Student Transportation Second Quarter Results

              Increased Revenue, Cash Flow, Earnings and Margin
                         "Kids have to go to school"


    -   Revenue was $54.5 million, up 16.2% from the same period last year
    -   Net income of $0.7 million for the second quarter compared to a net
        loss of $2.4 million from the same period last year
    -   EBITDAR(*) and Cash Available for Distributions(*) for the quarter
        increased 18.5% and 18%, respectively, from the same period last year
    -   EBITDAR(*) margin improvement of 50 basis points from the same period
        last year
    -   Subsequent to quarter end, Student Transportation Canada subsidiary
        completed acquisition of Canadex Resources Limited - the seventh
        acquisition in Ontario

    TORONTO, Feb. 13 /CNW/ - Student Transportation of America Ltd.
(TSX: STB, STB.UN) ("STA") today reported financial results for the second
quarter of fiscal 2008 ended December 31, 2007. All financial results are
reported in U.S. dollars and compared to the same three month period last year
except as otherwise noted.
    Second quarter revenue was $54.5 million, up 16.2 per cent from
$46.9 million. Net income for the quarter was $0.7 million, or $0.02 per
common share, compared to a net loss of $2.4 million or a $0.12 net loss per
common share.
    EBITDAR(*) for the second quarter increased to $12.0 million from
$10.2 million for the prior year second quarter and cash available for
distributions(*) increased to $9.7 million from $8.3 million. The Company paid
out C$5.9 million in distributions during the quarter. Net cash provided by
operations was $8.5 million for the quarter compared to $3.2 million in fiscal
    "The bottom line is, kids have to go to school. Our recession-resistant
business model demonstrates the stability and consistency of our revenue and
cash flow," said Denis J. Gallagher, Chairman and Chief Executive Officer.
"Year-over-year improvement in our second quarter operating results reflects
the gains in strategic growth areas we achieved during our 2007 fiscal year."
    Subsequent to quarter end, on January 18, 2008, the Company completed its
offer for Canadex Resources Limited ("Canadex"), one of the largest
independent school bus operators in Ontario. "This strategic acquisition is
STA's largest investment in Ontario and will significantly increase our
Canadian cash flows at a time when the Canadian dollar is near par with the
US," Gallagher said. "The increase in Canadian dollar cash flows acts as a
natural hedge in connection with our monthly distributions."

    Reconciliation of Net Income and EBITDAR

                                   Year over Year - Q2   Year over Year - YTD
    (Amounts in 000's)              Three Months Ended     Six Months Ended
                                   12/31/07   12/31/06   12/31/07   12/31/06

    Net income (loss)              $    713   $ (2,414)  $(11,855)  $ (8,560)

    Add back:
      Provision for (recovery
       of) income taxes                 515     (1,607)    (2,304)    (5,526)
      Loss on extinguishment
       of debt                            -          -     10,662          -
      Other non operating
       (income) expense, net         (1,342)      (313)    (1,205)      (193)
      Unrealized loss (gain) on
       derivative contracts             952      2,552     (2,500)     2,796
      Non-cash stock
       compensation                     327          -      1,396      1,862
      Interest expense                3,336      4,496      6,896      8,135
      Amortization expense              632      1,663      1,222      3,325
      Depreciation expense            6,165      5,486      8,243      7,428
      Operating Lease Expense           744        298      1,388        510
    EBITDAR                        $ 12,042   $ 10,161   $ 11,943   $  9,777

    Reconciliation of cash flow provided by operations to Cash Available for

                                      Three      Three        Six        Six
                                     Months     Months     Months     Months
    (Amounts in 000's)                Ended      Ended      Ended      Ended
                                   12/31/07   12/31/06   12/31/07   12/31/06
                                  ---------- ---------- ---------- ----------

    Cash flows provided by
     (used in) operating
     activities                    $  8,509   $  3,244   $  1,764   $ (5,683)

      Changes in non-cash
       working capital items            245      3,305      2,995      8,483
      Changes in other assets
       and liabilities                  372       (291)        11       (366)
      Non-operating cash
       flows                           (999)      (130)      (788)      (130)
      Cash interest expense           3,171      3,735      6,573      6,963
    Subtotal                         11,298      9,863     10,555      9,267

      Minority interest in
       cash flow of
       subsidiaries                                             -          -
      Interest expense (other
       than noncash and IPS
       Subordinated Notes)           (1,608)    (1,281)    (2,749)    (2,149)
      Non-operating cash
       flows                              -        (75)         -       (318)
      Cash taxes paid                    34          -        (75)       (89)
      Maintenance capital
       expenditures, net                 13       (253)    (3,780)      (900)
    Cash Available for
     Distributions            US$  $  9,737   $  8,254   $  3,951   $  5,811
    Cash Available for
     Distributions           $Cdn  $ 11,094   $  9,854   $  4,499   $  6,906

    Total Distributions
      Interest on IPS
       Subordinated Notes    $Cdn  $  1,532   $  2,796   $  3,904  $   5,592
      Dividends on IPS
       common shares         $Cdn     1,583      2,889      4,034      5,777
      Dividends on common
       shares                         2,820          -      4,039          -
    Total Distributions      $Cdn  $  5,935   $  5,685   $ 11,977  $  11,369

    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

    Conference Call & Webcast

    Management will host a conference call and live audio webcast to discuss
Student Transportation's performance for the second quarter ended December 31,
2007 at 11 a.m. ET on February 14, 2008. The call can be accessed by dialing
416-849-9305 or 1-866-838-4337. The audio webcast will be archived at A taped rebroadcast will be available until 12 a.m. ET on
February 21, 2008. To access the rebroadcast, please dial 416-915-1035 or
1-866-245-6755 and enter the passcode 586601 followed by the number sign.

    About Student Transportation

    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 5,000 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 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: Investor contacts: Student Transportation of
America Ltd., Denis J. Gallagher, Chairman and Chief Executive Officer, (732)
280-4200, (732) 280-4213 (FAX); Patrick J. Walker, Executive Vice President
and Chief Financial Officer, (732) 280-4200, (732) 280-4213 (FAX); Keith P.
Engelbert, Director of Investor Relations, (732) 280-4200, (732) 280-4213
(FAX), Email:, Website:

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