Student Transportation delivers record fiscal 2008 year-end results


    -   Continued Strong growth
    -   New Strategic Equity Investor
    -   Fuel and Currency protection increased

    TORONTO, Sept. 22 /CNW/ - Student Transportation of America Ltd. ("STA"
or the "Company") (TSX: STB, STB.UN) today reported financial results for
fiscal year ended June 30, 2008. A separate press release was filed for the
fourth quarter results. All financial results are reported in U.S. dollars and
compared to the same period last year except as otherwise noted.
    Revenue increased 22 percent year over year to $205.2 million for fiscal
2008 compared to $168.1 million. EBITDAR(*) for the fiscal year rose
32.5 percent to $40.1 million, resulting in a 19.5 percent margin compared to
$30.3 million or 17.7 percent margin for fiscal year 2007.
    Net loss for fiscal year 2008 amounted to $7.0 million down from
$7.1 million for fiscal year 2007. The net loss for fiscal 2008 resulted
primarily from a $10.7 million "non-cash" book loss on the redemption of $43.3
 million of subordinated notes that were extinguished as a result of the
September 2007 exchange offer. The net loss for fiscal 2008 also included $6.9
 million of interest paid to IPS note holders as part of their distributions
which is recorded as interest expense.
    The Company generated cash available for distributions(*) of $27 million
for the fiscal year ended June 30, 2008. Distributions paid during the fiscal
year totalled $22.3 million (C$ 25.2 million). Net cash provided by operations
was $22.4 million for the fiscal year ended June 30, 2008.
    "We are extremely pleased with our operating performance and financial
results for the past year", said Denis J. Gallagher, STA Chairman and Chief
Executive Officer. "We had a very good, safe and successful year. We are now
transporting over 500,000 students to and from school each day which is a
public trust we take ever so seriously. Revenue is up consistent with our
growth strategy, operating cash flows increased substantially, we achieved
significant margin improvement over fiscal 2007 and we positioned ourselves
for another great year. Our balance sheet is strong and we have debt capacity
to take advantage of various opportunities in the marketplace. We continued
our strategic regional growth plan, significantly increasing our Canadian
operations with two important acquisitions during fiscal 2008 that created
natural hedges for currency and fuel protection along with winning
approximately $10 million of new annual contracts in our U.S operations for
fiscal 2009".
    "Additionally we brought on board a significant new investor as part of a
$60 million common share Private Placement Offering. Long-time investors
simultaneously demonstrated continued confidence and commitment by increasing
their equity investments in STA. Clearly, these sophisticated investors
appreciate our ability to weather various business cycles, see the long-term
consistency in our contracted operations and value our very attractive, stable
dividends. As we continue to concentrate on our business and growth plans we
will work to improve communications to individual investors and retail brokers
about STA's operations and business model", Gallagher added.
    STA's overall performance this past year enabled the company to continue
its program of growth through acquisitions, bids and conversions. The Company
significantly increased its Canadian cash flows with two strategic
acquisitions, Elliot Coach Lines and Canadex Resources Limited, boosting
Canadian cash flows 214 percent on an annualized basis.
    "The Canadex acquisition, which closed just prior to the significant
spike in oil and gas prices this past winter, was one of the best deals we
have completed in our history. Combined with the Elliot acquisition, it gave
us significant growth in the Ontario school bussing market while the energy
portfolio included as part of the acquisition provided us with the best
natural fuel hedge we could have put in place during the fiscal year,"
Gallagher said. "The results of the integration of both companies have been
fantastic and the portfolio of non-operating oil and natural gas properties
clearly exceeded our expectations."
    The company said it has maintained its contract renewal rate since
inception, in the 95% range and has secured increases at CPI or above in most
cases in connection with contract renewals for the 2008-2009 school year. New
contract routes awarded for the 2008-2009 school year have been added in all
of the company's operating regions expanding a key strategy of regional

    Subsequent Events

    On July 15, 2008, Student Transportation of Canada ("STC"), an operating
subsidiary of STA, established its first foothold in South-western Ontario
when it announced the acquisition of London-based school bus operator Elgie
Bus Lines Limited. Elgie is STC's ninth acquisition in Canada and STA's 33rd
overall, increasing total Canadian operations to more than 1,200 vehicles and
nearly C$50 million in annualized Canadian revenues which provides a natural
hedge to currency fluctuations.
    In an effort to simplify its capital structure the Company continued its
transition to a common share security and recently completed a second exchange
offer which has resulted in the extinguishment of approximately 63 percent of
the original principal amount of outstanding subordinated notes prior to the
company's two exchange offers. The remaining notes outstanding are callable in
December 2009 at $4.04 each.
    In September 2008, the Company entered into a series of commodity
transactions to reduce its exposure to fluctuations in market fuel prices.
Combined with the fuel protection and mitigation clauses included in the
Company's contracts, the company now has overall contract fuel protection for
the 2008-2009 school year at approximately 80 percent.

    Reconciliation of Net Income and EBITDAR
    (in 000's of US$)

                                                        Year over Year - YTD
                                                         Twelve Months Ended
                                                          6/30/08    6/30/07
                                                        ----------  ---------
    Net Loss                                             $ (6,975)  $ (7,114)

    Add back:
      Recovery of income taxes                             (4,627)    (4,391)
      Loss on extinguishment of debt                       10,662          -
      Other non operating (income) expense, net            (2,006)      (472)
      Unrealized loss (gain) on derivative contracts           91     (1,481)
      Non-cash stock compensation                           1,412      1,862
      Severance                                                 -        452
      Interest expense                                     13,532     15,834
      Amortization expense                                  2,551      5,889
      Depreciation and depletion expense                   22,933     18,596
      Operating lease expense                               2,579      1,124
                                                        ----------  ---------
    EBITDAR                                              $ 40,152   $ 30,299
                                                        ----------  ---------
                                                        ----------  ---------

    Reconciliation of Cash Flow Provided by Operations and Cash Available for
    (in 000's of US$)

                                                           Twelve     Twelve
                                                           Months     Months
                                                            Ended      Ended
                                                          6/30/08    6/30/07
                                                        ----------  ---------

    Cash flows provided by operating activities          $ 22,364   $ 10,115

      Changes in non-cash working capital items             1,615      5,293
      Changes in other assets and liabilities                 189       (410)
      Non-operating cash flows                             (1,825)         -
      Cash interest expense                                12,847     14,206
                                                        ----------  ---------
    Subtotal                                               35,190     29,204

      Interest expense (other than noncash
       and IPS Subordinated Notes)                         (5,989)    (4,468)
      Dividends on Class B-Series two
       common shares                                         (486)      (599)
      Net realized foreign currency gain                    2,311          -
      Cash taxes paid                                        (431)       (89)
      Maintenance capital expenditures, net                (3,629)      (978)
                                                        ----------  ---------
    Cash Available for Distributions            US$      $ 26,966   $ 23,070
                                            ----------  ----------  ---------
                                            ----------  ----------  ---------

    Total Distributions - US$
      Interest on IPS Subordinated Notes        US$      $  5,772   $  9,425
      Dividends on IPS common shares            US$      $  5,970   $  9,757
      Dividends on common shares                US$      $ 10,531   $    512
                                            ----------  ----------  ---------
    Total Distributions                         US$      $ 22,273   $ 19,694
                                            ----------  ----------  ---------
                                            ----------  ----------  ---------

    Total Distributions                        $Cdn      $ 25,218   $ 23,264
                                            ----------  ----------  ---------
                                            ----------  ----------  ---------

    STA's financial statements, notes to financial statements and
management's discussion and analysis are available at or at the
Company's website

    Conference Call & Webcast

    Management will host a conference call and live audio webcast to discuss
STA's performance for the fourth quarter of fiscal year 2008 at 11 a.m. (ET)
on September 23, 2008. The call may be accessed at by dialling 1-888-205-4499
or 416-883-7132 and enter the passcode 37614 followed by the number sign. The
webcast will be subsequently archived at A taped rebroadcast
will be available until 12 a.m. September 30, 2008 and can be accessed by
dialling 1- 877-245-4531 and enter passcode 672536 followed by the number

    Annual Meeting of Investors

    STA will hold its Annual General Meeting on Thursday, November 13, 2008
at 2 p.m (ET) at the Le Méridien King Edward Hotel, the Windsor Ballroom at 37
 King Street East in Toronto. The meeting will also be webcast live at STA's
web site at


    Founded in 1997, Student Transportation is the fourth-largest provider of
school bus transportation services in North America, conducting operations
through local operating subsidiaries. Student Transportation has become a
leading school bus transportation company by aggregating operations through
the consolidation of existing providers and conversion of in-house operations
and currently operates more than 5,400 school vehicles in North America. For
more information, please visit

    (*) Non-GAAP Measures

    EBITDAR is a non-GAAP financial measure, but management believes it is
useful in measuring STA's performance. Readers are cautioned that this measure
should not be construed as an alternative to net income or loss or other
comparable measures determined in accordance with GAAP as an indicator of the
Company's performance or as a measure of its liquidity and cash flow. The
Company's method of calculating non-GAAP measures may differ from the methods
used by other issuers and accordingly, the Company's non-GAAP measures may not
be comparable to similarly titled measures used by other issuers.
    Cash available for distributions is a non-GAAP measure, and is not
intended to be representative of cash flow or results of operations determined
in accordance with GAAP. Investors are cautioned that cash available for
distribution, as calculated by the Company, is unlikely to be comparable to
similar measures used by other issuers.

    Forward-Looking Statements

    Certain statements in this news release are "forward-looking statements"
within the meaning of applicable securities laws, which reflect the
expectations of management regarding, among other matters, STA's revenues,
expense levels, cost of capital, financial leverage, seasonality, liquidity,
profitability of new businesses acquired or secured through bids, borrowing
availability, ability to renew or refinance various loan facilities as they
become due, ability to execute STA's growth strategy and cash distributions,
as well as their future growth, results of operations, performance and
business prospects and opportunities. Forward-looking statements generally can
be identified by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "estimate", "anticipate", "believe", "should", "plans" or
"continue" or similar expressions, and the negative forms thereof, suggesting
future outcomes or events.
    These forward-looking statements reflect STA's current expectations
regarding future events and operating performance and speak only as of the
date of this news release. Forward-looking statements involve significant
risks and uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate indications of
whether or not, or the times at or by which, such performance or results will
be achieved. A number of factors could cause actual results to differ
materially from the results discussed in the forward-looking statements,
including, but not limited to, the inability of STA to control its operating
expenses, its significant capital expenditures, its reliance on certain key
personnel, the possibility that a greater number of its employees will join
unions, its acquisition strategy, its inability to achieve our business
objectives, significant competition in its industry, rising insurance costs,
new governmental laws and regulations, its lack of insurance coverage for
certain losses, environmental requirements, seasonality of its industry, its
inability to maintain letters of credit and performance bonds and the
termination of certain of its contracts for reasons beyond its control.
Material factors and assumptions that were relied upon in making the
forward-looking statements include the number of Notes acquired pursuant to
the Exchange Offer, contract and customer retention, current and future
expense levels, availability of quality acquisition, bid and conversion
opportunities, current borrowing availability and financial ratios, as well as
current and historical results of operations and performance. Although the
forward-looking statements contained in this news release are based upon what
STA believes to be reasonable assumptions, investors cannot be assured that
actual results will be consistent with these forward-looking statements, and
the differences may be material. These forward-looking statements are made as
of the date of this news release and STA assumes no obligation to update or
revise them to reflect new events or circumstances, other than as required by
applicable law.

For further information:

For further information: INVESTOR CONTACTS: Student Transportation of
America Ltd., Denis J. Gallagher, Chairman and CEO, (732) 280-4200; Patrick J.
Walker, Executive VP and CFO, (732) 280-4200; Keith P. Engelbert, Director of
Investor Relations, (732) 280-4200, (732) 280-4213 (FAX), Email:, Website:; MEDIA CONTACT: Lynette
Viviani, (973) 968-7929 office, (973) 534-1004 mobile,

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