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)
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December 31, March 31,
2009 2009
(unaudited)
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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
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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
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$ 1,844,149 $ 1,841,880
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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
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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
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1,490,373 1,528,308
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Shareholders' equity:
Share capital 75,478 75,478
Retained earnings 278,298 238,094
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353,776 313,572
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$ 1,844,149 $ 1,841,880
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BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of Earnings, Comprehensive Income and
Retained Earnings (unaudited)
(expressed in thousands)
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Three months ended Nine months ended
December 31 December 31
2009 2008 2009 2008
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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
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159,888 149,357 589,966 553,350
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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
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161,768 151,077 498,183 470,501
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(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
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Net (loss) earnings (20,399) (14,644) 40,204 47,458
Other comprehensive income - - - -
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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
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Retained earnings, end
of period $ 278,298 $ 282,561 $ 278,298 $ 282,561
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BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of Cash Flows (unaudited)
(expressed in thousands)
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Three months ended Nine months ended
December 31 December 31
2009 2008 2009 2008
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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)
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19,402 8,222 120,730 86,633
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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)
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(125) 176,738 (22,878) 274,914
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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)
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(24,111) (58,882) (60,048) (345,569)
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(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
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Cash and cash
equivalents,
end of period $ 50,206 $ 132,307 $ 50,206 $ 132,307
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%SEDAR: 00020627E
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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