Student Transportation reports fiscal 2008 first quarter results

    Progressed with simplification of capital structure and increased
    regional density in Ontario

    TORONTO, Nov. 14 /CNW/ - Student Transportation of America Ltd. (TSX:
STB, STB.UN) ("STA") today reported financial results for the first quarter of
fiscal 2008 ended September 30, 2007. All financial results are reported in
U.S. dollars except as otherwise noted.

    First Quarter Summary:
    -   $2.0 million increase in revenue resulted in lower quarterly EBITDAR
        loss compared to same period last year
    -   $12.6 million net loss reflects $10.7 million non cash book loss on
        redemption of $43.3 million in sub debt resulting from completed
        exchange offer
    -   Successfully completed exchange offer in quarter with redemption of
        C$45.8 million in debt
    -   Student Transportation Canada subsidiary closed sixth acquisition

    STA's first quarter results reflect the seasonality of the school bus
industry. Revenue is typically lower during the first quarter due to schools
not being in session during the summer months. Accordingly, the first quarter
results are not considered to be indicative of the Company's annual results.
    During the first quarter, the Company completed a successful exchange
offer in which C $45.8 million or 51% of aggregate principal amount of
subordinated notes of STA ULC were tendered. As a result of the exchange, the
Company has a majority of common shares outstanding versus IPS units and has
reduced its total debt by approximately C $45.8 million.
    First quarter revenue totalled $28.1 million, up from $26.1 million for
the same period last year and EBITDAR(*) improved to ($0.1) million from ($0.4)
million in the same period of fiscal 2007.
    STA's reported net loss for the quarter was $12.6 million or
$0.48 per common share for the first quarter of fiscal 2008. Net loss for the
first quarter of fiscal 2007 was $6.1 million or $0.30 per common share. The
fiscal 2008 first quarter loss includes a $10.7 million non cash book loss on
the $43.3 million of subordinated notes that were extinguished as a result of
the completed exchange offer detailed above. The quarter's net loss also
includes $2.0 million of interest paid during the quarter to IPS note holders
as part of their distributions and non cash expense items such as non cash
stock compensation expense, amortization of deferred financing costs,
depreciation and amortization expense.
    For the quarter, the Company's cash available for distributions(*) was a
negative C $6.6 million and distributions paid amounted to C $6.0 million. Net
cash used in operations was $6.7 million for the first quarter. As stated
previously, the Company historically generates a loss and negative operating
cash flows in this quarter, reflecting the seasonality of the business during
the summer season break combined with capital expenditures occurring in the
first quarter of the fiscal year. The subsequent quarters of the fiscal year
typically generate excess cash, as schools are in session and due to the fact
that the majority of replacement capital expenditures have already been
purchased. Due to this historical seasonality, the Company views distributable
cash on an annualized basis.
    "Our first quarter performance reflects the typical seasonal fluctuations
that occur in the school bus industry. It is important to note that this is
not indicative of results for a full fiscal year and that each of our
subsequent quarters are expected to generate excess cash," said Denis J.
Gallagher, Chairman and Chief Executive Officer.
    Mr. Gallagher added, "The two most significant events in the quarter were
the successful completion of our exchange offer and our acquisition of Elliot
Coach Lines in Guelph, Ontario. The exchange offer furthers our strategy of
simplifying our capital structure and building common share liquidity. It will
also result in significant cash interest savings over the next few years. The
Elliot acquisition builds our regional density in Canada - which is a priority
region for STA - and also increases our Canadian dollar cash flows."

    Reconciliation of Net Income and EBITDAR

    (Amounts in 000's)                                    Three Months Ended
                                                          9/30/07    9/30/06

    Net income (loss)                                    $(12,568)  $ (6,146)

    Add back:
      Recovery of future taxes                             (2,819)    (3,919)
      Loss on extinguishment of debt                       10,662          -
      Other non operating (income) expense, net               137        120
      Unrealized loss (gain) on derivative contracts       (3,452)       244
      Non-cash stock compensation                           1,069      1,862
      Interest expense                                      3,560      3,639
      Amortization expense                                    590      1,662
      Depreciation expense                                  2,078      1,942
      Operating lease expense                                 644        212
                                                         ---------  ---------
    EBITDAR                                              $    (99)  $   (384)
                                                         ---------  ---------
                                                         ---------  ---------

    Reconciliation of cash flow provided by operations to Cash Available for

                                                           Three      Three
                                                           Months     Months
                                                           Ended      Ended
                                                          9/30/07    9/30/06
                                                         ---------  ---------
    Cash flows used in operating activities              $ (6,745)  $ (8,927)
      Changes in non-cash working capital items             2,750      5,178
      Changes in other assets and liabilities                (361)       (75)
       Non-operating cash flows                               211       (243)
      Cash interest expense                                 3,402      3,228
                                                         ---------  ---------
    Subtotal                                                 (743)      (839)
      Interest expense (other than noncash and
       IPS Subordinated Notes)                             (1,141)      (868)
      Cash taxes paid                                        (109)       (89)
      Maintenance capital expenditures, net                (3,793)      (647)
                                                         ---------  ---------
    Cash Available for Distributions                US$   $(5,786)   $(2,443)
                                                    ---  ---------  ---------
                                                    ---  ---------  ---------
    Cash Available for Distributions               $Cdn   $(6,587)   $(2,891)
                                                    ---  ---------  ---------
                                                    ---  ---------  ---------

    Total Distributions
      Interest on IPS Subordinated Notes           $Cdn   $ 2,372    $ 2,796
      Dividends on IPS common shares               $Cdn     2,450      2,888
      Dividends on common shares                   $Cdn     1,219          -
                                                         ---------  ---------
    Total Distributions                            $Cdn   $ 6,041    $ 5,684
                                                    ---  ---------  ---------
                                                    ---  ---------  ---------

    Student Transportation's interim financial statements, notes to financial
statements and management's discussion and analysis are available at or at the Company's investor website at

    Annual Meeting of Investors

    STA will hold its Annual General Meeting on Wednesday, November 14, 2007
at 2 p.m. ET at the TSX Gallery located at The Exchange Tower at 130 King
Street West in Toronto. Following the formal meeting, there will be a
presentation by management and a brief question and answer session for
shareholders, analysts, and institutional investors. The meeting will also be
webcast live at STA's web site at


    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
transportation and management company by aggregating operations through the
consolidation of existing providers and conversion of in-house operations and
currently operates more than 4,500 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. EBITDAR
represents earnings before interest, taxes, depreciation, amortization,
operating lease expense, severance expense and non cash items such as
unrealized gain / loss on foreign currency exchange contracts, non cash stock
compensation expense, and other income / loss.
    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

    This news release contains "forward-looking statements" within the
meaning of applicable securities laws, which reflects the expectations of
management regarding STA's results of operations, expense levels, cost of
capital, financial leverage, seasonality, cash flows, performance, liquidity,
borrowing availability, financial ratios, ability to execute the STA's growth
strategy and cash distributions. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as "may", "will",
"expect", "intend", "track", "targeted", "estimate", "anticipate", "believe",
"should", "plans" or "continue" or similar expressions suggesting future
outcomes or events. These forward looking statements reflect STA's current
expectations regarding anticipated future events, results, circumstances,
performance or expectations, including the acquisition of notes under the
Exchange Offer, that are not historical facts. Forward looking statements
involve significant risks and uncertainties, and 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 which or by the
performance or results will be achieved. A number of factors could cause our
actual results to differ materially from the results discussed, expressed or
implied in any forward-looking statement made by us or on our behalf,
including, but not limited to, the acquisition of less than a significant
number of notes under the Exchange Offer and the factors discussed under "Risk
Factors" in our Annual Information Form. These forward looking statements are
made as of the date of this news release and, except as required by applicable
law, we undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise.

For further information:

For further information: Denis J. Gallagher, Chairman and Chief
Executive Officer, Phone: (732) 280-4200, Fax: (732) 280-4213; Patrick J.
Walker, Chief Financial Officer, Phone (732) 280-4200, Fax: (732) 280-4213;
Keith P. Engelbert, Director of Investor Relations, Phone: (732) 280-4200,
Fax: (732) 280-4213,

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