Student Transportation Increases Currency and Fuel Protection

TORONTO, Jul 7, 2008 (Canada NewsWire via COMTEX News Network) —
Increased Canadian Revenues Coupled with Energy Portfolio Creates

Effective Hedge

Student Transportation of America Ltd. (STA) (STB:TSX) Chairman and CEO Denis Gallagher today announced that the company’s “natural hedges” for currency and fuel, combined with its continued growth, are expected to create sustainable dividends and increased value for shareholders while attracting new investors now and in the future.

“With the expected close of the Elgie acquisition in London, Ontario, in just two years, we have increased our Canadian revenue and cash flow to over 23 percent of our total company revenue,” Gallagher said. “Student Transportation of Canada’s net cash flows have helped create a natural currency hedge and, coupled with the company’s existing financial ‘rolling’ currency hedge in place for the next 60 months, mitigate currency fluctuations. We plan to
continue our growth in Canada and are actively pursuing new opportunities throughout several provinces.

“On the fuel side, good efforts by our management team have increased the proportion of school contracts with some form of fuel protection to 60 percent for the new school year. Those include contracts with fuel caps, pass-through rate increases and some with 100 percent customer-paid fuel. We also have addressed fuel costs on some contracts with no protection by negotiating higher than normal contract rate increases,” he said.

“In addition to these actions, the energy portfolio, purchased as part of the Canadex Resources acquisition in January, just prior to the spike in oil and gas prices, has performed very well due to higher commodities prices,” Gallagher said. “As a result, we have offset the rise in our own fuel costs in the transportation division in a manner
similar to a financial fuel hedge. This portfolio, while representing less than five percent of the total revenues of our core transportation division, was the best fuel hedge we could have put in place this year to support our core business. It offers us more protection than a ‘store-bought’ heating oil hedge with a correlation to diesel fuel prices, which have been unpredictable over the short term.

Gallagher said the company will look to the financial market to find an attractive alternative to hedge unprotected fuel again this year.

“Investors and shareholders should be pleased to know that STA will again achieve significant growth in revenue for this past fiscal year, increase cash flows, and deliver consistent, if not improved, cash flow margins to the prior year,” he said. “I believe investors like our business model because of several key factors: the stability of
the contracted nature of our business, the consistency of our results, the dividends we pay, and the experience and knowledge of our management team. This was evident with the successful issue of shares to new and existing investors in our most recent private placement offering that raised $60 million. While most transportation businesses have had challenges over the years, our ability to manage a wide range of issues is what investors expect, what we have done and what sets us apart from the others in the industry.”

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 operates more than 5,400 school vehicles in North America. For more information, please visit

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, which 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 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.

SOURCE: Student Transportation of America Ltd.

SOURCE: Student Transportation of America ULC

MEDIA CONTACT: Lynette Viviani, (973) 968-7929 office, (973) 534-1004 mobile,; 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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