemental cash flow information:
      Cash paid during the period for interest  $    15,125      $    15,236
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %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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