40-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 40-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2015

Commission File Number: 001-35233

STUDENT TRANSPORTATION INC.

(Exact name of registrant as specified in its charter)

Ontario	4151	n/a
(Province or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code)	(I.R.S. Employer Identification No.)

160 Saunders Road, Unit 6

Barrie, Ontario, Canada L4N 9A4

(Address and telephone number of Registrant’s Principal Executive Offices)

Patrick J. Walker

Executive Vice President and Chief Financial Officer

Student Transportation Inc.

3349 Highway 138

Building A, Suite C

Wall, New Jersey 07719

(732) 280-4200

(Name, address, including zip code, and telephone number, including area code,

of agent for service in the United States)

Copy to:

Barry L. Fischer, Esq.

Thompson Coburn LLP

55 East Monroe Street

37^th Floor

Chicago, Illinois 60603

Telephone: (312) 580-2233

Facsimile: (312) 782-1998

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
Common Shares, no par value	Toronto Stock Exchange The NASDAQ Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

For annual reports, indicate by check mark the information filed with this Form:

x Annual information form x Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: The Registrant had 96,141,516 Common Shares outstanding as of June 30, 2015.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes  x            No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes  x            No   ¨

EXPLANATORY NOTE

Student Transportation Inc. (the “Company” or the “Registrant”) is a Canadian issuer eligible to file its Annual Report on Form 40-F (this “Annual Report”) pursuant to the multi-jurisdictional disclosure system of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 under the Exchange Act.

FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report, including the documents incorporated herein by reference, are “forward looking statements,” which reflect the expectations of management regarding the Company’s future growth, results of operations, performance and business prospects and opportunities. These forward-looking statements reflect the Company’s current expectations regarding future events and operating performance and speak only as of the date of this Annual Report. 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 factors discussed under the section titled “Risk Factors” in the Registrant’s Annual Information Form for the fiscal year ended June 30, 2015, which is filed as Exhibit 99.1 to this Annual Report. Although the forward looking statements contained in this Annual Report are based on what the Registrant 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. Material factors and assumptions that were relied upon in making the forward-looking statements include 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.

The Registrant’s forward-looking statements contained in the exhibits incorporated by reference into this Annual Report are made as of the respective dates set forth in such exhibits. In preparing this Annual Report, the Registrant has not updated such forward-looking statements to reflect any subsequent information, events or circumstances or otherwise, or any change in management’s beliefs, expectations or opinions that may have occurred prior to the date hereof, nor does the Registrant assume any obligation to update such forward-looking statements in the future, except as required by applicable laws.

PRINCIPAL DOCUMENTS

The following documents have been filed as part of this Annual Report on Form 40-F:

A. Annual Information Form. The Registrant’s Annual Information Form for the fiscal year ended June 30, 2015 is attached as Exhibit 99.1 to this Annual Report on Form 40-F and is incorporated by reference herein.

B. Audited Financial Statements. The Registrant’s consolidated audited annual financial statements, including the report of the independent registered public accounting firm with respect thereto, are attached as Exhibit 99.2 to this Annual Report on Form 40-F and are incorporated by reference herein. The Registrant’s financial statements have been prepared in accordance with United States generally accepted accounting principles.

C. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The Registrant’s Management Discussion and Analysis of Financial Condition and Results of Operations for the twelve-month period ended June 30, 2015 is attached as Exhibit 99.3 to this Annual Report on Form 40-F and is incorporated by reference herein.

DISCLOSURE CONTROLS AND PROCEDURES

As of the end of the Registrant’s fiscal year ended June 30, 2015, an evaluation of the effectiveness of the Registrant’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) was carried out by the Registrant’s principal executive officer and principal financial officer.

Based upon the evaluation, the Registrant’s principal executive officer and principal financial officer have concluded that as of the end of the fiscal year, the Registrant’s disclosure controls and procedures were effective at the reasonable assurance level to ensure that information required to be disclosed by the Registrant in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the registrant’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

It should be noted that while the Registrant’s principal executive officer and principal financial officer believe that the Registrant’s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the Registrant’s disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by The Committee of Sponsoring Organizations of the Treadway Commission (“2013 COSO”). Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of June 30, 2015.

As an “emerging growth company,” the Company is exempted from the requirement to include an auditor attestation report in this Annual Report.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the fiscal year ended June 30, 2015, there were no changes in the Registrant’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

NOTICE PURSUANT TO REGULATION BTR

None.

IDENTIFICATION OF THE AUDIT COMMITTEE

The Registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the audit committee are: George Rossi, Irving Gerstein, David Scopelliti and Victor Wells.

Further information regarding the Registrant’s audit committee can be found in the Audit Committee and Auditor’s Fees section of the Registrant’s Annual Information Form for the fiscal year ended June 30, 2015, incorporated by reference as Exhibit 99.1 to this Annual Report on Form 40-F.

AUDIT COMMITTEE FINANCIAL EXPERTS

The Registrant’s Board of Directors has determined that George Rossi, Irving Gerstein, David Scopelliti and Victor Wells, all members of the Registrant’s audit committee, each qualify as an “audit committee financial expert” (as such term is defined in paragraph 8(b) of General Instruction B in Form 40-F) and are each “independent” (as such term is defined in the rules of The NASDAQ Stock Market (the “Nasdaq”)), in accordance with the director independence standards of the Nasdaq.

Further information regarding the Registrant’s audit committee can be found in the Audit Committee and Auditor’s Fees section of the Registrant’s Annual Information Form for the fiscal year ended June 30, 2015, incorporated by reference as Exhibit 99.1 to this Annual Report on Form 40-F.

CODE OF ETHICS

The Registrant has adopted a Code of Ethics (the “Code”) (as that term is defined in paragraph 9(b) of General Instruction B in Form 40-F), that applies to all directors, officers and employees of the Registrant, including the principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. A copy of the Code is posted on the Registrant’s website at www.ridesta.com. Any amendments to the Code, and all waivers of the Code with respect to any of the officers covered by it, will be posted to the Registrant’s website within five business days of any amendment or waiver to the Code and shall be provided in print to any shareholder who requests them.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required is included under the headings “Pre-Approval Policies and Procedures” and “External Auditor Service Fees” in the Audit Committee and Auditor’s Fees section of the Registrant’s Annual Information Form for the fiscal year ended June 30, 2015, incorporated by reference as Exhibit 99.1 to this Annual Report on Form 40-F.

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OFF-BALANCE SHEET ARRANGEMENTS

The Registrant has entered into operating leases in the ordinary course of its business to finance certain school vehicles and to lease certain facilities under non-cancelable operating leases. These arrangements are disclosed in Note 16 of the Company’s Audited Annual Financial Statements for the years ended June 30, 2015 and 2014; and the sections entitled “General—Managed and Leased Fleet Business,” “Liquidity and Capital Resources,” and “Commitments and Contractual Obligations,” in the Company’s Management Discussion and Analysis of Financial Condition and Results of Operations for the period ended June 30, 2015, incorporated by reference as Exhibits 99.2 and 99.3, respectively, to this Annual Report on Form 40-F.

DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The Company’s contractual obligations as of June 30, 2015, are summarized as follows:

	Payments Due by Period (000’s of U.S. dollars)
	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years
Contractual Obligations
Long Term Debt Obligations	$	204,936	$	—	$	94,467	$	110,469	$	—
Capital (Finance) Lease Obligations		—		—		—		—		—
Operating Lease Obligations		150,927		42,446		66,473		38,373		3,635
Purchase Obligations		—		—		—		—		—
Other Long Term Liabilities reflected on Balance Sheet		9,731		5,562		2,657		—		1,512
Total	$	365,594	$	48,008	$	163,597	$	148,842	$	5,147

See also Notes 8, 9, 10, 13, 14 and 16 of the Company’s Audited Financial Statements for the years ended June 30, 2015 and 2014, incorporated by reference as Exhibit 99.2 to this Annual Report on Form 40-F.

DIFFERENCES IN NASDAQ AND CANADIAN CORPORATE GOVERNANCE GUIDELINES

The Registrant’s Common Shares are listed on the Nasdaq. As a foreign private issuer under the Exchange Act, the Registrant is permitted under Nasdaq Rule 5615(a)(3) to follow its home country practice in lieu of certain Nasdaq corporate governance standards set forth in the Nasdaq Rule 5600 Series. In order to claim such exemption, the Registrant must disclose the Nasdaq corporate governance standards that it does not follow and describe the home country practice it follows in lieu of such standards. Except as set forth below, the Registrant is in compliance with Nasdaq corporate governance standards.

Nasdaq Rule 5620(c) provides that the minimum quorum requirement for a meeting of shareholders is 33 1/3% of the outstanding common shares. The Registrant follows applicable Canadian laws with respect to quorum requirements. The Registrant’s quorum requirement is set forth in its by-laws, which provide that a quorum for the transaction of business at any meeting of shareholders is one person, present in person, being entitled to vote at the meeting or a duly appointed proxy for an absent shareholder entitled to vote at the meeting.

Nasdaq Rule 5605(c) requires that the audit committee charter specify the party responsible for receiving a formal written statement from the outside auditors regarding all relationships between the auditor and the company, discussing with the auditor any relationships or services that may affect the objectivity and independence of the auditor, and taking or recommending that the board take action to oversee the independence of the auditor. The Registrant follows applicable Canadian laws with respect to the charter requirements for its Audit Committee, which do not require such provision.

Nasdaq Rule 5605(d)(1) provides that the compensation committee charter for each listed company must contain, among other things, a provision that the chief executive officer may not be present during voting or deliberations on his or her compensation. The Registrant follows applicable Canadian laws with respect to the charter requirements for its Compensation, Nominating and Corporate Governance Committee, which do not require such provision.

Nasdaq Rule 5630 provides that the audit committee or another independent body of the board of directors conduct appropriate review and oversight of all related party transactions (defined as transactions required to be disclosed under Item 404 of Regulation S-K) for potential conflict of interest situations. The Registrant follows applicable Canadian laws with respect to the review of such related party transaction by having them reviewed and approved by the Board of Directors as a whole.

UNDERTAKINGS

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities in relation to which the obligation to file an Annual Report on Form 40-F arises or transactions in said securities.

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CONSENT TO SERVICE OF PROCESS

The Registrant has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereto duly authorized.

STUDENT TRANSPORTATION INC.
By:	/s/ Patrick J. Walker
Name: Patrick J. Walker
Title: Executive Vice President and
Chief Financial Officer
Date: September 25, 2015

EXHIBIT INDEX

Exhibit No.
99.1	Annual Information Form for the year ended June 30, 2015
99.2	Audited Annual Financial Statements for the years ended June 30, 2015 and 2014
99.3	Management’s discussion and analysis of financial condition and results of operations for the year ended June 30, 2015
99.4	Consent of Ernst & Young LLP
99.5	Certification of Chief Executive Officer pursuant to Section Rule 13a-14(a) or 15d-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.6	Certification of Chief Financial Officer pursuant to Section Rule 13a-14(a) or 15d-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.7	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.8	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.9	Form 52-109F1 Certificate of Annual Filings (Chief Executive Officer)
99.10	Form 52-109F1 Certificate of Annual Filings (Chief Financial Officer)
101	Interactive Data File

EX-99.1

Exhibit 99.1

STUDENT TRANSPORTATION INC.

ANNUAL INFORMATION FORM

September 25, 2015

TABLE OF CONTENTS

GENERAL	1
CORPORATE STRUCTURE	1
STI	1
STA Holdings	2
Parkview Transit	2
STA Inc.	2
Ownership Structure	2
GENERAL DEVELOPMENT OF THE BUSINESS	3
DESCRIPTION OF THE BUSINESS	6
Business of the Issuer and the Company	6
Business of the Company and Subsidiaries	6
Our Competitive Strengths	7
Business and Growth Strategies	9
Recent Acquisitions and Contracts	11
Customers and Contracts	12
Operations	13
Sales and Marketing	13
Vehicle Fleet	13
Fleet Maintenance Expense	14
Bus Drivers	14
Insurance and Bonding	15
Safety	15
Technology Systems	15
Competitive Environment	16
Capital Expenditures	17
Currency Hedging Policy	18
Employees	19
Facilities	19
Environmental	19
Regulatory Environment	20
Oil and Gas Portfolio	20
THE ISSUER	21
Description of Common Shares and Share Capital of the Issuer	21
Dividend Policy	22
Dividend Reinvestment Plan	24
STA HOLDINGS	25
Capital of STA Holdings	25
Class A Shares	26
Class B Shares and Class C Shares	26
Preferred Shares	28
Distribution Policy	28
DIRECTORS, OFFICERS AND MANAGEMENT	29
STI	29
STA Holdings	37
Equity Incentive Plan	37
Deferred Share Unit Plan	40
Insurance Coverage for STI and Related Entities and Indemnification	40

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AUDIT COMMITTEE AND AUDITOR’S FEES	41
Relevant Education and Experience of Audit Committee Members	41
Pre-Approval Policies and Procedures	42
External Auditor Service Fees	43
Audit Committee Oversight	43
RISK FACTORS	43
Risks Related to our Business	43
Risks Related to the Capital Structure	52
MARKET FOR SECURITIES	56
PRIOR ISSUANCES	57
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	57
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS	57
CODE OF CONDUCT	57
TRANSFER AGENT AND REGISTRAR	58
MATERIAL CONTRACTS	58
NAMES OF EXPERTS AND INTEREST OF EXPERTS	59
ADDITIONAL INFORMATION	59

SCHEDULE “A” – AUDIT COMMITTEE CHARTER

ii

STUDENT TRANSPORTATION INC.

GENERAL

The information, including any financial information, disclosed in this Annual Information Form of Student Transportation Inc. (“STI” or the “Issuer”) is stated as at June 30, 2015 or for the year ended June 30, 2015, as applicable, unless otherwise indicated. Unless otherwise indicated, all dollar amounts are expressed in U.S. dollars and references to “$” are to the lawful currency of the United States. References in this Annual Information Form to “the Company”, “we”, “us” or “our” refer to the combination of the two subsidiaries of STI which together own and control all of the operating subsidiaries of STI, namely Student Transportation of America Holdings, Inc. (“STA Holdings”) and Parkview Transit Inc. (“Parkview Transit”) and all of their respective direct and indirect subsidiaries.

Certain statements in this Annual Information Form are “forward looking statements”, which reflect the expectations of management regarding the Issuer’s and the Company’s future growth, results of operations, performance and business prospects and opportunities. These forward-looking statements reflect the Issuer’s current expectations regarding future events and operating performance and speak only as of the date of this Annual Information Form. 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 factors discussed under the section titled “Risk Factors”. Although the forward looking statements contained in this Annual Information Form are based on what the Issuer and the Company believe 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. Material factors and assumptions that were relied upon in making the forward-looking statements include 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. These forward-looking statements are made as of the date of this Annual Information Form and the Issuer and the Company assume no obligation to update or revise them to reflect new events or circumstances other than as required under applicable securities laws.

Financial information contained in this Annual Information Form is presented in accordance with accounting principles generally accepted in the United States (“US GAAP”). The Consolidated Financial Statements of the Company for the year ended June 30, 2015 are incorporated by reference herein and are available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com or through the EDGAR website at www.sec.gov.

CORPORATE STRUCTURE

STI

Student Transportation Inc. was incorporated on September 22, 2004 under the Business Corporations Act (Ontario). STI’s registered head office is located at 160 Saunders Road, Unit 6, Barrie, Ontario, L4N 9A4. STI currently holds all of the issued and outstanding class A common shares of STA Holdings (the “Class A Shares”), representing a 98.5% voting interest, and 100% of the issued and outstanding common shares of Parkview Transit. On November 16, 2009, the Issuer filed articles of amendment to change its corporate name from Student Transportation of America Ltd. to Student Transportation Inc.

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STA Holdings

Student Transportation of America Holdings, Inc. is a Delaware corporation with its registered and head office located at 3349 Highway 138, Building A, Suite C, Wall, NJ 07719. STA Holdings owns all of the issued and outstanding common shares of Student Transportation of America, Inc. (“STA Inc.”), Student Transportation of America ULC (“STA ULC”) and Student Transportation of Ontario Inc.

Parkview Transit

Parkview Transit Inc. was incorporated by Articles of Amalgamation on March 3, 2008 under the Business Corporations Act (Ontario). Parkview Transit’s registered head office is located at160 Saunders Road, Unit 6, Barrie, Ontario, L4N 9A4.

STA Inc.

Student Transportation of America, Inc. is a Delaware corporation with its registered and head office located at 3349 Highway 138, Building A, Suite C, Wall, NJ 07719. STA Inc. has thirty wholly-owned operating subsidiaries.

Ownership Structure

The following chart illustrates the ownership structure of the Issuer and the Company:

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(1) STA Inc. has 30 wholly-owned operating subsidiaries, including: (i) Santa Barbara Transportation Corporation, a California corporation; (ii) Krise Bus Service, Inc., a Pennsylvania corporation; (iii) STA of Pennsylvania, Inc., a Pennsylvania corporation; (iv) Rick Bus Company, a New Jersey corporation; (v) Student Transportation of New Hampshire, Inc., a New Hampshire corporation; (vi) STA of Connecticut, Inc., a Connecticut corporation; (vii) Positive Connections Inc., an Illinois corporation; (viii) STA of New York, Inc., a New York corporation; (ix) Ledgemere Transportation, Inc., a Maine corporation; (x) Student Transportation of Canada Inc., an Ontario corporation; (xi) Mission School Transportation, Inc., a California corporation; (xii) Altoona Student Transportation, Inc., a Delaware corporation; (xiii) Student Transportation of Vermont, Inc., a Vermont corporation; (xiv) Jordan Transportation, Inc., a New Jersey corporation; (xv) Jordan Bus Service, Inc., a New Jersey corporation; (xvi) Student Transportation of Florida, Inc., a Florida corporation; (xvii) Grand Island Transit Corporation, a New York corporation: (xviii) Ocean State Transit, LLC, a Rhode Island limited liability company; (xix) Williams Bus Lines Co., a Pennsylvania corporation; (xx) Dairyland Buses, Inc., a Wisconsin corporation; (xxi) Dairyland-Hamilton Inc., a Wisconsin corporation; (xxii) Lakeland Area Bus Service, Inc., a Wisconsin corporation, (xxiii) Lakeside Buses of Wisconsin, a Wisconsin corporation; (xxiv) Student Transportation of Nebraska, Inc., a Nebraska corporation; (xxv) SafeStop, Inc., a Delaware corporation; (xxvi) SchoolWheels Direct Inc., a Delaware corporation; and (xxvii) Transportation Sector Consultants Inc., a Delaware corporation; (xxviii) STA of Missouri, Inc., a Missouri corporation; (xxix) STA of Colorado, Inc., a Colorado corporation; and (xxx) STA of Oregon, Inc., an Oregon corporation.

(2) Parkview Transit Inc. has one wholly-owned operating subsidiary, Canadex Resources Inc., an Alberta corporation.

GENERAL DEVELOPMENT OF THE BUSINESS

STI is a corporation established under the laws of the Province of Ontario. The Issuer, together with STA ULC, initially issued income participating securities (“IPS’s”) pursuant to its initial public offering in December 2004 combined with the exercise of an overallotment option in January 2005 (the “IPS Offering”) and in connection with two subsequent offerings: in October 2005 and June 2006. Each IPS consisted of one common share (a “Common Share”) of STI and Cdn $3.847 principal amount of 14% subordinated notes of STA ULC (the “Notes”). On December 21, 2009, the Company redeemed the remaining Notes, originally issued as a component of the IPSs, as the final step in the process of converting from the IPS structure to a traditional common share structure. The Issuer used the net proceeds from the IPO Offering and subsequent offerings to purchase 100% of the Class A Shares and 100% of the preferred shares of STA Holdings (the “Preferred Shares”), respectively. Certain existing investors in STA Inc. (the “Existing Investors”) retained 100% of the Class B Series One common shares (the “Class B-1 Shares”) of STA Holdings at the time of the IPS Offering. On December 22, 2006, the Company repurchased for cancellation all of the Class B-1 Shares of STA Holdings from the Existing Investors. Management owns 100% of the Class B Series Three common shares (the “Class B-3 Shares” and, together with the Class B Series Two common shares (the “Class B-2 Shares”) previously outstanding, (the “Class B Shares”) of STA Holdings pursuant to grants of shares under the STA Holdings Equity Incentive Plan (“EIP”). The holders of the Class B-1 Shares of STA Holdings were entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the distributions per IPS received by the holders of IPS’s. The holders of the Class B-2 Shares were also entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the distributions per IPS received historically by the holders of IPS’s when such distributions were paid. The holders of the Class B-3 Shares are entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the dividends received by the holders of the Class A Shares.

On November 10, 2011, the Company rolled over and extended the maturity of the $35 million Senior Secured Notes (as defined below) for a five year term. The Senior Secured Notes now reflect a fixed coupon of 4.246% and a maturity date of November 10, 2016. In December 2006, the Company initially issued the senior secured notes (the “Senior Secured Notes”) under a note purchase agreement (the “Note Purchase Agreement”) with two Canadian insurance companies. The Senior Secured Notes consisted of $35.0 million of five year, fixed rate senior secured notes at an original coupon of 5.941%. The Senior Secured Notes rank pari passu with borrowings under the Credit Agreement.

In July, August and September, 2012, the Company entered into additional leases with six major financial institutions to lease approximately $29.7 million in replacement school vehicles for the 2012-2013 school year. The term of these leases is six years at effective fixed rates in the range of 2.8% to 4.6%. Annual lease payments on these additional leases will approximate $4.3 million per year for the term of the leases.

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On October 3, 2012, the Issuer announced that it had exercised its right to redeem the remaining principal amount of its 7.5% convertible subordinated unsecured debentures due October 31, 2014 (the “7.5% Debentures”) in accordance with the terms of the trust indenture dated as of October 26, 2009 between STI and Computershare Trust Company of Canada governing the 7.5% Debentures. The redemption of the 7.5% Debentures was effective on November 2, 2012.

From July 1, 2012, through November 1, 2012, Cdn $22.4 million of the Issuer’s 7.5% Debentures were converted into 4,347,368 Common Shares. On November 2, 2012, the Issuer redeemed the remaining Cdn $0.3 million in principal amount of 7.5% Debentures for cash. During the 2012 and 2011 fiscal years Cdn $3.4 million and Cdn $25.7 million, respectively, of the 7.5% Debentures were converted into 656,297 common shares and 4,985,420 common shares, respectively.

On October 19, 2012, the TSX approved the Issuer’s notice of intention to renew its NCIB for a portion of its Common Shares as appropriate opportunities arise. The Issuer was permitted to commence purchasing Common Shares under the renewed normal course issuer bid on or about October 24, 2012. Pursuant to the notice, the Issuer was permitted to purchase up to Cdn $5.0 million of the Issuer’s Common Shares in the 12-month period commencing October 24, 2012 and ending on October 23, 2013. During the 2013 fiscal year, the Issuer purchased and cancelled 401,076 Common Shares having a fair value of $2.5 million pursuant to the NCIB.

On November 8, 2012 an additional allotment of 2,265,000 Class B-3 Shares was approved by the shareholders of the Company at the annual general and special meeting and made available for issuance under the EIP.

On December 18, 2012, the Company announced that it had secured the largest transportation agreement in its history to serve the Omaha and Millard Public Schools in Nebraska. Under the contract with the Metropolitan Omaha Education Consortium, Interlocal Transportation Association, the Company will provide approximately 530 vehicles including over 400 new fuel-efficient propane-powered vehicles, making it the nation’s largest propane-powered school bus fleet. The contract will add revenues of approximately $25 million a year for the potential six-year agreement.

On February 27, 2013, the Company signed a new five-year amended credit agreement with its senior lenders (as amended the “Credit Agreement”) to extend its current bank credit facility agreement to February 2018. The new $155 million amended facility is a $15 million increase over the prior one, included a lower base rate, maintained leverage covenants at existing levels and allowed additional flexibility to the Issuer for leasing and share buyback options, if needed. It also extended a $100 million “accordion feature” which allows the Company access to a larger facility should it ever be needed.

On April 8, 2013, the Company announced that it had been awarded several new school transportation contracts in Texas, Pennsylvania and in Ontario, Canada. All contracts are for five years or more and total over $10 million in annual revenues.

On April 18, 2013, the Company announced that it had been awarded a new school transportation contract with the Gateway School District in Pennsylvania for a term of seven years. The new contract includes 80 new school buses that will run on liquid propane gas. The new contract increases the regional density of the Company’s existing operations in Pennsylvania and will provide approximately $3.5 million in annual revenues.

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On July 23, 2013 the Company acquired Scholastic Bus Co., located in Bergen County, New Jersey for approximately $2.4 million.

On August 27, 2013 the Company acquired Williams Bus Lines Co., located in Wilkes Barre, Pennsylvania for approximately $3.4 million.

On October 21, 2013, the TSX approved the Issuer’s notice of intention to renew its NCIB for a portion of its Common Shares as appropriate opportunities arise from time to time. The Issuer was permitted to commence purchasing Common Shares under the renewed NCIB on or about October 24, 2013. Pursuant to the notice, the Issuer was permitted to purchase up to a maximum number of Common Shares equal to the lesser of 4,086,569 Common Shares, being 5% of the issued and outstanding Common Shares as of October 14, 2013, and that number of Common Shares that can be purchased under the NCIB for an aggregate purchase price of Cdn $5 million in the 12-month period commencing October 24, 2013 and ending on October 23, 2014. During the 2014 fiscal year, the Issuer purchased and cancelled 399,089 Common Shares at a weighted average price of $6.27 per share pursuant to the NCIB.

On November 12, 2013, the Issuer issued to a syndicate of underwriters on a bought deal basis Cdn $75 million aggregate principal amount of 6.25% convertible unsecured subordinated debentures due June 30, 2019 (the “6.25% Canadian Debentures”). See the heading “The Issuer – Description of Common Shares and Share Capital of the Issuer – The Debentures” below.

On July 8, 2014, the Issuer announced that it had recently completed negotiations for the conversion of three school district transportation systems in Pennsylvania, Vermont, and Idaho. The three new, long-term contracts will add over 290 vehicles and increase current fiscal year revenues by US$11 million annually. The contracts all include annual increases and two of the three customers will be supplying the fuel for their contracts.

On July 15, 2014, the Issuer announced that it was awarded a new four-year contract (2 year term with 2 year renewal) with St. Paul Public Schools in Minnesota. The initial award reflected 60 routes, which was subsequently reduced to 42 routes by the school district for the annual contract that started in August 2014. The contract is expected to generate approximately US$2.7 million in annual revenue and features new propane-powered vehicles and a refurbished facility located in St. Paul.

On August 19, 2014, the Issuer entered into a new extension to its Credit Agreement led by BMO Harris Bank of Chicago. In addition to BMO Harris Bank, the syndicate previously included The Bank of Montreal, The Bank of Nova Scotia, The Toronto Dominion Bank, Fifth Third Bank, Siemens Financial Services and Raymond James Bank. The new amended credit facility will increase commitments by US$60 million from the current US$165 million to US$225 million and the termination date has been extended to August 19, 2019, or if earlier, 90 days prior to the maturity of the Issuer’s senior secured notes. The increase in the size of the facility comes from the addition of HSBC Bank Canada and National Bank of Canada joining the syndicate group, as well as increased positions made by The Toronto Dominion Bank and Fifth Third Bank. The new amended facility also provides for a US$100 million “accordion feature” which provides access to a larger facility should it be needed in the future.

On October 21, 2014, the Issuer announced that it had renewed its normal course issuer bid. Pursuant to the issuer bid, the Issuer was permitted to acquire up to a maximum number of Common Shares equal to the lesser of 4,158,553 Common Shares, being 5% of the issued and outstanding Common Shares as of October 14, 2014, and that number of Common Shares that can be purchased under the normal course issuer bid for an aggregate purchase price of Cdn $5 million in the 12-month period commencing October 24, 2014 and ending on October 23, 2015.

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On February 4, 2015, the Issuer announced that it had locked in lower fuel costs relative to prior agreements for a portion of its fuel costs for fiscal 2016. Based on current fuel prices, the Company anticipates fuel expense for the current fiscal year will be in the range of 7.5% to 7.7% of revenue compared to the 8.8% reflected in the fiscal year 2014 results.

On March 6, 2015, the Issuer issued 11,983,000 Common Shares pursuant to a bought deal for total gross cash proceeds of approximately $69.1 million (Cdn $86.3 million), including 1,563,000 Common Shares pursuant to an over-allotment option. The net proceeds (after commissions and fees) of such issuances were used to repay debt (including the 6.75% Debentures due June 30, 2015, as discussed below) and for general corporate purposes.

On June 26, 2015, the Issuer announced that it called for the maturity and settlement of the 6.75% convertible subordinated unsecured debentures due June 30, 2015 (the “6.75% Debentures”) and would delist those at the close of business on June 30, 2015. During fiscal year 2015, Cdn $0.1 million of the 6.75% Debentures were converted into 18,342 common shares. On June 30, 2015, the Company redeemed the remaining Cdn $49.9 million of 6.75% Debentures for US$ 40.1 million in cash in accordance with the terms of the trust indenture dated as of June 21, 2010 between STI and Computershare Trust Company of Canada governing the 6.75% Debentures.

Additional developments impacting the 2015 – 2016 school year are included under the heading “Description of the Business – Recent Acquisitions and Contracts” below.

DESCRIPTION OF THE BUSINESS

Business of the Issuer and the Company

STI currently holds a 98.5% interest in STA Holdings. The balance of the common shares is held by management through the EIP. The Issuer and STA Holdings do not have any ongoing business operations of their own. STA Holdings depends on the operations and assets of its wholly-owned subsidiary, STA Inc., for cash distributions. As the holder of 100% of the outstanding common shares of Parkview Transit, STI depends on STA Holdings and Parkview Transit for cash distributions to satisfy the interest obligations of the Debentures and to pay dividends on the Common Shares. The Company has two segments, a transportation segment and an oil and gas segment. The transportation segment provides school bus management services to public and private schools in North America. The oil and gas segment represents the Company’s investments as a non-operator in oil and gas interests. The oil and gas interests are non-core and represent approximately 0.5% of the Company’s overall revenues.

Business of the Company and Subsidiaries

Business Overview

Founded in 1997 by industry executive, Denis J. Gallagher, we are the third largest provider of school bus transportation services in North America, conducting operations through wholly owned operating subsidiaries. We have become a leading school bus transportation company, aggregating operations through the consolidation of existing providers, targeted bid-ins and conversion of in-house operations in a fragmented industry. Based on industry sources, educational institutions in North America spend approximately $24 billion annually on school bus transportation. We currently provide school bus transportation services in Ontario, Canada and the following U.S. states: California, Connecticut, Florida, Idaho, Illinois, Maine, Minnesota, Nebraska, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, South Carolina, Texas, Washington, Wisconsin, Vermont and we operate a business development, technology and innovation office in South Carolina.

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Our services include home-to-school busing, special needs transportation and extracurricular and charter trips for school and other groups. Our primary service of transporting students to and from school (referred to as “home-to-school” busing) comprises approximately 88% of revenue. Included in home-to-school busing is the transportation of students with special needs, or special education transportation. Special education transportation typically requires the transportation of students to destinations outside their home district and usually is performed with smaller monitored vehicles. Extracurricular transportation typically accounts for 6% of revenue. We also provide charter services for athletic events, field trips, summer camp routes and other non-school related charter services and receive revenue associated with the oil and gas portfolio of assets acquired in connection with the acquisition of Canadex. These services and revenues account for approximately 6% of revenue. By successfully executing a business strategy that emphasizes safe, reliable, cost-efficient service we have experienced strong and consistent growth in revenue, margins, Adjusted EBITDA and EBITDA. Approximately 88% of our revenue is contracted with an average term of three to eight years. Our growth through strategic acquisitions, targeted bid-in and conversion opportunities and, more recently, management services contracts, has successfully leveraged management strength and created operating efficiencies.

School bus transportation revenue has historically been seasonal, based on the school calendar and holiday schedule. During the summer school break, revenue is derived primarily from summer camps and private charter services. Since schools are not in session, there is no school bus transportation revenue. Thus, the Company incurs operating losses during the first quarter of the fiscal year, which encompasses the summer school break. In addition, the Company purchases a majority of its replacement capital expenditures, along with investment capital spending for new bids and contracts awarded for the upcoming school year in the same time period. These purchases have historically been funded by borrowings on the Company’s credit facility and through operating lease financings.

Our Competitive Strengths

We possess a number of competitive advantages that management believes will allow us to sustain our proven track record of profitability and expand our position as a leading provider of school bus transportation services in North America, including the following:

Stable and Diversified Contract Base. We currently operate over 275 contracts with a fleet of approximately 12,000 vehicles for school districts in Ontario, Canada and eighteen U.S. states. As our largest contract represents approximately 5% of contract revenue, we do not face significant risks related to customer concentration, as management believes that the loss of a single contract would not have a significant impact on our performance. Additionally, we enjoy a stable and consistent revenue stream, due in part to the fact that our contracts have an average term of three to eight years. Since the inception of the Company in 1997, we have renewed 815 of the approximately 875 contracts (including annual contract renewals in New Jersey) that have been up for renewal, including renewals for the 2015-2016 school year.

Focus on Rural and Suburban Markets. In contrast to our large, national competitors, we target school districts located in rural and suburban markets, which provide the following advantages:

• Improved Contract Stability and Retention — Rural and suburban school districts are more likely than urban school districts to renegotiate and extend contracts with quality incumbent providers, rather than embark on a competitive re-bidding process. A re-bidding process may require extensive effort and expense for the school district. Incumbent providers who deliver a high level of service and have generally competitive pricing experience little or no significant contract attrition. In contrast, large school districts and districts in urban areas typically award contracts on the basis of the lowest bid price as opposed to lowest responsible bid, which considers qualitative factors. Additionally, large urban school districts usually employ multiple contractors for price advantages. As a result, rural and suburban contracts offer higher margins and greater stability for contract renewals and extensions.

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• Reduced Competition — We encounter national competitors less frequently in rural and suburban markets than we would if we operated in urban markets. Our national competitors are focused primarily on large, urban markets, with the objective of implementing homogeneous operations. Our local competitors often lack the financial resources to meet increasingly stringent contract requirements. Specifically, management believes that these smaller competitors often lack resources to meet customers’ growing needs and increased government regulations. In contrast, we are large, growing, consistently profitable and, unlike our smaller competitors, leverage our size and infrastructure to provide service to our customers at a profit. We intend to continue to use our significant market presence to our advantage in further penetrating our target markets. Our emphasis on local markets, combined with our national operating efficiencies, allows us to enjoy significant competitive advantages.

• Lower Operating Costs — Rural and suburban markets possess several attributes that allow us to operate at a low comparable cost relative to urban markets, including the following: (i) driver wage components are significantly lower than in urban markets and there is generally less driver turnover and absenteeism; (ii) the risk of unionization of employees is lower; (iii) facilities are easier to obtain and facility costs are substantially lower; (iv) maintenance costs are significantly lower, due to less wear and tear on the vehicles on rural and suburban routes; and (v) vehicle and workers’ compensation insurance premiums are less expensive in these markets.

• Increased Safety — Driving conditions in rural and suburban markets are generally safer, resulting in fewer accidents. Furthermore, less driver turnover and absenteeism results in fewer accidents. Management believes that these factors have contributed to our strong safety record.

Proven Acquisition, Bid and Conversion Experience. In order to grow in the consolidating private student transportation industry, a company must have the ability to identify and acquire targets and successfully integrate the acquired target into its operations. We have proven acquisition experience, successfully acquiring 52 school bus contractors since our inception in 1997. Moreover, upon acquiring these targets, we have been able to create incremental value through the operating leverage in our current infrastructure. Similarly, we have the proven ability to successfully win contracts in a competitive bidding process and identify school districts whose boards would be willing to convert their school bus transportation services to private operators and work with these districts throughout the conversion process. Since being founded in 1997, we have successfully won 108 new school district contracts and completed twelve school district conversions (from public to private provision of school bus services).

Focus on Long-Term Partnerships with Customers. We have a clear understanding of the issues facing school districts and are extremely effective at designing customized solutions for each district’s transportation needs. Our representatives meet with district officials to educate them about the advantages of outsourcing. Following an acquisition or conversion of a school district’s transportation program, we often hire the current bus drivers and district staff, maintaining consistency for the children and emphasizing the partnership with the school district. We work closely with each of our customers to optimize routing and bell times to achieve daily operating efficiencies. In addition, we assist our customers in maximizing reimbursement from governmental entities for their transportation programs.

Experienced Management. Led by Denis Gallagher, our chief executive officer, our management team has extensive experience, with an average of approximately 25 years experience and over 500 years of collective experience in the student and passenger transportation industry. Moreover, many of the members of senior management worked together in the student transportation operations of Laidlaw Transit during the period from 1985 to 2002. Our senior management team has proven itself by

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successfully growing our business since inception through the implementation of a disciplined acquisition, bid and conversion program. At the regional level, our operations are managed by seasoned industry executives and/or former owners who have extensive experience and knowledge of the school districts and competitors in their region.

Business and Growth Strategies

Our primary strategic objective is to increase cash flow and profitability by (i) growing organically; (ii) leveraging our operating and financial infrastructure within our regional platforms through acquisitions, bid awards and conversions, including management services contracts; and (iii) expanding into new geographic markets.

Grow Organically. Organic growth from our existing contracts is driven primarily by inflation related escalators built into our contracts and increased enrolment in schools. The U.S. Department of Education’s National Center For Education Statistics projects that public school enrolments in the United States will increase by 6% between 2012 and 2024. Regionally, enrolments in the western United States are projected to increase by 11% between 2012 and 2024 and enrolments in the southern United States are projected to increase by 9% between 2012 and 2024. We have monitored, and will continue to monitor, school enrolment trends in order to ensure that our operations are in a position to benefit from emerging trends. As an example, our west coast regional operations are well positioned to take advantage of the expected above average increase of the population in the western United States.

Leverage our Infrastructure within our Regional Platforms. We establish platform companies in targeted markets, usually via acquisitions or substantial bid awards, and create regional density by executing our “Acquisition-Bid-Conversion” strategy through the addition of “tuck-in” acquisitions, bid awards and conversions. This strategy enables us to enjoy the benefits of financial and operating leverage, as a larger contracted revenue base is achieved without a corresponding rise in fixed costs. This emphasis on regional density, combined with our national scope, creates greater economies of scale in the areas of finance, purchasing and marketing through the integration of these businesses and contracts. Since being founded in 1997, we have acquired and integrated 52 school bus contractors, won 108 new school district contracts and completed twelve school district conversions (from public to private provision of school bus services) as illustrated in the chart below:

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Subsequent to June 30, 2015 we have secured 14 new bid contracts (including 3 new states – Colorado, Missouri and Oregon) and 1 new conversion contract, (not included in the 275 contracts noted above).

Acquisitions. The fragmentation of the school bus market provides us with significant consolidation opportunities. Specifically, an estimated 4,000 private contractors account for approximately 33% of the industry’s revenues. Accordingly, there exists an opportunity to acquire and consolidate many of these private operators, as they lack the financial resources needed to meet increasingly stringent contract requirements and are unable to compete with the economies of scale of national providers such as ourselves. We execute our acquisition program by acquiring regional platform companies that are capable of operating effectively on a decentralized basis. These platforms utilize local management teams that are familiar with the market to begin to build our regional presence. We create regional density when these platform companies are supplemented with “tuck-in” acquisitions. As a result, we are able to grow our regional platforms, realize operating synergies and improve profit margins. Our key acquisition criteria are geographic market, strength of management, quality of contracts and customer relationships and profitability.

Bids. Bidding activities are directed toward school districts that have chosen to solicit bids from private operators for their school bus transportation contracts. These contracts are primarily awarded by school districts based on a public bidding process or Request for Proposal, on the basis of the lowest “responsible” bid. Lowest responsible bids enable school districts to consider factors other than price in awarding a bid, such as safety records and initiatives, driver training programs, community involvement and quality of service.

Our experience has been that these bid-in contract awards are substantially accretive to earnings. In particular, the ability to leverage our existing operating and management infrastructure is a key variable when bidding for contracts. New contracts provide incremental revenue spread over a largely fixed regional cost base, as the new contracts share existing hub facilities, maintenance and management personnel. We have successfully won 108 bids since inception by emphasizing our qualitative advantages and leveraging our cost efficiencies within the regional platform.

Conversions. We target school district-owned and managed fleets for conversion. It is estimated that school districts operate approximately 66% of the approximately 510,000 school buses in North America. Capital expenditures related to growing fleet sizes and year-round school and safety regulations, coupled with rising costs associated with fleet management and driver unionization, create fiscal constraints for school districts. Management believes that many private operators such as ourselves have demonstrated the ability to operate at a savings compared to district operators. As a result, some school districts are pursuing a strategy of conversion. Our conversion program operates similarly to our bid-in program, as we focus on privatizing school districts in regions contiguous to our existing operations. Conversions also take advantage of operating and financial benefits by sharing fixed costs and, as a result, are accretive to earnings. We have been successful in completing twelve conversion opportunities since inception.

One distinctive feature of conversions is that they can be structured as management contracts under which the contractor manages the transportation for the school district and the district continues to own the school bus fleet and facilities. School districts sometimes elect a management contract approach in order to maintain a degree of control through the ownership of the fleet and facilities. In addition, we have entered into operating lease agreements to lease replacement school vehicles each year since the 2006 – 2007 school year. Such managed services contracts and leased vehicles require lower up front capital investment (as the school district maintains ownership of the managed fleet and the lessor maintains ownership of the leased fleet) resulting in lower annual depreciation expense on an ongoing basis. Currently, leased and managed buses account for approximately 30% of our fleet. We intend to review leasing alternatives on an annual basis based on the economics of the lease financing. While the current lease of vehicles has been an attractive alternative to purchasing such vehicles due to the low cost of financing, it effectively accelerates expense recognition through lease payments over the six year lease term compared to depreciation of purchased vehicles which would be depreciated over a period of nine years to 11 years.

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The following table is a summary of our revenue under existing contracts by type:

Expand into New Markets. Management believes that we are well positioned to take advantage of considerable expansion opportunities in new markets. Although we have historically focused on school districts that understand the benefits of outsourcing, a majority of school districts in the United States continue to manage student transportation internally. We continue to believe that large portions of the southeast and the southwest regions of the United States could represent significant opportunity for conversion, as outsourcing currently represents less than 20% of the student transportation market in those regions.

Recent Acquisitions and Contracts

We recently completed the following acquisitions and were awarded the following contracts for the 2015 – 2016 school year:

On December 9, 2014, the Issuer announced that it had been awarded a new contract with Columbia Public Schools in Columbia, Missouri. The initial three-year contract, with the option for additional renewal years, will commence in August 2015 and feature 212 new state-of-the-art school vehicles, bringing in annual revenues exceeding US$10 million. Other terms of the contract include fuel protection for the Company for all fuel in excess of one dollar per gallon, as well as the Company’s agreement to use district-owned facilities as part of this public-private partnership.

On March 18, 2015, the Company announced that STA Inc. had been awarded a new school transportation contract in Colorado, adding 140 new vehicles, including 122 cleaner-burning liquid propane gas fueled vehicles and approximately $6 million in estimated new annualized revenues.

On March 24, 2015 the Company announced that STA Inc. had been awarded a new seven year school transportation contract in Pennsylvania, adding 77 new, cleaner-burning liquid propane gas vehicles and approximately $3.7 million in estimated new annualized revenues.

On May 18, 2015, the Company announced that STA Inc. had been awarded a new school transportation contract in Oregon, adding 60 new vehicles, including 52 clean-burning propane autogas vehicles and approximately $3 million in estimated new annualized revenues.

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On May 21, 2015, the Company announced that Goldstar Transit Inc. had been awarded school transportation contracts at four school districts in Texas, adding approximately 200 vehicles (including school district owned vehicles) and approximately $8.6 million in estimated new annualized revenues.

On August 27, 2015 the Company amended its current NCIB to increase the maximum amount of common shares that the Company is permitted to acquire to 6,806,591 common shares from the number of common shares that could be purchased for an aggregated purchase price of Cdn$ 5.0 million. The amended NCIB will still cover the twelve month period commencing October 24, 2014 and ending on October 23, 2015. Upon expiration of the current NCIB, the Company can renew the NCIB for another twelve month period.

Customers and Contracts

We currently operate over 275 contracts with a fleet of approximately 12,000 vehicles as at June 30, 2015, for school districts in Ontario, Canada and eighteen US states. Our contracts have an average term of three to eight years, with payments generally made as services are provided from September through June. Compensation under school bus transportation contracts is generally based on a daily rate per vehicle. Contracts generally provide for an annual escalator clause for inflation based on the consumer price index and often provide for additional protection for fuel increases. Approximately 59% of our contracts include some form of protection against fuel increases, including through reimbursement by the school district. The majority of the contracts (representing approximately 96% of the fleet) require the Company to provide vehicles.

As our average contract accounts for less than 1% of contract revenue and our largest contract represents approximately 5.0% of contract revenue, management believes that the loss of a single contract would not have a material impact on our performance. Since our inception in 1997, we have renewed 815 of the approximately 875 contracts (including annual contract renewals in New Jersey) that have been up for renewal over that period, including renewals for the 2015-2016 school year. One factor contributing to this high level of retention is that in rural and suburban areas, being the markets in which we operate, school districts tend to extend existing contracts rather than solicit bids from potential replacement contractors, unless applicable law requires otherwise or the school district is dissatisfied with the service of its current school bus transportation contractor. Some districts believe that replacing an existing contractor through a bidding process can result in higher prices than contract extensions due to the significant fleet investment and start-up costs that a replacement contractor requires.

Management attributes our successful contract renewal rate to the following:

• management’s experience in the student transportation industry;

• our reputation for passenger safety and providing efficient, on-time service;

• the preference of school districts, and particularly those in the rural and suburban markets in which we operate, to maintain continuity of service;

• our success in operating as a local company, including maintaining the local brand, participating in local school programs and emphasizing our commitment to the local community;

• proactively renegotiating and extending existing contracts before maturity; and

• operating in states where regulations allow contracts to be extended without mandatory public bids.

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Operations

Our operating strategy is to conduct business on a decentralized basis through regional platform operations, as well as to leverage our operating, management and financial infrastructure to create efficiencies. Management has been able to enhance the value of our regional platforms by implementing operating efficiencies in such areas as driver recruitment and training, fleet management, facilities management and vehicle maintenance. As well, we have utilized our national economies of scale for purchasing benefits in fleet procurement, vehicle parts, insurance and safety programs.

We currently operate 145 terminal locations, seventeen of which are owned, organized into seven regional divisions: Northeast (Maine, New Hampshire, Vermont, Rhode Island, Connecticut and New York), New Jersey, Pennsylvania, Central (Nebraska, Texas, Illinois, Wisconsin and Minnesota), South (Florida and South Carolina), West (California, Idaho and Washington) and Ontario, Canada. These regional platforms have been established in states that are favourable to private contracting of school transportation. Regions are led by regional operating officers, who have overall responsibility for growth and operational performance. The structure enables us to add contracts with minimal increases to our overhead, taking advantage of the inherent operating leverage.

Our executive office in Wall, New Jersey, provides national support to the regions through the consolidation of the accounts payable, treasury and finance functions, and coordination of the legal, insurance, fleet procurement, administration and human resources functions. The senior management team sets our overall strategic direction and leads the execution of our business strategy. The senior management team reviews and approves each of the financial models developed for potential acquisitions, bids and conversions and is directly involved in the negotiation and execution of all acquisitions, bids and conversions. In addition, the senior management team reviews and approves each of the regional divisions’ annual operating plans.

Sales and Marketing

All three levels of our management, including senior management, regional operating vice presidents and local terminal managers, execute sales and marketing functions in our core school bus transportation business. The senior and regional management team consists of industry veterans with an average tenure of 25 years in the school bus transportation industry. The local terminal managers have a deep knowledge of their respective markets and continuously search for potential bid and conversion opportunities. Our senior management team evaluates over 100 acquisitions, bid and conversion opportunities each year, and the team includes our business development staff who, working together with our local management, continuously identifies and explores potential acquisition, bid and conversion targets. Once we complete an acquisition, bid award or conversion, the sales and marketing process then focuses on customer service execution. The regional vice presidents, regional management teams and local terminal managers and employees are all responsible for customer service execution, which is intended to enhance our reputation for quality service and increase the likelihood of contract renewal.

Vehicle Fleet

We operate a fleet approximately 12,000 school buses, vans and other vehicles as at June 30, 2015. Buses range in size from 7 to 84 passengers, and have an average cost of $73,800. We purchase our buses from quality suppliers such as Navistar International Corp., Freightliner/Thomas Built Buses, General Motors, Collins Bus Corporation, and Blue Bird Corporation. Management believes that the Company’s savings approximate 10% - 15% on vehicle purchases compared to smaller operators, due to a higher volume of annual purchase activity and that our fleet purchasing power is comparable to other national operators.

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Our fleet is properly maintained, resulting in lower annual maintenance expenses and reduced capital expenditures. The average age of vehicles in our fleet at June 30, 2015 was 5.7 years. Additionally, our vehicles are subject to inspection by government authorities that ensure our buses comply with the applicable regulations.

Our regional operating density allows us to efficiently deploy our fleet of vehicles, which increases asset utilization and reduces annual vehicle maintenance capital expenditures. We manage our fleet at the regional operating level and are capable of moving equipment within a given region, based on varying contracted vehicle age requirements. We estimate that we save at least $3.0 million to $5.0 million per year in annual maintenance capital expenditures by re-deploying our bus fleet.

We continue to focus on our managed and leased fleet. As of our most recent fiscal year-end, leased and managed vehicles represented approximately 30% of revenue vehicles. Managed services contracts and leased vehicles require lower up-front capital investment (as the school district maintains ownership of the managed fleet and the lessor maintains ownership of the leased fleet), resulting in lower annual depreciation expense on an ongoing basis. Conversions usually drive an increase in managed business, as school districts opt for outsourced providers while maintaining ownership of their bus fleet. We have entered into operating lease agreements to lease replacement school vehicles each year since the 2006 – 2007 school year. We intend to review leasing alternatives on an annual basis, based on the economics of the lease financing. While the current lease of vehicles has been an attractive alternative to purchasing due to the low cost of financing, it effectively accelerates expense recognition as lease payments are expensed over the 6 year lease term to a residual value in the 25% to 30% range, as compared to purchased vehicles, which would be depreciated over a period of nine years to 11 years.

Fleet Maintenance Expense

Maintenance of the bus fleet is a critical factor in maximizing service and minimizing the high cost of repairs. These operating expenses are distinct from maintenance capital expenditures, which refer to those expenditures that are required to upgrade existing infrastructure, including the replacement of school buses and vans.

We have a comprehensive preventive maintenance program for our equipment to minimize equipment downtime and prolong equipment life. Programs implemented by us include standard maintenance, regular safety checks, lubrication, wheel alignment and oil and filter changes, all of which are performed on a regularly scheduled basis. Approximately 99% of our fleet is maintained by our trained technicians at 144 of our 145 terminal locations. The remaining buses are maintained by local truck service contractors who adhere to strict state, provincial and federal regulations as well as our standards.

Bus Drivers

The ability to recruit, hire and retain drivers is critical. Drivers generally work less than 1,000 hours a year and generally earn wages of between $10.00 and $27.00 per hour, depending on seniority and local wage competition. We believe that we provide competitive driver compensation, as evidenced by what we believe to be a relatively low attrition rate of our drivers. In addition, we generate opportunities for drivers to earn supplemental wages by providing charter or extracurricular assignments. We target homemakers with children in the school system and early retirees as ideal driver candidates. We require our drivers to complete a comprehensive training process to fully satisfy or exceed federal and state regulatory requirements, as well as local contract requirements.

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Insurance and Bonding

The Company maintains various forms of liability insurance against claims for bodily injury or property damage. In the U.S., such insurance consists primarily of: (i) automobile and general liability insurance with a primary limit of $5 million per occurrence, subject to a $250,000 retention per occurrence; (ii) automobile and general liability excess insurance with an aggregate limit of $50 million; (iii) statutory workers’ compensation and employers’ liability insurance, subject to a $250,000 retention per occurrence; and (iv) all risk property damage insurance (excluding automobiles) covering replacement value and/or building contents as required by lease terms, subject to a $10,000 deductible per occurrence for most causes of loss. In addition, the Company insures its U.S. vehicles at 100% of full current book (depreciated) value for physical damage, up to an overall sublimit of 90% of book value per location. Auto physical damage coverage is written with the same $250,000 retention per incident as the liability coverage.

In Canada, the Company maintains property insurance on a replacement cost basis, subject to a Cdn $1,000 deductible. Auto liability and commercial general liability coverage each have primary limits of Cdn $10 million, with a shared excess limit of Cdn $10 million. Auto physical damage coverage is based on stated (book) value, subject to a Cdn $1,000 deductible.

In addition to property/casualty insurance programs, the Company maintains coverage for Directors and Officers Liability with an aggregate limit of liability of $40 million and an excess limit of $15 million that is available solely to the individual directors and officers. In the U.S., the Company also carries Employment Practices Liability with limits and coverage terms commensurate with its exposures in these areas.

Where appropriate, the Company maintains current levels of insurance coverage of acquired companies for a transition period before rolling up the acquisition exposures into the Company programs described above. Certain of our customer contracts contain protections against increases in our insurance costs.

Certain of our school bus revenue contracts contain performance or surety bond requirements. These bonds are written by certified surety underwriters with whom we have longstanding relationships. For the 2014-2015 school year, our outstanding performance bonds aggregated $94.6 million, at an annual cost of approximately $0.7 million.

Safety

We have an excellent safety record. We are subject to occupational safety and health regulations in both the U.S. and Canada and have had no material citations or violations. Also, state authorities conduct both scheduled and random inspections of our fleet to ensure that we comply with applicable regulations. We believe that we are in material compliance with all current United States and Canadian federal, state and provincial safety laws and regulations. Management has developed a corporate culture focused on passenger safety and service. In support of this commitment, we employ approximately 350 school bus safety instructors, all certified where required by law. These instructors are responsible for the implementation of safety and training programs. Management believes that our emphasis on passenger safety and service is a major contributor to our success in winning new contracts.

Technology Systems

Management believes that our technology systems and competency in regular and accurate financial reporting amount to a strong competitive advantage. Our enterprise applications are on demand, web and mobile based and delivered securely to employees. Vehicles and other assets are monitored using a fixed asset management system. Our core accounting software package and asset management system are hosted by a third party provider.

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Throughout the Company, a personnel management system is used to report on and enhance compliance with state and federal driver requirements for safety training, physicals and testing.

The Company historically installed global positioning systems (“GPS”) and mobile surveillance systems on its vehicles as needed or required by customers, however we have started to install GPS on a standard basis for a majority of new fleet units that we deploy. The Company works with multiple routing software platforms when requested or, on a case-by-case basis, we install routing and planning software in locations as needed or as required by customers. In connection with some of our smaller rural and suburban markets, we have determined that routing and mapping tools commonly available on the internet are adequate in certain situations. The Company also utilizes a charter trip management system that automates dispatch and billing.

The Company has also developed a mobile application (“SafeStop”) that connects parents and school administrators with the vehicles transporting their students. The SafeStop application provides real-time map features, estimated arrival times, and alerts and messaging for its users. The SafeStop application is compatible with various GPS and routing systems. The application continues to evolve and its functionality has increased, as has its adoption by school districts.

The Company has utilized multiple vehicle maintenance system platforms at specific locations in the past, however we will install one standard vehicle maintenance system for a majority of our locations. We began the installation of this standard maintenance system in approximately one half of the locations in fiscal year 2015, and plan to have all of our locations converted to this vehicle maintenance system by the end of fiscal year 2016. In addition, the Company has engine diagnostic systems in place at our locations, which can be used by technicians to efficiently diagnose vehicle system problems. These systems allow us to utilize our maintenance personnel more efficiently and take advantage of the computerized systems in our vehicles to reduce cost, improve vehicle utilization, and assure compliance to Company and regulatory preventative maintenance programs.

The Company has begun installing time and attendance (“TAA”) systems at the terminal locations as a way of automating the collection of hours worked by employees. The TAA system will also automate the process of summarizing the data for payroll processing and for various compliance reporting requirements.

Competitive Environment

Generally, the school bus transportation industry awards contracts through a public bidding process, which is often based on the concept of lowest responsible bid. Specifically, in selecting a bid, the school district will consider a variety of factors in addition to cost, including reputation of the bidder, its safety record and quality of service. As we operate primarily in rural and suburban markets, we generally compete with smaller regional companies.

First Group and National Express are the national industry consolidators and have acquired many of the largest private school bus transportation providers over the last decade. Their strategy has been to purchase competitors in various markets, with the elimination of local branding in favour of the national brand already established. This strategy has resulted in a high concentration of their business in urban markets. As a result of the high concentration in urban markets, companies operating in these markets generally experience a higher degree of competitive pricing than those operating in rural and suburban markets. The following chart lists the top ten providers of school bus transportation services in the United States:

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TOP TRANSPORTATION CONTRACTORS OF 2015

Rank	Company	Fleet Size(1)			Headquartered
1	First Student Inc. (First Group plc)		49,000		Cincinnati, OH
2	National Express Group plc		20,500		Warrenville, IL
3	Student Transportation Inc.		12,500		Wall, NJ
4	Illinois Central School Bus Company		3,000		Joliet, IL
5	George Krapf Jr. & Sons Inc.		2,510		West Chester, PA
6	Cook-Illinois Corp.		2,150		Oak Brook, IL
7	WE Transport		1,659		Plainview, NY
8	DATTCO Inc.		1,350		New Britain, CT
9	Dean Transportation Inc.		1,297		Lansing, MI
10	North Reading Transportation		1,290		Methuen, MA
10	Lamers Bus Lines Inc		1,290		Green Bay, WI
	Total Top 10		96,546
12-50	Total of Next 39 Operators		20,164
	Total Private Industry		170,000	(2)

Note:

(1) Source: School Bus Fleet Magazine

(2) Based on an industry total of 510,000 school buses and a one-third market share of the estimated 4,000 private operators.

Capital Expenditures

Our capital expenditures can be categorized into two types: (i) maintenance and (ii) growth or earnings enhancing. Over the last several years we have financed our replacement capital expenditures with borrowings on the Company’s credit facility for the outright purchase of vehicles and through operating lease financing arrangements.

The table below sets forth our historical and average maintenance and growth capital expenditures purchased for the past three fiscal years (in millions of dollars), and the value of the maintenance capital expenditures we have leased over the same time period.

	2015		2014		2013		Average
Maintenance Fleet Purchased	$	6.7	$	4.6	$	6.3	$	5.9
Growth Fleet Purchased	$	26.8	$	33.2	$	35.5	$	31.9
Total Capital Expenditures	$	33.5	$	37.8	$	41.8	$	37.7
Maintenance Fleet Leased	$	38.7	$	24.0	$	30.3	$	31.0
Growth Fleet Leased	$	30.8	$	27.9	$	0	$	19.6

In fiscal 2015, growth capital expenditures include $1.0 million in investments in new wells in connection with the oil and gas assets.

Proceeds on sale of equipment totaled $2.1 million in fiscal 2015, $1.1 million in fiscal 2014 and $2.9 million in fiscal 2013. Such proceeds are not included in the capital expenditures set forth above.

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Maintenance Capital Expenditures

Maintenance capital expenditures include those required to maintain and upgrade existing infrastructure, including the replacement of school buses and vans.

Over the last three years we have deployed replacement fleet and incurred non-vehicle capital expenditures with a gross value of $45.4 million, $28.6 million and $36.6 million for the 2015, 2014 and 2013 fiscal years, respectively, as set forth in the table above. We have utilized operating lease financing for a portion of the replacement fleet. These leases have six year terms with fixed rates of interest and residual values in the 20% to 30% range. Utilizing operating lease financing for a portion of the replacement fleet provides an alternative source of financing at attractive rates for the Company, while also allowing us to maintain borrowing availability under the credit agreement for financing future additional growth opportunities. We intend to review leasing alternatives on an annual basis, based on the economics of the lease financing. While the current lease of vehicles has been an attractive alternative to purchasing due to the low cost of financing, it effectively accelerates expense recognition as lease payments are expensed over the six year lease term to a residual value in the 25% to 30% range, as compared to purchased vehicles, which would be depreciated over a period of nine years to 11 years.

Growth Capital Expenditures

Growth capital expenditures are those related to new bids and/or new revenue routes, the purchase of new equipment and the expansion of existing infrastructure (i.e., expansion of existing building facilities and/or addition of new facilities and other capital improvements). Growth capital expenditures are intended to increase productivity and cash flows, enhance margins and/or increase capacity.

Over the last three years we have purchased fleet and incurred associated non-vehicle capital expenditures related to growth opportunities (excluding acquisitions) of $57.7 million, $61.1 million and $35.5 million for the 2015, 2014 and 2013 fiscal years, respectively. These growth expenditures were financed though borrowings on our credit agreement and through operating lease financing arrangements.

Currency Hedging Policy

The Company managed its exposure to currency fluctuations through foreign currency exchange contracts (“Forward Contracts”) primarily to mitigate the exchange rate risk on the common share dividends. In May 2015, the Company announced that the Board of Directors had approved a change in the currency of the monthly dividend to U.S dollars, effective July 1, 2015. Effective with the announcement, the Company liquidated all of the Forwards Contracts that were outstanding, which had a notional value of $17.5 million. This liquidation resulted in a realized loss of $0.4 million which is recorded in foreign currency (gain) loss in the consolidated statement of operations (see “The Issuer—Dividend Policy” and “The Issuer – Description of Common Shares and Share Capital of the Issuer – The Debentures”).

In June 2015, the Company liquidated the foreign exchange forward contract it had in place to cover the principal amount of the Cdn $6.75% Convertible Debentures that matured on June 30, 2015. This liquidation resulted in a realized gain of $0.1 million which is recorded in foreign currency (gain) loss in the consolidated statement of operations.

The Company uses cash flows from its Canadian operations to partially mitigate the exchange rate risk on the Convertible Debentures interest payments.

The Company prepares its financial statements in U.S. dollars. In connection with the Company’s Canadian operations, approximately 21.7% of the Company’s consolidated income before taxes are incurred in Canadian dollars. The results of the Canadian operations are translated into U.S. dollars for financial statement reporting purposes.

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Changes in the Canadian dollar / U.S. dollar currency exchange rate from period to period will impact the translated U.S. dollar equivalent results of the Canadian operations. The Company recorded a gain of $0.1 million on the translation of its monthly dividends into U.S. dollars (which included the liquidation of the monthly currency contracts used to hedge the dividends). Both of these transactions are recorded in foreign currency gain in the consolidated statements of operations.

The Company was not required to deposit any collateral with regards to the Forward Contracts. We review our hedging policy on an ongoing basis.

Employees

As at June 30, 2015, we had approximately 13,750 employees, most of whom are employed on a part-time basis. Of these employees, approximately 12,500 are drivers and monitors, approximately 1,100 are employed in operations, maintenance and safety training and approximately 150 are employed in administration. Approximately 22% of the workforce is represented by labour unions. Management believes that the workforce is relatively stable and considers our employee relations to be excellent.

Facilities

We operate a total of 145 terminal locations, seventeen of which are owned. The typical school bus terminal consists of parking spaces for buses, additional space for driver parking, several maintenance bays, a small office and dispatch area and a driver training and rest area. The leased properties range in lease length from month-to-month to 10 years and contain various renewal options. We generally tie our lease terms to the length of the primary local revenue contract, with our leases currently set to expire at various times through 2023. Twenty-eight of the terminals are located on school district properties under the terms of our contracts with those customers. In addition, we lease twenty-eight parking-only sites and nine office locations. Rental expenses were $13.8 million for the twelve months ended June 30, 2015.

Environmental

Our facilities and operations are subject to extensive and constantly evolving federal, state, provincial and local environmental and occupational health and safety laws and regulations, including requirements relating to air emissions, storage and handling of chemicals and hazardous substances, vehicle fuelling and maintenance, wastewater and storm water discharge, ownership and operation of Underground Storage Tanks (“USTs”) and cleanup of contaminated soil and groundwater. We have taken into account the requirements of such environmental laws in the improvement, expansion and start-up of our facilities. We typically conduct Phase I environmental assessments of most terminals prior to occupying them, and upon entering into a lease of any terminal, we typically obtain an indemnity from the landlord in regard to any pre-existing environmental liabilities, contamination or compliance obligations that relate to the period prior to our occupancy. USTs are located and operated at fifteen of our properties. Under applicable environmental laws, we could be potentially responsible for cleanup of contamination at owned or leased facilities caused by our operation or, potentially, by the past operations of others. Although we do not expect significant environmental liabilities or compliance or cleanup obligations, there can be no assurance that such liabilities and/or obligations will not increase in the future or have a material adverse effect on operations at such facilities.

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Regulatory Environment

We are subject to a wide variety of federal, state, provincial and municipal laws in the U.S. and Canada concerning vehicle standards, equipment maintenance, the qualification, training and testing of employees and the qualification and maintenance of operating facilities.

In the U.S., our vehicles are subject to federal motor vehicle safety standards established by the National Highway Traffic Safety Administration (“NHTSA”), a division of the U.S. Department of Transportation pursuant to the National Traffic and Motor Vehicle Safety Act (1966). Specific standards are promulgated by the NHTSA with regard to school buses pursuant to the School Bus Safety Amendments passed in 1974. Our vehicles are also subject to the laws and regulations of each state in which we operate, which are often more stringent than applicable federal requirements.

The Commercial Motor Vehicle Safety Act of 1986 requires drivers of commercial vehicles, including school buses, to obtain a Commercial Drivers License. Many states have additional licensing requirements for subclasses of drivers such as school bus drivers. Under regulations enacted at the state and/or local levels, our school bus drivers are required to complete certain minimum basic training and follow-up refresher classes annually. Pursuant to regulations promulgated by the U.S. Department of Transportation under the Drug Free Workplace Act of 1988, U.S. drivers are required to undergo pre-employment drug and alcohol testing and we are required to conduct random testing for drug and/or alcohol abuse. Similar drug and alcohol abuse testing is also required under various state laws. As well, we conduct criminal background checks on all of our drivers. The Surface Transportation Board governs interstate movements of school buses and the Federal Highway Administration regulates the licensing of all school bus carriers conducting interstate commerce. Certain states require contractors to obtain operating permits to carry on intra-state business.

In Canada, our operations in Ontario are subject to provincial motor vehicle safety, licensing and driver operation standards established by the Ontario Ministry of Transportation under the Highway Traffic Act and the Provincial Offences Act. Ontario law also requires bus companies which provide charter trips to obtain a Public Vehicle Operating Licence from the Ontario Highway Transport Board, under the Public Vehicles Act. Our Ontario operations are also subject to workplace safety laws including the Workplace Safety and Insurance Act and the Occupational Health and Safety Act.

Oil and Gas Portfolio

In connection with the acquisition of Canadex on January 18, 2008, the Company acquired an energy portfolio which includes non-operating interests in oil and gas properties which are jointly owned with others. Earnings of the acquired energy portfolio are included in the Company’s results of operations from the acquisition date. The Company uses the full-cost method of accounting to determine the capitalized cost, whereby all direct expenditures related to the acquisition, exploration and development of oil and gas properties are capitalized. Capitalized costs include the cost of land acquired or leased, intangible drilling costs such as those for equipment, casing and attachments and completion costs as well as re-completion costs on both productive and non-productive wells. These costs, net of salvage values, are accumulated in a single cost center and are depleted and amortized using the units-of production method. Natural gas reserves and production are converted, at a ratio of six thousand cubic feet of natural gas to one barrel of oil, for depletion and depreciation purposes. The Company has not capitalized any of its own administrative or interest costs and accounts for these costs as expenses during the year. The oil and gas portfolio is a non-core operation that represents approximately 0.5% of the Company’s overall revenues. While the oil and gas portfolio represents only 0.5% of the Company’s overall revenues, the cash generated by the oil and gas portfolio provides the Company with an economic hedge against market price exposure of fuel used in the school bus transportation operations.

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THE ISSUER

Description of Common Shares and Share Capital of the Issuer

Share Capital of STI

The authorized share capital of STI consists of an unlimited number of common and preferred shares. As at June 30, 2015, no preferred shares and 96,141,516 Common Shares were issued and outstanding. See “The Issuer – Description of Common Shares”.

Holders of Common Shares of STI are entitled to receive dividends as and when declared by the board of directors and are entitled to one vote per Common Share on all matters to be voted on at all meetings of shareholders. Upon the voluntary or involuntary liquidation, dissolution or winding-up of STI, the holders of Common Shares are entitled to share rateably in the remaining assets available for distribution, after payment of liabilities. The Common Shares are not redeemable or convertible.

The Debentures

On June 7, 2011, pursuant to a bought deal, the Issuer issued $60 million principal amount of 6.25% US convertible subordinated unsecured debentures due June 30, 2018. The 6.25% US Debentures pay interest semi-annually in arrears on June 30 and December 31 of each year commencing on December 31, 2011. Each $1,000 principal amount of 6.25% US Debentures was convertible into Common Shares at the option of the holder into 105.2632 Common Shares, representing a conversion price of $9.50. The 6.25% US Debentures were not redeemable prior to July 1, 2015. On and after July 1, 2015, but prior to June 30, 2016, the 6.25% US Debentures will be redeemable, in whole or in part, from time to time, at the option of the Issuer on not more than 60 days’ and not less than 30 days’ prior notice, at a price equal to the principal amount thereof plus accrued and unpaid interest up to but excluding the redemption date, provided that the weighted average trading price of the Common Shares on the TSX for the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is not less than 125% of the conversion price. On or after June 30, 2016, and prior to maturity, the Issuer may redeem the 6.25% US Debentures, in whole at any time or in part from time to time, on not more than 60 days and not less than 30 days prior, at a redemption price equal to the principal amount of the 6.25% US Debentures to be redeemed, plus accrued and unpaid interest thereon, if any, up to but excluding the Redemption Date. The terms of the 6.25% US Debentures are set forth in a trust indenture dated as of June 7, 2011. The net proceeds of approximately $57 million (after commissions and fees) were used to repay indebtedness under the Issuer’s credit facilities and for general corporate purposes. For a complete description of the terms of the 6.25% US Debentures, see the trust indenture dated June 7, 2011, between the Issuer and Computershare Trust Company of Canada, a copy of which can be obtained at www.sedar.com or www.sec.gov.

On November 12, 2013, pursuant to a bought deal, the Issuer issued Cdn $75 million principal amount of 6.25% convertible unsecured subordinated debentures due June 30, 2019. The 6.25% Canadian Debentures pay interest semi-annually in arrears on June 30 and December 31 of each year commencing on June 30, 2014. Each Cdn $1,000 principal amount of 6.25% Canadian Debentures is convertible into Common Shares at the option of the holder of the 6.25% Canadian Debentures into 110.4972 Common Shares, representing a conversion price of Cdn $9.05. The 6.25% Canadian Debentures will not be redeemable on or before June 30, 2017. On and after June 30, 2017, but prior to June 30, 2018, the 6.25% Canadian Debentures will be redeemable, in whole or in part, from time to time, at the option of the Issuer on not more than 60 days’ and not less than 30 days’ prior notice, at a price equal to the principal amount thereof plus accrued and unpaid interest up to, but excluding the redemption date, provided that (i) the weighted average trading price of the Common Shares on the TSX for the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is not less than

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125% of the conversion price. On and after June 30, 2018 but prior to June 30, 2019, the 6.25% Canadian Debentures will be redeemable, in whole or in part, from time to time, at the option of the Issuer on not more than 60 days’ and not less than 30 days’ prior notice, at a price equal to the principal amount thereof plus accrued and unpaid interest up to but excluding the redemption date. The terms of the 6.25% Canadian Debentures are set forth in a trust indenture dated as of November 12, 2013. The net proceeds of Cdn $72 million (after commissions and fees) were used to repay indebtedness under the Issuer’s credit facilities and for general corporate purposes. For a complete description of the terms of the 6.25% Canadian Debentures, see the trust indenture dated November 12, 2013 between the Issuer and Computershare Trust Company of Canada, a copy of which can be obtained at www.sedar.com.

The 6.25% US Debentures and the 6.25% Canadian Debentures are collectively referred to herein as the “Debentures”.

The Issuer may elect, subject to applicable regulatory approval, to issue and deliver Common Shares of the Issuer to the indenture trustee under the applicable indenture governing the 6.25% US Debentures and the 6.25% Canadian Debentures, to sell in the open market, to satisfy the Issuer’s obligation to pay interest on the 6.25% US Debentures and the 6.25% Canadian Debentures on each interest payment date. The holders of the 6.25% US Debentures and the 6.25% Canadian Debentures will receive a cash payment in satisfaction of the interest obligation equal to the interest payable from the sale of such Common Shares.

The Issuer must commence, within 30 days of a Change of Control (as defined in the applicable indentures governing the Debentures), an offer to purchase all of the Debentures then outstanding at a purchase price equal to 101% of the principal amount of the Debentures, plus accrued and unpaid interest thereon.

Dividend Policy

STI will pay dividends on the Common Shares (if declared) on the 15th day of each month (or the next business day, if such day is not a business day) to holders of record at the close of business on the last business day of the preceding month. Dividends are paid to the extent declared in advance by STI’s board of directors and permitted by applicable law. The board of directors currently approves, and the Company announces, dividends on a quarterly basis. STI has currently adopted a dividend policy that contemplates an annual dividend of approximately US $0.44 per Common Share. On May 8, 2015, the board of directors approved a change in the currency of the monthly dividend to U.S. dollars, effective July 1, 2015, with the first US dollar dividend payable August 17, 2015 (the “July 2015 Dividend”) to holders of record on July 31, 2015. Prior to the July 2015 Dividend, the historical annual dividend under the dividend policy was approximately Cdn. $0.55642 per Common Share.

STI will generally declare dividends of its available cash after satisfying its debt service obligations under any credit facilities or other agreements with third parties, if any, satisfying its other expense obligations, including withholding and other applicable taxes, and retaining reasonable reserves as may be considered appropriate by its board of directors.

The board of directors of STI may, in its discretion, modify or repeal STI’s current dividend policy. No assurances can be made that STI will pay dividends at the level contemplated in the future or at all.

Dividends paid to the Holders of Common Shares

Dividends on the Common Shares are paid on the 15th of each month (or the next business day, if such day was not a business day) to holders of record at the close of business on the last business day of the preceding month. On May 15, 2013, STI celebrated the payment of its 100^th consecutive dividend.

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Monthly dividends for the three most recently completed fiscal years, rounded to five decimal places, were as follows:

	Dividend Per Common Share (Cdn. $)
Fiscal 2015
July 2014		0.04637
August 2014		0.04637
September 2014		0.04637
October 2014		0.04637
November 2014		0.04637
December 2014		0.04637
January 2015		0.04637
February 2015		0.04637
March 2015		0.04637
April 2015		0.04637
May 2015		0.04637
June 2015		0.04637
Total Fiscal 2015 Dividends		0.55644
Fiscal 2014
July 2013		0.04637
August 2013		0.04637
September 2013		0.04637
October 2013		0.04637
November 2013		0.04637
December 2013		0.04637
January 2014		0.04637
February 2014		0.04637
March 2014		0.04637
April 2014		0.04637
May 2014		0.04637
June 2014		0.04637
Total Fiscal 2014 Dividends		0.55644
Fiscal 2013
July 2012		0.04637
August 2012		0.04637
September 2012		0.04637
October 2012		0.04637
November 2012		0.04637
December 2012		0.04637
January 2013		0.04637
February 2013		0.04637
March 2013		0.04637
April 2013		0.04637
May 2013		0.04637
June 2013		0.04637
Total Fiscal 2013 Dividends		0.55644

On May 11, 2015, the Company announced that, effective July 1, 2015, all dividends will be paid in U.S. dollars.

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Dividend Reinvestment Plan

The Issuer established a dividend reinvestment plan (the “Plan”) in May 2009 to enable eligible shareholders of the Issuer to reinvest dividends on their Common Shares to acquire additional Common Shares of the Issuer. The Common Shares issued under the Plan are issued directly from the treasury of STI at a price based on the volume weighted average of the closing price of the Common Shares for the five trading days immediately preceding the relevant dividend date, less a 3% discount. Pursuant to the Plan, the Issuer issued 1,485,040 Common Shares during the fiscal year ended June 30, 2015, which have an approximate value of $8.5 million.

Cash Available for Distribution

The Company distributes a significant portion of its free cash flows from operations to holders of its common shares. The Company believes that cash available for distribution provides one useful measure for evaluation of the Company’s performance as it outlines the net cash flow generated by the Company which is available for distribution in the period and sustainable for the next periods.

Cash available for distribution is a non-US GAAP measure and is not intended to be representative of cash flow or results of operations determined in accordance with US 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.

Cash available for distribution has been prepared by management using reasonable and supportable assumptions, all of which reflect the Company’s planned courses of action given management’s judgment about the most probable set of economic conditions. However, actual results may differ, perhaps materially from the assumptions made, and readers are cautioned not to place undue reliance on the calculations. The major differences between cash available for distribution and cash provided by operating activities as reported in the Company’s financial statements are: (a) changes in non-cash working capital items, (b) changes in other assets and liabilities, (c) cash interest expense, (d) net maintenance capital expenditures purchased, (e) dividends on Class B common shares, (f) net realized foreign currency gains or losses, and (g) cash taxes. Maintenance capital expenditures purchased primarily represent the amounts spent on replacement vehicles by the Company to maintain the current revenue contract base in place.

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	FY15			FY14
	Actual			Actual
Adjusted EBITDA *	$	102,022		$	89,372
Less:
Total cash interest expense		(15,390	)		(14,998	)
Operating lease expense payments		(29,559	)		(19,888	)
Class B dividend payments		(899	)		(816	)
Class B share repurchases		(2,013	)		(1,267	)
Common Share repurchases		(848	)		—
Foreign currency loss (gain)		136			(424	)
Repayment of seller debt		(200	)		—
Cash taxes paid, net		(281	)		(1,051	)
Replacement capital spending, net		(4,630	)		(3,481	)
Oil and gas investments in wells		(1,003	)		(1,522	)
Cash Available for Distributions	$	47,335		$	45,925
Total Cash Dividends on Common Shares	$	33,657		$	34,147
Payout Ratio - Cash Dividends divided by Cash Available		71.1	%		74.4	%

* Adjusted EBITDA is a non-US GAAP financial measure, but management believes it is also a useful in measuring the Company’s performance. Investors 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 US 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-US GAAP measures may differ from the methods used by other issuers and accordingly, the Company’s non-US GAAP measures may not be comparable to similarly titled measures used by other issuers. The Company provides a reconciliation of net income to Adjusted EBITDA in its 2015 fiscal year results of operations press release.

STA HOLDINGS

Capital of STA Holdings

Authorized Capital

The authorized capital of STA Holdings consists of 1,200,000 Class A Shares, 873,000 Class B-1 Shares, 718,345 Class B-2 Shares, 3,710,693 Class B-3 Shares, 2,000,000 Class C common shares and 250,000 Preferred Shares.

Consolidation

During 2008, the aggregate number of issued Class A Shares and Preferred Shares had increased over time to an amount approaching 50,000,000 shares. Management and the board of STA Holdings determined that the number of shares should be reduced for administrative reasons. Accordingly, on

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November 21, 2008 the board of STA Holdings approved an amendment to STA Holdings’ Charter to consolidate both the Class A Shares and the Preferred Shares on a 1 for 100 basis (the “Consolidation”), resulting in the issuance of one post-Consolidation share for every 100 pre-Consolidation shares outstanding.

Prior to the Consolidation, the Class A Shares effectively “mirrored” the Issuer’s publicly traded common shares, such that on any given dividend payment date the dividend paid on a common share of the Issuer was the same as the dividend paid on a Class A Share. In connection with the Consolidation, and in order to preserve the continuity of the relative rights among classes of shares, STA Holdings’ Charter was amended to provide that the liquidation value of a Preferred Share is Cdn. $384.70 (100 times the initial liquidation value of such shares). The amended Charter further provides that, with respect to (a) the computation of dividends, (b) the exercise of voting rights and (c) the computation of liquidation rights, each Class A Share is deemed to be equal to 100 shares of all other classes of common stock of STA Holdings.

For the purposes of effectively comparing the Class A Shares and the Preferred Shares with the rest of the capital stock of STA Holdings, the discussion in this section titled “STA Holdings” disregards the Consolidation (and should be read as though the authorized number of Class A and Preferred Shares were actually 120,000,000 and 25,000,000, respectively).

Issued Capital

As at June 30, 2015, the issued capital of STA Holdings consists of only two share classes; STI owns 107,591,897 Class A Shares (representing a 98.5% interest in STA Holdings), and current or former management of STA Holdings own 1,591,211 issued and outstanding Class B-3 Shares (representing a 1.5% interest in STA Holdings). No Class B-1, Class B-2, Class C common shares or Preferred Shares are issued and outstanding.

Class A Shares

The following section should be read in conjunction with, and is qualified by, the discussion under “Capital of STA Holdings – Consolidation”.

Each Class A Share carries one vote on all matters to be voted on at all meetings of shareholders. Holders of Class A Shares are entitled to receive dividends, as and when declared by the board of directors. In the event of the liquidation, dissolution or winding-up of STA Holdings or other distribution of assets of STA Holdings among shareholders for the purpose of winding-up its affairs, the holders of Class A Shares shall be entitled to share rateably with the holders of Class B Shares and Class C Shares in the remaining assets available for distribution, after payment of liabilities, including the portion of the amounts owing on the Class B-1 Shares, Class B-2 Shares and the Class C Shares that are preferential to payments on the Class A Shares, as described below.

Class B Shares and Class C Shares

The following section should be read in conjunction with, and is qualified by, the discussion under “Capital of STA Holdings – Consolidation”.

The holders of Class B-1 Shares, Class B-2 Shares and Class C Shares were entitled to one vote per share on all matters to be voted on at all meetings of shareholders. As of June 30, 2014 (and subsequently thereafter) there were no Class B-1 Shares or Class C Shares outstanding. In May 2015, the Company exchanged all of the remaining Class B-2 Shares for Class B-3 Shares, based on the fair market value of each class of shares. This non-cash exchange resulted in approximately 1.57 Class B-3 Shares being

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issued for each Class B-2 Shares outstanding. As of June 30, 2015 (and subsequently thereafter), there were no Class B-2 Shares outstanding. The holders of the Class B-1 Shares, Class B-2 Shares and the Class C Shares are entitled to receive, as and when declared by the board of directors of STA Holdings, fixed cumulative preferential cash dividends at a rate of 14% of the Liquidation Amount thereof (as defined below) or approximately Cdn. $0.5386 per share, per annum, to be paid after the distributions in respect of the Preferred Shares described below and before any dividend on the Class A Shares and the Class B-3 Shares. Dividends on the Class B-2 Shares and the Class C Shares are paid on a monthly basis in U.S. dollars on the 15th day of the following month (or the next business day if such day is not a business day). Any dividends paid by STA Holdings in excess of the dividends at a rate of 14% or approximately Cdn. $0.5386 per share shall for periods ending after December 21, 2006, be paid to the holders of Class B-1 Shares and Class C Shares (subject to the subordination provisions described below) in an amount per share equal to 1.1 times the dividend per share to which the holders of the Class A Shares and the Class B-2 Shares are entitled (such enhanced dividend entitlement of holders of the Class B-1 Shares and Class C Shares over the dividend entitlement of the Class A Shares and Class B-2 Shares is referred to as the “Enhanced Dividend”). The Enhanced Dividend will be non-cumulative and may only be paid to holders of the Class B-1 Shares and Class C Shares in respect of any month if STA Holdings has declared and paid dividends on the Class A Shares and Class B-2 Shares at no less than the monthly amount of Cdn. $0.04637 per share for such month (not taking into account any dividend to the holders of Class A Shares in respect of the expenses of STI).

The holders of Class B-3 Shares are entitled to one vote per share on all matters to be voted on at all meetings of shareholders. The holders of the Class B-3 Shares are entitled to receive, as and when declared by the board of directors of STA Holdings, dividends approximately equivalent to the dividends per share to which holders of the Class A Shares are entitled. Dividends on the Class B-3 Shares are paid on a monthly basis in U.S. dollars on the 15^th day of the following month (or next business day if such day is not a business day).

Pursuant to the share award agreements for the Class B-3 Shares awarded under the EIP plan, the Class B-3 Shares have “tag along” rights and long term liquidity rights accorded to holders thereof. Pursuant to the “tag along” rights, if the Issuer obtains a bona fide offer to purchase, directly or indirectly, from a third party a sufficient number of securities of the Issuer, whereby the third party would acquire the power to elect a majority of the Board of Directors of STA Holdings or the Issuer pursuant to an agreement entered into with the Issuer or in respect of which the Issuer proposes to enter into a support agreement with such person (such offer being a “Third Party Offer”), and the Issuer is willing and able to accept the Third Party Offer, then it shall be a condition of any such agreement or support agreement that the Issuer obtain an equivalent offer for all Class B-3 Shares of STA Holdings. Pursuant to the long term liquidity rights, the holders of the Class B-3 Shares have the option to “put” a percentage of their shares back to STA Holdings at fair value annually after the conclusion of a hold period for such shares as determined by the Board of Directors. Pursuant to these “put” rights, a total 322,019 Class B-3 Shares were “put” back to STA Holdings during the fiscal year ended June 30, 2015. The Class B-2 Shares had similar tag along rights, long term liquidity rights and “put” rights. Pursuant to those “put” rights, a total 10,777 Class B-2 Shares were “put” back to STA Holdings during the fiscal year ended June 30, 2015. In addition, 50,689 Class B-2 Shares were exchanged for 80,009 Class B-3 Shares in May 2015 as discussed above, resulting in no Class B-2 Shares being outstanding as at June 30, 2015.

No Class B-1 Shares, Class B-2 Shares or Class C Shares are issued and outstanding. On December 22, 2006, the Company repurchased for cancellation all of the Class B-1 Shares of STA Holdings. In May 2015, the Company exchanged all of the remaining Class B-2 Shares for Class B-3 Shares, based on the fair market value of each class of shares as discussed above.

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Preferred Shares

The following section should be read in conjunction with, and is qualified by, the discussion under “Capital of STA Holdings – Consolidation”.

As of December 21, 2009, all Preferred Shares of STA Holdings, which were 100% owned by STA ULC, were redeemed as part of STA ULC redeeming for cash all of the outstanding Notes originally issued as a component of the IPSs, as the final step in the process of converting from the IPS structure to a traditional common share structure. Thus there are no Preferred Shares issued or outstanding. The Preferred Shares consist of 25,000,000 authorized shares designated as Preferred Shares. The holders of the Preferred Shares would be entitled to receive, as and when declared by the board of directors of STA Holdings, out of the assets of STA Holdings, fixed cumulative preferential cash dividends at the rate of 14.01% or approximately Cdn. $0.5390 per share, per annum in addition to any dividends in excess of such preferential dividend declared by the board of directors of STA Holdings from time to time in its sole discretion. Dividends are paid on an annual basis in Canadian dollars at the end of each year, but accrue on a daily basis.

Except as otherwise required by law, the holders of Preferred Shares do not have any voting rights. Holders of Preferred Shares may cause STA Holdings to redeem, or STA Holdings may redeem, in either case at any time, all or any of the outstanding Preferred Shares for an amount equal to Cdn. $3.847. The figures in this paragraph disregard the Consolidation discussed above.

Distribution Policy

The board of directors of STA Holdings has adopted a policy to distribute a majority of its available cash, subject to applicable law and the terms of the Third Amended and Restated Credit Agreement, the Note Purchase Agreement and any other then outstanding indebtedness by way of monthly dividends and/or loans on any of its common shares, Preferred Shares or other distributions on its securities, after:

• satisfaction of its debt service or other obligations, if any, under credit facilities or other agreements with third parties;

• satisfaction of its interest and other expense obligations, including any applicable taxes;

• making any redemptions in respect of any Preferred Shares; and

• retaining reasonable working capital or other reserves as may be considered appropriate by the board of directors of STA Holdings.

Distributions in respect of and dividends on the common shares and Preferred Shares of STA Holdings will be paid on the 15th day of each month (or the next business day if such day is not a business day).

Dividend payments are not mandatory or guaranteed. The board of directors of the Company may, in its discretion, amend or repeal its dividend policies in respect of its common shares. The Company’s board of directors may decrease the level of dividends provided for in each dividend policy in respect of its common shares or discontinue entirely the payment of dividends in respect of its common shares.

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DIRECTORS, OFFICERS AND MANAGEMENT

STI

Directors of STI

STI’s articles of incorporation provide for a minimum of 3 and a maximum of 20 directors, a majority of whom must be Canadian residents. The STI board consists of nine directors, five of whom are Canadian residents. The directors of STI are Irving Gerstein, George Rossi, David Scopelliti, Victor Wells, Ken Needler, Grace Palombo, Wendi Sturgis, Barbara Basney and Denis Gallagher. Irving Gerstein, George Rossi, David Scopelliti, Ken Needler, Grace Palombo, Wendi Sturgis, Barbara Basney and Victor Wells are, for regulatory purposes, independent from STI. Denis Gallagher, the chief executive officer of STI and the Company, serves as the chairman of the STI board and Irving Gerstein serves as its independent lead director, in which capacity he is responsible for reviewing and commenting on the agenda for directors’ meetings, acting as a liaison between the independent directors and management, leading independent sessions of the independent directors and chairing STI’s annual meeting.

The term of office for each of the directors expires at the time of the next annual meeting of shareholders of STI. Directors will be elected at each annual meeting of shareholders of STI. A director may be removed by a resolution passed by a majority of the shareholders or may resign. The vacancy created by the removal of a director must be filled at the shareholder meeting at which he or she was removed. A vacancy not so filled at a shareholder meeting, or created by the resignation of a director, may be filled by a quorum of the remaining directors. A quorum for meetings of directors is a majority of the directors, provided that a majority of directors present (or one director, where a quorum is two directors) must be residents of Canada. If there is no quorum of directors, a special shareholder meeting must be called to fill vacancies.

The directors are required to supervise the activities and manage the affairs of STI, including acting for, voting on behalf of and representing STI as a holder of common shares in the Company.

Committees of the Board of Directors

Audit Committee

STI has an audit committee that is comprised of George Rossi (Chair), Victor Wells, Irving Gerstein and David Scopelliti, all of whom are, for regulatory purposes, independent directors. The audit committee is responsible for the oversight and supervision of the accounting and financial reporting practices and procedures of STI, the adequacy of internal accounting controls and procedures, and the quality and integrity of financial statements of STI. The independent auditors of STI report directly to the audit committee. In addition, the audit committee is responsible for directing the auditors’ examination of specific areas and for recommending to the board of directors the selection of independent auditors of STI.

Compensation, Nominating and Governance Committee

The compensation, nominating and governance committee (the “CNG Committee”) of STI, which currently consists of Irving Gerstein (Chair), Kenneth Needler, Grace Palombo and David Scopelliti (all of whom are independent directors), is required to consist of not fewer than three directors, a majority of whom are independent from STI and the Company. The CNG Committee is charged with responsibility for: (i) establishing procedures for the identification of the nominees to the board of directors, (ii)

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recommending to the board of directors of STI and the Company nominees to the board for the next annual meeting of shareholders and nominees for each committee of the board, (iii) assessing directors on an ongoing basis, (iv) assessing the effectiveness of the board of directors of STI and the Company as a whole, the committees of the board of directors of STI and the Company and the contribution of each individual director, (v) developing and implementing orientation procedures for new directors, (vi) advising on, and oversight of, the Company’s compensation programs generally, including the provision of pension benefits; and (vii) developing and monitoring the approach of STI and the Company to governance issues applicable to STI and the Company and the operations and people within its wholly-owned corporate group.

Compensation Committee of STA Holdings

STA Holdings has a Compensation Committee, formed in 2007 upon approval of the board of the Issuer. The committee consists of two of the three directors of STA Holdings: Mr. Scopelliti (Chair) and Ms. Palombo, each of whom is also a member of the CNG Committee. The Compensation Committee reports to, and takes direction from, the CNG Committee and the entire board of the Issuer as to its activities.

Innovation and Technology Committee Description

The Innovation and Technology Committee (the “ITC”) was formed on May 6, 2014. The purpose of the ITC is to provide understanding, clarification and validation to the board on the fundamental technological and strategic direction of new ventures and major investment projects within the Company in order to enhance shareholder value. Innovation and technology are key contributors to the Company’s long-term competitiveness and profitability. The committee currently consists of Ms. Sturgis (Chair) and Ms. Basney.

Disclosure

The board of directors is responsible for adopting and, upon the advice of the Chief Executive Officer and Chief Financial Officer of STI, periodically reviewing and updating the written disclosure policy for STI and its subsidiaries. This policy, among other things:

• articulates the legal obligations of STI, its affiliates and their respective directors, officers and employees with respect to confidential information;

• identifies spokespersons of STI, who are the only persons authorized to communicate with third parties such as analysts, media and investors;

• provides guidelines on the disclosure of forward looking information;

• requires advance review by senior executives of any selective disclosure of financial information to ensure that the information is not material, to prevent the selective disclosure of material information, and to ensure that if selective disclosure does occur, a news release is issued immediately; and

• establishes “black-out” periods immediately prior to and following the disclosure of quarterly and annual financial results and immediately prior to the disclosure of certain material changes, during which periods the Issuer, its subsidiaries and its directors, managers, officers, employees and consultants may not purchase or sell Common Shares, Debentures or other securities of STI or its subsidiaries (including securities exchangeable for or convertible into Common Shares or Debentures).

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Remuneration of the Directors

During the 2015 fiscal year, compensation for non-management directors of the Issuer and STA Holdings was as follows: $40,000 per year and $1,500 per meeting for attending board or committee meetings in person. Directors received $750 for attending meetings by phone. The lead director received additional remuneration of $15,000 per year as compensation for his duties as lead director and for chairing a committee, the Audit Committee chair received additional remuneration of $10,000 per year and the Compensation Committee chair received additional remuneration of $5,000 per year. The Innovation and Technology Committee chair received additional remuneration of $5,000 per year. Additional compensation of $10,000 per annum was paid to each director, in the form of four quarterly contributions of $2,500 each, to the individual DSU Plan (as defined below) accounts of each director.

Effective July 1, 2015 (the start of the 2016 fiscal year), compensation for non-management directors of the Issuer and STA Holdings was amended to reflect an annual retainer of $80,000, of which not more than 50% will be paid in cash. The non-management directors have the ability to elect to receive 100% of the annual retainer in DSU grants (as defined below), however they must elect at least 50% in DSUs (as defined below). The annual retainer of $80,000 will be inclusive of attendance fees for up to six combined board / committee sessions attended in person per year, and up to six individual committee meetings attended by phone each year. Meetings held in excess of these levels will be compensated in cash as per the previous structure. The chair fees will continue to be paid in cash at the same levels as per the previous structure, unless directed otherwise by a director prior to any new fiscal year. Such chair fees will continue to reflect $15,000 per year for the lead director as compensation for his duties as lead director and for chairing a committee, $10,000 per year for the Audit Committee chair, $5,000 per year for the Compensation Committee chair and $5,000 per year for the Innovation and Technology Committee chair.

Directors are also reimbursed for out-of-pocket expenses for attending board and committee meetings. Directors may elect to receive some or all of their fees pursuant the DSU Plan, as described below. The directors also participate in the insurance arrangements described below under “Insurance Coverage for STI and Related Entities and Indemnification”.

The Board of Directors has adopted a mandatory Director Share Ownership Policy in order to further align the interests of the Issuer’s independent Directors with the long-term interests of the Shareholders. The Policy, provides that all independent directors are required to acquire (and thereafter maintain ownership of) common share equity, which will include Notional Shares (as defined below) under the Issuer’s DSU Plan, with a fair market value equal to a minimum of US$150,000 within a period of three (3) years from the date of adoption of the policy or, in the case of new directors appointed later, three (3) years from the date of their respective appointments. For purposes of the policy, share ownership includes any shares owned, directly or indirectly, by a director or his or her immediate family members or held by such person or his or her immediate family members as part of a tax or estate plan, and DSUs issued under the DSU Plan. For purposes of determining compliance with the policy, the value of a share means an assumed per share value based on the average of the closing price of a Common Share on the last trading day of each of the previous four fiscal quarters, adjusted to USD currency if necessary to match the US$150,000 requirement. The above policy was adopted in June 2015, and is applicable for the 2016 and 2017 fiscal years, subject to review in June of 2017.

In fiscal 2007, the board of directors of the Issuer established a Deferred Share Unit Plan (“DSU”) for the non-management directors of the Issuer. Under the plan, a director is entitled to participate in the plan to the extent of fees earned during the year. For fees elected by directors to be deferred under the plan, an

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amount shall be credited under the plan in the form of notional shares representing the estimated fair value, as determined by the Issuer, of the common shares of the Issuer (the “Notional Shares”) allocated to the participant’s DSU account. If the director continues to serve, dividends will accrue on the Notional Shares consistent with amounts declared by the board on the common shares of the Issuer and be credited to the participant’s DSU account. Amounts deferred under the DSU and accrued dividends earned thereon are immediately vested, and can be redeemed only when a director no longer serves on the board of directors of the Issuer or upon a change in control (as defined in the DSU Plan).

Two of the Issuer’s independent directors, Messrs. Scopelliti and Wells, initially elected to receive all or a portion of their retainer fee and meeting fees in Notional Shares, such that their fees payable in cash are reduced to the extent of their DSU participation. These two directors continue their participation in the DSU such that their fees are reduced to the extent of their DSU participation. As of June 30, 2015, Messrs. Scopelliti and Wells had been issued 41,205 and 29,237 Notional Shares, respectively, in lieu of the aggregate amount of $289,465 of cumulative Board fees (which includes the annual $10,000 contribution in Notional Shares as described below) payable to them to date and accrued dividends on the Notional Shares credited to the participant’s DSU account.

In addition, in the 2015 fiscal year, 2014 fiscal year and 2013 fiscal year, each of the Issuer’s independent directors received from the Issuer a contribution of $10,000 in Notional Shares in their individual DSU Plan accounts, in the form of four quarterly contributions of $2,500 each. Amounts contributed to the DSU accounts, and accrued dividends earned thereon, are immediately vested and can be redeemed only once a director ceases serving on the board or upon a change in control (as defined in the DSU Plan).

Executive Management

STI has three officers. Mr. Denis Gallagher is the Chairman and Chief Executive Officer, Mr. Patrick Walker is Executive Vice President and Chief Financial Officer and Mr. Patrick Vaughan is Chief Operating Officer. Primary responsibility for managerial and executive oversight of the business of STI’s subsidiaries is delegated to and discharged by the Company.

The following table sets out the name, jurisdiction of residence, month appointed and principal occupation of the directors of STI. The table also sets out the name, jurisdiction of residence, and position(s) with the Company, of the executive officers of the Company:

Name and Municipality of Residence	Position(s)	Director Since	Principal Occupation if not with the Company
IRVING GERSTEIN(1)(2) Ontario, Canada	Lead Director	October 2004	Member, Senate of Canada
GEORGE ROSSI(2) Quebec, Canada	Director	October 2004	Corporate Director
DAVID SCOPELLITI(1)(2)(3) Connecticut, U.S.A.	Director	October 2004	Senior Vice President of both Alcentra, a wholly-owned subsidiary of The Bank of New York Mellon Corporation and Alcentra Capital Corporation
VICTOR WELLS(2) Ontario, Canada	Director	September 2006	Corporate Director
KENNETH B. NEEDLER(1) Ontario, Canada	Director	September 2004	Corporate Director

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Name and Municipality of Residence	Position(s)	Director Since	Principal Occupation if not with the Company
GRACE M. PALOMBO(1)(3) Ontario, Canada	Director	February 2010	Executive Vice President and Chief Human Resources Officer of Great West Lifeco Inc.
WENDI STURGIS(4) New York, U.S.A	Director	December 2013	Executive Vice President of Enterprise Sales and Services, Yext, Inc.
BARBARA BASNEY(4) Connecticut, U.S.A	Director	November 2014	Vice President of Global Advertising and Media, Xerox Corp.
DENIS J. GALLAGHER New Jersey, U.S.A.	Director, Chairman and Chief Executive Officer	September 2004	—
PATRICK J. WALKER New Jersey, U.S.A.	Executive Vice President and Chief Financial Officer	—	—
PATRICK VAUGHAN Massachusetts, U.S.A.	Chief Operating Officer	—	—
JOHN DIMAIOLO New Jersey, U.S.A.	Chief Accounting Officer	—	—
PAULA ALTIERI New Jersey, U.S.A.	Vice President of Corporate Finance	—	—

(1) Member of compensation, nominating and governance committee of STI.

(2) Member of audit committee of each of STI and STA Holdings.

(3) Member of the compensation committee of STA Holdings.

(4) Member of the innovation and technology committee of STI.

As of September 18, 2015, the directors and executive officers as a group beneficially own, directly or indirectly, 900,099 Common Shares, being approximately 0.9% of the issued and outstanding Common Shares of STI and 748,741 Class B Shares, being approximately 45% of the issued and outstanding Class B Shares of STA Holdings.

Directors’ Equity Ownership Policy

The Board of Directors has adopted a mandatory Director Share Ownership Policy in order to further align the interests of the Issuer’s independent Directors with the long-term interests of the Shareholders. The policy provides that all independent directors are required to acquire (and thereafter maintain ownership of) common share equity, which will include Notional Shares (as defined above under “Remuneration of the Directors”) under the Issuer’s DSU Plan, with a fair market value equal to a minimum of US$150,000 within a period of three (3) years from the date of adoption of the policy or, in the case of new directors appointed later, three (3) years from the date of their respective appointments.

Biographies

Irving Gerstein, C.M., O.Ont: The Honourable Irving R. Gerstein has been a director of the Company since 2004. Senator Gerstein is a Member of the Order of Canada, a Member of the Order of Ontario and was appointed to the Senate of Canada in December 2008. He is a retired executive and is currently a director of Medical Facilities Corporation and Atlantic Power Corporation and previously served as a director of other public issuers, including Economic Investment Trust Limited, CTV Inc., Traders Group Limited, Guaranty Trust Company of Canada, Confederation Life Insurance Company and Scott’s

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Hospitality Inc., and as an officer and director of Peoples Jewellers Limited. Senator Gerstein is an honorary director of Mount Sinai Hospital (Toronto), having previously served as Chairman of the Board, Chairman Emeritus and a director over a period of twenty-five years, and is currently a member of its Research Committee. Senator Gerstein received his BSc. in Economics from the University of Pennsylvania (Wharton School of Finance and Commerce).

George Rossi is a consultant and corporate director. Mr. Rossi serves on the boards of several public and private entities including Zone Finance, a mortgage provider in Quebec and Technosport Inc., a Canadian clothing distributor. He also serves on the investment valuation committee of Investissements Desjardins. As the Senior Vice-President and Chief Financial Officer of Cinar Corporation from November 2000 to 2002 and as Interim President from 2002 to 2003, Mr. Rossi successfully led the turnaround and financial restructuring of the company. Between 1983 and 2000, Mr. Rossi was Vice-President and Chief Financial Officer of Radiomutuel Inc., a publicly traded media company. Before 1983 Mr. Rossi was an audit manager with Ernst & Young. A commerce graduate of Concordia University, Mr. Rossi is a chartered accountant.

David Scopelliti is a Senior Vice President of both Alcentra, a wholly-owned subsidiary of The Bank of New York Mellon Corporation and Alcentra Capital Corporation (NASDAQ: “ABDC”) and was a Principal of GarMark Partners, a private debt and equity firm in Stamford, Connecticut. David is also a Director of Athena Wellness Brands LLC.. Mr. Scopelliti has over 25 years of experience as a principal investor in the private equity and debt markets. Prior to joining GarMark, he was a Managing Director at PCG Asset Management, advising pension fund clients on alternative investments. Prior to that he was Head of Private Equity for the State of Connecticut Pension Plan and Vice Chairman of the Institutional Limited Partners Association (ILPA). Prior to that, he was the Managing Director with CIBC World Markets in New York, focusing on mezzanine and private equity transactions. Previous to that, Mr. Scopelliti was the head of ING’s New York Merchant Banking Group, focusing on mezzanine and private equity capital in support of buyouts and growth financing. Mr. Scopelliti also served Heller Financial as a Portfolio Manager for the Leveraged Finance Group. Mr. Scopelliti holds a Bachelors of Business Administration in Finance from Pace University in New York and has previously held NASD Series 7, 63 & 24 securities licences.

Victor Wells is a director and chair of the Audit Committee of Contagious Gaming Inc. and Pasinex Resources Limited. He was formerly a director and chair of the audit committee of Unique Broadband Systems Inc. (2012 – 2015), GT Canada Medical Properties Inc. (2010-2012), MagIndustries Inc. (2006 – 2011) and Northstar Healthcare Inc. (2007 – 2010). He was also formerly a director of and member of the Audit Committee of TriNorth Capital Inc., a TSX-V listed company, from 2009 to 2010, and a Trustee of Canada Cartage Diversified Income Fund and chaired its Audit Committee. Mr. Wells was Vice President, Finance and CFO of Chemtrade Logistics Income Fund from its initial public offering in July 2001 until 2006. From 1998 to 2001 Mr. Wells was Vice President, Finance and CFO of Tahera Diamond Corporation, a diamond mining company listed on the TSX. While Mr. Wells was a director, TriNorth Capital Inc. was subject to a management cease trade order as a result of not filing its financial statements and MD&A for the periods ending December 31, 2009 and March 31, 2010 within the required time frames. Such financial statements and MD&A were subsequently filed and the management cease trade order is no longer in effect. Mr. Wells resigned from the Board of TriNorth on June 30, 2010. Mr. Wells is a member of Financial Executives International, a past Chapter President and Director. Mr. Wells is Chairman of the Canadian Financial Executives Research Foundation and was formerly the Chairman of the Committee on Corporate Reporting and was a member of the Accounting Standards Board from 1991 to 1995. Mr. Wells obtained his Chartered Accountant designation with Ernst & Young in Toronto, and was elected a Fellow of the Institute of Chartered Accountants of British Columbia in 1990 and a Fellow of the Ontario Institute of Chartered Accountants in 2006. Mr. Wells obtained his Institute of Corporate Directors designation in 2007 and is a member of the Institute of Corporate Directors.

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Kenneth B. Needler, former President and Chief Operating Officer of STA Holdings, began his career in the passenger transportation industry in 1972, with a company that was subsequently acquired by Laidlaw, Inc. Mr. Needler was named President and Chief Operating Officer of the Company in July 1999, and served as such until June 30, 2005, after being appointed to the STA Holdings’ Board of Directors in 1998. Between 1972 and 1990, Mr. Needler served in a number of management capacities at Laidlaw, Inc. including Division Manager (from 1974 to 1976), Regional Vice President (from 1976 to 1980) and President of the Canadian school bus operations (from 1980 to 1984). In 1984, Mr. Needler was appointed to the Board of Directors of Laidlaw, Inc. where he served as a Member of the Audit Committee and then as President of the Passenger Services Group. Mr. Needler has served on various bus association boards in both the motorcoach and school bus industries. He has also served as a director on his local hospital board as well as on the board of a Mutual Insurance Company located in Ontario.

Grace M. Palombo, Grace Palombo is a Human Resource, Shared Services and Legal Executive who is currently in the role of Executive Vice President and Chief Human Resources Officer for Great West Lifeco Inc. (“GWL”) based in Toronto. Prior to working at GWL, Grace served as the Executive Vice President Human Resources for TD Bank in the United States and as the Senior Vice President Corporate Human Resources for CanWest Global Communications in Toronto, Ontario reporting to the CEO and was a member of the Executive Management Committee. Grace’s expertise is in general executive management which includes corporate reorganizations, transformations and acquisition integration. Ms. Palombo has held various executive positions in the areas of Human Resources, Legal and Corporate Services with Husky Injection Molding Systems, Canada Life Financial Services, Westcoast Energy/Union Gas and Bombardier Aerospace. Grace has also practiced law in Toronto, in the areas of Employment, Labour Relations and Corporate Law. Ms. Palombo served as General Counsel and Corporate Secretary at Union Gas. Ms. Palombo holds a Law Degree from Osgoode Hall Law School in Toronto and a Bachelor of Arts in Psychology. Grace serves as a Director on the Board of Directors of Enercare Inc., a company listed on the TSX. She also served on the Board of Advisors of Catalyst Inc. in New York City, the Osgoode Hall Law School Alumni Association, and the Board of Directors of the Canadian College of Naturopathic Medicine for six years where she was a member of the Audit Committee, the Administrative Affairs Committee and the Board Development Committee. She currently is a member of the Institute of Corporate Directors, Conference Board of Canada, Council of National Human Resource Executives, the Law Society of Upper Canada, The Canadian Bar Association, the Women’s Law Association and the Women’s Executive Network.

Wendi Sturgis, is the Executive Vice President of Enterprise Sales and Services at Yext, Inc., a New York based geomarketing SaaS company. Ms. Sturgis has worked at the intersection of technology, marketing and the digital worlds since the inception of her career in 1990, and previously ran the North America Account Management team at Yahoo! Inc. where she was responsible for an 800 person organization and $1.4 billion in revenue. Ms. Sturgis holds a Bachelor of Science from Georgia Institute of Technology and currently serves on the Georgia Institute of Technology Presidential Advisory Board, a group of volunteers, made up of alumni and corporate executives charged with providing strategic direction and feedback to the President of the Georgia Institute of Technology. Ms. Sturgis is the Vice Chair of the National Board of Step Up Women’s Network, is actively involved in the start-up community in New York, and currently serves on the board of directors of Dailyworth.com, a private financial media company headquartered in New York City.

Barbara Basney is an Advertising, Marketing and Media executive with more than 20 years of experience, and is currently the Vice President, Global Advertising and Media for Xerox Corporation, headquartered in Norwalk, CT. Barbara has been part of the Xerox global advertising leadership team since 2003, overseeing Xerox brand and product advertising, including television, print, radio and outdoor, as well as digital media in more than 35 countries. Barbara’s expertise includes the formulation of advertising strategies, campaign development and implementation and media optimization with a focus on integrating social, native and content into the media mix. Starting in 1998, she was the Director of

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Marketing and Communications for Tektronix, Office Printer Business. In this role she was responsible for advertising, public relations, corporate communications, direct marketing, tradeshows and customer communications. With a strong background in marketing strategy and research, Ms. Basney led the Strategic Marketing function for the $5 Billion Thrifty Payless drugstore chain from 1992 through 1998. Barbara holds a BBA from the College of William and Mary, and an MBA from Portland State University where she graduated with honors. Barbara is an active public speaker at national and global advertising, brand and media events, most recently at DMEXCO (Digital Marketing Exposition and Conference) in Cologne, Germany, as well as the 2015 NewsCred#ThinkContent Summit in NYC and the 2014 ANA Media Leadership conference in Boca Raton, Florida. Ms. Basney has been active in the Association of National Advertisers (ANA) for over ten years, as well as a panel judge for more than three years with the National Advertising Review Board and the International Advertising Association (IAA). She is also a member of the Advertising Women of New York and is named on the Annual List of 100 Marketing Leaders by The Internationalis.

Denis J. Gallagher, is a leading industry executive in the school busing industry. The founder, Chairman and Chief Executive Officer of STA, Inc. has over 38 years of experience in the passenger transportation industry. Mr. Gallagher previously held various positions in the transportation industry from 1976 to 1997. Mr. Gallagher founded the company in May 1997 and has led the strategic growth of the company as well as building the senior management team and has developed strong banking relations with its lenders and the capital markets. Mr. Gallagher is a graduate of Monmouth University, with a B.S. degree in Business Administration. He is a past member of the University’s Board of Trustees and was the recipient of the University’s Distinguished Alumni Award. He is an honorary Member in Alpha Beta Gamma Business Honor Society. He is involved in numerous industry and community activities and was awarded Contractor of the Year in August 2014 by the National School Transportation Association. Mr. Gallagher has been recognized as a leader for the use of alternative fuels and innovation in the school bus industry. He served as a member of various private and charitable organizations and was on the board of directors of Canada Cartage Diversified Fund, a dedicated trucking and logistics company listed on the TSX, until that company was acquired in 2007.

Patrick J. Walker, the Executive Vice President and Chief Financial Officer of the Company, has over 25 years of financial management experience. Mr. Walker began his career as an accountant with the Philadelphia CPA firm of Tait, Weller and Baker, followed by the New York firm of McGladrey & Pullen. Between 1989 and 1992, Mr. Walker was employed with the global food products conglomerate TLC Beatrice International Holdings, Inc., as Manager of Accounting and Financial Reporting. In 1992, Mr. Walker joined Six Flags Entertainment Corporation, the largest regional operator of theme parks in the United States, as Corporate Controller, before being promoted to Vice President of Finance in 1998. From 1999 to 2001, Mr. Walker served as Chief Financial Officer of two portfolio companies of Indigo Capital, a private equity firm. Prior to his appointment at the Company, Mr. Walker was a consultant to the Chief Financial Officer of H.J. Heinz Company. Mr. Walker became Chief Financial Officer of the Company in November 2002. Mr. Walker is a graduate of the Wharton School of the University of Pennsylvania, and a Member of the American Institute of Certified Public Accountants, the Pennsylvania Institute of Certified Public Accountants and the Institute of Management Accountants.

Patrick Vaughan, the Chief Operating Officer of the Company, has 35 years in the transportation industry with the most recent 20 years devoted to student transportation. In 1977, Mr. Vaughan began his career in transportation & logistics with St. Johnsbury Trucking Company, a less-than-truckload carrier owned by Sun Oil Corporation. In 1988, Mr. Vaughan joined the Connecticut based retail firm of Ames Department Stores where he was Vice President of Transportation & Logistics. In 1991, Mr. Vaughan joined Laidlaw Transit Inc. as Director of Operations and was promoted in 1996 to the position of Senior Vice President. Upon the acquisition of Laidlaw Transit Inc., by First Group in 2007, Mr. Vaughan was appointed to the role of Chief Operating Officer and charged with the effective integration of the two largest student transportation providers in the industry. In 2008, Mr. Vaughan was awarded the National School

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Transportation Association’s Golden Merit Award for his dedication and commitment to the school bus industry. Mr. Vaughan is a graduate of Suffolk University, with a B.S. in Business Administration. He is a past member of the Board of Directors of National School Transportation Association.

John DiMaiolo, the Vice President and Chief Accounting Officer of the Company, has over 35 years of financial management experience with 15 of those years within the student passenger transportation industry. Mr. DiMaiolo began his career as an accountant for Cadence Industries in 1979. In 1982, Mr. DiMaiolo joined Twin County Grocers Inc., a wholesale food distribution company, holding various positions over the next 12 years including Financial Accounting Manager, Manager of Budgeting and Financial Systems, and Division Controller. In 1995, Mr. DiMaiolo joined New Jersey Press Inc., a multimedia news provider in central New Jersey as Corporate Controller. From 1998 to 2000, Mr. DiMaiolo served as Vice President and Corporate Controller for Journal Register Company. Before joining Student Transportation Inc., Mr. DiMaiolo was Director of Finance for Laidlaw Transit Inc.’s Eastern Business Group for 8 years. Mr. DiMaiolo is a graduate of Duke University and earned a Master in Business Administration from Seton Hall University. He is a Member of the New Jersey Society of Certified Public Accountants and the American Institute of Public Accountants.

Paula Altieri, Vice President and Corporate Controller at Student Transportation Inc., has over 25 years of financial management experience with 15 of those years within the student passenger transportation industry. Altieri began her career as an accountant in the financial services industry. Before joining Student Transportation Inc. in 2005, she spent 4 years as a Regional Finance Manager at Laidlaw Transit Inc. and was CFO of Liberty Helicopters Inc. from 2000 to 2005. Altieri is a graduate of Florida Atlantic University and earned a Master in Business Administration from Fairleigh Dickinson University. She is a Certified Public Accountant and a member of the New Jersey Society of Certified Public Accountants and the American Institute of Public Accountants.

STA Holdings

Directors and Executive Officers of STA Holdings

STA Holdings is a Delaware corporation and is governed in accordance with its constating documents and applicable law. STA Holdings’ board of directors was, as of June 30, 2015, comprised of three individuals, a majority of whom are unrelated to the Company and a majority of whom are residents of the United States. The directors of STA Holdings are currently Grace Palombo, David Scopelliti and Denis Gallagher. Grace Palombo and David Scopelliti are, for regulatory purposes, independent from STI. STA Holdings has three officers. Mr. Denis Gallagher is the Chairman and Chief Executive Officer, Mr. Patrick Walker is the Executive Vice President and Chief Financial Officer and Mr. Patrick Vaughan is Chief Operating Officer.

Equity Incentive Plan

In the year following the Company’s initial IPS Offering, two outside compensation consultants were retained to assist the CNG Committee in designing a share-based equity compensation plan for the Company’s officers. The two consultants were compensation consultant Watson Wyatt & Company, and the law firm Sonnenschein Nath & Rosenthal LLP. The mandate for the consultants was to, among other things, design a plan to align the interests of key officers and employees with that of the Issuer and its shareholders, and adequately assist with attracting and retaining qualified executives in the relevant U.S. executive labour pool. Based on the recommendations of these compensation consultants and the CNG Committee of STA Holdings, on November 10, 2005, the board of directors of STA Holding adopted an Equity Incentive Plan (“EIP”) intended to (a) align the interests of selected employees and officers of STA Holdings and its affiliates (“Participants”) with those of the shareholders of Issuer (b) optimize the profitability and growth of the Company and its affiliates through incentives that are consistent with the Company’s goals, (c) provide Participants with an incentive for excellence in individual performance, and (d) promote teamwork among the Company’s employees, officers and consultants.

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On December 8, 2005, at the annual and special meeting of shareholders, the shareholders of STI approved the adoption by STA Holdings of the EIP.

A summary of the EIP is provided below and is qualified in its entirety by the specific language of the EIP, a copy of which is available to any shareholder upon request to the Secretary of the Issuer.

Pursuant to the EIP, the board of directors of STA Holdings may at any time and from time to time ratify grants to employees of Class B-3 Shares of STA Holdings (collectively, the “EIP Shares”), as recommended by the CEO of the Company and approved by the CNG Committee. These grants of shares are subject to forfeiture and are non-transferable if the Participant does not satisfy certain conditions included in the applicable award agreement (including non-competition provisions). The grant of EIP Shares is evidenced by an award agreement that will specify, among other things, the number of shares granted and such other provisions as determined by the CNG Committee, including the amount of consideration, if any, that a Participant shall pay for the shares.

The terms and conditions of EIP Shares granted are subject to adjustments in certain circumstances, as set forth in the Plan, in the discretion of the board and the committee, including those that may be required pursuant to any employment agreements with key executives or employees of the Company.

The board of directors of STA Holdings may, at any time and from time to time, alter, amend, suspend, discontinue or terminate the EIP in whole or in part, except that any amendment or alteration shall be subject to the approval of the shareholders of the Issuer if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Issuer’s shares may then be listed or quoted, provided that no termination, amendment, or modification of the EIP shall adversely affect in any material way any shares previously granted under the EIP, without the written consent of the grantee of such share.

The Issuer has implemented Share Ownership Guidelines (“SOG”), to encourage the long term holding of shares of the Issuer and/or EIP Shares by certain senior officers and managers. The objective of the SOG is that the holdings of shares of the Issuer and EIP Shares (on a combined basis per person) be no less than: (i) 150% of base salary for the four most senior officers; (ii) for the next five most critical officers, 100% of base salary; and (iii) for the other senior managers subject to the SOG rules, 50% of base salary. The guidelines provide for a phase-in period of five years such that the person must achieve at least one-fifth toward his or her goal each year. The EIP Plan has been amended to restrict Class B Share puts of any person not on plan to achieve these levels. The CNG Committee is to review this policy at least annually and propose recommended changes to the Board, as appropriate.

Under the EIP, Participants are required to reimburse the Company an amount equal to the tax withholding requirements related to grants of EIP Shares based on the value of such shares. The Participants can satisfy this obligation by (i) delivering cash, negotiable personal check or electronic funds transfer in an amount equal to the amount to be withheld; (ii) delivering EIP Shares having a value equal to the amount to be withheld; or (iii) requesting that the Company withhold from the EIP Shares that would otherwise be delivered pursuant to a grant, a number of EIP Shares whose value is equal to the amount to be withheld. Grants made to Participants, including in connection with grants of EIP Shares, provide that if any shares subject to a grant under the EIP are withheld, forfeited or otherwise terminated without the delivery of such shares, the shares subject to such grant, to the extent of any such withholding, forfeiture or termination, may be available for further grant pursuant to the terms of the EIP.

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In order to provide for additional flexibility in structuring STA Holdings’ compensation policies, the EIP provides for the issuance to Participants of securities of STA Holdings other than EIP Shares, including options, stock appreciation rights, performance units, performance shares, deferred stock, dividend equivalents and other stock-based awards (which, together with the EIP Shares, are collectively referred to as “Awards”). However, it is not currently the intention of the board of directors to grant any such Awards under the EIP other than EIP Shares.

Under the EIP, 717,747 shares were approved by the shareholders of the Company at the December 8, 2005 annual general meeting, which have been granted to management. On November 13, 2008, at the annual general meeting, the shareholders of the Company approved an increase in the allotted number of EIP Shares available for issuance under the EIP by 1,446,291, which have also been granted to management.

On March 5, 2010, STA Holdings amended its Certificate of Incorporation in order to differentiate those Class B common shares issued pursuant to the EIP while the Issuer was under the IPS structure from those to be issued subsequent to the end of the IPS structure. Pursuant to the amendment, the authorized Class B-2 Shares were split into Class B-2 Shares, which have been issued pursuant to the EIP during the period the IPS structure was in place, and Class B-3 Shares, which have been utilized for all future share grants under the EIP subsequent to March 5, 2010. On November 8, 2012 an additional allotment of 2,265,000 Class B-3 Shares was approved by the shareholders of the Company at the annual general and special meeting. The holders of the Class B-2 Shares were entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the distributions per IPS that were paid historically to the holders of the IPSs. The holders of the Class B-3 Shares are entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the dividends received by the holders of the Class A Shares. These shares are accounted for as a liability upon issuance, as a result of a put option they contain. Pursuant to the liquidity provisions of the EIP, all holders of Class B-3 Shares have the option to “put” up to one third of the shares awarded each year back to the Company, one year immediately following the grant. All new share awards after the split set out above under the EIP have been in the form of Class B-3 Shares and there will be no further issuances of Class B-2 Shares.

The Compensation Committee of STA Holdings has approved aggregate awards of 133,549 Class B-2 Shares pursuant to the EIP in fiscal 2006, 290,073 in fiscal 2007, 198,903 in fiscal 2008, 290,206 in fiscal 2009, and 146,661 in fiscal 2010. No Class B-2 Shares were granted subsequent to fiscal 2010. In connection with these grants, an aggregate of 190,449 Class B-2 Shares were withheld at the election of the Participants to satisfy tax withholdings on these grants. In addition to the shares withheld to satisfy tax withholdings on grants, 5,000 shares were forfeited by one shareholder during fiscal year 2007 and STA Holdings repurchased 18,137 shares from one shareholder during fiscal year 2008. Such shares became available for issuance upon the withholding for taxes or forfeiture by the participants and the repurchase by STA Holdings. Pursuant to the long term liquidity provision of the EIP, for each year beginning in the fiscal year ending June 30, 2009, each participant has the option to “put” a portion of their aggregate EIP Shares back to STA Holdings at fair value. A total of 119,776, 296,518, 196,202, 96,719, 72,075, 3,050 and 10,777 Class B-2 Shares were sold to STA Holdings during the twelve months ended June 30, 2009, June 30, 2010, June 30, 2011, June 30, 2012, June 30, 2013, June 30, 2014 and June 30, 2015, respectively, pursuant to the put rights under the EIP. To the extent shares are sold to STA Holdings pursuant to the put rights under the EIP, such shares are cancelled and shall not be available for further grant under the EIP. In May 2015, the Company exchanged all of the remaining Class B-2 Shares for Class B-3 Shares, based on the fair market value of each class of shares. This non-cash exchange resulted in approximately 1.57 Class B-3 Shares being issued for each Class B-2 Shares outstanding. As such, no Class B-2 Shares related to these grants remain outstanding as at June 30, 2015.

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The Compensation Committee of STA Holdings has approved aggregate awards of 239,000 Class B-3 Shares pursuant to the EIP in fiscal 2010, 485,814 in fiscal 2011, 625,970 in fiscal 2012, 495,020 in fiscal 2013, 635,074 in fiscal 2014 and 663,620 in fiscal 2015. In connection with the grants, an aggregate of 902,392 Class B-3 Shares were withheld at the election of the participants to satisfy tax withholdings on these grants. A total of 9,413, 80,543, 121,396, 197,533 and 322,019 Class B-3 Shares were sold to STA Holdings during the twelve months ended June 30, 2011, June 30, 2012 and June 30, 2013, June 30, 2014 and June 30, 2015, respectively, pursuant to the put rights under the EIP. To the extent shares are sold to STA Holdings pursuant to the put rights under the EIP, such shares are cancelled and shall not be available for further grant under the EIP. In May 2015, the Company exchanged all of the remaining Class B-2 Shares for Class B-3 Shares, based on the fair market value of each class of shares. This non-cash exchange resulted in approximately 1.57 Class B-3 Shares being issued for each Class B-2 Shares outstanding. As such, 1,591,211 Class B-3 Shares related to these grants remain outstanding as at June 30, 2015. The shares withheld to satisfy tax withholdings became available for issuance upon the withholding for taxes by the participants and the repurchase by STA Holdings.

At June 30, 2015, there are approximately 81 participants in the EIP.

Deferred Share Unit Plan

In fiscal 2007, the board of directors of the Issuer established the DSU for the non-management Directors of the Issuer. Under the plan, a director is entitled to participate in the plan to the extent of fees earned during the year. For fees elected by directors to be deferred under the plan, an amount shall be credited under the plan in the form of Notional Shares allocated to the participant’s DSU account. If the director continues to serve, dividends will accrue on the Notional Shares consistent with amounts declared by the board on the common shares of the Issuer and be credited to the participant’s DSU account. Amounts deferred under the DSU and accrued dividends earned thereon are immediately vested, and can be redeemed only when a director no longer serves on the board of directors of the Issuer or upon a change in control. See “Remuneration of the Directors” above for further information.

Insurance Coverage for STI and Related Entities and Indemnification

STI maintains an insurance policy for directors and officers of STI and for the directors and officers of its subsidiaries (the “D&O program”). The primary insurance policy within the D&O program has a limit of liability applicable to the insured directors and officers of $40 million per year on a claims-made basis. Under the policy, each entity has reimbursement coverage to the extent that it has indemnified directors and officers. The policy includes securities claims coverage, insuring against any legal obligation to pay on account of any securities claims brought against STI and any of its subsidiaries. The total limit of liability is shared among STI and its subsidiaries and their respective directors and officers so that the limit of liability will not be exclusive to any one of the entities or their respective directors and officers.

The D&O program also contains an Excess Side A policy with a limit of $15 million. The policy limits under the excess policy are available exclusively to the individual directors and officers.

The by-laws of each of STI and STA Holdings provide for the indemnification of its directors and officers from and against liability and costs in respect of any action or suit brought against them in connection with the execution of their duties of office, including in respect of periods prior to the closing of the IPS Offering, subject to certain limitations.

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AUDIT COMMITTEE AND AUDITOR’S FEES

The Issuer has established a separately designated audit committee of four directors. The members of the committee are: George Rossi (Chair), Irving Gerstein, David Scopelliti and Victor Wells. Each of the members is independent from the Issuer and STA Holdings and is “financially literate” and a financial expert within the meaning of Multilateral Instrument 52-110 – Audit Committees, Rule 10A-3 of the United States Securities Exchange Act of 1934, as amended, and NASDAQ Rule 5605(a)(2). The audit committee is responsible for the oversight and supervision of the accounting and financial reporting practices and procedures of STI, monitoring the adequacy of internal accounting controls and procedures and reviewing the quality and integrity of financial statements of STI. The independent auditors of STI report directly to the audit committee. In addition, the audit committee is responsible for reviewing and approving the auditors’ examination and for recommending to the board of directors the selection of independent auditors of STI. The charter of the audit committee is attached hereto as Appendix “A”.

Relevant Education and Experience of Audit Committee Members

The following is a summary of the education or experience of each member of the audit committee that is relevant to the performance of his responsibilities as a member of the audit committee, including any education or experience that has provided the member with an understanding of the accounting principles used by STI to prepare its annual and interim financial statements:

Name of Audit Committee Member	Relevant Education and Experience
George Rossi (Chair)	Mr. Rossi, a member of the Institute of Chartered Accountants, has twenty years of experience as a CFO of two different companies, from 1983 to 2002. Prior to 1983, Mr. Rossi was an audit manager with Ernst and Young. Since his retirement, he has continued to apply his experience as a director and audit committee chair on several boards, as more fully described in the section entitled “Directors, Officers and Management – Biographies” above. As a former CFO, along with his continued experience as a director on several boards, Mr. Rossi has developed an understanding of accounting principles and internal controls and procedures for financial reporting sufficient to ensure his financial literacy.
Irving Gerstein	Senator Gerstein is a member of the audit committee of Atlantic Power Corporation and Medical Facilities Corporation. These positions, in conjunction with his economic background and his previous experience as a director of several public issuers (as more fully described in the section entitled “Directors, Officers and Management – Biographies” above) have enabled him to develop a strong understanding of accounting principles sufficient to ensure his financial literacy.
David Scopelliti	Mr. Scopelliti is a Senior Vice President of both Alcentra, a wholly-owned subsidiary of The Bank of New York Mellon Corporation and Alcentra Capital Corporation (NASDAQ: “ABDC”) and previously was a Principal of GarMark Partners, a private debt and equity firm. David is also a Director of Nudo Products, Inc. and Athena Wellness Brands, LLC. Mr. Scopelliti has over 20 years of experience as a principal investor in private equity and debt markets, and has held NASD Series 7, 63 & 24 securities licenses. Prior to joining GarMark, he was Managing Director at PCG Asset Management and before that, he was the Head of Private Equity for the State of Connecticut Pension Plan. Previously, Mr. Scopelliti was a Managing Director with CIBC World Markets and Group Head of ING Group’s Merchant Banking Division. As part of his experience in the private debt and equity markets and securities industry, he has developed an understanding of accounting principles and procedures for public reporting sufficient to ensure his financial literacy.

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Name of Audit Committee Member

Relevant Education and Experience

Victor Wells

Mr. Wells is a member of the Ontario and British Columbia Institutes of Chartered Accountants, and was elected a Fellow of ICABC in 1990 and of ICAO in 2006. He currently chairs the Canadian Financial Executives Research Foundation of Financial Executives International Canada. He has held increasingly senior finance positions during the last 20 plus years. He was Vice President, Finance and CFO of Chemtrade Logistics Income Fund from its IPO in July 2001 until 2006. From 1998 to 2001 he was Vice President Finance and CFO of Tahera Diamond Corporation, a diamond mining company listed on the TSX. Mr. Wells is currently a director and Chair of the Audit Committee of Contagious Gaming Inc. and Pasinex Resources Limited. He was formerly a director, and Chair of the Audit Committee of Unique Broadband Systems Inc. (2012 – 2015), GT Canada Medical Properties Inc. (2010-2012), MagIndustries Inc. (2006 – 2011) and Northstar Healthcare Inc. (2007 – 2010). He was also formerly a director and member of the Audit Committee of TriNorth Capital Inc. (2009—2010) and formerly was a Trustee, and chaired the Audit Committee of, Canada Cartage Diversified Income Fund, until that company was acquired in 2007. This experience has ensured that Mr. Wells has developed an understanding of accounting principles and internal and disclosure controls sufficient to ensure his financial literacy.

Pre-Approval Policies and Procedures

The Issuer’s audit committee has adopted specific policies and procedures for the engagement of external auditors for all services, including non-audit services. In particular, the committee is required to review at least annually the non-audit services provided by the Issuer’s independent auditor for the purposes of getting assurance that the performance of such services will not compromise the independence of the independent auditor and pre-approve all non-audit services to be provided to the Issuer or its subsidiary entities by its independent auditor or the independent auditor of its subsidiary entities, provided that the committee may delegate to one or more independent members the authority to pre-approve non-audit services in satisfaction of this requirement. The pre-approval of non-audit services by any member to whom authority has been delegated must be presented to the full committee at its first scheduled meeting following such pre-approval.

The committee may satisfy the pre-approval requirement if: (a) the aggregate amount of all the non-audit services that were not pre-approved could reasonably be expected to constitute no more than five per cent of the total amount of fees paid by the Issuer and its subsidiary entities to the Issuer’s independent auditor during the fiscal year in which the services are provided; (b) the services were not recognized by the Issuer or the subsidiary entity of the Issuer at the time of the engagement to be non-audit services; and (c) the services are promptly brought to the attention of the committee and approved, prior to the completion of the audit, by the committee or by one or more members of the committee to whom authority to grant such approvals has been delegated by the committee.

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External Auditor Service Fees

The table below provides greater disclosure of the services provided and the fees earned by the Company’s external auditor for the fiscal years ended June 30, 2015 and June 30, 2014.

Type of Work	Fiscal 2015		Fiscal 2014
Audit fees	$	907,000	$	902,000
Audit related fees	$	25,000	$	25,000
Tax fees	$	171,000	$	123,000
All other fees	$	58,000	$	80,000

Fees for audit services include fees associated with the annual audit, reviews of the Company’s quarterly financial reporting, as well as consent and comfort letter procedures for an equity and a debt offering. Audit related fees principally include accounting consultations. Tax fees are related to transfer pricing studies, tax compliance service and tax consulting services. “All other fees” are for translation services required in connection with the filing of certain materials with the Canadian Securities Administrators and also include fees related to a license for accounting research software for both fiscal years. The Audit fees, Audit related fees, Tax fees and All other fees have been approved by the Audit Committee in accordance with the procedures set forth above.

Audit Committee Oversight

At no time since the commencement of the Issuer’s most recently completed fiscal year has a recommendation of the audit committee to nominate or compensate an external auditor not been adopted by the board of directors.

RISK FACTORS

The following section describes both general and specific risks that could affect our financial performance. The risks described below are not the only risks facing the Issuer and the Company. Additional risks and uncertainties that are not currently known or that are currently considered to be immaterial may also materially and adversely affect the Issuer and our business operations. If any of these risks actually occur, the Issuer’s business, financial conditions, results of operations and cash flow could be adversely affected, in which case the trading prices of the Common Shares and the Debentures would decline.

Risks Related to our Business

We cannot control certain of our operating expenses

The price of fuel, insurance costs and maintenance costs are operating expenses over which we have little or no control. Although certain of our customer contracts provide for automatic price increases or other forms of protection against fuel price and/or insurance cost increases, significant increases in the price of fuel, insurance or maintenance could affect our costs as well as the affordability of our services to our customers. Similarly, depending on the availability of qualified drivers and the level of competition with other businesses for their services, we may have little control over the labour costs for our drivers. Any difficulties in attracting and retaining qualified drivers could affect our costs and, ultimately, result in the loss of customer contracts due to the inability to service the contract. Accordingly, a significant escalation in our operating expenses or in the inability to attract and retain qualified drivers could have a material adverse effect on us, our financial condition, results of operations and cash flows.

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We have significant capital expenditure requirements

In order to maintain our school bus fleet, and to expand our business pursuant to our business strategy, we are required to make significant capital expenditures. There can be no assurance that cash flow from operations will enable us to acquire a sufficient number of new vehicles or make capital expenditures necessary to implement any expansion of service. If we are required to obtain additional financing, there can be no assurance that we can obtain financing on terms acceptable to us. Our inability to have sufficient cash flows or procure the financing necessary to acquire additional school buses or make needed capital improvements could delay or prevent us from implementing our business strategy and would have a material adverse effect on us. Future maintenance capital expenditures are dependent on a number of future events. The future replacement of school vehicles will be dependent on contract retention and renewal and will also be dependent on the number of new contracts secured through acquisitions, new bids and conversions and the renewal of current contracts. If current contracts are not renewed, or only a portion are renewed, i.e. the number of net new contracts is higher or lower than expected, the assumed level of maintenance capital expenditures will be significantly different from the level currently anticipated. In addition, future expenditures will also depend on future vehicle pricing, negotiating ability with regard to future vehicles pricing, and future vehicle specifications.

Our ability to achieve our business objectives depends on many factors, many of which are beyond our control

Some of the factors that may affect our ability to successfully achieve our business objectives are the following:

• notwithstanding our high retention rate of renewable contracts, we may be unable to retain certain of our existing customer contracts, or we may only be able to renew them at minimal or no price increase, or price reductions, reducing profitability. Specifically, the decision to renew contracts is not made solely by us and may be based upon factors beyond our control. Accordingly, there can be no assurance that any of our current or future contracts will be extended, or if extended, that the rates of compensation for such extensions will be acceptable to us. Moreover, there can be no assurance that the school districts that currently employ our services will not seek to satisfy their transportation needs in the future by alternative means, including reducing or eliminating transportation services. We had 80 contracts that were up for renewal for fiscal year 2015. The approximate percentages of fiscal year 2015 revenue that are up for renewal (including annual contract renewals in New Jersey) for fiscal years 2016 and 2017 are 26% and 29%, respectively.

• we may be unable to find suitable businesses to acquire or to successfully complete acquisitions on profitable terms or to successfully integrate acquired businesses; and

• we may be unable to identify conversion opportunities or win bid contracts on profitable terms or to find adequate facilities to operate conversion or bid contracts won.

The Company’s consolidated indebtedness could negatively impact the business

On June 30, 2015, the Company had total indebtedness of $204.9 million (including $119.5 million indebtedness to holders of Debentures).

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The degree to which the Company is leveraged on a consolidated basis could have important consequences to the holders of Common Shares and Debentures, including:

• the Company’s ability in the future to obtain additional financing for working capital, capital expenditures or other purposes may be limited;

• the Company may be unable to refinance indebtedness on terms acceptable to it or at all;

• a significant portion of the Issuer’s cash flow (on a consolidated basis) is likely to be dedicated to the payment of the principal of and interest on the Company’s indebtedness, including the Debentures, thereby reducing funds available for future operations, capital expenditures and/or dividends on the Common Shares;

• the Issuer may be more vulnerable to economic downturns and be limited in our ability to withstand competitive pressures;

• the Company may be limited in its ability to plan for or react to changes in its business or the industry in which it operates; and

• the Company may be at a competitive disadvantage to its competitors that have less indebtedness.

The restrictive covenants in the Credit Agreement and the Note Purchase Agreement could impact the Company’s business and affect its ability to pursue its business strategies

The Credit Agreement and the Note Purchase Agreement feature restrictive covenants that limit the Company’s ability, among other things, to:

• incur additional indebtedness;

• pay dividends and make distributions in respect of the Equity Interest or to make certain other restrictive payments or investments;

• sell assets;

• consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets;

• enter into transactions with the Company’s and/or the Issuer’s affiliates;

• create liens; and

• enter into new lines of businesses.

In addition, the Credit Agreement and the Note Purchase Agreement include other and more restrictive covenants and prohibit the Company and certain of its affiliates from prepaying its other indebtedness, while debt under the Credit Agreement and Note Purchase Agreement is outstanding. The Credit Agreement and the Note Purchase Agreement also require the Company to achieve specified financial and operating results and maintain compliance with specified financial ratios. The Company’s ability to comply with these ratios may be affected by events beyond its control.

A breach of any of the restrictive covenants in the Credit Agreement or under the Note Purchase Agreement or in the Company’s ability to comply with the required financial ratios could result in a default under the Credit Agreement or under the Note Purchase Agreement. If a default occurs, the lenders under the Credit Agreement and/or the Note Purchase Agreement may elect to declare all borrowings outstanding under either facility, together with accrued interest and other fees, to be immediately due and payable.

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We may not be able to make all principal payments on the Debentures

The 6.25% US Debentures will mature on June 30, 2018 and the 6.25% Canadian Debenture will mature on June 30, 2019. STI may not be able to refinance the principal amount of the Debentures in order to repay the principal outstanding or may not have generated enough cash from operations to meet this obligation. There is no guarantee that STI will be able to repay the outstanding principal amount upon maturity of the Debentures.

As a result of the subordinated nature of the guarantees of the Debentures, upon any distribution to creditors of the Company in a bankruptcy, liquidation or reorganization or similar proceeding relating to the Company or its property or assets, the holders of the Company’s senior indebtedness will be entitled to be paid in full in cash before any payment may be made with respect to the Debentures.

We face a number of risks in connection with our acquisition strategy

As part of our business strategy, we have expanded through acquisitions and will likely acquire additional businesses in the future. The acquisition and development of existing businesses to be operated by us will be dependent on our ability to identify, acquire and develop suitable acquisition targets in both new and existing markets. While we are careful in selecting the businesses that we acquire, and while the sellers of these businesses routinely execute indemnities in our favour relating to pre-closing liabilities, acquisitions involve a number of risks, including (i) the possibility that we, as successor owner, may be legally and financially responsible for liabilities of prior owners if the indemnities are inapplicable or the former owner has limited assets; (ii) the possibility that we pay more than the acquired company or assets are worth; (iii) the additional expense associated with completing an acquisition and amortizing any acquired intangible assets; (iv) the difficulty of assimilating the operations and personnel of the acquired business; (v) the challenge of implementing uniform standards, controls, procedures and policies throughout the acquired business; (vi) the inability to integrate, train, retain and motivate key personnel of the acquired business; (vii) the potential disruption of our ongoing business and the distraction of management from its day-to-day operations; and (viii) the inability to incorporate the acquired business successfully into our operations. Such risks, if they materialize, could have a material adverse effect on us, our financial condition, results of operations and cash flows.

In addition, we may not be able to maintain the levels of operating efficiency that any of the acquired businesses had achieved or might have achieved separately. Successful integration of each of their operations would depend upon our ability to manage those operations and to eliminate redundant and excess costs. As a result of difficulties associated with combining operations, we may not be able to achieve the cost savings and other benefits that we would hope to achieve with these acquisitions. Any difficulties in this process could disrupt our ongoing business, distract management, result in the loss of key personnel, increase our expenses and otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows. There can be no assurance that the acquired businesses will achieve anticipated levels of profitability.

We may be adversely affected by substantial competition in the school bus transportation industry and increased consolidation within the industry

The school bus transportation industry is highly competitive and we expect that there will continue to be substantial competition for contract bidding and for prospective acquisitions. Such competition may decrease the profitability associated with any contract and increase the cost of acquisitions. Contracts are generally awarded pursuant to public bidding, where price is the primary criteria for a contract award. We

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have many competitors in the school bus transportation business, including transportation companies with resources and facilities substantially greater than ours and school districts that operate their own buses. There can be no assurance that we will be able to identify, acquire or profitably manage additional contracts, or that the assumptions underlying the contract price and / or expense levels included in the bid process will be realized. Although we have historically been competitive in the market for new contracts as well as for acquisitions of other companies, there can be no assurance that we will be able to compete effectively in the future.

In particular, the school bus transportation industry is undergoing significant consolidation, which has intensified the competition for contracts and acquisitions. From time to time, we make unsolicited inquiries with respect to possible acquisitions. Whether such inquiries will result in further communications or, ultimately, an acquisition, has depended, and will continue to depend, upon the facts and circumstances in each case, including whether our competitors make bids for such contracts and acquisitions. Any failure to compete effectively could have a material adverse effect on our company, our financial condition, results of operations and cash flows.

Our business depends on certain key personnel

We believe that our success depends, in part, on the retention of senior executive and regional management. There can be no assurance that we would be able to find qualified replacements for the individuals who make up our senior management team if their services were no longer available. The loss of services of one or more members of the senior management team could adversely affect our business, results of operations and our ability to effectively pursue our business strategy. We do not maintain key-man life insurance for any of our employees.

A greater number of our employees may join unions

Although some of our employees are subject to collective bargaining agreements, there are no assurances that the number of our employees who are members of unions will not increase in the future. A significant increase in the number of our employees becoming members of unions could result in increased labour costs and have a material adverse effect on us, our financial condition, results of operations and cash flows.

We may be adversely affected by rising insurance costs

Our cost of maintaining vehicle liability, personal injury, property damage and workers’ compensation insurance is significant. We could experience higher insurance premiums as a result of adverse claims experience or because of general increases in premiums by insurance carriers for reasons unrelated to our own claims experience. As an operator of school buses, we are exposed to claims for personal injury or death and property damage as a result of accidents. Generally, our insurance policies must be renewed annually. Our ability to continue to obtain insurance at affordable premiums also depends upon our ability to continue to operate with an acceptable safety record. A significant increase in the number of claims against us, the assertion of one or more claims in excess of our policy limits or the inability to obtain adequate insurance coverage at acceptable rates, or at all, could have a material adverse effect on us. In addition, the running of statutes of limitations for personal injuries to minor children typically is suspended during the children’s legal minority. Therefore, it is possible that accidents causing injuries to minors on school buses may not give rise to lawsuits until a number of years later, which could also have a material adverse effect on us.

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We may not be insured for certain losses

We may become subject to liabilities for claims for which insurance is not normally obtained, hazards that we cannot or may not elect to insure because of high premium costs or other reasons or for occurrences that exceed maximum coverage under our policies. For example, we do not have insurance to guard against claims for breach of contract. The occurrence of any liability for which we are not insured, any liability for a claim that exceeds our maximum coverage under our policies, or a multiplicity of otherwise insured claims for amounts within the deductible levels in our policies, could have a material adverse effect on us, our financial condition, results of operations and cash flows.

We may be adversely affected by current and new governmental laws and regulations

We are required to comply with laws and regulations relating to safety, driver qualifications, insurance, worker overtime and other matters promulgated by various federal, state, provincial and local regulatory agencies including, among others, state motor vehicle agencies, state departments of education, the Federal Highway and Safety Administration, the National Highway Traffic Safety Administration and the Occupational Safety and Health Administration. We are also required to comply with certain statutes, such as the Americans with Disabilities Act. We have incurred, and expect to incur, costs for our operations to comply with these legal requirements, and these costs could increase in the future. Many of these legal requirements provide for substantial fines, orders, including orders to cease operations, and criminal sanctions for violations. Although we believe that we are in material compliance with applicable safety laws and regulations, it is difficult to predict the future development of such laws and regulations or their impact on our business or results of operations. We anticipate that standards under these types of laws and regulations will continue to tighten and that compliance will require increased capital and other expenditures. Furthermore, we cannot predict whether new laws or regulations will be adopted and, if adopted, no assurance can be given that the implementation of such laws or regulations and any additional compliance costs associated therewith will not have a material adverse effect on us. Also, a significant order or judgment against us, the loss of a significant permit or license or the imposition of a significant fine or any other liability in excess of, or not covered by, our reserves or our insurance could adversely affect our business, financial condition and results of operations.

We may be adversely affected by environmental requirements

Our facilities and operations are subject to extensive and constantly evolving federal, state, provincial and local environmental and occupational health and safety laws and regulations, including laws and regulations governing air emissions, wastewater discharges, the storage and handling of chemicals and hazardous substances and cleanup of contaminated soil and groundwater. Additional expenditures, beyond those currently included in capital and operating budgets, may be incurred in order to comply with either new environmental legislation and regulations, new interpretations of existing laws and regulations or more rigorous enforcement of such laws and regulations, most of which are difficult to pass on to the customer. It is not possible to predict whether these new expenditures will be material. We are also subject to liability for the investigation and remediation of environmental contamination (including contamination caused by other parties) at properties that we own or operate and at other properties where we or our predecessors have operated or arranged for the disposal of hazardous substances. Although we do not believe that any such liabilities or environmental compliance or cleanup obligations will have a material adverse effect on our business or operations, there can be no assurance that such liabilities or compliance or cleanup obligations will not increase in the future or will not have a material adverse effect on us.

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The school bus transportation industry is highly seasonal

The school bus transportation industry is subject to seasonal variations in operations. As a result, school bus contractors, including us, historically experience a significant decline in operating income during the summer months. Specifically, because customers often pay for the annual amount due under a contract in 10 installments ending in June, our revenues and cash flows sharply decrease in July and August. Additionally, many school districts have dramatically cut back on summer programs in recent years, including summer camp and charter programs, compounding this effect. Our quarterly operating results have also fluctuated due to a variety of factors, including variation in the number of school days in each quarter (which is affected by the timing of the first and last days of the school year, holidays, the month in which spring break occurs and adverse weather conditions, which can close schools). Consequently, interim results are not necessarily indicative of the full fiscal year and quarterly results may vary substantially, both within a fiscal year and between comparable fiscal years.

We may not be able to maintain letters of credit or performance bonds required by our transportation contracts

Our school bus transportation contracts generally provide for performance security in one or more of the following forms: performance bonds, letters of credit or cash retainages. The contracts also require the maintenance of minimum amounts of insurance coverage, the maintenance of appropriate facilities and transportation equipment, and the implementation of various operating rules and regulations. There can be no assurance that either letters of credit or performance bonds will continue to be available to us as security for our contracts or, if available, at a cost that does not adversely affect our margins or cash flow. If adequate performance security is not available or if the terms of such security are too onerous, our Company, our financial condition, results of operations and cash flows could be materially adversely affected.

Some of our customer contracts may be terminated due to factors beyond our control

Some of our school bus transportation contracts may be terminated due to factors beyond our control, such as decreases in funding for our customers. All school bus contracts can also be terminated by school districts for not meeting certain performance criteria. Although we believe we have established strong relationships with our customers, there can be no assurance that our contracts will not be affected by circumstances beyond our control. The number of school buses to be provided under our contracts generally may decrease, and hence the revenues generated under such contracts may decrease based on the requirements of our customers.

We face uncertain risks associated with the Company’s oil and gas operations

The exploration of oil and gas involves risk that exploration efforts may not find oil and natural gas resources and even when they have been discovered, they may not be economically extracted. Factors affecting economic extraction of oil and natural gas include fluctuations in the price of oil and natural gas, technical extraction difficulties, the ability to bring the oil and natural gas to market, the quality of the oil and natural gas resources, the availability of water used in the extraction process, and the ability to dispose of water associated with the extraction process in an environmentally acceptable manner. In addition, other related uncertainties include and are not limited to geopolitical maneuvering on an international level, terrorist activities, governmental regulations and restrictions, functional obsolescence through widespread migration to alternative non-petroleum-based fuels, such as those that are hydrogen or nuclear-based, environmental and other considerations that are hypothetically possible. Oil and gas revenues are dependent on the commodity prices of oil and natural gas. Market changes in the price of these commodities will have a corresponding effect on the revenues and cash flows of the Company’s oil and gas segment.

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As a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our shareholders

STI is a “foreign private issuer” under applicable U.S. federal securities laws and, therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. As a result, we do not file the same reports that a U.S. domestic issuer would file with the SEC, although we are required to file or furnish to the SEC the continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In addition, our officers, directors, and principal shareholders are exempt from the reporting and “short swing” profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell their Common Shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements are longer and filing thresholds differ. In addition, as a foreign private issuer, we are exempt from the proxy rules under the Exchange Act.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us

We may in the future lose our foreign private issuer status if a majority of the Common Shares are held in the U.S. and we fail to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than the costs incurred as a Canadian foreign private issuer eligible to use the Multi-Jurisdictional Disclosure System (“MJDS”) adopted by the United States and Canada. If we are not a foreign private issuer, we would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are generally more detailed and extensive than the forms available to a foreign private issuer.

We are an “emerging growth company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the Common Shares less attractive to investors

We are an “emerging growth company,” as defined in the Jumpstart Our Business Start-ups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act. In addition, should we remain an emerging growth company at a time we are no longer eligible to use the MJDS, we would be able to take advantage of reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Common Shares less attractive because we rely or decide in the future to rely on these exemptions. If some investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and our stock price may be more volatile.

We will remain an “emerging growth company” until June 30, 2017 (the last day of our fiscal year following the fifth anniversary of the first registered US public sale of our Common Stock), although we would lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of May 30 of any year.

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The financial reporting obligations of being a public company in the U.S. are expensive and time consuming, and place significant additional demands on our management

With the listing of our Common Shares on the NASDAQ Global Select Market in September 2011, we became subject to public company reporting obligations in the United States. The additional obligations of being a public company in the United States require significant additional expenditures and place additional demands on our management. In particular, at such time we are no longer an “emerging growth company” under the JOBS Act, section 404 of the Sarbanes-Oxley Act of 2002 and the SEC rules and regulations implementing section 404 will require an annual evaluation of our internal controls over financial reporting to be attested to by an independent auditing firm. If an independent auditing firm is unable to provide us with an attestation and an unqualified report as to the effectiveness of our internal controls, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our Common Shares. In addition, future acquisitions of companies by us may create challenges in implementing the required processes, procedures and controls in the acquired operations, as acquired companies (in particular, privately held companies) may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those required under the securities law applicable to STI.

Economic and financial market conditions have resulted in reduced spending by school districts and other governmental agencies

The 2008 global economic crisis and continuing economic instability resulted in a reduction in revenues to various state and local governmental entities, including school districts and other purchasers of our services. This reduction in revenues to our customers may negatively affect the revenues received by the Company in connection with annual rate increases on its school district customer contracts and non-contracted ancillary revenues due to potential cutbacks by customers in these spending areas. If the Company’s financial condition is materially impacted, then impairment charges with respect to the Company’s goodwill and other long-lived assets could be necessary.

We may be adversely affected by terrorism attacks and man-made or natural disasters

The potential for terrorism exists in the countries in which we operate. Public transportation has previously been subject to terrorist attacks and may be the target of future attacks, which could have a negative impact on our operations. Man-made and natural disasters, including adverse weather conditions, from which we are experiencing greater and more frequent disruptions, could negatively impact our operations through, among other things, increased costs, business disruptions and increased accidents. The occurrence of any of these events could have a material adverse effect on us, our financial condition, results of operations and cash flows.

We may be adversely affected by cyber terrorism or other data security breaches and are subject to data privacy risks.

In the normal course of our business, we rely on information technology systems. These systems, among other things, collect and safeguard confidential information regarding our employees, customers and the users of our services, including information collected through our SafeStop™ application. Cyber terrorists, hackers and data thieves have become increasingly sophisticated and have the ability to operate large-scale and complex data attacks that could lead to breaches of our systems and the security of our data and information. These attacks could also lead to other significant disruptions. Such breaches and disruptions may result in service interruptions or the loss of confidential information and could give rise to unwanted media attention, material damage to our customer relationships and reputation and fines or lawsuits. The occurrence of any of these events could have a material adverse effect on us, our financial condition, results of operations and cash flows.

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Risks Related to the Capital Structure

The Issuer is dependent on the Company for all cash available for dividends and interest

STI is dependent on the operations and assets of the Company through the ownership of common shares. Cash distributions to the holders of Common Shares and the Debentures will be dependent on the ability of the Company to make dividend payments on its common shares held by STI. The actual amount of cash available for payments to holders of Common Shares and the Debentures will depend upon numerous factors relating to the business of the Company, including profitability, changes in revenue, fluctuations in working capital, capital expenditure levels, applicable laws, compliance with contracts and contractual restrictions contained in the instruments governing any indebtedness. Any reduction in the amount of cash available for distribution, or actually distributed, by the Company will reduce the amount of cash available to STI for dividends to holders of Common Shares. Cash dividends by STI on the Common Shares are not guaranteed and will fluctuate with the performance of the business of the Company. Cash available for distribution is not intended to be representative of cash flow or results of operations determined in accordance with generally accepted accounting principles in the United States and does not have a standardized meaning prescribed by US GAAP.

A significant amount of our cash is distributed, which may restrict potential growth

The payout of substantially all of our operating cash flow will make additional capital and operating expenditures dependent on increased cash flow or additional financing in the future. Lack of these funds could limit the Issuer’s future growth and its cash flow. In addition, the Issuer may be precluded from pursuing otherwise attractive acquisitions or investments because they may not be accretive on a short-term basis.

STI may not receive dividends from the Company provided for in the dividend policy adopted by the board of directors of the Company, or any dividends at all

STI’s only source of cash flow for payment of dividends on the Common Shares and interest payments on the Debentures is distributions on its equity ownership of the Company. The board of directors of STI may, in its discretion, amend or repeal the dividend policy. STI’s board of directors may decrease the level of dividends provided for in this dividend policy or entirely discontinue the payment of dividends. Future dividends with respect to the Common Shares of STI, if any, will depend on, among other things, the results of operations, cash requirements, financial condition, contractual restrictions, business opportunities, provisions of applicable law and other factors that the board of directors of STI may deem relevant. The Credit Agreement and the Note Purchase Agreement contain significant restrictions on the Company’s ability to make dividend payments.

Fluctuations in the exchange rate may impact the amount of cash available to the Issuer for distribution and the Company’s results of operations

The 6.25% Canadian Debentures are denominated in Canadian dollars, and payment of these Debentures upon maturity will be payable in Canadian dollars. The Company has not entered into any hedge arrangement with respect to the payment of these Debentures upon maturity in 2019. Interest payments on the 6.25% Canadian Debenture are denominated in Canadian dollars. Conversely, approximately 78% of the Company’s revenue and expenses, together with distributions received from the Company’s subsidiaries are denominated in U.S. dollars. As a result, the Company is exposed to currency exchange rate risks.

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Although the Company intends to fund the interest payments on the 6.25% Canadian Debentures with cash flows from the Company’s Canadian operations to mitigate the exchange rate risk with respect to the total amount of currently anticipated interest payments on those debentures, there can be no assurance that these arrangements will be sufficient to fully protect against this risk. If the Canadian dollar cash flow does not fully protect against this risk, changes in the currency exchange rate between U.S. and Canadian dollars could have a material adverse effect on the Issuer’s financial condition, results of operations and cash flow, and may adversely affect the Issuer’s cash distributions.

In addition, the Company prepares its financial statements in U.S. dollars. In connection with the Company’s Canadian operations, approximately 22% of the Company’s consolidated income before taxes for fiscal year 2015 is incurred in Canadian dollars. The results of the Canadian operations are translated into U.S. dollars for financial statement reporting purposes. Changes in the Canadian dollar / U.S. dollar currency exchange rate from period to period will impact the translated U.S. dollar equivalent results of the Canadian operations. A weakening Canadian dollar will have a negative impact on the translation of the results of the Canadian operations in U.S. dollars for financial reporting purposes. Conversely, a strengthening Canadian dollar will have a positive impact on the translation of the results of the Canadian operations in U.S. dollars for financial reporting purposes.

Changes in the Issuer’s creditworthiness may affect the value of the Common Shares and Debentures

The perceived creditworthiness of the Issuer, the Company and their respective subsidiaries may affect the market price or value and the liquidity of the Common Shares and the Debentures.

Future sales or the possibility of future sales of a substantial amount of Common Shares may impact the price of the Common Shares and could result in dilution

Future sales or the possibility of future sales of a substantial amount of Common Shares in the public market by the Company or an existing shareholder could adversely affect the prevailing market price of the Issuer’s Common Shares, and could impair the Issuer’s ability to raise capital through future sales of those securities. For example, the Company understands that SNCF Participations S.A., which held approximately 15.0 million of the Company’s Common Shares on June 30, 2015, sold 4.0 million of those shares on August 6, 2015 in market transactions at a discount to the market trading price at that time, which we believe had an adverse impact on the price of the Common Shares.

Additionally, the issuance of additional Common Shares may dilute an investor’s investment in the Issuer and reduce distributable cash per Common Share. The Issuer may issue Common Shares, or other securities from time to time, in order to raise capital or as consideration for future acquisitions and investments. If an acquisition or investment is significant, the number of Common Shares or the number or aggregate principal amount, as the case may be, of other securities that may be issued may in turn be significant. In addition, the Issuer may also grant registration rights covering those Common Shares or other securities in connection with any acquisitions or investments.

Further, the Issuer may determine to redeem outstanding Debentures for Common Shares or to repay outstanding principal amounts thereunder at maturity of the Debentures by issuing additional Common Shares. The issuance of additional Common Shares may have a dilutive effect on shareholders and an adverse impact on the price of Common Shares.

Investment eligibility

There can be no assurance that the Common Shares will continue to be qualified investments for trusts governed by registered retirement savings plans, registered retirement income funds, registered disability savings plans, deferred profit sharing plans and registered education savings plans and for arrangements that are tax-free savings accounts.

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The Issuer may not be able to make all interest payments on the Debentures

The likelihood that holders of the Debentures will receive the payments owing to them in connection with the Debentures will be dependent upon the financial health and creditworthiness of the Company and the ability of the Company to earn revenues.

The Issuer may not be able to purchase the Debentures on a change of control

The Issuer will be required to offer to purchase all outstanding Debentures upon the occurrence of a change of control. However, it is possible that following a change of control, the Issuer will not have sufficient funds at that time to make the required purchase of outstanding Debentures or that restrictions contained in other indebtedness will restrict those purchases.

Redemption prior to maturity

The Debentures may be redeemed in accordance with their respective terms, upon payment of the principal, together with any accrued and unpaid interest. Holders of Debentures should assume that this redemption option will be exercised if the Issuer is able to refinance at a lower interest rate or it is otherwise in the interest of the Issuer to redeem the Debentures.

Conversion following certain transactions

In the case of certain transactions, each Debenture will become convertible into securities, cash or property receivable by a holder of Debentures in the kind and amount of securities, cash or property into which the Debenture was convertible immediately prior to the transaction. This change could substantially lessen or eliminate the value of the conversion privilege associated with the Debentures in the future.

Prevailing yields on similar securities

Prevailing yield on similar securities will affect the market value of the Debentures. Assuming all other factors remain unchanged, the market value of the Debentures will decline as prevailing yields for similar securities rise, and will increase as prevailing yields for similar securities decline.

There is a limited active public market for the Common Shares and Debentures and holders may have limited liquidity

Although the Common Shares and Debentures are listed and posted for trading on the TSX and the Common Shares also trade on the NASDAQ Global Select Market, they trade in markets with modest trading volumes. Although the Issuer has taken a number of steps to increase the liquidity of the Common Shares through additional common share offerings and debt to equity exchanges, there is no guarantee that an active trading market will further emerge and/or continue.

The market price for the Common Shares or Debentures may be volatile

Factors such as variations in the Issuer’s financial results, announcements by the Issuer or others, developments affecting the Company’s business or the North America school bus transportation industry, general interest rate levels, general fuel price levels, the market price of the Common Shares and general market volatility could cause the market price of the Common Shares or the Debentures to fluctuate significantly.

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Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” under the JOBS Act, we may be less attractive to investors, which may make it more difficult for us to raise additional capital as and when we need it. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

STA Holdings’ interest deductions on the Notes were likely “dual consolidated losses” for U.S. federal income tax purposes and may result in disallowance of interest deductions under U.S. tax law if certain “triggering events” occur

Pursuant to Section 1503(d) of the Code and the Treasury Regulations thereunder, the interest deductions generated on the Notes likely generated a “dual consolidated loss” (“DCL”) for U.S. federal income tax purposes and therefore were deductible by STA Holdings only if STA Holdings and STA ULC made the appropriate election and complied with all applicable requirements, including annual reporting and certification requirements. STA Holdings and STA ULC made, and intend to continue to make, such election and have complied with all applicable requirements to date. Even though such an election was made, however, if any of several “triggering events” occurs (e.g., the use of such losses to offset the income of any other non-U.S. person, or, in certain circumstances, a disposition of STA ULC stock or assets), STA Holdings will generally be required to report the amount of any prior interest deductions on the Notes (plus interest thereon) as gross income in the year of the triggering event. STA Holdings and STA ULC intend to comply with all of the DCL reporting and certification requirements and to conduct their affairs such that no DCL triggering event occurs. However, if STA Holdings and STA ULC fail to satisfy such reporting and certification requirements, or if a DCL triggering event occurs and no exception applies, STA Holdings’ taxable income may be increased and if so, its U.S. federal income tax liability would be increased, perhaps materially. This would adversely affect the Company’s financial position, cash flow, and liquidity, and could affect the Issuer’s ability to make interest or dividend payments on the Debentures and the Common Shares and the Company’s ability to continue as a going concern.

Application of U.S. federal income tax corporate “inversion” rules is uncertain

U.S. federal income tax legislation enacted in October 2004 dealing with corporate “inversions” (e.g., certain transactions in which a non-U.S. corporation acquires substantially all of the equity interests in, or the assets of, a U.S. corporation or partnership, if, after the transaction, former equity owners of the U.S. corporation or partnership own a specified level of stock in the non-U.S. corporation) provides in certain cases that a non-U.S. corporation may be treated as a U.S. corporation for U.S. federal income tax purposes. As enacted, this legislation does not appear to apply to STI, because the Existing Investors did not own any stock in STI as a result of the original offering and related transactions or subsequent IPS or Common Share offerings. The legislation grants authority to the U.S. Treasury, however, to write implementing regulations, which could, if exercised broadly and retroactively, cause the inversion provisions to apply to STI and result in, among other things, U.S. withholding taxes being imposed on dividends paid on the Common Shares to non-U.S. Holders, and the potential inability of U.S. holders to claim a foreign tax credit for Canadian withholding tax on dividends paid on the Common Shares to them. The Internal Revenue Service subsequently issued regulations to provide further guidance on when a non-U.S. corporation may be treated as a U.S. corporation for U.S. federal income tax. Those regulations would not cause STI to be treated as a U.S. corporation for U.S. federal income tax purposes, but there can be no assurance such regulations may not be modified in the future.

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MARKET FOR SECURITIES

The Common Shares and the Debentures are listed and posted for trading on the TSX. On September 6, 2011, the Common Shares commenced trading on the NASDAQ Global Select Market, under the symbol “STB”.

The volume of trading and price ranges of the Common Shares on the TSX (symbol STB) over fiscal 2015 are set forth in the following table:

Period	High$		Low$		Volume
July 2014	$	7.17	$	6.95		1,404,725
August 2014	$	7.17	$	6.98		1,570,777
September 2014	$	7.12	$	6.77		1,609,197
October 2014	$	7.24	$	6.75		2,952,222
November 2014	$	7.35	$	7.04		1,463,462
December 2014	$	7.32	$	7.04		2,237,154
January 2015	$	7.38	$	6.88		2,705,078
February 2015	$	7.48	$	7.04		3,470,712
March 2015	$	7.19	$	6.62		5,392,027
April 2015	$	6.99	$	6.78		2,042,412
May 2015	$	6.84	$	6.08		5,441,350
June 2015	$	6.25	$	5.4		3,723,999

The volume and trading price ranges of the 6.25% US Debentures on the TSX (symbol STB.DB.U) over fiscal 2015 are set forth in the following table:

Period	High$		Low$		Volume
July 2014	$	104.00	$	102.11		301,000
August 2014	$	102.75	$	102.50		565,000
September 2014	$	102.62	$	101.81		3,519,000
October 2014	$	102.50	$	100.50		255,000
November 2014	$	101.30	$	100.25		395,000
December 2014	$	101.00	$	99.90		634,000
January 2015	$	101.00	$	99.50		683,000
February 2015	$	101.80	$	98.00		1,346,000
March 2015	$	101.50	$	100.04		1,842,000
April 2015	$	101.00	$	100.25		747,000
May 2015	$	101.00	$	100.00		1,626,000
June 2015	$	100.50	$	98.75		571,000

The volume and trading price ranges of the 6.25% Canadian Debentures on the TSX (symbol STB.DB.C) over fiscal 2015 are set forth in the following table:

Period	High$		Low$		Volume
July 2014	$	103.00	$	101.50		1,256,000
August 2014	$	103.25	$	102.25		616,000
September 2014	$	105.00	$	102.25		1,101,100
October 2014	$	104.00	$	102.00		1,082,000
November 2014	$	104.00	$	101.50		570,000
December 2014	$	104.50	$	103.11		456,000
January 2015	$	105.60	$	103.50		611,000

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Period	High$		Low$		Volume
February 2015	$	105.00	$	103.25		785,000
March 2015	$	104.50	$	100.00		966,500
April 2015	$	107.00	$	101.00		726,500
May 2015	$	108.00	$	104.50		978,500
June 2015	$	104.50	$	99.99		1,391,000

PRIOR ISSUANCES

The only issuances of non-listed securities by the Issuer in the 12 months prior to June 30, 2015 were:

• During the fiscal year 2015, STA Holdings granted 663,620 Class B-3 Shares pursuant to the EIP.

In July 2015, STA Holdings granted 173,705 Class B-3 Shares pursuant to the EIP. The Company will recognize non-cash stock-based compensation expense related to these grants during the quarter ended September 30, 2015.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

The Company utilized a transportation equipment dealer, primarily to assist in procurement and disposal of the Company’s fleet under the direction of the Company’s CFO. The transportation equipment dealer also provided consulting services to the Company, assisting with fleet valuations in its acquisition efforts. The transportation equipment dealer is a company controlled by a family member of the Company’s Chairman and Chief Executive Officer. Beginning in fiscal year 2015, the fleet procurement and disposal services were provided for an annual fee including a retainer amount plus a commission per vehicle amount not to exceed $0.5 million per annum. Prior to fiscal year 2015, these services were provided on a non-contractual basis. The Issuer paid the transportation equipment dealer approximately US$0.5 million and US$0.6 million for the years ended June 30, 2015 and 2014, respectively. In April 2015, the Company terminated the contract and began to perform these services directly with internal resources.

These transactions are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

No director or executive officer who is, or at any time during the most recently completed financial year of the Issuer was, a director or executive officer of the Issuer, has any indebtedness to the Issuer or any of its subsidiaries.

CODE OF CONDUCT

The Issuer has adopted a Code of Conduct (the “Code”) that applies to all directors, officers and employees of the Issuer, including the principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. A copy of the Code is posted on the Issuer’s website at www.ridesta.com. Any amendments to the Code, and all waivers of the Code with respect to any of the officers covered by it, will be posted to the Issuer’s website within five business days of any amendment or waiver to the Code and shall be provided in print to any shareholder who requests them.

57

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Shares is Computershare Investor Services Inc. at its principal office in Toronto, Ontario, Canada and Computershare Trust Company, N.A. at its office in Denver, Colorado, USA.

MATERIAL CONTRACTS

The only material contracts (other than contracts entered into in the ordinary course of business) to which the Issuer or the Company is a party as at June 30, 2015, are as follows:

• Note Purchase Agreement dated December 14, 2006, as amended from time to time (the “Note Purchase Agreement”);

• First Amendment to Note Purchase Agreement dated July 23, 2007;

• Waiver and Amendment Agreement to Note Purchase Agreement dated January 17, 2008;

• Waiver Agreement to Note Purchase Agreement dated March 31, 2008;

• Amendment Agreement to Note Purchase Agreement dated as of August 11, 2008;

• Amendment Agreement to Note Purchase Agreement dated as of February 18, 2009;

• Waiver and Amendment Agreement to Note Purchase Agreement dated October 2, 2009;

• Amendment Agreement to Note Purchase Agreement dated as of October 2, 2009;

• Amendment Agreement to Note Purchase Agreement dated as of June 1, 2010;

• Amendment Agreement to Note Purchase Agreement dated as of November 10, 2011;

• Amendment Agreement to Note Purchase Agreement dated as of March 27, 2012;

• Amendment Agreement to Note Purchase Agreement dated as of February 27, 2013;

• Amendment Agreement to Note Purchase Agreement dated as of November 7, 2013;

• Third Amended and Restated Credit Agreement dated February 4, 2011(the “Third Amended and Restated Credit Agreement”);

• First Amendment to the Third Amended and Restated Credit Agreement dated as of October 11, 2011;

• Second Amendment to the Third Amended and Restated Credit Agreement dated as of March 27, 2012;

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• Third Amendment and Waiver to the Third Amended and Restated Credit Agreement dated as of October 1, 2012;

• Fourth Amendment to the Third Amended and Restated Credit Agreement dated as of February 27, 2013;

• Fifth Amendment to the Third Amended and Restated Credit Agreement dated as of November 7, 2013;

• Sixth Amendment to the Third Amended and Restated Credit Agreement dated as of August 19, 2014;

• Subscription Agreement for the Purchase of Common Shares by SNCF Participations S.A. dated April 14, 2008;

• Note Indenture in respect of the 6.75% Debentures dated as of June 21, 2010;

• Note Indenture in respect of the 6.25% US Debentures dated June 7, 2011;

• Note Indenture in respect of the 6.25% Canadian Debentures dated November 12, 2013;

• Underwriting Agreement for the purchase of Common Shares dated February 20, 2015;

• The Equity Incentive Plan referred to under “Equity Incentive Plan” and “General Development of the Business”; and

• Amended and Restated Equity Incentive Plan dated May 7, 2015.

Each of these material contracts is available for review on SEDAR at www.sedar.com.

NAMES OF EXPERTS AND INTEREST OF EXPERTS

Ernst & Young LLP, the Issuer’s auditor, has issued an audit report on the consolidated financial statements for the fiscal year ended June 30, 2015. To the knowledge of the Issuer, Ernst & Young LLP is independent within the meaning of the rules of professional conduct of the Institute of Chartered Accountants of Ontario.

ADDITIONAL INFORMATION

Additional information is provided in the Issuer’s financial statements and management’s discussion and analysis of the Issuer’s financial condition and results of operations for its most recently completed fiscal year. Copies of such documents and any additional information related to the Issuer may be found on SEDAR at www.sedar.com. In the alternative, copies may be obtained from our Chief Financial Officer upon written request.

Additional information including directors’ and officers’ remuneration and indebtedness and the principal holders of the Issuer’s securities and securities authorized for issuance under the Issuer’s equity compensation plans, will be contained in the Issuer’s Management Information Circular to be filed in connection with the annual meeting of shareholders of the Issuer to be held in respect of its 2015 fiscal year.

59

Reviewed and Re-approved September 9, 2015

SCHEDULE “A”

STUDENT TRANSPORTATION INC.

AUDIT COMMITTEE CHARTER

The Audit Committee (the “Committee”) of Student Transportation Inc. (the “Issuer”) is established in order to assist the board of directors of the Issuer in their oversight activities. The purpose of the Committee is to assist the board in its oversight and supervision of:

• the integrity of the Issuer’s accounting and financial reporting practices and procedures,

• the adequacy of the Issuer’s internal accounting controls and procedures,

• the quality and integrity of the Issuer’s consolidated financial statements,

• compliance by the Issuer with legal and regulatory requirements, in regard to financial disclosure, that the Issuer is subject to; and

• the independence and performance of the Issuer’s independent auditor.

Composition:

The board of directors of the Issuer shall elect annually from among its members a committee to be known as the Audit Committee to be composed of not less than three directors, each of whom qualify as “independent directors” within the meaning of Multilateral Instrument 52-110 – Audit Committees, as amended from time to time (the “Audit Committee Rule”); and each of whom is “financially literate” (or will become so within a reasonable period of time following his or her appointment) within the meaning of the Audit Committee Rule.

Reports:

The Committee shall report to the board of directors of the Issuer on a regular basis and, in any event, before the public disclosure by the Issuer of its quarterly and annual financial results. The reports of the Committee shall include any issues of which the Committee is aware with respect to the quality or integrity of the Issuer’s consolidated financial statements, its compliance with legal or regulatory requirements, and the independence and performance of the Issuer’s independent auditor.

Responsibilities:

Subject to the powers and duties of the board of directors of the Issuer, the board hereby delegates to the Committee the following powers and duties to be performed by the Committee on behalf of and for the board of directors of the Issuer:

A. Financial Statements and Other Financial Information

The Committee shall:

(a) review the Issuer’s consolidated annual audited financial statements and related documents prior to any public disclosure of such information;

(b) review the Issuer’s consolidated interim unaudited financial statements and related documents prior to any public disclosure of such information;

(c) following a review with management and the independent auditor of such annual and interim consolidated financial statements and related documents, recommend to the board of directors of the Issuer the approval of such financial statements and related documents;

(d) review with management and/or the independent auditor all critical policies and practices used as well as significant management estimates and judgements and any changes in accounting policies or financial reporting requirements that may affect the Issuer’s consolidated financial statements;

(e) review with management and/or the independent auditor the treatment in the financial statements of any significant transactions and other potentially difficult matters;

(f) review a summary provided by the Issuer’s legal counsel of the status of any material pending or threatened litigation, claims and assessments respecting the Issuer and its subsidiaries;

(g) review the other annual financial reporting documents as well as management’s discussion and analysis and earnings press releases of the Issuer prior to any disclosure to the public; and

(h) have the responsibility of reviewing, in advance, any communications between the Issuer and any applicable securities regulators or commissions.

B. Financial Reporting Control Systems

The Committee shall:

(a) report to the Board on a regular basis, prior to the public release by the Issuer of its quarterly and annual financial statements;

(b) require management to implement and maintain appropriate internal controls, and use reasonable efforts to satisfy itself as to the adequacy of the Issuer’s policies for the management of risk and the preservation of assets and the fulfillment of legislative and regulatory requirements;

(c) annually, in consultation with management, the independent auditor and, if applicable, the officer or employee responsible for the internal audit function, review, evaluate and assess the adequacy and integrity of the Issuer’s consolidated financial reporting processes and internal controls, and discuss significant financial risk, exposures and the steps management has taken to monitor, control and report such exposures;

(d) if applicable, at a time when internal audit personnel are in place, meet separately with the such personnel responsible for the internal audit function to discuss any matters that the Committee or independent auditor believe should be discussed in private;

(e) submit to the board of directors of the Issuer, and the boards of directors of its subsidiaries, any recommendations that the Committee may have from time to time (through its own inquiries or those of advisors retained by the Committee) with respect to financial reporting, accounting procedures and policies and internal controls;

(f) review reports from senior officers of the Issuer and its subsidiaries outlining any significant changes in financial risks facing the Issuer; in addition, the Committee shall liaise with the Board as a whole to ensure that management presents to the Board, annually, an overall risk assessment in relation to the Issuer’s business;

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(g) review the management letter of the independent auditor and the responses to suggestions made;

(h) review any new appointments to senior positions of the Issuer and its subsidiaries with financial reporting responsibilities;

(i) satisfy itself that adequate procedures are in place for the review of the Issuer’s disclosure of the Issuer’s financial information extracted or derived from the Issuer’s consolidated financial statements (other than the financial statements, management’s discussion and analysis and earnings press releases) and periodically assess the adequacy of those procedures;

(j) establish a written policy regarding procedures for:

(i) receipt, retention and treatment of complaints received by the Issuer or its subsidiaries regarding accounting, internal accounting controls or auditing matters; and

(ii) the confidential, anonymous submission by employees of the Issuer or its subsidiaries of concerns regarding questionable accounting or auditing matters;

(k) establish, or review and approve the Issuer’s (and its respective subsidiaries’) hiring policies regarding partners, employees and former partners and employees of the present and former independent auditors of the Issuer; and

(l) obtain assurance from the independent auditor regarding the overall control environment and the adequacy of accounting system controls.

The Committee shall also keep itself apprised of the workings and effectiveness of the Whistleblower Policy of the Issuer. That policy provides that any employee with a good faith concern about any accounting, financial or auditing matter, including: fraud or deliberate error in the preparation, evaluation, review or audit of any financial statements of the Issuer; fraud or deliberate error in the recording or maintaining of financial records of the Issuer; deficiencies in, or non-compliance with, the Issuer’s system of internal controls; misrepresentations or false statements to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of the Issuer; or deviations from full and fair reporting of the Issuer’s financial condition, should promptly report those concerns, on any basis that the employee may choose, by contacting National Hotline Services (“NHS”) at the following toll-free number: 1-800-826-6762. The Committee should ensure that NHS forwards any such concerns promptly to the Chairman of the Committee. The Committee shall then determine the appropriate manner to deal with the concerns raised, in the best interests of the Issuer.

C. Independent Auditor

The Committee shall:

(a) Obtain confirmation from the independent auditor that it will be accountable to, and report directly to, the Audit Committee of the Board;

(b) review the audit plan with the independent auditor;

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(c) review regularly the performance, qualifications and independence of the independent auditor, as well as the competence and responsiveness of the individual partners assigned to the Issuer’s account;

(d) discuss in private with the independent auditor matters affecting the conduct of its audit and other corporate matters;

(e) recommend to the board of directors of the Issuer each year the retention or replacement of the independent auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Issuer and the remuneration of the independent auditor;

(f) if there is a plan to change the independent auditor, review all issues related to the change and the steps planned for an orderly transition;

(g) annually review and recommend for approval to the shareholders the terms of engagement and the remuneration of the independent auditor;

(h) oversee the work of the independent auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Issuer, including the resolution of disagreements between management and the independent auditor regarding financial reporting;

(i) discuss with the Issuer’s independent auditor the quality and not just the acceptability of the Issuer’s accounting principles;

(j) meet with the Issuer’s independent auditor on a regular basis in the absence of management; and

(k) relay its expectations to the Issuer’s independent auditor from time to time including its expectation that (i) any disagreements of a material nature with management be brought to the attention of the Committee, (ii) the independent auditor is accountable to the Committee and the board, each as representatives of the shareholders and must report directly to the Committee, (iii) any irregularities in the financial information be reported to the Committee, (iv) the independent auditor explains the process undertaken by it in auditing or reviewing the Issuer’s financial disclosure, (v) the independent auditor discloses to the Committee any significant changes to accounting policies or treatment of the Issuer, (vi) the independent auditor discloses to the Committee any reservations it may have about the financial statements or its access to materials and/or persons in reviewing or auditing such statements, and (vii) the independent auditor discloses any conflict of interest that may arise in its engagement.

Structure:

• The Committee shall appoint one of its members to act as Chairman of the Committee. The Chairman will appoint a secretary who will keep minutes of all meetings (the “Secretary”). The Secretary does not have to be a member of the Committee or a director and can be changed by simple notice from the Chairman.

• The Committee will meet as many times as is necessary to carry out its responsibilities but in no event will the Committee meet less than quarterly each year. Meetings will be at the call of the Chairman. Notwithstanding the foregoing, the independent auditor of the Issuer or any member of the Committee may call a meeting of the Committee on not less than 48 hours’ notice unless so warranted.

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• No business may be transacted by the Committee except at a meeting of its members at which a quorum of the Committee is present or by a resolution in writing signed by all the members of the Committee. A majority of the members of the Committee shall constitute a quorum provided that if the number of members of the Committee is an even number one half of the number of members plus one shall constitute a quorum.

• Any member of the Committee may be removed or replaced at any time by the board of directors of the Issuer and shall cease to be a member of the Committee as soon as such member ceases to be a director. Subject to the foregoing, each member of the Committee shall hold such office until the next annual meeting of shareholders after his or her election as a member of the Committee.

• The independent auditor of the Issuer shall be entitled to receive notice of every meeting of the Committee and, at the expense of the Issuer, to attend and be heard thereat.

• The time at which and the place where the meetings of the Committee shall be held, the calling of meetings and the procedure in all respects of such meeting shall be determined by the Committee, or otherwise determined by resolution of the board of directors.

• The members of the Committee shall be entitled to receive such remuneration for acting as members of the Committee as the board of directors may from time to time determine.

Chairman of the Committee:

The chairman of the Committee (the “Chairman”) is responsible for the effective functioning of the Committee.

The Chairman of the Committee shall:

• Establish procedures to govern the Committee’s work and ensure the Committee’s full discharge of its duties, including:

• Collaborating with the Lead Director of the board of directors, the CEO, the CFO and other members of management, where appropriate, to develop the agenda for Committee meetings;

• Obtaining appropriate information from management to enable the Committee to exercise its duties;

• Ensuring that all items requiring Committee approval or Committee recommendations to the board of directors are appropriately tabled;

• Ensuring proper flow of information to the Committee and reviewing adequacy and timing of required documentary materials;

• Ensuring that external advisors retained or to be retained by the Committee are appropriately qualified and independent;

• Ensuring that the Committee has access to such members of senior management as may be required;

• Ensuring an open and frank relationship between the Committee and the internal and external auditors; and

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• Supporting the independence of the external auditor from management;

• Discuss as necessary with the Chair of the CNG Committee the skills, experience and talents required for the Committee on an ongoing basis;

• Chair every meeting of the Committee and encourage a free and open discussion at the meetings;

• Report to the board of directors on behalf of the Committee;

• Attend every meeting of securityholders and respond to such questions from securityholders as may be put the Chair of the Audit Committee; and

• Carry out other duties as requested by the Board, depending on need and circumstances.

Non-Audit Services of Independent Auditor:

The Committee shall review at least annually the non-audit services provided by the Issuer’s independent auditor for the purposes of getting assurance that the performance of such services will not compromise the independence of the independent auditor; and pre-approve all non-audit services to be provided to the Issuer or its subsidiary entities by its independent auditor or the independent auditor of its subsidiary entities, provided that the Committee may delegate to one or more independent members the authority to pre-approve non-audit services in satisfaction of this requirement. The pre-approval of non-audit services by any member to whom authority has been delegated must be presented to the full Committee at its first scheduled meeting following such pre-approval.

The Committee may satisfy the pre-approval requirement if: (a) the aggregate amount of all the non-audit services that were not pre-approved could reasonably be expected to constitute no more than five per cent of the total amount of fees paid by the Issuer and its subsidiary entities to the Issuer’s independent auditor during the fiscal year in which the services are provided; (b) the services were not recognized by the Issuer or the subsidiary entity of the Issuer at the time of the engagement to be non-audit services; and (c) the services are promptly brought to the attention of the Committee and approved, prior to the completion of the audit, by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee.

Independent Advice:

In discharging its mandate the Committee shall have the authority to retain and receive advice from special legal, accounting or other advisors at the expense of the Issuer, as required to fulfill its duties, and to set and pay the compensation for any such advisors.

Annual Evaluation:

At least every two years, the Committee shall, in a manner it determines to be appropriate:

• Perform a review and evaluation of the performance of the Committee and its members, including the compliance of the Committee with its Charter and terms of reference.

• Review and assess the adequacy of its Charter and terms of reference and recommend to the board of directors of the Issuer any improvements to the Committee’s Charter and terms of reference that the Committee determines to be appropriate.

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Limitation:

Nothing in this charter is intended to or shall have the effect of limiting or impairing the independent decision making authority or responsibility of any board of directors/managers of a subsidiary of the Issuer mandated by applicable law.

Limitation on Committee’s Duties

Except as otherwise required by applicable laws including the Audit Committee Rules, in contributing to the Committee’s discharge of its duties under this charter, each member of the Committee shall be obliged only to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Nothing in this charter is intended or may be construed as imposing on any member of the Committee a standard of care or diligence that is in any way more onerous or extensive than the standard to which the directors of the Issuer are subject.

Except as otherwise required by applicable laws including the Audit Committee Rules, it is not the duty of the Committee to prepare financial statements or ensure their accuracy or absence of errors and omissions, to plan or conduct audits, to determine that the financial statements are complete and accurate and in accordance with Canadian generally accepted accounting principles, to conduct investigations, or to assure compliance with laws and regulations or the Issuer’s internal policies, procedures and controls, as these are the responsibility of management and in certain cases the external auditor. Nothing contained in this charter is intended to make the Committee liable for any non-compliance by the Issuer with applicable laws or regulations.

The Committee is a committee of the board of directors and is not and shall not be deemed to be an agent of the Issuer’s securityholders or creditors for any purpose whatsoever. The board of directors may, from time to time, permit departures from the terms hereof, either prospectively or retrospectively, and no provision contained herein is intended to give rise to civil liability to securityholders of the Issuer or to any other liability whatsoever.

Except as otherwise required by applicable laws including the Audit Committee Rules, members of the Committee are entitled to rely, absent actual knowledge to the contrary, on (i) the integrity of the persons and organizations from whom they receive information, (ii) the accuracy and completeness of the information provided, (iii) representations made by management as to the non-audit services provided to the Issuer by the external auditor, (iv) financial statements of the Issuer represented to them by a member of management or in a written report of the external auditors to present fairly the financial position of the Issuer in accordance with generally accepted accounting principles, and (v) any report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by any such person.

Definitions:

“financially literate” means the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Issuer’s financial statements.

“independent director” means a director who has no direct or indirect material relationship with the Issuer.¹

¹  For the purpose of the definitions of “independent director” and “material relationship” in this section, “Issuer” includes a subsidiary entity of the Issuer and a parent of the Issuer, as applicable.

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“material relationship” means a relationship which could, in the view of the board of directors of the Issuer, be reasonably expected to interfere with the exercise of a member’s independent judgement. Without limiting the generality of the foregoing, the following individuals are considered to have a material relationship with the Issuer:²

(a) an individual who is, or has been within the last three years, an employee or executive officer³ of the Issuer;

(b) an individual whose immediate family member is, or has been within the last three years, an executive officer of the Issuer;

(c) an individual who:

(i) is a partner⁴ of a firm that is the Issuer’s internal or external auditor,

(ii) is an employee of that firm, or

(iii) was within the last three years a partner or employee of that firm and personally worked on the Issuer’s audit within that time;

(d) an individual whose spouse, minor child or stepchild, or child or stepchild who shares a home with the individual:

(i) is a partner of a firm that is the Issuer’s internal or external auditor,

(ii) is an employee of that firm and participates in its audit, assurance or tax compliance (but not tax planning) practice, or

(iii) was within the last three years a partner or employee of that firm and personally worked on the Issuer’s audit within that time;

(e) an individual who, or whose immediate family member, is or has been within the last three years, an executive officer of an entity if any of the Issuer’s current executive officers serves or served at that same time on the entity’s compensation committee; and

(f) an individual who received, or whose immediate family member who is employed as an executive officer of the Issuer received, more than $75,000 in direct compensation⁵ from the Issuer during any 12 month period within the last three years.⁶

²  An individual will not be considered to have a material relationship with the Issuer solely because he or she had a relationship identified in this definition if that relationship ended before March 30, 2004 (or before June 30, 2005 where the relationship existed with respect to a subsidiary or parent of the Issuer). An individual will not be considered to have a material relationship with the Issuer solely because the individual or his or her immediate family member has previously acted as an interim chief executive officer of the Issuer or acts, or has previously acted, as a chair or vice-chair of the board of directors or of any board committee of the Issuer on a part-time basis.

³  An “executive officer” includes any individual who performs a policy-making function in respect of the entity.

⁴  A partner does not include a fixed income partner whose interest in the firm that is the internal or external auditor is limited to the receipt of fixed amounts of compensation (including deferred compensation) for prior service with that firm if the compensation is not contingent in any way on continued service.

⁵  Direct compensation does not include: (a) remuneration for acting as a member of the board of directors or of any board committee of the Issuer; and (b) the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Issuer if the compensation is not contingent in any way on continued service.

⁶  An individual who: (a) has a relationship with the Issuer pursuant to which the individual may accept, directly or indirectly, any consulting, advisory or other compensatory fee from the Issuer or any subsidiary entity of the Issuer, other than as remuneration for acting in his or her capacity as a member of the board of directors or any board committee, or as a part-time chair or vice-chair of the board or any board committee; or (b) is an affiliated entity of the Issuer or any of its subsidiary entities, is considered to have a material relationship with the Issuer. The indirect acceptance by an individual of any consulting, advisory or other compensatory fee includes acceptance of a fee by: (a) an individual’s spouse, minor child or stepchild, or a child or stepchild who shares the individual’s home; or (b) an entity in which such individual is a partner, member, an officer such as a managing director occupying a comparable position or executive officer, or occupies a similar position (except limited partners, non-managing members and those occupying similar positions who, in each case, have no active role in providing services to the entity) and which provides accounting, consulting, legal, investment banking or financial advisory services to the Issuer or any subsidiary entity of the Issuer. Compensatory fees do not include the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the Issuer if the compensation is not contingent in any way on continued service.

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EX-99.2

Exhibit 99.2

CONSOLIDATED FINANCIAL STATEMENTS

Student Transportation Inc.

For the years ended June 30, 2015 and 2014

Student Transportation Inc.

Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

Contents

Report of Independent Registered Public Accounting Firm	3
Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Consolidated Statements of Comprehensive Income	6
Consolidated Statements of Shareholders’ Equity	7
Consolidated Statements of Cash Flows	8
Notes to the Consolidated Financial Statements	9

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Student Transportation Inc.:

We have audited the accompanying consolidated balance sheets of Student Transportation Inc. as of June 30, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for the years then ended, and the notes to the consolidated financial statements.

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with United States generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Student Transportation Inc. as at June 30, 2015 and 2014 and the consolidated results of its operations and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Independent Registered Public Accounting Firm

MetroPark, New Jersey USA

September 14, 2015

3

Student Transportation Inc.

Consolidated Balance Sheets

(000’s of U.S. dollars)

	As at June 30, 2015			As at June 30, 2014
Assets
Current assets:
Cash and cash equivalents	$	5,333		$	10,858
Accounts receivable, net of allowance for doubtful accounts of $126 and $152 at June 30, 2015 and 2014, respectively		55,275			47,731
Inventory		4,148			3,858
Prepaid expenses		9,721			9,619
Other current assets		3,443			4,788
Total current assets		77,920			76,854
Investment in investee		1,776			—
Other assets		20,384			20,883
Property and equipment, net		231,296			231,352
Oil and gas interests, net		7,713			7,871
Other intangible assets, net		61,899			67,720
Goodwill		134,939			139,158
Total assets	$	535,927		$	543,838
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	2,230		$	1,656
Accrued expenses and other current liabilities		67,396			48,682
Current portion of long-term debt		—			200
Total current liabilities		69,626			50,538
Long-term debt		204,936			273,898
Asset retirement obligation		575			438
Deferred income tax liability		41,558			41,523
Class B Series Three common share liability		1,993			2,734
Other liabilities		17,432			15,667
Total liabilities		336,120			384,798
Shareholders’ equity
Paid in Share Capital		517,560			443,100
Accumulated deficit		(315,633	)		(276,938	)
Accumulated other comprehensive loss		(2,120	)		(7,122	)
Total shareholders’ equity		199,807			159,040
Total liabilities and shareholders’ equity	$	535,927		$	543,838

See accompanying notes.

4

Student Transportation Inc.

Consolidated Statements of Operations

(000’s of U.S. dollars, unless specified, except share and per share amounts)

	Twelve months ended June 30, 2015			Twelve months ended June 30, 2014
Revenues	$	554,751		$	489,499
Costs and expenses:
Cost of operations		427,536			373,060
General and administrative		54,749			46,673
Non-cash stock compensation		4,170			3,942
Acquisition expenses		3			282
Depreciation and depletion expense		47,757			46,444
Amortization expense		3,374			3,573
Total operating expenses		537,589			473,974
Income from operations		17,162			15,525
Interest expense		17,412			16,641
Foreign currency (gain) loss		(136	)		424
Unrealized gain on foreign currency exchange contracts		(83	)		(737	)
Non-cash gain on US$ 6.25% Convertible Debentures conversion feature		(231	)		(714	)
Gain on Bargain purchase of businesses acquired, net of tax		—			(2,762	)
Other (income) expense , net		(3,481	)		1,651
Income before income taxes and equity in net income of unconsolidated investment		3,681			1,022
Equity in net income of unconsolidated investment		58			—
Income tax expense (benefit)		84			(395	)
Net income	$	3,655		$	1,417
Weighted average number of shares outstanding-basic		87,345,708			82,096,947
Weighted average number of shares outstanding-diluted		108,824,430			100,554,123
Basic and diluted net income per common share	$	0.04		$	0.02
Dividends declared per common share (Cdn$)	$	0.42		$	0.61
Dividends declared per common share (US$)	$	0.11		$	—

See accompanying notes.

5

Student Transportation Inc.

Consolidated Statements of Comprehensive Income

(000’s of U.S. Dollars)

	Twelve months ended June 30, 2015		Twelve months ended June 30, 2014
Net income :	$	3,655	$	1,417
Other comprehensive income :
Unrealized gain on currency translation adjustments		5,002		782
Other comprehensive income :		5,002		782
Comprehensive income	$	8,657	$	2,199

See accompanying notes.

6

Student Transportation Inc.

Consolidated Statements of Shareholders’ Equity

(000’s of U.S. Dollars)

	Share Capital						Accumulated Other Comprehensive Loss			Accumulated Deficit			Shareholders’ Equity
	Shares			Amount
Balance at June 30, 2013		81,358,291		$	434,236		$	(7,904	)	$	(231,850	)	$	194,482
Net income		—			—			—			1,417			1,417
Dividends		—			—			—			(46,505	)		(46,505	)
Common stock issuance		1,458,258			8,864			—			—			8,864
Other comprehensive income		—			—			782			—			782
Balance at June 30, 2014		82,816,549		$	443,100		$	(7,122	)	$	(276,938	)	$	159,040
Net income		—			—			—			3,655			3,655
Dividends		—			—			—			(42,350	)		(42,350	)
Common stock issuance		13,468,040			75,200			—			—			75,200
Conversion of debt to common stock		18,342			108			—			—			108
Repurchase of common stock		(161,415	)		(848	)		—			—			(848	)
Other comprehensive income		—			—			5,002			—			5,002
Balance at June 30, 2015		96,141,516		$	517,560		$	(2,120	)	$	(315,633	)	$	199,807

See accompanying notes.

7

Student Transportation Inc.

Consolidated Statements of Cash Flows

(000’s of U.S. Dollars)

	Twelve months ended June 30, 2015			Twelve months ended June 30, 2014
Operating activities
Net income	$	3,655		$	1,417
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		282			112
Unrealized gain on forward contracts		(83	)		(737	)
Non-cash gain on US$ 6.25% Convertible Debentures conversion feature		(231	)		(714	)
Unrealized foreign currency loss		79			431
Amortization of deferred financing costs		1,866			1,642
Non-cash stock compensation		4,170			3,942
Equity in net income from unconsolidated investment		(58	)		—
Gain on bargain purchase of businesses acquired, net of tax		—			(2,762	)
Gain on disposal of fixed assets		(1,036	)		(532	)
Depreciation and depletion expense		47,757			46,444
Amortization expense		3,374			3,573
Changes in current assets and liabilities:
Accounts receivable		(11,879	)		(3,163	)
Prepaid expenses, inventory and other current assets		3,576			(9,545	)
Accounts payable		673			(60	)
Accrued expenses and other current liabilities		(4,177	)		3,853
Changes in other assets and liabilities		1,751			2,509
Net cash provided by operating activities		49,719			46,410
Investing activities
Business acquisitions, net of cash acquired		(391	)		(22,756	)
Equity investment		(1,718	)		—
Payments on seller debt		(200	)		—
Purchases of property and equipment		(33,470	)		(37,794	)
Proceeds on sale of equipment		2,081			1,153
Net cash used in investing activities		(33,698	)		(59,397	)
Financing activities
Offering of common shares, net of expenses		65,743			—
Redemption of Cdn$ 6.75% Convertible Debentures		(40,083	)		—
Redemption of Class B Series Two and Three common shares		(2,014	)		(1,266	)
Repurchase of common stock		(848	)		—
Financing fees		(618	)		(3,559	)
Cdn$ 6.25% Convertible Debenture Offering		—			71,442
Common stock dividends		(33,657	)		(34,147	)
Borrowings on credit facility		181,505			164,150
Payments on credit facility		(190,448	)		(179,712	)
Net cash (used in) provided by financing activities		(20,420	)		16,908
Effect of exchange rate changes on cash		(1,126	)		8
Net (decrease) increase in cash and cash equivalents		(5,525	)		3,929
Cash and cash equivalents at beginning of period		10,858			6,929
Cash and cash equivalents at end of period	$	5,333		$	10,858
Supplemental information:
Cash paid for interest	$	15,586		$	14,762
Cash paid for income taxes	$	1,082		$	1,594

See accompanying notes.

8

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

1. General

Student Transportation Inc. (“STI” or the “Company”) is a corporation established under the laws of the Province of Ontario. STI together with its indirect subsidiary Student Transportation of America ULC (“STA ULC” and together with STI the “Issuer”), completed an Initial Public Offering (the “IPS Offering”) on December 21, 2004 through the issuance of income participating securities (“IPSs”). Each IPS consisted of one common share of STI and Cdn $3.847 principal amount of 14% subordinated notes of STA ULC (the “Subordinated Notes”). On December 21, 2009, the Company redeemed the remaining Subordinated Notes, originally issued as a component of the IPSs, as the final step in the process of converting from the IPS structure to a traditional common share structure. STI owns 100% of the Class A common shares of Student Transportation of America Holdings, Inc. (“STA Holdings”). Management owns 100% of the Class B Series Two and Class B Series Three common shares (collectively the “Class B” common shares) of STA Holdings pursuant to the grant of shares under the STA Holdings Equity Incentive Plan (“EIP”) (see Note 13). STI currently holds a 98.5% interest in STA Holdings, through its ownership of the Class A shares of STA Holdings. STI also owns 100% of the outstanding shares of Parkview Transit.

STA Holdings owns 100% of the outstanding shares of Student Transportation of America, Inc. (“STA, Inc.”). The Company, through its ownership of STA Holdings and Parkview Transit, is the third largest provider of school bus transportation services in North America.

2. Basis of Presentation

These consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“US GAAP”). The accompanying consolidated financial statements include the accounts of the Company and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The significant accounting policies used to prepare the financial statements are described below:

Foreign Currency Translation

Monetary assets and liabilities denominated in a currency other than the functional currency are translated at the rate of exchange prevailing at the balance sheet date. Transactions denominated in a currency other than the functional currency are translated at the rate of exchange prevailing on the transaction date. Gains and losses on translation of these items are considered transaction gain and losses and are included in the consolidated statements of operations in foreign currency (gain) loss.

The functional currency of STI, the parent, STA ULC and the Company’s Canadian operations, is the Canadian dollar. The functional currency of STA Holdings and the Company’s operations in the United States is the U.S. dollar. The Company’s financial statements are reported in U.S. dollars, as the principal operations and cash flows of its subsidiaries are conducted in U.S. dollars.

9

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

As a result, the assets and liabilities of the STI, STA ULC and the Company’s Canadian operations are translated into U.S. dollars using the exchange rate in effect at the period end and revenues and expenses are translated at the average rate during the period. Exchange gains or losses on translation are deferred as a separate component of shareholders’ equity. The Company’s Cdn$ 6.75% convertible subordinated unsecured debentures (the “Cdn$ 6.75% Convertible Debentures”) and the Cdn$ 6.25% convertible subordinated unsecured debentures (the “Cdn$ 6.25% Convertible Debentures”), as described in Note 9, of STI are denominated in Canadian dollars. As the functional currency of STI is the Canadian dollar, exchange gains or losses related to the Cdn$ 6.75% Convertible Debentures and the Cdn$ 6.25% Convertible Debentures on the translation of the STI financial statements into U.S. dollars, the reporting currency, are deferred as a separate component of shareholders’ equity. The US$ 6.25% convertible subordinated unsecured debentures (the “6.25% Convertible Debentures”) of STI as described in Note 9 are denominated in U.S. dollars. As the functional currency of STI is the Canadian dollar, unrealized gains or losses on re-measurement of the US$ 6.25% Convertible Debentures into Canadian dollars are considered transaction gains and losses, at the STI level, and are included in the consolidated statement of operations.

Foreign currency transactions gains and losses, related to short-term related intercompany loans are recorded in the Consolidated Statement of Operations as incurred. Foreign currency transaction gains and losses for intercompany loans that are considered long-term in nature are recorded in Accumulated Other Comprehensive Loss as incurred.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with maturities of three months or less from the date of purchase. At June 30, 2015 and June 30, 2014 there were no cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company bases its estimates on historical experience, actuarial evaluations and on various other assumptions that it believes are reasonable under the circumstances.

10

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

Amounts reported based upon these estimates include, but are not limited to, insurance reserves, income taxes, goodwill and intangible assets, derivatives, certain components of long term debt, Class B common share liability and impairment testing of long-lived assets.

Allowance for Doubtful Accounts

The Company establishes provisions for losses on accounts receivable if it is determined that all or part of the outstanding balance is not collectable. Collectability is reviewed regularly and an allowance is established or adjusted, as necessary, using the specific identification method.

Concentration of Credit Risk

Credit is extended based on an evaluation of the customer’s financial condition and, generally, advance payment is not required. The Company has no individual customers which account for more than 10% of its revenues.

Anticipated credit losses are provided for in the financial statements. Management monitors the financial condition of its customers to reduce the risk of loss.

Inventories

Inventories, consisting primarily of repair parts and vehicle accessories, are valued at the lower of cost or market determined on a first-in, first-out (FIFO) method.

Property and Equipment

Property and equipment is recorded at cost or at fair value if obtained as part of a business acquisition, less accumulated depreciation. Ordinary maintenance and repairs are expensed as costs are incurred. Depreciation on transportation equipment is computed on a usage basis over the estimated useful lives of the assets, which approximate a range from seven to eleven years.

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Buildings are depreciated on a straight line basis over 40 years. Other property and equipment is depreciated on a straight line basis over three to five years.

The Company recorded depreciation expense of $46.6 million and $45.2 million for the years ended June 30, 2015 and 2014, respectively.

The Company accrued approximately $21.0 million in fixed assets at June 30, 2015, related to fiscal year 2016 growth vehicles, which has been recorded as a non-cash investing activity for fiscal year 2015.

11

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

Goodwill and Indefinite Lived Intangibles

Goodwill represents the excess of cost over fair value of net assets acquired in business combinations accounted for under the purchase method. Goodwill and trade names are not amortized but rather assessed for impairment annually or more frequently if circumstances change and indicators of impairment are present. The annual impairment testing is performed in the fourth quarter.

The annual assessment of goodwill impairment, may be performed either on a quantitative or qualitative basis. In accordance with Accounting Standards Codification (“ASC”) 350-20, Intangibles-Goodwill and Other, the quantitative assessment is a two step impairment test. The Company first compares the fair value of the reporting unit with its carrying value, including goodwill. If the carrying value exceeds the fair value, the carrying value is then compared to the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss will be recognized in the statement of earnings in an amount equal to the difference and the implied fair value of goodwill becomes the new carrying value of goodwill for that reporting unit which is then used in future impairment tests.

ASC 350-20 was amended in September 2011, and gives the Company the option to perform a qualitative assessment for goodwill impairment. Under the qualitative assessment, consideration is given to both external factors (including the macroeconomic and industry conditions) and the Company’s own internal factors (including internal costs, recent financial performance, management, business strategy, customers, and stock price). Facts and circumstances are evaluated each year to determine whether to use the qualitative or quantitative assessment. We performed a qualitative assessment during the fourth quarter of 2015, and there was no indication of impairment for goodwill.

Other Identifiable Intangible Assets

When assessing the impairment for indefinite-lived trade names, the Company performs the assessment in accordance with ASC 350-30, Intangibles other than Goodwill which states that when the carrying value exceeds the fair value, an impairment loss will be recognized in the statement of earnings in an amount equal to the excess. Fair values are derived by using discounted cash flow analyses which requires, among other factors, estimates of the amount and timing of projected cash flows and the appropriate discount rate. ASC 350-30, Intangibles Other than Goodwill, was amended in July 2012, and gives the Company the option to first assess qualitative factors to determine if a quantitative impairment test of the indefinite-live intangible asset is necessary. If the qualitative assessment reveals that it’s more likely than not that the asset is impaired, a calculation of the assets’ fair value is required. Otherwise, no quantitative calculation is necessary. The Company performed the quantitative assessment of trade names and there was no

12

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

indication of impairment. Definite-lived intangible assets consist of contract rights and covenants not to compete. Contract rights, which include customer relationships, are amortized on a straight-line basis over an estimated useful life of 20 to 23 years. The useful life for contract rights was determined based on third party valuation reports prepared for the Company. The valuations took into account the average length of the contracts, the expected renewal periods and assumptions regarding future renewals based upon historical customers lives. Covenants not-to-compete are amortized on a straight-line basis over an estimated useful life of two to five years. The Company recorded amortization expense associated with its intangible assets of $3.4 million and $3.6 million for the years ended June 30, 2015 and 2014, respectively.

Convertible Debentures

The principal amounts of the Cdn$ 6.75% Convertible Debentures, which were redeemed on June 30, 2015, and the Cdn$ 6.25% Convertible Debentures are convertible into common shares of the Company at the option of the holders and the Company under certain conditions. The Company has determined that the debentures are not required to be bifurcated into separate debt and equity components. In accordance with ASC 470-20, Debt with Conversion and Other Options, if the conversion feature of the debenture is non-beneficial (i.e. “out of the money”) upon issuance and the Company cannot settle conversions in cash, the full proceeds from these debentures should be recorded as a liability with no value attributed to the conversion feature. As such, the Company has recorded the full amount of the debentures as a liability.

In accordance with ASC 815, Derivatives and Hedging, as the conversion feature on STI’s US$ 6.25% Convertible Debentures provides that the US dollar denominated notes can be converted at a US dollar denominated strike price into common shares of STI, a Canadian dollar functional currency entity, the conversion feature represents an embedded derivative that must be bifurcated and accounted for separately. The embedded conversion feature is recorded at fair value in other liabilities at each reporting period end with the non-cash changes in fair value included in the consolidated statement of operations. The Company recorded a non-cash gain for the year ended June 30, 2015 of $0.2 million in connection with the change in fair value of the embedded conversion feature during the 2015 fiscal year. The value of the embedded conversion feature represents a liability of nine thousand dollars and $0.2 million as at June 30, 2015 and 2014, respectively, which are included within other liabilities in the consolidated balance sheet.

Deferred Financing Costs

The Company incurred costs related to obtaining debt financing. The Company capitalized costs associated with its Credit Agreement, Senior Secured Notes and costs related to the issuances of the Convertible Debentures. These costs have been capitalized and are being amortized to interest expense over the term of the related debt using the effective interest rate method. The carrying

13

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

value of the deferred financing costs was $5.8 million and $7.4 million as of June 30, 2015 and 2014 respectively. Amortization expense totaled $1.9 million and $1.6 million for the years ended June 30, 2015 and 2014, respectively. Deferred financing costs are included in other assets in the consolidated balance sheet.

Impairment of Long-Lived Assets

Management continually evaluates whether events or circumstances have occurred that indicate that the remaining estimated useful lives of property and equipment, contract rights and covenants not to compete may warrant revision or that the remaining balances may not be recoverable. Events or circumstances that would trigger testing for impairment include, but are not limited to, the loss of a significant school district customer contract, a significant increase in the Company’s expense levels absent a corresponding increase in revenue that causes operating or cash flow losses or projected operating or cash flow losses, significant adverse changes in legal factors or the business climate in which the Company operates that could affect the value of long-lived assets, or the expectation that a long-lived asset will be sold or otherwise disposed of at a loss before the end of its previously estimated useful life. If this review indicates that the assets will not be recoverable, as determined based on the undiscounted future cash flows from the use of the assets, the carrying value of the assets will be reduced to their estimated fair value. There were no indicators of impairment during the years ended June 30, 2015 and 2014.

Business Combinations

The Company accounts for business combinations under the principles codified in ASC 805, Business Combinations. The principles set forth how an acquirer recognizes and measures assets acquired, liabilities assumed, non-controlling interest and goodwill in a business combination. Key components include: (i) recognition of transaction costs in current period earnings and included in the consolidated statement of operations in acquisition expense; (ii) recognition of the estimated fair value of all contingent consideration at the acquisition date and an adjustment to fair value at each reporting date with an offset to current period earnings included in the consolidated statement of operations in other (income) expense; (iii) adjustments to deferred tax asset valuation allowances and income tax uncertainties recorded at the acquisition date to be recognized in current period earnings; (iv) acquisition method accounting is applied on the date that control is obtained in step acquisitions; (v) re-measurement of previously acquired non-controlling equity investments at fair value as at the acquisition date with an offset to current period earnings; and (vi) any excess of fair value of acquired net assets over the acquisition consideration results in a bargain purchase which is recognized in the statement of operations.

14

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

Income Taxes

Income taxes have been computed utilizing the asset and liability approach, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates expected to be in effect for the years in which those taxes are expected to be realized or settled. A valuation allowance is recorded to reduce deferred tax assets to the amount that is believed to be more likely than not to be realized. The recorded deferred income tax liability results from a difference between the book and tax basis of certain transportation equipment, other equipment and intangible assets.

The Company uses judgment in determining income tax provisions and in evaluating its tax positions under the accounting guidance for income taxes. Additional provisions for income taxes are established when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold, which is a tax position that is more-likely-than-not to be sustained upon examination by the applicable taxing authority. The Company and its subsidiaries are examined by various federal and state tax authorities. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known. The Company recognizes interest and penalties related to underpayment of income taxes in income tax provision (benefit) (see Note 8).

Revenue Recognition

Revenue from the Company’s school bus operations is recognized when the following criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed and determinable, and collectability is reasonably assured. The Company bills customers on a monthly basis upon the completion of school bus routes, which are based on contracts or extension agreements with customers.

Revenue from oil and gas interests is derived from the Company’s partial ownership in various oil and gas wells. As a non-operator, the Company records revenue from its oil and gas interests based on its share of the sales value of production from producing wells. Revenue is received from the well operators and is recognized when the commodities are delivered to customers, the price is fixed or determinable and collectability is assured.

15

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

Insurance Reserves

The Company had approximately $25.9 million and $22.1 million in recorded insurance reserves at June 30, 2015 and 2014, respectively. These reserves reflect the estimated deductible amounts the Company is responsible for under its workers’ compensation and vehicle liability insurance programs. Insurance expense for these items is largely dependent on the Company’s claims experience and the Company’s ability to control such claims, in addition to third party premiums/expenses associated with this coverage. The Company has recorded estimated insurance reserves for the anticipated losses on open claims and estimated reserves for incurred but not recorded claims under the workers’ compensation and vehicle liability programs based upon actuarial analysis prepared by an independent third party actuary. Although the estimates of these accrued liabilities are based on the factors mentioned above; it is possible that future cash flows and results of operations could be materially affected by changes in our assumptions or changes in claims experience. Insurance reserves are included in accrued expenses and other current liabilities and other liabilities on the consolidated balance sheet.

Stock-Based Compensation

The Company accounts for stock-based compensation and other stock-based payments using the fair value method. Under the fair value method, the fair value of stock-based compensation and other stock-based payments are estimated at the grant date and the total fair value is amortized over the vesting schedule of the awards as compensation expense. The Class B Series Two and Class B Series Three common shares issued by STA Holdings are fully vested on the grant date, and, as such, the Company recognizes compensation expense when the shares are issued. STA Holdings has issued only Class B Series Three common shares pursuant to the EIP during fiscal year 2015 and fiscal year 2014. In May 2015 the Company redeemed all of the remaining Class B Series Two common shares by exchanging them for Class B Series Three common shares, based on the fair market value of each class of shares. Subsequent to March 2010, all new share awards under the EIP have only been in the form of grants of Class B Series Three common shares. These shares are accounted for as a liability upon issuance and remeasured at fair value on a quarterly basis (see Note 13). The Company recognized $4.2 million and $3.9 million in non-cash stock- based compensation expense based on the estimated fair value on the date of grant of the shares issued, for the years ended June 30, 2015 and 2014, respectively.

The Class B common shares are not traded in an active market and have certain restrictions on their transferability. These shares are accounted for as a liability upon issuance, as a result of a put option they contain. In the case of the Class B Series Two common shares issued pursuant to the EIP during the period the IPS structure was in place, the put option provided for a fair market value of Class B Series Two common shares put at an amount equal to the weighted average trading price of the STI common shares for the ten consecutive trading days immediately prior to the date of put, plus Cdn. $3.847 (an amount

16

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

equivalent to the historical value of the Subordinated Note component of the IPS). In the case of the Class B Series Three common shares utilized for EIP share grants subsequent to the end of the IPS structure, the put option provides for a fair market value of Class B Series Three common shares put at an amount equal to the weighted average trading price of the STI common shares for the ten consecutive trading days immediately prior to the date of put.

Stock-based compensation expense associated with the issuance of Class B Series Three common shares is based on the trading value of the STI common shares at the date of grant, similar to the fair value of such common shares in connection with the put option values described above.

Accounting for Derivatives and Hedging Activities

Derivatives are recorded at fair value on the balance sheet, which, in accordance with ASC 820, Fair Value Measurements and Disclosure, requires that a company take into account its own credit risk and the credit risk of the counterparty when determining the fair value of financial assets and financial liabilities, including derivative instruments. Changes in fair value will be recorded in the income statement or through other comprehensive income depending on the nature of the derivative instrument. The Company did not elect hedge accounting for any of its derivative financial instruments and therefore records all changes in fair value in the income statement. The Company has offset the fair value amounts recorded on its forward foreign currency contracts executed with the same counterparty under an executed master netting arrangement.

Segment Reporting

The Company has two reportable segments, a transportation segment and an oil and gas segment. The transportation segment provides school bus and management services to public and private schools in North America. The oil and gas segment represents the Company’s investments as a non-operator in oil and gas interests.

Oil and Gas Interests

The Company holds non-operating interests in oil and gas properties, which are jointly owned with others. The financial statements reflect the Company’s proportionate interest in the oil and gas activities as a non-operator.

The Company uses the full-cost method of accounting for oil and gas interests to determine the capitalized cost, whereby certain expenditures related to the acquisition, exploration and development of oil and gas properties are capitalized. Capitalized costs include the cost of land acquired or leased, intangible drilling costs such as those for equipment, casing and attachments on

17

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

both productive and non-productive wells. These costs, net of salvage values, are accumulated in a single cost center and are depleted and amortized using the units-of production method. Natural gas reserves and production are converted, at a ratio of six thousand cubic feet of natural gas to one barrel of oil, for depletion and depreciation purposes.

In connection with the oil and gas interests, the Company has an asset retirement obligation which represents the liability associated with the retirement of long-lived assets that arise from the acquisition, construction, development or normal operation of such assets.

Under US GAAP, the impairment test for oil and gas assets (the “ceiling test”) requires the Company to use tax effected discounted cash flow using a present value technique. Under ASC 932, Extractive Industries – Oil and Gas, the pricing assumption to be used in the ceiling test calculation is defined as the twelve month average of realized prices.

Earnings per Share

Basic and diluted earnings per share are calculated by dividing the net income for the period by the weighted number of shares outstanding during each period. The shares used in the calculation of basic earnings per share are based on the weighted average number of shares outstanding. Shares used in the calculation of diluted earnings per share are based on the weighted average number of shares outstanding plus an adjustment for the incremental shares that would be outstanding assuming the exercise of the Company’s Convertible Debentures. The net income for basic earnings per share is net earnings available to common stockholders. The net income for diluted earnings per share is net earnings available to common stockholders with interest expense associated with the Convertible Debentures added back (net of tax) for the assumed conversion of the Convertible Debentures into common stock.

Seasonality

The Company’s operations are seasonal and follow the school calendars of the public and private schools it serves. During the summer school break, revenue is derived primarily from summer camps and private charter services. Since schools are not in session, there is no school bus transportation revenue. Depreciation of fixed assets occurs in the months during which schools are in session, which is generally September through June. A full year’s worth of depreciation is recorded in these ten months to match the vehicles’ usage.

Recent Adopted Accounting Standards

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss or a Tax Credit Carryforward Exists. This ASU provides for the presentation of all or a portion of an unrecognized tax benefit as a reduction

18

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward unless such balances are not available at the reporting date at which point the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The Company adopted this standard prospectively for all unrecognized tax benefits that existed beginning in the first quarter of fiscal 2015. This presentation is consistent with how the Company historically presents unrecognized tax benefits; therefore the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards

In January 2014, the FASB issued ASU 2015-05, Service Concession Arrangements. This ASU applies to an operating entity of a service concession arrangement entered into with a public-sector entity grantor when the arrangement meets both of the following conditions: (i) the grantor controls or has the ability to modify or approve the services that the operating entity must provide with the infrastructure, to whom it must provide them and at what price and (ii) the grantor controls, through ownership, beneficial entitlement, or otherwise, any residual interest in the infrastructure at the end of the term of the arrangement. This is effective for annual periods beginning after December 15, 2014 (including interim periods within those fiscal years) and should be applied on a modified retrospective basis to service concession arrangements in existence at the beginning of the fiscal year of adoption. The Company is required to adopt this standard for the first quarter of fiscal 2016. Early adoption is permitted. The Company is currently evaluating the requirements of this ASU to determine the impact on their consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In April 2014, the FASB issued ASU 2014-08, an update modifying the criteria under which asset disposal activities qualify for presentation as a discontinued operation. The amendment restricts presentation as a discontinued operation to disposals that represent a strategic shift that has, or will have a major effect on an entity’s operations and financial results. The amendments in this update are to be applied prospectively to all disposals or classifications as held for sale of components of an entity. The Company is required to adopt this standard for the first quarter of fiscal 2016. Early adoption is permitted, but only for disposals or classifications as held for sale that have not been reported in financial statements previously issued. This standard is not anticipated to have an impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers. This new revenue recognition standard will supersede most existing revenue recognition guidance and is intended to improve revenue recognition and related financial reporting requirements. The standard will require companies to review contract arrangements with customers and ensure that all separate performance obligations are properly recognized in the compliance with the new guidance. The standard allows for either “full retrospective” or “cumulative effect” adoption. In

19

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

July 2015, the FASB delayed the effective date of this standard. The Company is now required to adopt this standard effective July 1, 2018. Early adoption is permitted beginning with the original effective date of July 1, 2017. The Company is currently evaluating both the method of adoption as well as the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The guidance is effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In January 2015, The FASB issued ASU 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which simplifies income statement presentation by eliminating the need to determine whether to classify an item as an extraordinary item. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis, to improve the targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations similar entities and reduce the number of consolidation models. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30)-Simplifying the Presentation of Debt Issuance Costs, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

20

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

2. Basis of Presentation (continued)

In April 2015, the FASB issued ASU 2015-05 Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement which requires that if a cloud computing arrangement includes a software license, then a customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

Certain amounts have been reclassified in our prior period consolidated balance sheets to conform to current year presentation and such amounts were not material to current and prior periods.

3. Business Combinations

2015 Acquisition

Dalton Bus Lines Limited

On December 5, 2014 the Company acquired certain assets and a contract of Dalton Bus Lines in Ontario, Canada. Earnings of the acquired company were included in the Company’s results of operations from the acquisition date. The aggregate purchase price of these assets was approximately $0.4 million.

Property and equipment	$	520
Intangible Assets		10
Total	$	530

The purchase price consisted of $0.4 million in cash. Identifiable intangible assets consisted primarily of a non compete agreement that will be amortized over 3 years. The fair value of the assets acquired was greater than the purchase price; therefore the Company recognized a gain of approximately $0.1 million which is included in the statement of operations for fiscal year 2015. Approximately three thousand dollars of acquisition-related costs were recognized as an expense in the statement of operations during fiscal year 2015.

2014 Acquisitions

Atlantic Express Transportation Corporation

On February 10, 2014, the Company closed the acquisition of certain assets and contracts in California from Atlantic Express Transportation Corporation (“AE”). STI’s subsidiary School

21

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

3. Business Combinations (continued)

Wheels Direct (“SWD”) managed the California operations from January 10, 2014 to February 9, 2014. Earnings of the acquired company were included in the Company’s results of operations from February 10, 2014. The aggregate purchase price of these assets was approximately $17.2 million.

Current assets, less current liabilities	$	294
Property and equipment		19,807
Intangible assets		1,736
Deferred taxes		(1,841	)
Fair value of net assets acquired	$	19,996

The purchase price consisted of $17.2 million in cash. Identifiable intangible assets consisted of contracts rights of $1.7 million that will be amortized over 20 years. Approximately $0.2 million of acquisition-related costs were recognized as an expense in the statement of operations during fiscal year 2014.

Prior to the acquisition, AE had filed for protection under the federal bankruptcy protection rules. The SWD management services contract and the agreement to acquire the California assets of AE, including vehicles and school contracts, were both approved by the bankruptcy court. The purchase price was lower than the fair market value of the business acquired. Therefore, the Company recognized a gain of approximately $2.8 million, net of tax, which was included in the consolidated statement of operations for fiscal year 2014.

Williams Bus Line Co.

On August 27, 2013, the Company closed its acquisition of all of the outstanding common stock of Williams Bus Lines Co., (“Williams”), located in Wilkes Barre, Pennsylvania. Earnings of the acquired company were included in the Company’s results of operations from August 27, 2013. The aggregate purchase price of this acquisition was $3.4 million.

Current assets, less current liabilities	$	29
Property and equipment		1,343
Deferred Taxes		(525	)
Subtotal		847
Goodwill		2,557
Total	$	3,404

22

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

3. Business Combinations (continued)

The purchase price consisted of $3.4 million in cash. Approximately forty-seven thousand dollars of acquisition-related costs were recognized as an expense in the statement of operations during the fiscal year 2014. The goodwill attributed to this acquisition includes the value of the workforce acquired, the opportunity to expand within the marketplace and other key competitive advantages. None of the goodwill related to this acquisition was deductible for tax purposes.

Scholastic Bus Co.

On July 23, 2013, the Company closed its acquisition of all of the outstanding common stock of Scholastic Bus Co., (“Scholastic”), located in Fairlawn, New Jersey. Earnings of the acquired company were included in the Company’s results of operations from the acquisition date. The aggregate purchase price of this acquisition was $2.4 million.

Current assets, less current liabilities	$	298
Property and equipment		2,104
Deferred taxes		(772	)
Subtotal		1,630
Goodwill		803
Total	$	2,433

The purchase price consisted of $2.2 million in cash and $0.2 million in deferred payments. Approximately twenty-seven thousand dollars of acquisition-related costs were recognized as an expense in the statement of operations during fiscal year 2014. The goodwill attributed to this acquisition includes the value of the workforce acquired, the opportunity to expand within the marketplace and other key competitive advantages. None of the goodwill related to this acquisition was deductible for tax purposes.

The following unaudited pro forma financial information combines the consolidated results from operations for fiscal year 2014 as if all of the 2014 acquisitions had occurred as of July 1, 2013. Pro forma adjustments include the bargain gain, the adjustment for amortization on acquired intangibles and the adjustment to record the tax impact on the pro forma financial results. The unaudited results are as follows:

	Pro Forma Basis for fiscal year Ended June 30, (unaudited)
	2014
Revenue	$	505,609
Net income		1,688
Basic and diluted net income per common share	$	0.02

23

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

3. Business Combinations (continued)

The pro forma financial information is not necessarily indicative of operating results that would have occurred had the 2014 acquisitions been consummated as of July 1, 2013, nor is it indicative of future operating results.

4. Equity Method Investments

On March 11, 2015 a wholly-owned subsidiary of the Company made a non-controlling investment in a consulting and management services firm for cash consideration of $1.7 million. The Company has accounted for this investment under the equity method, in accordance with ASC- 323, Investments-Equity Method and Joint Ventures.

5. Property and Equipment

Property and equipment consist of the following:

June 30, 2015	Cost		Accumulated Depreciation			Net Book Value		Useful Life in years
Land	$	5,629	$	—		$	5,629
Buildings		5,982		(1,086	)		4,896	40
Transportation equipment		432,826		(226,513	)		206,313	7 to 11
Leasehold improvements		7,826		(3,702	)		4,124	The shorter of the life of lease or the useful life of the asset
Other machinery and equipment		29,674		(19,340	)		10,334	3 to 5
	$	481,937	$	(250,641	)	$	231,296

June 30, 2014	Cost		Accumulated Depreciation			Net Book Value		Useful Life in years
Land	$	6,076	$	—		$	6,076
Buildings		5,065		(882	)		4,183	40
Transportation equipment		414,325		(205,292	)		209,033	7 to 11
Leasehold improvements		6,510		(2,693	)		3,817	The shorter of the life of lease or the useful life of the asset
Other machinery and equipment		24,837		(16,594	)		8,243	3 to 5
	$	456,813	$	(225,461	)	$	231,352

24

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

6. Oil and Gas Interests

Oil and gas interests consist of the following:

	2015			2014
Oil and gas interests	$	18,098		$	17,094
Less accumulated depletion		(10,385	)		(9,223	)
	$	7,713		$	7,871

The Company does not capitalize any of its own administrative or interest costs and accounts for these costs as expenses during the year. There were no costs excluded from costs subject to depletion and depreciation at the balance sheet dates.

Under full cost accounting many costs incurred will be capitalized even though they have not resulted in an increase in the future revenue generating capacity of the enterprise. Accordingly, it is widely recognized that there should be a limit on the aggregate costs that may be carried forward for amortization against revenue of future periods (the “ceiling test”); the Company performed a ceiling test calculation at both June 30, 2015 and 2014. The ceiling test requires the Company to use tax effected discounted cash flows using a present value technique. The sales prices used for the ceiling test at June 30, 2015 were $73.88 per barrel for oil and $4.17 per thousand cubic feet of natural gas. Based on the calculations under the first step of the ceiling test, the Company determined that its oil and gas interests are recoverable.

7. Goodwill and Other Intangible Assets

Intangible assets consist of the following:

	2015
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Remaining Life Years
Contract rights	$	65,102	$	(25,428	)	$	39,674	12
Covenants not to compete		14,800		(14,774	)		26	1
Trade names		22,199		—			22,199	None (Indefinite Life)
Total	$	102,101	$	(40,202	)	$	61,899

25

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

7. Goodwill and Other Intangible Assets (continued)

	2014
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Remaining Life Years
Contract rights	$	67,627	$	(22,868	)	$	44,759	14
Covenants not to compete		14,995		(14,952	)		43	—
Trade names		22,918		—			22,918	None (Indefinite Life)
Total	$	105,540	$	(37,820	)	$	67,720

Estimated annual amortization expense for intangibles assets is as follows:

Year ending June 30,
2016	$	3,162
2017		3,152
2018		3,147
2019		3,146
2020		3,146
	$	15,753

The following table represents the changes in the carrying amount of goodwill for the years ended June 30, 2015 and 2014 (see Note 8):

Balance as of June 30, 2013	$	138,312
Goodwill related to acquisitions	$	3,360
Goodwill reduction related to prior acquisitions	$	(1,826	)
Foreign currency effects on Goodwill	$	(688	)
Balance as of June 30, 2014	$	139,158
Goodwill additions related to prior acquisitions	$	1,826
Foreign currency effects on Goodwill	$	(6,045	)
Balance as of June 30, 2015	$	134,939

26

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

8. Income Taxes

The components of the expense (benefit) for income taxes are as follows:

	2015			2014
Federal: Canada
Current	$	(432	)	$	(1,388	)
Deferred		(21	)		1,964
		(453	)		576
Provincial: Canada
Current		(332	)		94
Deferred		(16	)		(423	)
		(348	)		(329	)
Foreign:
Current		566			786
Deferred		319			(1,428	)
		885			(642	)
Total expense (benefit)	$	84		$	(395	)

The components of income before income tax expense (benefit) for income taxes are as follows:

	2015			2014
Domestic	$	(8,361	)	$	196
Foreign		12,100			826
Total		3,739			1,022

The difference between the effective rate reflected in the income tax expense (benefit) for income taxes and the amount determined by applying the Canadian statutory rate to income before income taxes for the fiscal year ended June 30, 2015 and June 30, 2014 is analyzed below:

	2015			2014
Provision for income taxes at statutory rate	$	561		$	158
Provincial taxes		(332	)		112
Foreign rate differential		1,097			264
Canadian rate difference		(59	)		168
Effect of U.S. state rate changes		(1,268	)		—
Gain on bargain purchase		—			(1,105	)
Permanent items		121			96
Uncertain tax position adjustments		(192	)		—
Other		156			(88	)
	$	84		$	(395	)

27

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

8. Income Taxes (continued)

Deferred taxes arise because of the differences in the book and tax basis of certain assets and liabilities. Significant components of deferred tax assets and (liabilities) are as follows:

	2015			2014
Deferred tax liabilities
Intangibles	$	(24,873	)	$	(25,055	)
Property and equipment		(55,588	)		(52,082	)
Total deferred tax liabilities		(80,461	)		(77,137	)
Deferred tax assets:
Net operating loss carry forward		25,779			21,675
Other		13,461			14,276
Total deferred tax assets		39,240			35,951
Valuation allowance		(337	)		(337	)
Net deferred tax assets		38,903			35,614
Net deferred tax liabilities	$	(41,558	)	$	(41,523	)

In fiscal 2015, the Company increased goodwill and net non-current deferred income tax liabilities by $1.9 million to correct the adjustment for purchase price allocation associated with the acquisition of the school bus division of Ayr Coach Lines in July 2006 that was recorded in the fourth quarter of 2014.

It is the Company’s intention to reinvest the undistributed earning of its foreign subsidiaries and thereby indefinitely postpone their remittance. As a result, deferred income taxes have not been provided on undistributed earnings of foreign subsidiaries of the Company. It is not practical to compute the deferred tax liability and as such is not recorded.

The following table summarizes the gross amounts of unrecognized tax benefits without regard to reduction in tax liabilities if such unrecognized tax benefits were settled.

	2015			2014
Balance at July 1,	$	1,704		$	1,704
Additions for tax position related to prior year		190			—
Effective settlements with tax authorities		(1,439	)		—
Balance at June 30,	$	455		$	1,704

The total amount of the unrecognized tax benefits, if recognized would favorably impact the effective tax rate by $0.5 million. Included in the amounts above are approximately seventy thousand dollars and $0.2 million of interest and penalties for the fiscal years ended June 30, 2015 and 2014, respectively, which are also included as a component of the income tax benefit on the consolidated statement of operations. During fiscal year 2015, the Company reviewed its state tax filing positions in various states. As a result, the Company established a $0.2 million uncertain tax position related to a filing position not more-likely-than-not to succeed.

28

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

8. Income Taxes (continued)

The Company recently concluded a full scope examination of one of its Canadian entities and a limited scope examination for two of its Canadian entities for the years ended June 30, 2011 and June 30, 2012. As a result, the corresponding uncertain tax position associated with these entities for the years under examination, have been effectively settled with tax authorities and therefore recognized. All tax years starting with June 30, 2012 are currently open in the United States. All tax years starting with June 30, 2013 are currently open in Canada.

At June 30, 2015, the Company has available U.S. net operating loss carry forwards of approximately $62.2 million expiring in the years 2022 through 2034 and Canadian non-capital loss carry forwards of approximately $4.4 million expiring in the years 2025 through 2035. These deferred tax assets are offset by a valuation allowance of approximately $0.3 million.

9. Debt

Indebtedness of the Company includes the following:

	Amounts Outstanding at
	June 30, 2015				June 30, 2014
	Current		Long Term		Current		Long Term
Third Amended and Restated Credit Agreement
Revolving credit facility	$	—	$	50,421	$	—	$	62,436
Convertible Debentures		—		119,515		—		176,462
Senior Secured Notes		—		35,000		—		35,000
Promissory notes due to former owners		—		—		200		—
	$	—	$	204,936	$	200	$	273,898

Maturities of long-term debt are as follows:

	Third Amended Credit Facility		Convertible Debentures		Senior Secured Notes		Total
Year ending June 30,
2016	$	—	$	—	$	—	$	—
2017		—		—		35,000		35,000
2018		—		59,467		—		59,467
2019		—		60,048		—		60,048
2020		50,421		—		—		50,421
thereafter		—		—		—		—
	$	50,421	$	119,515	$	35,000	$	204,936

29

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

9. Debt (continued)

Third Amended and Restated Credit Agreement and Senior Secured Notes

On August 19, 2014, the Company amended its Third Amended and Restated Credit Agreement (the “Credit Agreement”). The amendment extended the maturity date (previously due February 27, 2018) to August 19, 2019, or if earlier, 90 days prior to the maturity of the Senior Secured Notes, extended the $100.0 million accordion feature and increased the commitments to $225.0 million, from the previous commitments of $165.0 million. The increase in the size of the facility resulted from the addition of two new lenders to the bank group and certain existing lenders increasing their commitments. The extension was accounted for as a modification of debt, and as such, transaction costs related to the modification have been recorded in other assets in the consolidated balance sheet and are being amortized over the term of the Credit Agreement. The current commitments at June 30, 2015, include a US $180.0 million loan facility and a Canadian $45.0 million loan facility both of which are available to fund working capital requirements and to fund acquisitions and investment requirements for new revenue and bid-in contracts.

The Company may request an increase to the $225.0 million in commitments for up to an additional $100.0 million in additional commitments (the “Accordion Feature”), so long as no default or event of default has occurred and is continuing. Each lender under the Credit Agreement shall have the option to subscribe for a portion of the remaining Accordion Feature and any portion not so subscribed may be assumed by one or more of the existing lenders or by another financial institution as agreed by the Company and the Agent under the agreement. At June 30, 2015 the Company had approximately $172.8 million in borrowing availability under the Credit Agreement.

On November 10, 2011, the Company rolled over and extended the maturity of its $35.0 million of fixed rate Senior Secured Notes (previously due December 14, 2011), for an additional five year term, carrying a fixed coupon of 4.246% (the previous fixed coupon was 5.941%). The Senior Secured Notes rank pari-passu with borrowings under the Credit Agreement and have a maturity date of November 10, 2016. The extension was accounted for as a modification of debt, and as such, transaction costs related to the modification have been recorded in other assets in the consolidated balance sheet and are being amortized over the term of the notes.

Borrowings under the Credit Agreement are collateralized by (i) the unencumbered assets of STA Holdings and its subsidiaries, and certain shares of the capital stock of STA Holdings and the capital stock of each of its subsidiaries and (ii) by the unencumbered assets of Parkview Transit and its subsidiaries and the capital stock of Parkview Transit and the capital stock of each of its subsidiaries. In addition, payment and performance of the obligations under the Credit Agreement are guaranteed by each of STA Holdings’ subsidiaries. Borrowings under the Senior Secured Notes are collateralized by the unencumbered assets of STA Holdings and its US subsidiaries, and certain shares of the capital stock of STA Holdings and the capital stock of each of its US subsidiaries. In addition, payment and performance of the obligations under the Senior Secured Notes are guaranteed by each of STA Holdings US subsidiaries.

30

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

9. Debt (continued)

Borrowings under the Credit Agreement may be Base Rate Loans or Eurodollar Loans, as defined in the Credit Agreement. Base Rate Loans bear interest at the base rate, as defined in the Credit Agreement (3.25% at June 30, 2015), plus the applicable margin, which ranges from 0.50% to 1.25% depending on STA Holdings’ senior leverage ratio on the pricing date. Eurodollar Loans bear interest at the adjusted LIBOR rate, as defined in the Credit Agreement (0.18650% at June 30, 2015), plus the applicable margin, which ranges from 1.75% to 2.50% depending on STA Holdings’ senior leverage ratio on the pricing date. The effective interest rate on the Credit Agreement was 4.0% for the year ended June 30, 2015.

The Company was in compliance with all debt covenants related to both the Third Amended and Restated Credit Agreement and the Senior Secured Notes at June 30, 2015.

Convertible Debentures

On November 12, 2013, the Company issued the Cdn$ 6.25% Convertible Debentures due June 30, 2019 at a price of $1,000 per debenture, for total gross proceeds of $71.4 million (Cdn $75.0 million). The issue costs of approximately $3.5 million (Cdn $3.6 million) have been recorded in other assets in the consolidated balance sheet and are being amortized over the term of the Cdn$ 6.25% Convertible Debentures due June 30, 2019, using the effective interest method.

Interest on the Cdn$ 6.25% Convertible Debentures due June 30, 2019 is payable semi-annually, in arrears, on June 30 and December 31 of each year.

Each Cdn$ 6.25% Convertible Debenture due June 30, 2019 is convertible into common shares of the Company at the option of the holder at any time prior to the close of business on the earlier of the business day immediately preceding the maturity date or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of Cdn $9.05 per common share (the “Cdn$ 6.25% Convertible Debenture Conversion Price”) which is equivalent to 110.4972 common shares for each Cdn $1,000 principal amount of the Cdn$ 6.25% Convertible Debentures due June 30, 2019.

The Cdn$ 6.25% Convertible Debentures due June 30, 2019 are not redeemable prior to June 30, 2017. The Company will have the right, at its option, to redeem the Cdn$ 6.25% Convertible Debentures due June 30, 2019 in whole or in part, from time to time, on or after June 30, 2017 but prior to June 30, 2018, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the Cdn$ 6.25% Convertible Debenture Conversion Price. After June 30, 2018 and prior to maturity the Company will have the right, at its option to redeem the Cdn$ 6.25% Convertible Debentures due June 30, 2019 in whole or in part, from time to time, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest.

31

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

9. Debt (continued)

On June 7, 2011, the Company issued the US$ 6.25% Convertible Debentures due June 30, 2018 at a price of $1,000 per debenture, for total gross proceeds of $60.0 million. The issue costs of approximately $3.0 million have been recorded in other assets in the consolidated balance sheet and are being amortized over the term of the US$ 6.25% Convertible Debentures due June 30, 2018, using the effective interest method. The conversion feature of this debenture provides that these US dollar denominated notes can be converted into Canadian denominated common shares of the Company. As such, the conversion feature represents on embedded derivative that is required to be bifurcated and accounted for separately.

The Company recorded the embedded derivative liability as a component of other liabilities in the consolidated balance sheet. The embedded conversion liability is recorded at fair value in other liabilities at each reporting period end with the non-cash changes in fair value included in the consolidated statement of operations. In addition, as the functional currency of STI is the Canadian dollar, unrealized gains or losses on re-measurement of the US$ 6.25% Convertible Debentures into Canadian dollars are considered transaction gains and losses, at the STI level, and are also included in the consolidated statement of operations.

Interest on the US$ 6.25% Convertible Debentures is payable semi-annually, in arrears, on June 30 and December 31 of each year.

Each US$ 6.25% Convertible Debenture is convertible into common shares of the Company at the option of the holder at any time prior to the close of business on the earlier of the business day immediately preceding the maturity date or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of $9.50 per common share (the “US$ 6.25% Convertible Debenture Conversion Price”) which is equivalent to 105.2632 common shares for each $1,000 principal amount of the US$ 6.25% Convertible Debenture.

The US$ 6.25% Convertible Debentures were not redeemable prior to June 30, 2014. The Company had the right, at its option, to redeem the US$ 6.25% Convertible Debentures in whole or in part, from time to time, on or after July 1, 2014 but prior to June 30, 2016, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the US$ 6.25% Convertible Debenture Conversion Price. After June 30, 2016 and prior to maturity the Company will have the right, at its option to redeem the US$ 6.25% Convertible Debentures in whole or in part, from time to time, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest.

32

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

9. Debt (continued)

On June 21, 2010, the Company issued the Cdn$ 6.75% Convertible Debentures which were due June 30, 2015 at a price of Cdn $1,000 per debenture, for total gross proceeds of $48.2 million (Cdn $50 million). The Cdn$ 6.75% Convertible Debentures matured on June 30, 2015, at which time the Company redeemed the remaining balance of Cdn$ 6.75% Convertible Debentures for cash, as discussed below. The Cdn$ 6.75% Convertible Debentures of STI were denominated in Canadian dollars, and as such, they were not required to be bifurcated into separate debt and equity components.

Interest on the Cdn$ 6.75% Convertible Debentures was payable semi-annually, in arrears, on June 30 and December 30 of each year.

The Cdn$ 6.75% Convertible Debentures were convertible into common shares of the Company at the option of the holder at any time prior to the close of business on the earlier of the business day immediately preceding the maturity date or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of Cdn $7.25 per common share (the “Cdn$ 6.75% Convertible Debenture Conversion Price”) which is equivalent to 137.9310 common shares for each Cdn $1,000 principal amount of the Cdn$ 6.75% Convertible Debenture.

The Company redeemed the Cdn$ 6.75% Convertible Debentures at June 30, 2015 as discussed below. The Cdn$ 6.75% Convertible Debentures were not redeemable prior to June 30, 2013. The Company had the right, at its option, to redeem the Cdn$ 6.75% Convertible Debentures in whole or in part, from time to time, after July 1, 2013, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the Cdn$ 6.75% Convertible Debenture Conversion Price.

During fiscal year 2015, Cdn $0.1 million of the Company’s Cdn$ 6.75% Convertible Debentures were converted into 18,342 shares of common stock. On June 30, 2015, the Company redeemed the remaining Cdn $49.9 million in principal amount of Cdn$ 6.75% Convertible Debentures for US$ 40.1 million in cash, in accordance with the terms of the trust indenture dated as of June 21, 2010 between STI and Computershare Trust Company of Canada governing the Cdn$ 6.75% Convertible Debentures.

The Cdn$ 6.75% Convertible Debentures, the US$ 6.25% Convertible Debentures and the Cdn$ 6.25% Convertible Debentures are collectively referred to as the “Convertible Debentures”. The Convertible Debentures are subordinate to both the Third Amended and Restated Credit Agreement and the Senior Secured Notes.

33

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

9. Debt (continued)

The Company may at its option, subject to applicable regulatory approval, elect to satisfy its obligation to pay the outstanding principal amount of the Convertible Debentures in whole, by issuing and delivering common shares for each US $1,000 principal amount of the US$ 6.25% Convertible Debentures and Cdn $1,000 principal amount of the Cdn$ 6.25% Convertible Debentures. The amount of common shares delivered is obtained by dividing each principal amount of Convertible Debentures by 95% of the current market price of the common shares on the date set for redemption or the maturity date.

The Company may elect, subject to applicable regulatory approval, to issue and deliver common stock of the Company to the indenture trustee under the Convertible Debentures indentures, to sell in the open market, to satisfy the Company’s obligation to pay interest on the Convertible Debentures on each interest payment date. The Convertible Debenture holders will receive a cash payment in satisfaction of the interest obligation equal to the interest payable from the sale of such common shares.

The Company must commence, within 30 days of a Change in Control (as defined in the Convertible Debenture indentures), an offer to purchase all of the Convertible Debentures then outstanding at a purchase price equal to 101% of the principal amount of the Convertible Debentures, plus accrued and unpaid interest thereon.

The Company expects to be able to repay, renew or refinance its various loan facilitates and Convertible Debentures as they become due with other long term financing options.

10. Asset Retirement Obligation

ASC 410-20, Asset Retirement Obligation, establishes standards for the recognition, measurement and disclosure of liabilities for asset retirement obligations and the associated asset retirement costs. The standards apply to legal obligations associated with the retirement of long-lived tangible assets that arise from the acquisition, construction, development or normal operation of such assets. The standards require that a liability for an asset retirement obligation be recognized in the period in which it is incurred and when a reasonable estimate of the fair value of the liability can be made. Furthermore, a corresponding asset retirement cost should be recognized by increasing the carrying amount of the long lived asset. The asset retirement cost is subsequently allocated in a rational and systematic method over the underlying asset’s useful life. The initial fair value of the liability is accreted, by charges to operations, to its estimated normal fair value. The obligation relates to the cost associated with shutting down oil and gas wells. The Company recorded accretion expense of twenty seven thousand dollars and thirty seven thousand dollars for the years ended June 30, 2015 and 2014, respectively.

34

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

10. Asset Retirement Obligation (continued)

At June 30, 2015, the present value of the Company’s asset retirement obligation was $0.6 million. The Company expects the discounted obligation to become payable over the next 50 years. A discount rate of 7.2% was used to calculate the present value of the asset retirement obligation. If the Company had estimated the asset retirement obligation using undiscounted cash flows it would amount to approximately $1.1 million.

11. Common Shares

The authorized share capital of the Company consists of an unlimited number of no par value common and preferred shares. At June 30, 2015 there are no preferred shares issued and outstanding.

Pursuant to its Dividend Reinvestment Plan (the “Plan”), the Company issued 1,485,040 and 1,458,258 common shares during the fiscal years ended June 30, 2015 and 2014, respectively. The shares issued pursuant to the plan represent non-cash dividends with values of $8.5 million and $8.9 million, for the fiscal years ended June 30, 2015 and 2014, respectively, which have been recorded as a non-cash financing activity in each year. The Plan was established to enable eligible shareholders of the Company to reinvest dividends paid on their common shares to acquire additional common shares of the Company. The common shares issued under the Plan are issued at a price based on the volume weighted average of the closing price of the common shares for the five trading days immediately preceding the relevant dividend date, less a 3% discount.

During the 2015 fiscal year, the Company issued 18,342 common shares, having an approximate value of $0.1 million in connection with the conversion of the Company’s Cdn$ 6.75% Convertible Debentures, which were recorded as a non-cash financing activity (see Note 9).

The Company renewed its normal course issuer bid (“NCIB”) on October 21, 2014. Pursuant to the notice, the Company is permitted to acquire up to a maximum amount of Common Shares equal to the lesser of 4,158,553 Common Shares or the number of Common Shares that can be purchased for an aggregate purchase price of Cdn $5.0 million in the twelve month period commencing October 24, 2014 and ending on October 23, 2015. Under the renewed NCIB, the Company repurchased 161,415 shares with a value of $0.8 million during fiscal year 2015. The Company did not repurchase any shares during the 2014 fiscal year. The Company amended the NCIB in August 2015 (see Note 21).

On March 6, 2015, the Company issued 11,983,000 common shares for total gross cash proceeds of $69.1 million (Cdn $86.3 million) pursuant to the 2015 Bought Deal. The net proceeds of $66.7 million (Cdn $83.2 million) after commission and fees, were used to redeem the remaining $40.1 million in principal amount of Cdn$ 6.75% Convertible Debentures, with the balance used to pay down debt on the Company’s senior credit facility.

35

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

11. Common Shares (continued)

On May 8, 2015, the Board of Directors of the Company approved a change in the currency of the monthly dividend to U.S dollars, effective July 1, 2015, with the first U.S. dollar dividend payable August 17, 2015 to shareholders of record on July 31, 2015.

Common shares issued and outstanding are 96,141,516 and 82,816,549 million at June 30, 2015 and 2014, respectively.

12. Earnings Per Share

The following table sets forth the basic and diluted weighted average share amounts:

	Twelve months ended June 30, 2015		Twelve months ended June 30, 2014
Weighted-average shares outstanding-basic		87,345,708		82,096,947
Potential dilutive effect of shares to be issued to settle the debentures		21,478,722		18,457,176
Weighted-average shares outstanding-diluted		108,824,430		100,554,123

The computations for basic and diluted income per common share are as follows:

	Twelve months ended June 30, 2015		Twelve months ended June 30, 2014
Net income–basic	$	3,655	$	1,417
Add back: Interest expense on debentures (net of tax)		6,541		5,907
Net income used for diluted earnings per share		10,196		7,324
Basic income per share	$	0.04	$	0.02
Diluted income per share	$	0.04	$	0.02

The conversion of the convertible debentures is anti-dilutive for both years ended June 30, 2015 and 2014.

13. Stock-Based Compensation

The shareholders of the Company approved the adoption by STA Holdings of the EIP, at the annual general meeting held on December 8, 2005. As part of the 2005 EIP formation, the shareholders approved an initial allotment of 717,747 Class B Series Two common shares of STA Holdings. On November 13, 2008, an additional allotment of 1,446,291 Class B Series Two common shares was approved by the shareholders, which have been granted to management.

36

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

13. Stock-Based Compensation (continued)

These shares are accounted for as a liability upon issuance, as a result of a put option they contain, which may be granted to management.

On March 5, 2010, STA Holdings amended its Certificate of Incorporation in order to differentiate those Class B common shares issued pursuant to the EIP while the Company was under the IPS structure from those issued and those to be issued subsequent to the end of the IPS structure. Pursuant to the amendment, the authorized Class B Series Two common shares were split into Class B Series Two common shares, which have been issued pursuant to the EIP during the period the IPS structure was in place, and Class B Series Three common shares, which will be utilized for all future share grants under the EIP, subsequent to March 5, 2010. On November 8, 2012, an additional allotment of 2,265,000 Class B Series Three common shares was approved by the shareholders. In May 2015, the Company redeemed all of the remaining Class B Series Two common shares by exchanging the outstanding Class B Series Two common shares for Class B Series Three common shares, based on the fair market value of each class of shares. This non-cash exchange resulted in approximately 1.57 Class B Series Three common shares being issued for each Class B Series Two common share outstanding. The holders of the Class B Series Two common shares were entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the distributions per IPS that were paid historically to the holders of IPS’s. The holders of the Class B Series Three common shares are entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the dividends received by the holders of STI common shares.

Pursuant to the liquidity provisions of the EIP, the holders of Class B Series Three common shares will have an option to “put” up to one third of the shares awarded each year back to the Company, starting one year immediately following the grant.

Class B common shares granted are fully vested on the grant date. These shares are classified as a liability and re-measured at fair value at the end of each reporting period. Changes in fair value and dividends on the Class B common shares are recorded as a component of other (income) expense, in the consolidated statement of operations. The Company recorded income of $3.3 million and an expense of $0.9 million for the years ended June 30, 2015 and 2014, respectively, associated with the change in fair value on the Class B common shares, which are recorded as a component of other (income) expense, in the consolidated statement of operations. The Company recorded $0.9 million and $0.8 million in dividend payments for the years ended June 30, 2015 and 2014, respectively, which are recorded as a component of other (income) expense, in the consolidated statement of operations.

37

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

13. Stock-Based Compensation (continued)

The following tables summarize the Class B Series Two common shares redeemed and shares outstanding pursuant to the EIP:

For the year ended June 30, 2015 Net shares outstanding
Shares outstanding at June 30, 2014	61,466
Redemptions	(10,777	)
B2/B3 Share exchange	(50,689	)
Shares outstanding at June 30, 2015	—

Pursuant to the liquidity provision of the EIP plan, 10,777 shares were “put” back to the Company during the year ended June 30, 2015 for which the Company paid $0.1 million. The remaining Class B Series Two common shares were exchanged for Class B Series Three common shares as discussed above.

	For the year ended June 30, 2014
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2013		254,965			(190,449	)		64,516
Redemptions		(3,050	)		—			(3,050	)
Shares outstanding at June 30, 2014		251,915			(190,449	)		61,466

Pursuant to the liquidity provision of the EIP plan, 3,050 shares were “put” back to the Company during the year ended June 30, 2014 for which the Company paid thirty one thousand dollars. The fair value of the Class B Series Two common shares outstanding at June 30, 2014 represents a liability of $0.6 million all of which is recorded in other current liabilities. This amount represents the current value of those shares eligible to put in the next twelve months pursuant to the EIP plan.

The following tables summarize the Class B Series Three common shares granted, shares withheld for income tax withholdings at the election of the participants, shares redeemed and shares outstanding pursuant to the EIP:

	For the year ended June 30, 2015
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2014		2,071,993			(666,151	)		1,405,842
Grants		663,620			(236,241	)		427,379
Redemptions		(322,019	)		—			(322,019	)
B2/B3 Share exchange		80,009			—			80,009
Shares outstanding at June 30, 2015		2,493,603			(902,392	)		1,591,211

The Company recognized $4.2 million in non-cash stock based compensation expense related to the above grants during the year ended June 30, 2015, based on the estimated fair value of these shares on the grant date. The additional 80,009 Class B Series Three common shares were issued in exchange for the remaining Class B Series Two common shares outstanding as discussed above. Pursuant to the liquidity provision of the EIP plan, 322,019 shares were “put” back to the

38

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

13. Stock-Based Compensation (continued)

Company during the year ended June 30, 2015 for which the Company paid $1.9 million. The fair value of the Class B Series Three common shares outstanding at June 30, 2015 represents a liability of $7.3 million, of which $5.4 million is recorded in other current liabilities and represents the current value of those shares eligible to be put in the next twelve months pursuant to the EIP plan. The remaining balance is recorded in Class B Series Three common share liability.

	For the year ended June 30, 2014
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2013		1,634,452			(470,862	)		1,163,590
Grants		635,074			(195,289	)		439,785
Redemptions		(197,533	)		—			(197,533	)
Shares outstanding at June 30, 2014		2,071,993			(666,151	)		1,405,842

The Company recognized $3.9 million in non-cash stock based compensation expense related to the above grants during the year ended June 30, 2014, based on the estimated fair value of these shares on the grant date. Pursuant to the liquidity provision of the EIP plan, 197,533 shares were “put” back to the Company during the year ended June 30, 2014 for which the Company paid $1.2 million. The fair value of the Class B Series Three common shares outstanding at June 30, 2014 represents a liability of $9.3 million, of which $6.6 million is recorded in other current liabilities and represents the current value of those shares eligible to be put in the next twelve months pursuant to the EIP plan. The remaining balance is recorded in Class B Series Three common share liability.

14. Financial Instruments

The Company’s financial assets and financial liabilities are as follow:

	As at June 30, 2015		As at June 30, 2014
Cash	$	5,333	$	10,858
Accounts receivable	$	55,275	$	47,731
Accounts payable	$	2,230	$	1,656
Other accrued liabilities		62,040		41,382
Class B Series Two and Three share liability		7,349		9,951
Long-term debt (including portion due within one year)		204,936		274,098
Conversion right on 6.25% Convertible Debentures		9		236
Derivative financial instrument		—		83
Other long term liabilities		17,423		15,431
	$	293,987	$	342,837

39

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

14. Financial Instruments (continued)

The carrying amounts of cash, accounts receivable, accounts payable, and other accrued liabilities approximate fair value because of the short-term maturity of these items. The carrying amount of long-term debt, which bears interest at both fixed and floating rates, also approximates fair value.

Foreign currency exchange contracts were measured at fair value based on appropriate valuation methodologies. The fair value of the Class B Series Two common share liability was based upon an amount equal to the weighted average trading price of the STI common shares for the 10 consecutive trading days immediately prior to the date of valuation plus Cdn $3.847 (reflecting the equivalent value of the Subordinated Note component of the IPS) and the fair value of the Class B Series Three common share liability is based upon an amount equal to the weighted average trading price of the STI common shares for the 10 consecutive trading days immediately prior to the date of valuation. Other long term liabilities consist primarily of insurance reserves which are valued upon actuarial analysis.

The fair value of a financial instrument is the amount of consideration that could be agreed upon in an arm’s length transaction between knowledgeable willing parties who are under no compulsion to act. In certain circumstances, however, the initial fair value may be based upon other observable current market transactions in the same instrument, without modification or on a valuation technique using market-based inputs.

Fair value measurements are categorized using a fair value hierarchy that reflects the significance of inputs used in determining the fair values:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Quoted prices in active markets for similar assets or liabilities or valuation techniques where significant inputs are based on observable market data.

Level 3: Valuation techniques for which any significant input is not based on observable market data.

Each type of fair value is categorized based on the lowest level input that is significant to the fair value measurement in its entirety.

40

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

14. Financial Instruments (continued)

The fair values of the Company’s financial assets and liabilities measured on a recurring basis were categorized as follows:

As at June 30, 2015
	Level 1		Level 2		Level 3		Total
Interest rate swap		—	$	337		—	$	337
Class B Series Three common share liability		—		7,349		—		7,349
Conversion right on US$ 6.25% Convertible Debentures		—		—		9		9
	$	—	$	7,686	$	9	$	7,695

As at June 30, 2014
	Level 1		Level 2		Level 3		Total
Foreign currency exchange contracts	$	—	$	83	$	—	$	83
Interest rate swap		—		408		—		408
Class B Series Two and Three common share liability		—		9,951		—		9,951
Conversion right on US$ 6.25% Convertible Debentures		—		—		236		236
	$	—	$	10,442	$	236	$	10,678

The following tables summarize the changes in the Company’s level 3 financial instrument for the twelve months ended June 30, 2015 and 2014, respectively.

Conversion rights on US$ 6.25% Convertible Debentures For the twelve months ended June 30,	2015			2014
Balance at June 30,	$	236		$	954
Total unrealized gain:
Non-cash gain on conversion feature		(231	)		(714	)
FX impact on conversion feature		4			(4	)
Balance at June 30,	$	9		$	236

The decrease in fair value of the conversion rights was driven by an increase in the bond yield from 2.83% to 6.01% in the twelve months ended June 30, 2015. The decrease in fair value of the conversion rights, in the twelve months ended June 30, 2014, was driven largely by the change in the Company’s stock price volatility which decreased to 17.0% from 23.0%.

The Company uses a binomial model to fair value the conversion rights on the 6.25% Convertible Debentures which takes into account the Company’s stock price volatility, the bond yield and other market factors. This is considered a level 3 value due to the sensitivity of the model to movements in volatility which is not directly observable. The change in fair value of the conversion rights led to income of $0.2 million in the consolidated statement of operations for the year ended June 30, 2015.

41

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

14. Financial Instruments (continued)

The Company has exposure to interest rate risk, foreign currency exchange risk, credit risk and liquidity risk. The Company’s management has overall responsibility for the establishment of the Company’s risk management framework, with oversight provided by the Board of Directors.

Interest Rate Risk

The Company’s interest rate risk primarily arises from its variable rate borrowings under the senior credit facility, which bears a floating rate of interest. The Company manages its interest rate exposure by using a combination of fixed and variable rate debt as well as through an interest rate swap that the Company has in place for a notional amount of $50.0 million of credit facility borrowings. The swap has not been designated as a hedge for accounting purposes therefore the changes in fair value of the interest rate swap are recorded in the condensed consolidated statement of operations. The Company recorded a non cash gain for the year ended June 30, 2015, of $0.1 million in connection with the changes in fair value of the swap, which is included in the consolidated statement of operations as a component of interest expense. The value of the interest rate swap represents a liability of $0.3 million as at June 30, 2015. The Company has secured fixed rate financing in the form of its Senior Secured Notes and its Convertible Debentures.

At June 30, 2015, the Company had $85.4 million in outstanding senior indebtedness (comprised of $50.4 million in revolving credit facility borrowings and $35.0 million in fixed rate Senior Secured Notes) as well as $119.5 million in fixed rate Convertible Debentures.

A 100 basis point change in interest rates, with all other variables held constant, applied to the outstanding credit facility borrowings as at June 30, 2015, would result in an annual change in interest expense and a corresponding change in cash flows of approximately $0.5 million.

Foreign Currency Exchange Risk

The Company managed its exposure to currency fluctuations through foreign currency exchange contracts (“Forward Contracts”) primarily to mitigate the exchange rate risk on the common share dividends. In May 2015, the Company announced that the Board of Directors had approved a change in the currency of the monthly dividend to U.S dollars, effective July 1, 2015. Effective with the announcement, the Company liquidated all of the Forwards Contracts that were outstanding, which had a notional value of $17.5 million. This liquidation resulted in a realized loss of $0.4 million which is recorded in foreign currency (gain) loss in the consolidated statement of operations.

In June 2015, the Company liquidated the foreign exchange forward contract it had in place to cover the principal amount of the Cdn$ 6.75% Convertible Debentures that matured on June 30, 2015. This liquidation resulted in a realized gain of $0.1 million which is recorded in foreign currency (gain) loss in the consolidated statement of operations.

42

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

14. Financial Instruments (continued)

The Company uses cash flows from its Canadian operations to partially mitigate the exchange rate risk on the Convertible Debentures interest payments.

The Company prepares its financial statements in U.S. dollars. In connection with the Company’s Canadian operations, approximately 21.7% of the Company’s consolidated income before taxes are incurred in Canadian dollars. The results of the Canadian operations are translated into U.S. dollars for financial statement reporting purposes.

Changes in the Canadian dollar / U.S. dollar currency exchange rate from period to period will impact the translated U.S. dollar equivalent results of the Canadian operations. The Company recorded a gain of $0.1 million on the translation of its monthly dividends into U.S. dollars (which included the liquidation of the monthly currency contracts used to hedge the dividends). Both of these transactions are recorded in foreign currency (gain) loss in the consolidated statements of operations.

Credit Risk

The Company is exposed to credit risk in its cash and cash equivalents, accounts receivable and to the credit risk of its derivative financial instrument counterparties if they do not meet their obligations. The Company minimizes the credit risk of cash by depositing such with only reputable financial institutions with federally insured backing. The Company minimizes the credit risk of its derivative financial instruments by dealing only with reputable financial institutions and monitoring the credit risk of these financial institutions. As the Company does not utilize credit derivatives or similar instruments, the maximum exposure to credit risk is the full carrying value of the financial instrument or face value of open derivative financial instruments.

Receivables from the transportation segment are secured by the creditworthiness of local municipalities and agencies. The majority of the customers are local school districts that are funded through a combination of local taxes and funding from state/provincial and federal governments. The Company has historically had excellent collections experience with these customers and believes that these receivables are collectable. Receivables from the oil and gas segment are due from reputable general partners operating large partnerships in the oil and gas industry. Consistent with the Company’s history there were minimal write-offs of accounts receivable during the fiscal years ended June 30, 2015 and 2014.

15. Segment Information

The Company has two reportable segments, a transportation segment and an oil and gas segment. The Company reassesses its reportable segments at least annually. The transportation segment provides school transportation and management services to public and private schools in both the United States and Canada.

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Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

15. Segment Information (continued)

The table below summarizes revenue and assets by geographical area for the transportation segment for the years ended June 30, 2015 and 2014:

2015
	Revenues		Property and Equipment (net)		Goodwill
United States	$	480,936	$	198,135	$	99,484
Canada		70,925		33,161		35,455
Total	$	551,861	$	231,296	$	134,939

For the year ended June 30, 2015, the oil and gas segment, which is located in the United States, had revenues of $2.9 million and net oil and gas interests of $7.7 million. There is no goodwill associated with this segment.

2014
	Revenues		Property and Equipment (net)		Goodwill
United States	$	409,683	$	187,218	$	99,484
Canada		74,633		44,134		39,674
Total	$	484,316	$	231,352	$	139,158

For the year ended June 30, 2014, the oil and gas segment, which is located in the United States, had revenues of $5.2 million and net oil and gas interests of $7.9 million. There is no goodwill associated with this segment.

The accounting policies of the segments are the same as those described in the basis of presentation. There are no inter-segment sales.

Reportable operating segments:

	2015			2014
Revenue
Transportation	$	551,861		$	484,316
Oil and gas		2,890			5,183
	$	554,751		$	489,499
Operating earnings (losses)
Transportation	$	17,702		$	14,290
Oil and gas		(540	)		1,235
		17,162			15,525
Unallocated expenses		13,423			14,503
Tax expense (benefit)		84			(395	)
Net Income	$	3,655		$	1,417

44

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

15. Segment Information (continued)

	2015		2014
Capital Expenditures
Transportation	$	32,467	$	36,271
Oil and gas		1,003		1,523
	$	33,470	$	37,794
Depreciation, depletion and amortization
Transportation	$	49,969	$	48,896
Oil and gas		1,162		1,121
	$	51,131	$	50,017
Total Assets
Transportation	$	527,291	$	534,522
Oil and gas		8,636		9,316
	$	535,927	$	543,838
Total Liabilities
Transportation	$	334,333	$	383,114
Oil and gas		1,787		1,684
	$	336,120	$	384,798

16. Lease Commitments

The Company leases certain facilities under non-cancelable operating leases. Rent expense associated with the leases facilities totaled $13.8 million and $12.0 million for the years ended June 30, 2015 and 2014, respectively. The Company also leases certain school vehicles under non-cancelable operating leases. Operating lease expense associated with these leased school vehicles totaled $29.6 million and $19.9 million for the years ended June 30, 2015 and 2014, respectively. The terms of these and other leases expire at various times through 2024.

The following represent future minimum rental payments and operating lease payments under non cancelable operating leases:

	Facility Leases		Vehicle Leases		Total
Year ending June 30,
2016	$	14,422	$	28,024	$	42,446
2017		11,024		25,005		36,029
2018		8,634		21,810		30,444
2019		6,426		17,526		23,952
2020		3,103		11,318		14,421
2021 and thereafter		3,402		233		3,635
Total minimum payments	$	47,011	$	103,916	$	150,927

45

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

17. Employee Benefit Plans

The Company has a qualified defined contribution benefit plan, which allows for voluntary pre-tax contributions by the employees. The Company makes a matching contribution on behalf of the employees. The Company incurred $0.6 million in expenses related to the plan for both of the years ended June 30, 2015 and 2014.

18. Related Party Transactions

The Company utilized a transportation equipment dealer, primarily to assist in procurement and disposal of the Company’s fleet under the direction of the Company’s CFO. The transportation equipment dealer also provided consulting services to the Company, assisting with fleet valuations in its acquisition efforts. The transportation equipment dealer is a company controlled by a family member of the Company’s Chairman and CEO. Beginning in fiscal year 2015, the fleet procurement and disposal services were provided for an annual fee including a retainer amount plus a commission per vehicle amount not to exceed $0.5 million per annum. Prior to fiscal year 2015, these services were provided on a non-contractual basis. The Company paid the transportation equipment dealer $0.5 million and $0.6 million for each of the years ended June 30, 2015 and 2014, respectively. In April 2015, the Company terminated the agreement and began to perform these services directly with internal resources.

These transactions are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.

19. Commitments and Contingencies

The Company is subject to certain claims and lawsuits arising in the normal course of business, most of which involve claims for personal injury and property damage incurred in connection with its operations. The Company maintains automobile, workers’ compensation and general liability insurance coverage with deductible amounts for each incident that is the financial responsibility of the Company. The Company accrues for estimated deductible amounts when the incident occurs. The Company’s insurance program is designed to minimize the financial risk associated with claims. The primary risks in the Company’s operations are bodily injury and property damage to third parties.

In the opinion of management, uninsured losses related to deductible amounts resulting from the ultimate resolution of these matters will not have a material effect on the Company’s financial position, results of operations or cash flows.

As part of collateral agreements supporting its insurance programs, the Company had $0.7 million and $0.9 million of letters of credit outstanding at June 30, 2015 and 2014, respectively and $0.9 million and $0.7 million of cash deposits at June 30, 2015 and 2014, respectively which are included in other assets in the consolidated balance sheet.

46

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

19. Commitments and Contingencies (continued)

Certain of the Company’s contracts contain performance or surety bond requirements. These bonds are written by certified surety underwriters. For the most recent fiscal year, outstanding performance bonds aggregated $94.6 million. There are no collateral requirements for these surety bonds.

20. Additional Financial Information

Select additional financial information consists of the following:

Balance Sheet Information At June 30	2015		2014
Prepaid Expenses
Prepaid Insurance	$	7,098	$	6,924
Other		2,623		2,695
	$	9,721	$	9,619
Other Current Assets
Fuel Tax Receivable	$	1,799	$	1,249
Other Receivables		1,644		3,539
	$	3,443	$	4,788
Accrued Expenses and Accounts Payable
Accrued Accounts Payable	$	8,483	$	8,711
Dividends Payable		14,096		14,255
Insurance		9,111		7,532
Wages and Benefits		5,175		6,237
Class B Shares		5,356		7,217
Taxes Payable		1,259		1,335
Deferred Revenue		655		774
Accrued Fixed Assets		20,983		—
Other		2,278		2,621
	$	67,396	$	48,682
Other liabilities
Insurance	$	16,756	$	14,565
Other		676		1,102
	$	17,432	$	15,667

47

Student Transportation Inc.

Notes to Consolidated Financial Statements

For the years ended June 30, 2015 and 2014

(000’s of U.S. Dollars, unless specified, except share and per share amounts)

21. Subsequent Events

On July 2, 2015, STA Holdings granted 173,705 Class B Series Three common shares pursuant to the EIP. The Company will recognize non-cash stock-based expense related to these grants during the quarter ending September 30, 2015.

During July and August 2015, the Company entered into additional operating leases with ten major financial institutions to lease approximately $57.5 million in growth and replacement school vehicles for the upcoming 2015-2016 school year. The term of these leases is six years at effective fixed rates in the range of 2.7% to 4.2%. Annual lease payments on these additional leases will approximate $8.0 million per year for the term of the leases.

During August 2015 the Company amended its current NCIB to increase the maximum amount of common shares that the Company is permitted to acquire to 6,806,591 common shares from the number of common shares that could be purchased for an aggregate purchase price of Cdn$ 5.0 million, subject to the Company’s senior debt agreement requirements. The amended NCIB will still cover the twelve month period commencing October 24, 2014 and ending on October 23, 2015. Upon expiration of the current NCIB, the Company can renew the NCIB for another twelve month period.

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EX-99.3

Exhibit 99.3

STUDENT TRANSPORTATION INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of the Financial Condition and Results of Operations of Student Transportation Inc., is supplemental to, and should be read in conjunction with, the financial statements and footnotes for the period ended June 30, 2015. These financial statements can be found on SEDAR at www.sedar.com. As an SEC issuer (as defined under applicable Canadian securities laws), Student Transportation Inc.’s financial statements are prepared in accordance with United States generally accepted accounting principles (“US GAAP”). The information in this Management’s Discussion and Analysis of the Financial Condition and Results of Operations is effective September 14, 2015. Additional information about, and the Annual Information Form filed by, Student Transportation Inc., is also available on SEDAR at www.sedar.com.

All references to “$” or “US$” are to U.S. dollars and all references to “Cdn $” are to Canadian dollars. All references to the Company are to either Student Transportation Inc. or to STI and its subsidiaries, as the context requires. Unless the context requires otherwise, references to years are to the Company’s fiscal year ended June 30.

Forward-Looking Statements

Certain statements in this Management’s Discussion and Analysis (“MD&A”), including without limitation in the sections of this MD&A entitled “Results of Operations”, “Liquidity and Capital Resources” and “Subsequent Events” are “forward-looking statements” within the meaning of applicable securities laws, which reflect the expectations of management regarding the Company’s revenues, expense levels, seasonality, liquidity, profitability of new business acquired or secured through bids, borrowing availability, ability to renew or refinance various loan facilities as they become due, ability to execute the Company’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 negative forms thereof, suggesting future outcomes or events.

These forward-looking statements reflect the Company’s current expectations regarding future events and operating performance and speak only as of the date of this Management Discussion and Analysis. Actual results may vary from the forward-looking statements. Specifically, 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 factors referred to and incorporated by reference under the heading “Risk Factors” such as an inability to control the Company’s operating expenses, significant capital expenditures, the Company’s ability to retain or renew its customer contracts, find suitable business for acquisition and identify conversion opportunities and win bid contracts on profitable terms, the Company’s consolidated indebtedness and restrictive covenants related thereto, the Company’s ability to make payments on its convertible debentures, the Company’s acquisition strategy, increased industry competition and consolidation, reliance on certain key personnel, the possibility that a

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greater number of employees will join unions, rising insurance costs, a lack of insurance coverage for certain losses, new governmental laws and regulations, environmental requirements, seasonality of the industry in which the Company operates, any inability to maintain letters of credit and performance bonds, the termination of certain of the Company’s contracts for reasons beyond management’s control, uncertain risks associated with the Company’s oil and gas operations, the Company’s status as a public company, foreign private issuer and emerging growth company status for U.S. federal securities law purposes, reduced spending by school districts and governmental agencies, terrorism attacks, man-made or natural disasters, cyber terrorism and data security breeches and risks related to the Company’s capital structure. Material factors and assumptions that were relied upon in making the forward-looking statements include 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 Management Discussion and Analysis are based upon what the Company 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 Management Discussion and Analysis and the Company assumes no obligation to update or revise them to reflect new events or circumstances, except as specifically required by applicable law.

General

Student Transportation Inc. (“STI” or the “Company”) is a corporation established under the laws of the Province of Ontario. STI, together with its indirect subsidiary Student Transportation of America ULC (“STA ULC” and together with STI, the “Issuer”), initially issued income participating securities (“IPSs”) pursuant to the Issuer’s initial public offering in December 2004 (the “IPS Offering”). Each IPS consisted of one common share of STI and Cdn $3.847 principal amount of 14% subordinated notes of STA ULC. On December 21, 2009, the Company redeemed the remaining 14% subordinated notes, originally issued as a component of the IPSs, as the final step in the process of converting from the IPS structure to a traditional common share structure.

STI owns 100% of the Class A common shares of Student Transportation of America Holdings, Inc. (“STA Holdings”). Management owns 100% of the Class B Series Two and Class B Series Three common shares (collectively the “Class B common shares”) of STA Holdings pursuant to the grant of shares under the STA Holdings Equity Incentive Plan. STI currently holds a 98.5% interest in STA Holdings as at June 30, 2015, through its ownership of the Class A shares of STA Holdings. The Company also owns 100% of the outstanding shares of Parkview Transit Inc. (“Parkview Transit”). STA Holdings, through its wholly owned subsidiary, Student Transportation of America, Inc. (“STA, Inc.”), combined with Parkview Transit, is the third largest provider of school bus transportation services in North America.

On July 13, 2011, the Company filed a Form 40-F registration statement with the United States Securities and Exchange Commission (the “SEC”) and a listing application with the NASDAQ-OMX, both in connection with the Company’s initial US listing of its common stock on the NASDAQ Global Select Market.

On September 1, 2011 the NASDAQ-OMX formally approved the Company’s listing application, and on September 2, 2011, the SEC formally declared effective the Company’s Form 40-F registration statement. As such, the Company became a “foreign private issuer” under applicable U.S. federal securities laws. On September 6, 2011, the Company’s common shares commenced trading on the NASDAQ Global Select Market under the trading symbol STB. The Company’s common stock and convertible debentures continue to be listed on the Toronto Stock Exchange.

On June 21, 2010, STI closed its offering of Cdn$ 6.75% convertible subordinated unsecured debentures (the “Cdn$ 6.75% Convertible Debentures”) due June 30, 2015, at a price of Cdn $1,000 per debenture, for total gross proceeds of $48.2 million (Cdn $50.0 million) (see “Liquidity and Capital Resource-Convertible Debentures”). The Company repaid the remaining Cdn$ 6.75% Convertible Debentures at June 30, 2015, as discussed below.

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On June 7, 2011, the Company issued US$ 6.25% convertible subordinated unsecured debentures (the “US$ 6.25% Convertible Debentures”) due June 30, 2018, at a price of US $1,000 per debenture, for total gross proceeds of $60.0 million.

On November 12, 2013, the Company closed its offering of Cdn$ 6.25% convertible subordinated unsecured debentures due June 30, 2019 (the “Cdn$ 6.25% Convertible Debentures”), at a price of Cdn $1,000 per debenture, for total gross proceeds of $71.4 million (Cdn $75.0 million).

The Cdn$ 6.75% Convertible Debentures, which were repaid June 30, 2015, the US$ 6.25% Convertible Debentures and the Cdn$ 6.25% Convertible Debentures are collectively referred to as the “Convertible Debentures”. The net proceeds from the issuances of the Convertible Debentures were used to repay indebtedness under the senior credit facilities, which provided additional borrowing capacity, and for general corporate purposes.

Each outstanding Convertible Debenture is convertible into common shares of the Company at the option of the holder at any time prior to the close of business on the earlier of the business day immediately preceding the maturity date or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of US $9.50 per common share (the “US$ 6.25% Convertible Debenture Conversion Price”) which is equivalent to 105.2632 common shares for each US $1,000 principal amount of US$ 6.25% Convertible Debentures and at a conversion price of Cdn $9.05 per common share (the “Cdn$ 6.25% Convertible Debenture Conversion Price”) which is equivalent to 110.4972 common shares for each Cdn $1,000 principal amount of Cdn$ 6.25% Convertible Debentures.

The Company repaid the Cdn$ 6.75% Convertible Debentures at June 30, 2015 as discussed below. The Cdn$ 6.75% Convertible Debentures were not redeemable prior to June 30, 2013. The Company had the right, at its option, to redeem the Cdn$ 6.75% Convertible Debentures in whole or in part, from time to time, after July 1, 2013, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the Cdn$ 6.75% Convertible Debenture Conversion Price. During fiscal year 2015, Cdn $0.1 million of the Company’s Cdn$ 6.75% Convertible Debentures were converted into 18,342 shares of common stock. On June 30, 2015, the Company repaid the remaining Cdn $49.9 million in principal amount of Cdn$ 6.75% Convertible Debentures for US$ 40.1 million in cash, in accordance with the terms of the trust indenture dated as of June 21, 2010 between STI and Computershare Trust Company of Canada governing the Cdn$ 6.75% Convertible Debentures.

The US$ 6.25% Convertible Debentures were not redeemable prior to June 30, 2014. The Company has the right, at its option, to redeem the US$ 6.25% Convertible Debentures in whole or in part, from time to time, after July 1, 2014, but prior to June 30, 2016, on at least 30 days’ prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the US$ 6.25% Convertible Debenture Conversion Price. After June 30, 2016 and prior to maturity, the Company will have the right, at its option, to redeem the US$ 6.25% Convertible Debentures in whole or in part, from time to time, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest.

The Cdn$ 6.25% Convertible Debentures are not redeemable prior to June 30, 2017. The Company will have the right, at its option, to redeem the Cdn$ 6.25% Convertible Debentures in

3

whole or in part, from time to time, on or after June 30, 2017 but prior to June 30, 2018, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the Cdn$ 6.25% Convertible Debenture Conversion Price. After June 30, 2018 and prior to maturity the Company will have the right, at its option to redeem the Cdn$ 6.25% Convertible Debentures in whole or in part, from time to time, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest.

The Company may at its option, subject to applicable regulatory approval, elect to satisfy its obligation to pay the outstanding principal amount of the Convertible Debentures in whole by issuing and delivering common shares for each US $1,000 principal amount of the US$ 6.25% Convertible Debentures and for each Cdn $1,000 principal amount of the Cdn$ 6.25% Convertible Debentures. The amount of common shares delivered is obtained by dividing each principal amount of Convertible Debentures by 95% of the current market price of the common shares on the date set for redemption or the maturity date.

The Company may elect, subject to applicable regulatory approval, to issue and deliver common stock of the Company to the indenture trustee under the Convertible Debenture indentures, to sell in the open market, to satisfy the Company’s obligation to pay interest on the Convertible Debentures on each interest payment date. The Convertible Debenture holders will receive a cash payment in satisfaction of the interest obligation equal to the interest payable from the sale of such common shares.

The Company must commence, within 30 days of a Change of Control (as defined in the Convertible Debentures indentures), an offer to purchase all of the Convertible Debentures then outstanding at a purchase price equal to 101% of the principal amount of the Convertible Debentures, plus accrued and unpaid interest thereon.

The Company established a dividend reinvestment plan (the “Plan”) in May 2009 to enable eligible shareholders of the Company to reinvest dividends on their common shares to acquire additional common shares of the Company. The common shares issued under the Plan are issued directly from the treasury of STI at a price based on the volume weighted average of the closing price of the common shares for the five trading days immediately preceding the relevant dividend date, less a 3% discount. Pursuant to the Plan, the Company issued 1,485,040 common shares during the twelve months ended June 30, 2015, which represent non-cash dividends having a value of $8.5 million.

The shareholders of the Company approved the adoption by STA Holdings of the Equity Incentive Plan (“EIP”), at the annual general meeting held on December 8, 2005. As part of the 2005 EIP plan formation, the shareholders of STI approved an initial allotment of 717,747 Class B Series Two common shares of STA Holdings, which have been granted to management. On November 13, 2008, at the annual general meeting, the shareholders of the Company approved an increase in the allotted number of Class B Series Two common shares available for issuance under the EIP by 1,446,291. Pursuant to the STA Holdings amendment discussed below, the majority of this additional allotment was converted into Class B Series Three shares. All of these shares have been granted to management. These shares are accounted for as a liability upon issuance, as a result of a put option they contain.

On March 5, 2010, STA Holdings amended its Certificate of Incorporation in order to differentiate those Class B common shares issued pursuant to the EIP while the Company was under the IPS structure from those issued subsequent to the end of the IPS structure. Pursuant to the amendment, the authorized Class B Series Two common shares were split into Class B Series Two common shares, which had been issued pursuant to the EIP during the period the IPS structure was in place, and Class B Series Three common shares, which have been utilized for all share grants under the EIP subsequent to March 5, 2010. On November 8, 2012, an additional allotment of 2,265,000 Class B Series Three common shares was approved by the shareholders.

4

In May 2015, the Company exchanged all of the remaining Class B Series Two common shares for Class B Series Three common shares, based on the fair market value of each class of shares. This non-cash exchange resulted in approximately 1.57 Class B Series Three common shares being issued for each Class B Series Two common share outstanding.

The holders of the Class B Series Two common shares were entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the distributions per IPS that were paid historically to the holders of IPSs. The holders of the Class B Series Three common shares are entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the dividends paid to the holders of STI common shares. These shares are accounted for as a liability upon issuance, as a result of a put option they contain. Pursuant to the liquidity provisions of the EIP the holders of Class B Series Three common shares have an option to “put” up to one third of the shares awarded each year back to the Company, one year immediately following the grant.

As noted above, the Class B common shares are classified as a liability and re-measured at fair value at the end of each reporting period. Changes in fair value and dividends on the Class B common shares are recorded as a component of other (income) expense, net in the consolidated statement of operations. The Company recorded income of $3.3 million and an expense of $0.9 million for the years ended June 30, 2015 and 2014, respectively, associated with the change in fair value on the Class B common shares. The Company recorded $0.9 million and $0.8 million in dividend payments on the Class B common shares for the years ended June 30, 2015 and 2014, respectively, which are recorded as a component of other (income) expense, net in the consolidated statement of operations.

During the twelve month ended June 30, 2015, there were 10,777 Class B Series Two shares “put” back to the Company, for which the Company paid $0.1 million. The remaining 50,689 Class B Series Two common shares were exchanged for 80,009 Class B Series Three common shares as discussed above. There are no Class B Series Two common shares outstanding at June 30, 2015.

During the twelve months ended June 30, 2014, a total of 3,050 Class B Series Two common shares were “put” back to the Company having a fair value of thirty one thousand dollars. The total number of Class B Series Two common shares outstanding as at June 30, 2014 was 61,466. The fair value of the Class B Series Two common shares outstanding at June 30, 2014 represents a liability of $0.6, million all of which is recorded in other current liabilities.

During the twelve months ended June 30, 2015, STA Holdings granted 663,620 Class B Series Three common shares pursuant to the EIP. The Company recognized $4.2 million in non-cash stock-based compensation expense related to these grants during the twelve months ended June 30, 2015. In connection with these grants, 236,241 shares were withheld at the election of the participants to satisfy income tax withholdings. An additional 80,009 Class B Series Three common shares were issued in exchange for the remaining Class B Series Two common shares outstanding as discussed above. Pursuant to the liquidity provision of the EIP plan, 322,019 Class B Series Three common shares were “put” back to the Company, having a fair value of $1.9 million during the twelve months ended June 30, 2015. The total number of Class B Series Three common shares outstanding as at June 30, 2015 was 1,591,211. The fair value of the Class B Series Three common shares outstanding at June 30, 2015 represents a liability of $7.3 million, of which $5.4 million is recorded in other current liabilities and represents the current value of those shares eligible to be put in the next twelve months pursuant to the EIP plan. The remaining balance is recorded in Class B Series Three common share liability.

During the twelve months ended June 30, 2014, STA Holdings granted 635,074 Class B Series Three common shares pursuant to the EIP. The Company recognized $3.9 million in non-cash

5

stock-based compensation expense related to these grants during the twelve months ended June 30, 2014. In connection with these grants, 195,289 shares were withheld at the election of the participants to satisfy income tax withholdings. In addition, pursuant to the liquidity provision of the EIP plan, 197,533 Class B Series Three common shares were “put” back to the Company, having a fair value of $1.2 million during the twelve months ended June 30, 2014. The total number of Class B Series Three common shares outstanding as at June 30, 2014 was 1,405,842. The fair value of the Class B Series Three common shares outstanding at June 30, 2014 represents a liability of $9.3 million, of which $6.6 million is recorded in other current liabilities and represents the current value of those shares eligible to be put in the next twelve months pursuant to the EIP plan. The remaining balance is recorded in Class B Series Three common share liability.

The Company renewed its normal course issuer bid (“NCIB”) on October 21, 2014. Pursuant to the notice, the Company is permitted to acquire up to a maximum amount of Common Shares equal to the lesser of 4,158,553 Common Shares or the number of Common Shares that can be purchased for an aggregate purchase price of Cdn $5.0 million in the twelve month period commencing October 24, 2014 and ending on October 23, 2015. Under the renewed NCIB, the Company repurchased 161,415 shares with a value of $0.8 million during the fiscal year 2015. The Company did not repurchase any shares under the previous NCIB. The Company amended the NCIB in August 2015, to increase the maximum amount of common shares that the Company is permitted to acquire under the NCIB (see “Subsequent Events”).

During fiscal year 2015, Cdn$ 0.1 million of the Company’s Cdn$ 6.75% Convertible Debentures were converted into 18,342 shares of common stock. The remaining Cdn$ 6.75% Convertible Debentures were repaid on June 30, 2015, as discussed above (see “Liquidity and Capital Resource-Convertible Debentures”).

On March 6, 2015, the Company issued 11,983,000 common shares pursuant to a bought deal for total gross cash proceeds of $69.1 million (Cdn $86.3 million) (the “2015 Bought Deal”). The net proceeds of $66.7 million (Cdn $ 83.2 million) after commission and fees, were used to redeem the remaining $40.1 million in principal amount of Cdn$ 6.75% Convertible Debentures, with the balance used to pay down debt on the Company’s senior credit facility.

On May 8, 2015, the Board of Directors of the Company approved a change in the currency of the monthly dividend from Canadian dollars to U.S dollars, effective July 1, 2015, with the first U.S. dollar dividend payable August 17, 2015 to shareholders of record on July 31, 2015.

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Results of Operations ($ in 000’s, except per share data)

As noted in the cautionary language concerning forward-looking disclosures under the heading “Forward-Looking Statements” in this management discussion and analysis, this section contains forward-looking statements, including with respect to the Company’s seasonality, fuel prices, currency and leasing alternatives. Such statements involve known and unknown risks, uncertainties and other factors outside of management’s control, including the risk factors set forth in this management discussion and analysis that could cause results to differ materially from those described or anticipated in the forward-looking statements.

	Three Months Ended June 30,						Twelve Months Ended June 30,
	2015			2014			2015			2014
Revenues	$	152,454		$	142,567		$	554,751		$	489,499
Costs and expenses
Cost of operations		113,107			103,680			427,536			373,060
General and administrative		13,532			11,729			54,749			46,673
Non-cash stock compensation		—			—			4,170			3,942
Acquisition expense		—			16			3			282
Depreciation and depletion expense		14,303			14,585			47,757			46,444
Amortization expense		943			831			3,374			3,573
Total operating expenses		141,885			130,841			537,589			473,974
Income from operations		10,569			11,726			17,162			15,525
Interest expense		4,247			4,562			17,412			16,641
Foreign currency loss (gain)		242			348			(136	)		424
Unrealized gain on foreign currency exchange contracts		(2,053	)		(798	)		(83	)		(737	)
Non-cash gain on US$ 6.25% Convertible Debentures conversion feature		(12	)		(43	)		(231	)		(714	)
Gain on bargain purchase of businesses acquired, net of tax		—			—			—			(2,762	)
Other (income) expense, net		(736	)		977			(3,481	)		1,651
Income before income taxes and equity in net income of unconsolidated investment		8,881			6,680			3,681			1,022
Equity in net income of unconsolidated investment		33			—			58			—
Income tax expense (benefit)		1,934			1,973			84			(395	)
Net income	$	6,980		$	4,707		$	3,655		$	1,417
Basic and diluted net income per common share	$	0.07		$	0.06		$	0.04		$	0.02

Seasonality

The Company’s operations are seasonal and follow the school calendars of the public and private schools it serves. During the summer school break, revenue is derived primarily from summer camps and private charter services. Since schools are not in session, there is minimal school bus transportation revenue. Thus, the Company incurs operating losses during the first three months of the fiscal year, which encompass the summer school break. Depreciation of fixed assets occurs in the months during which schools are in session, which is generally September through June. A full year’s worth of depreciation is recorded in these ten months to correspond with the vehicles’ usage. In addition, the Company purchases a majority of its replacement capital expenditures, along with investment capital spending for new bids and contracts awarded for the upcoming school year in the same time period. These purchases have historically been funded by borrowings on the Company’s senior credit facility and through operating lease financings.

Recent Market Fuel Price Trends

There has been a significant decrease in market fuel prices over the last twelve months in North America. The recent trend in declining market fuel prices is evidenced by the decline in oil prices since July 2014 (the start of our 2015 fiscal year). The price of oil in July 2014 was approximately $100 per barrel. Prices in September 2014 were approximately $95 per barrel, and started to decline to a range of $75 per barrel and $60 per barrel in the November 2014 and December 2014 time frame, respectively. At June 2015 (the end of our 2015 fiscal year), the price of oil stood at approximately $60 per barrel. We have seen positive impacts on this declining trend in market fuel prices in our fuel expense for the 2015 fiscal year, with fuel expense at 7.7% of revenue for fiscal year 2015 compared to the 8.9% level for fiscal year 2014.

The Company is exposed to changes in the market price of fuel on our school transportation contracts in the ordinary course of business. The Company continues to have fuel mitigation features in approximately 60% of its school transportation revenue contracts that provide some measure of protection against market fuel price increases, ranging from the outright purchase of fuel by school districts to fuel reimbursements associated with fuel price caps / collars and fuel escalators. So while the Company is still exposed to some price risk under some of these fuel mitigation features when market fuel prices increase, it also benefits to some extent with a decline in market fuel prices as well.

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In addition to the contract mitigation features related to fuel in the revenue contracts, over the last several years the Company also endeavored to lock in an approximate 20% of its fuel exposure by entering into fixed price contracts with its fuel vendors on an annual basis, with the final approximate 20% of fuel exposure at risk and fully subject to market price fluctuations. In August 2014, the Company entered into fixed price contracts with fuel vendors to cover the approximate 20% of fuel exposure for fiscal year 2015. As such, the fixed price contracts for fiscal year 2015 reflect lock-in prices from the August 2014 time period, prior to the substantial market fuel price declines experienced in the November 2014 and December 2014 time periods. The Company has benefited from the recent market fuel price declines on the final 20% of fuel exposure fully subject to market price fluctuations.

In connection with the annual fixed price contracts for approximately 20% of the Company’s fuel exposure and based on the decline in market fuel prices that started subsequent to September 2014 (as noted above) and which continued through the current date, the Company has secured some fixed price contracts for the next two fiscal years. In October 2014, the Company entered into a fixed price contract with its fuel vendors for approximately 20% of its fuel exposure for fiscal year 2016 and in August 2015, the Company locked in a portion of the approximate 20% fuel exposure for the 2017 fiscal year. As such, the Company expects a further reduction in fuel expense in fiscal year 2016 compared to fiscal year 2015, with fiscal year 2016 fuel expense lowering to a level of 7.0% to 7.2% of revenue, all else being equal (see Forward Looking Statements).

Foreign Currency Translation Impacts on Financial Reporting

The Company’s financial statements are reported in U.S. dollars, as the principal operations and cash flows of its subsidiaries are conducted in U.S. dollars. The Company’s reported results have been negatively impacted by the recent weakening of the Canadian dollar in connection with the translation of the Canadian operations into U.S. dollar. These negative impacts are purely financial statement reporting impacts and have no effect on the Company’s Canadian dollar operating results. The results of the Company’s Canadian operations (revenues and expenses) are translated into U.S. dollars using the average exchange rate during the period. The average Canadian dollar / U.S. dollar exchange rate for the twelve months ended June 30, 2015 and 2014 were 1.1738 and 1.0703, respectively. Revenue and operating income for fiscal year 2015 were negatively impacted by approximately $7.4 million and $0.7 million, respectively, related to the change in exchange rates between the Canadian dollar and the U.S. dollar as compared to fiscal year 2014.

Managed and Leased Fleet Business

The Company’s school transportation services have historically included managed services contracts. These transportation services are structured as management services contracts under which the Company manages the transportation for the school district and the school district continues to own the school bus fleet. In addition, since the fiscal year 2007 the Company has financed a portion of its growth and replacement school vehicles through operating leases. Such managed services contracts and leased vehicles require lower up front capital investment (as the school district maintains ownership of the managed fleet and the lessor maintains ownership of the leased fleet) and thus results in lower annual depreciation expense on an ongoing basis. Currently, leased and managed buses account for approximately 25% and 5%, respectively, of the Company’s fleet. The Company intends to review leasing alternatives on an annual basis based on the economics of the lease financing.

During the fiscal year ended June 30, 2014, the Company entered into additional operating leases with seven major financial institutions to lease approximately $24.0 million in replacement school vehicles and $20.4 million in growth vehicles for the 2013-2014 school year. The term of these leases is six years at effective fixed rates in the range of 2.3% to 4.5%. Annual lease payments on these additional leases are approximately $6.3 million per year for the term of the leases.

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During the fiscal year ended June 30, 2015, the Company entered into additional operating leases with seven major financial institutions to lease approximately $38.7 million in replacement school vehicles and $38.3 million in growth school vehicles for the 2014-2015 school year. The term of these leases is six years at effective fixed rates in the range of 2.7% to 4.4%. Annual lease payments on these additional leases will approximate $11.2 million per year for the term of the leases.

During July and August 2015, the Company entered into additional operating leases with ten major financial institutions to lease approximately $46.0 million in replacement school vehicles and $11.5 million in growth school vehicles for the upcoming 2015-2016 school year. The term of these leases is six years at effective fixed rates in the range of 2.7% to 4.2%. Annual lease payments on these additional leases will approximate $8.0 million per year for the term of the leases.

Oil and Gas Interests

In January 2008, the Company closed the acquisition (the “Canadex Acquisition”) of all of the outstanding stock of Canadex Resources Limited (“Canadex”). Canadex was a transportation and energy company consisting of two separate business segments. The transportation segment represented school bus operations in Ontario, while the energy division held non-operating positions in oil and gas investments in the United States. The interests in oil and gas properties are held through Canadex’s wholly owned subsidiary, Canadex Resources Inc. (“CRI”). CRI invests as a non-operator in properties for the exploration and upstream production of crude oil, natural gas and condensates. It holds junior participations in approximately 500 wells primarily in Texas and Oklahoma, with a few located in Louisiana and Kansas in the United States. Approximately 70% of these wells produce natural gas. CRI’s co-investments with a range of operators provide flexibility to exploit a variety of exploration and development opportunities. The financial statements reflect the Company’s proportionate interest in the oil and gas activities as a non-operator. Canadex, through a series of amalgamations subsequent to the Canadex Acquisition, was renamed Parkview Transit Inc., which is a direct subsidiary of the Company.

The Company’s oil and gas revenues, on an annual basis, are approximately one half of one percent of consolidated Company revenues.

Three months ended June 30, 2015 Compared to Three months ended June 30, 2014

The Company’s core business is school bus transportation. As a result of the Canadex Acquisition, the Company has two reportable segments, school bus transportation and an oil and gas portfolio. The oil and gas portfolio represents approximately one-half of one percent of the Company’s revenue on an annual basis.

The consolidated results for the fourth quarter of fiscal year 2015 include $0.5 million in oil and gas revenue, $0.4 million in related cost of operations and $0.3 million in depletion expense. The consolidated results for the fourth quarter of fiscal year 2014 include $1.4 million in oil and gas revenue, $0.7 million in related cost of operations and $0.4 million in depletion expense. The revenue reduction for the fourth quarter of fiscal year 2015 compared to the fourth quarter of fiscal year 2014 was due to a reduction in both price and production, primarily related to the recent decline in fuel market prices.

The remaining discussion of the Company’s operating results through “Income from Operations” is related to the Company’s core school bus transportation segment. Discussion of items below “Income from Operations” reflects the consolidated results of the Company as these items are unallocated between the two reporting segments.

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Revenues: Revenues for school bus transportation for the fourth quarter of fiscal year 2015 were $152.0 million compared to $141.2 million for the fourth quarter of fiscal year 2014, representing an increase of $10.8 million, or 7.64%. Revenue for the fourth quarter of fiscal year 2015 was negatively impacted by approximately $2.7 million related to the change in exchange rates between the Canadian dollar and the U.S. dollar from the fourth quarter of fiscal year 2014 to the fourth quarter of fiscal year 2015 in connection with the translation of the Company’s Canadian operations into U.S. dollars. In the first quarter of fiscal year 2015, the Company started operations on fourteen new bid contracts (two of which were conversions and two of which were tuck-ins to existing locations) and closed one acquisition in the second quarter of fiscal year 2015. The Company did not renew four contracts for the fiscal year 2015.

The acquisition completed in the second quarter of fiscal year 2015, along with the new bid-in contracts for fiscal year 2015, accounted for $10.9 million in new business growth in the fourth quarter of fiscal year 2015, which was partially offset by a $0.7 million revenue reduction resulting from the four contracts not renewed. The remaining $3.3 million increase in revenues resulted primarily from net increases in service requirements of existing contracts and contract rate increases. The revenue deferral noted in the third quarter of fiscal 2015, primarily related to weather days, compared to originally anticipated revenues was substantially recovered in the fourth quarter of fiscal year 2015.

Cost of Operations: Cost of operations for school bus transportation for the fourth quarter of fiscal year 2015 was $112.8 million as compared to $103.0 million for the fourth quarter of fiscal year 2014, representing an increase of $9.8 million or 9.5%. The acquisition completed in the second quarter of fiscal year 2015, along with the new bid-in contracts for fiscal year 2015 accounted for $12.3 million of the total increase in cost of operations which was partially offset by a $0.4 million reduction resulting from the four contracts not renewed. The remaining $2.1 million decrease in cost of operations, net of new business and contracts not renewed for the fourth quarter of fiscal year 2015, resulted primarily from a decrease in fuel expense, salaries and wages and maintenance costs, partially offset by an increase in insurance costs, operating costs and driver development and safety costs. Fuel expense, net of new business for the fourth quarter of fiscal year 2015, decreased $2.2 million, primarily related to lower market prices. As a percentage of revenue, fuel decreased to 7.2% in the fourth quarter of fiscal year 2015 from 8.8% in the fourth quarter of fiscal 2014. Salaries and wages, net of new business for the fourth quarter of fiscal year 2015, decreased by $0.6 million primarily related to lower driver wages. As a percentage of revenue, driver wages decreased to 32.8% in the fourth quarter of fiscal year 2015 from 33.4% in the fourth quarter of fiscal year 2014. Maintenance expense, net of new business for the fourth quarter of fiscal year 2015, decreased $0.9 million due primarily to lower net parts and tire expense. Maintenance expense decreased as a percentage of revenue to 4.2% in the fourth quarter of fiscal year 2015 from 4.9% in the fourth quarter of fiscal year 2014. Insurance costs, net of new business for the fourth quarter of fiscal year 2015, increased $1.0 million primarily due to unfavorable liability insurance claims development. As a percentage of revenue, insurance costs increased to 3.3% from 2.6% in the fourth quarter of fiscal year 2015 compared to the fourth quarter of fiscal year 2014. Operating expenses, net of new business for the fourth quarter of fiscal year 2015, increased $0.5 million due primarily to an additional year of vehicle leasing costs. Driver development and safety costs, net of new business for the fourth quarter of fiscal year 2015 increased $0.1 million. As a percentage of revenue driver development and safety cost increased to 0.5% from 0.4% in the fourth quarter of fiscal year 2015 compared to the fourth quarter of fiscal year 2014.

General and Administrative Expense: General and administrative expense for school bus transportation for the fourth quarter of fiscal year 2015 was $13.5 million compared to $11.7 million for the fourth quarter of fiscal year 2014, an increase of $1.8 million or 15.4%. As a percentage of revenue, total general and administrative expense increased to 8.9% of revenue in the fourth quarter of fiscal year 2015 from 8.3% in the fourth quarter of fiscal year 2014. The increase in general and administrative expenses is primarily due to the conversions and bid- in contracts completed during the fiscal year 2015, as well as higher administrative compensation and professional fees.

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Acquisition Expense: The Company did not incur any acquisition expense for school bus transportation for the fourth quarter of fiscal year 2015, as there were no acquisitions completed in the quarter. Acquisition expense for the fourth quarter of fiscal year 2014 was sixteen thousand dollars. Acquisition expenses related to transaction costs associated with acquisitions are expensed as incurred under US GAAP.

Depreciation Expense: Depreciation expense for school bus transportation for the fourth quarter of fiscal year 2015 was $14.0 million compared to $14.2 million for the fourth quarter of fiscal year 2014, a decrease of $0.2 million. The decrease was primarily related to the depreciation savings due to the additional vehicles leased quarter over quarter, partially offset by increase in depreciation from the vehicles associated with the acquisitions completed in the fourth quarter of fiscal year 2014 and the second quarter of fiscal year 2015, along with the new bid-in contracts that started operations in fiscal 2015. As a percentage of revenue, depreciation expense decreased to 9.2% for the fourth quarter of fiscal year 2015 from 10.0% for the fourth quarter of fiscal year 2014.

Amortization Expense: Amortization expense for school bus transportation was $0.9 million for the quarter of fiscal year 2015 compared to $0.8 million for the fourth quarter of fiscal year 2014, an increase of $0.1 million. As a percentage of revenue, amortization expense remained consistent at 0.6% for both the fourth quarter of fiscal years 2015 and 2014.

Income from Operations: Income from operations for school bus transportation was $10.8 million for the fourth quarter of fiscal year 2015 compared to $11.5 million for the fourth quarter of fiscal year 2014. The decrease in income from operations of $0.7 million resulted from the operating line items discussed above and reflects a negative impact of $0.4 million in exchange rates between the Canadian dollar and the US dollar from the fourth quarter of fiscal year 2014 compared to the fourth quarter of fiscal year 2015 in connection with the translation of the Company’s Canadian operations into US dollars.

Interest Expense: Interest expense for the fourth quarter of fiscal year 2015 was $4.2 million compared to $4.6 million for the fourth quarter of fiscal year 2014. The decrease in interest expense of $0.4 million was due to a decrease in the average debt outstanding, partially offset by an increase in the weighted average interest rate, for the fourth quarter of fiscal year 2015, compared to the fourth quarter of fiscal year 2014.

Foreign Currency Gain: Foreign currency gain for the fourth quarter of fiscal year 2015 totaled $0.2 million compared to a foreign currency gain $0.3 million for the fourth quarter of fiscal year 2014. The decrease in the foreign currency gain of $0.1 million results primarily from the gains realized upon the settlement of the foreign currency exchange contracts.

Unrealized Gain on Foreign Currency Exchange Contracts: Unrealized gain on foreign currency exchange contracts was $2.1 million for the fourth quarter of fiscal year 2015 compared to an unrealized gain of $0.8 million for the fourth quarter of fiscal year 2014. The increase in unrealized gain of $1.3 million primarily reflects the change in the fair value adjustment of the foreign currency exchange contracts during the fourth quarter of fiscal year 2015.

Non-cash Gain on US$ 6.25% Convertible Debentures Conversion Feature: Non-cash gain on the US$ 6.25% Convertible Debentures conversion feature was twelve thousand dollars for the fourth quarter of fiscal year 2015 compared to a non-cash gain of forty three thousand dollars in the fourth quarter of fiscal year 2014. The decrease in the gain of thirty- one thousand dollars was related to the change in fair value of the embedded conversion feature derivative associated with STI’s issuance of the U.S. dollar denominated US$ 6.25% Convertible Debentures. The conversion feature on STI’s US$ 6.25% Convertible Debentures provides that the U.S. dollar denominated debentures can be converted at a U.S. dollar denominated strike price into common shares of the Issuer, a Canadian functional currency entity. Therefore, the conversion feature represents an embedded

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derivative that must be bifurcated and accounted for separately. The embedded conversion feature is recorded at fair value in other liabilities at each reporting period end with changes in fair value included in the consolidated statement of operations.

Other (Income) Expense, Net: Other income totaled $0.7 million in the fourth quarter of fiscal year 2015 compared to an expense of $1.0 million in the fourth quarter of fiscal year 2014. The increase in other income of $1.7 million was due primarily to a decrease in the Class B share expense of $2.0 million offset by and an increase in unrealized losses on foreign currency translations of $0.3 million, in the fourth quarter of fiscal year 2015 compared to the fourth quarter of fiscal year 2014.

Income before Income Taxes and Equity in Net Income of Unconsolidated Investment: Income before income taxes and Equity in Net Income of Unconsolidated Investment was $8.9 million for the fourth quarter of fiscal year 2015 compared to $6.7 million for the fourth quarter of fiscal year 2014. The increase in income of $2.2 million resulted primarily from, an increase in other (income) expense of $1.7 million, an increase in unrealized gains on foreign currency exchange contracts of $1.3 million and a decrease in interest expense of $0.4 million partially offset by a decrease in income from the school bus transportation segment of $0.7 million, a decrease in the operating income from the Company’s oil and gas portfolio of $0.4 million and a decrease in the foreign currency gain of $0.1 million.

Equity in Net Income of Unconsolidated Investment: The Equity in Net Income of unconsolidated investments of thirty-three thousand dollars represents the Company’s share of the earnings of a consulting and management services firm, an investment which the Company completed in the third quarter of fiscal year 2015 (see “Liquidity and Capital Resource-Acquisitions and Investments”).

Net Income: Net income for the Company for the fourth quarter of fiscal year 2015 totaled $7.0 million, which included an income tax expense of $1.9 million. Net income for the fourth quarter of fiscal year 2014 amounted to $4.7 million, which included an income tax expense of $2.0 million. The effective tax rates for the fourth quarter of fiscal year 2015 and the fourth quarter of fiscal year 2014 were 21.7% and 29.5%, respectively. The decrease in the effective tax rate quarter over quarter was due primarily to the favorable change in the state apportionment factors resulting from the transition to unitary filing in several states and the mix of the statutory Canadian and U.S. tax rates and the apportionment of the Company’s income before income taxes resulting from the operations in each country. Basic and diluted net income per common share was $0.07 for the fourth quarter of fiscal year 2015 compared to $0.06 for the fourth quarter of fiscal year 2014.

Twelve months ended June 30, 2015 Compared to Twelve months ended June 30, 2014

The Company’s core business is school bus transportation. As a result of the Canadex Acquisition, the Company has two reportable segments, school bus transportation and an oil and gas portfolio. The oil and gas portfolio represents approximately one-half of one percent of the Company’s revenue on an annual basis.

The consolidated results for the fiscal year 2015 include $2.9 million in oil and gas revenue, $2.0 million in related cost of operations, $0.2 million in general and administrative expense and $1.2 million in depletion expense. The consolidated results for the fiscal year 2014 include $5.2 million in oil and gas revenue, $2.5 million in related cost of operations, $0.3 million in general and administrative expense and $1.2 million in depletion expense. The revenue reduction for the fiscal year 2015 compared to the fiscal year 2014 was due to a reduction in both price and production, primarily related to the recent decline in fuel market prices.

The remaining discussion of the Company’s operating results through “Loss from Operations” is related to the Company’s core school bus transportation segment. Discussion of items below “Loss from Operations” reflects the consolidated results of the Company as these items are unallocated between the two reporting segments.

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Revenues: Revenues for school bus transportation for the fiscal year 2015 were $551.9 million compared to $484.3 million for the fiscal year 2014, representing an increase of $67.6 million, or 13.9%. Revenue for the fiscal year 2015 was negatively impacted by approximately $7.4 million related to the change in exchange rates between the Canadian dollar and the U.S. dollar from the fiscal year 2014 to the fiscal year 2015 in connection with the translation of the Company’s Canadian operations into U.S. dollars. In the first quarter of fiscal year 2015, the Company started operations on fourteen new bid contracts (two of which were conversions and two of which were tuck-ins to existing locations) and closed one acquisition in the second quarter of fiscal year 2015. The Company did not renew four contracts for the fiscal year 2015. In addition, the Company closed three acquisitions, two during the first quarter of fiscal year 2014 and one during the third quarter of fiscal year 2014.

The acquisitions completed in the first and third quarters of 2014, the new bid-in contracts for fiscal year 2015 and the acquisition completed in the second quarter of fiscal year 2015, accounted for $54.5 million in new business growth in fiscal year 2015, which was partially offset by a $2.6 million revenue reduction resulting from the four contracts not renewed. The remaining $23.1 million increase in revenues resulted primarily from net increases in service requirements of existing contracts and contract rate increases.

Cost of Operations: Cost of operations for school bus transportation for the fiscal year 2015 was $425.5 million as compared to $370.5 million for the fiscal year 2014, representing an increase of $55.0 million or 14.8%. The acquisitions completed in the first and third quarters of 2014, the new bid-in contracts for fiscal year 2015 and the acquisition completed in the second quarter of fiscal year 2015, accounted for $47.6 million of the total increase in cost of operations, which was partially offset by a $1.7 million reduction resulting from the four contracts not renewed. The remaining $9.1 million increase in cost of operations, net of new business and contracts not renewed for fiscal year 2015, resulted primarily from an increase in salaries and wages, operating costs, higher fringe benefit costs, higher insurance costs and higher driver development and safety costs, partially offset by lower fuel costs. Salaries and wages, net of new business and contracts not renewed for fiscal year 2015, increased by $5.6 million due primarily to higher driver, maintenance and operations wages. As a percentage of revenue, driver wages decreased to 34.1% in fiscal year 2015 from 34.4% in fiscal year 2014. Operating cost, net of new business and contracts not renewed for fiscal year 2015 increased $4.9 million primarily due to an additional year of vehicle leasing costs. As a percentage of revenue, operating costs increased to 6.5% in fiscal year 2015 from 5.7% in fiscal year 2014. Fringe benefit costs net of new business and contracts not renewed for fiscal year 2015, increased $1.8 million due to higher employment taxes associated with higher rates and the wage increases noted above. Fringe benefit costs increased as a percentage of revenue to 9.3% in fiscal year 2015 from 9.2% in fiscal year 2014. Insurance costs, net of new business for fiscal year 2015, increased $1.1 million primarily due to unfavorable liability insurance claims development. As a percentage of revenue, insurance costs increased to 3.4% in fiscal year 2015 from 3.3% in fiscal year 2014. Driver development and safety costs, net of new business for the fiscal year 2015, increased $0.3 million. As a percentage of revenue, driver development and safety cost increased to 0.6% in fiscal year 2015 from 0.5% in fiscal year 2014. Fuel expense, net of new business and contracts not renewed for fiscal year 2015, decreased $4.6 million due primarily to lower fuel market prices. Fuel expense decreased as a percentage of revenue to 7.7% in fiscal year 2015 from 8.9% in fiscal year 2014.

General and Administrative Expense: General and administrative expense for school bus transportation for the fiscal year 2015 was $54.5 million compared to $46.4 million for the fiscal year 2014, an increase of $8.1 million or 17.5%. As a percentage of revenue, total general and administrative expense increased to 9.9% for the fiscal year 2015 compared to 9.6% for the fiscal year 2014. The increase in general and administrative expenses is primarily due to the bid in contracts completed during the fiscal year 2015 and increased administrative compensation and professional fees.

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Acquisition Expense: Acquisition expense for the fiscal year 2015 was three thousand dollars. Acquisition expense for the fiscal year 2014 was $0.3 million. Acquisition expenses related to transaction costs associated with acquisitions are expensed as incurred under US GAAP.

Non-Cash Stock Compensation: Non-cash stock compensation expense for school bus transportation for the fiscal year 2015 was $4.2 million. The non-cash compensation expense was related to the issuance of 663,620 Class B Series Three common shares of STA Holdings in the fiscal year 2015. Non-cash stock compensation expense for school bus transportation for the fiscal year 2014 was $3.9 million. The non-cash compensation expense was related to the issuance of 635,074 Class B Series Three common shares of STA Holdings in the fiscal year 2014.

Depreciation Expense: Depreciation expense for school bus transportation for the fiscal year 2015 was $46.6 million compared to $45.3 million for the fiscal year 2014, an increase of $1.3 million. The increase was primarily related to the vehicles associated with the acquisition completed in the third quarter of fiscal year 2014, the acquisition completed in the second quarter of 2015 and the new bid-in contracts that started operations in fiscal 2015, partially offset by the depreciation savings due to the additional vehicles leased in fiscal 2015. As a percentage of revenue, depreciation expense decreased to 8.4% for the fiscal year 2015 from 9.4% for the fiscal year 2014.

Amortization Expense: Amortization expense for school bus transportation was $3.4 million for the fiscal year 2015 compared to $3.6 million in the fiscal year 2014. The decrease of $0.2 million related primarily to several covenants not to compete which have fully amortized. As a percentage of revenue, amortization expense decreased to 0.6% in the fiscal year 2015 from 0.7% in the fiscal year 2014.

Income from Operations: Income from operations for school bus transportation was $17.7 million for the fiscal year 2015 compared to $14.3 million for the fiscal year 2014. The increase in income from operations of $3.4 million resulted from the operating line items discussed above and reflects a negative impact of $0.7 million in exchange rates between the Canadian dollar and the US dollar from the fiscal 2014 compared to the fiscal 2015 in connection with the translation of the Company’s Canadian operations into US dollars.

Interest Expense: Interest expense for the fiscal year 2015 was $17.4 million compared to $16.6 million for the fiscal year 2014. An approximate $0.8 million increase in interest expense was due to both higher average debt outstanding and higher average interest rates, which were partially offset by a decrease in the mark to market on the interest rate swap in the fiscal year 2015 as compared to the fiscal year 2014.

Foreign Currency (Gain) Loss: Foreign currency gain for the fiscal year 2015 totaled $0.1 million compared to foreign currency loss of $0.4 million for the fiscal year 2014. The increase in the foreign currency gain of $0.5 million results primarily from the gains realized upon the settlement of the foreign currency exchange contracts.

Unrealized Gain on Foreign Currency Exchange Contracts: Unrealized gain on foreign currency exchange contracts was $0.1 million for the fiscal year 2015 compared to an unrealized gain of $0.7 million for the fiscal year 2014. The decrease in unrealized gain of $0.6 million primarily reflects the fair value adjustment of the foreign currency exchange contracts resulting from the change in exchange rates for each period offset by the unrealized gain associated with the liquidation of the foreign currency exchange contracts during the fourth quarter of fiscal year 2015, in connection with the Company changing to US$ dividend payments.

Non-cash Gain on US$ 6.25% Convertible Debentures Conversion Feature: Non-cash gain on the US$ 6.25% Convertible Debentures conversion feature was $0.2 million for the fiscal year 2015 compared to a non-cash gain of $0.7 million in the fiscal year 2014. The decrease in the non-

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cash gain of $0.5 million was related to the change in fair value of the embedded conversion feature derivative associated with STI’s issuance of the U.S. dollar denominated US$ 6.25% Convertible Debentures. The conversion feature on STI’s US$ 6.25% Convertible Debentures provides that the U.S. dollar denominated debentures can be converted at a U.S. dollar denominated strike price into common shares of the issuer, a Canadian functional currency entity. Therefore, the conversion feature represents an embedded derivative that must be bifurcated and accounted for separately. The embedded conversion feature is recorded at fair value in other liabilities at each reporting period end with changes in fair value included in the consolidated statement of operations.

Gain on Bargain Purchase of Businesses Acquired: The gain on the bargain purchase in fiscal year 2014 was $2.8 million, net of tax, resulting from the acquisition of certain assets and contracts in California from Atlantic Express Transportation Corporation, as discussed below under the heading “Liquidity and Capital Resource-Acquisitions”.

Other (Income) Expense, net: Other income totaled $3.5 million in the fiscal year 2015 compared to other expense of $1.6 million in the fiscal year 2014. The increase in income of $5.1 million was due to a decrease in the Class B Series Three share expense of $4.3 million, combined with an increase unrealized gains on foreign currency translations of $0.3 million and an increase in the gain on disposal of assets of $0.5 million in the fiscal year 2015 compared to the fiscal year 2014.

Income before Income Taxes and Equity in Net Income of Unconsolidated Investment: Income before income taxes and Equity in Net Income of Unconsolidated Investment was $3.7 million for the fiscal year 2015 compared to income of $1.0 million for the fiscal year 2014. The increase in the income of $2.7 million resulted primarily from an increase in other (income) expense of $5.1 million, an increase in the operating income for school bus operations of $3.4 million as discussed above, a increase in foreign currency gain of $0.5 million, partially offset by a decrease in the bargain gain of $2.8 million, an increase in interest expense of $0.8 million, an decrease in gains on unrealized foreign currency exchange contracts of $0.6 million, a decrease in the gain on the US$ 6.25% Convertible Debenture conversion feature of $0.5 million and a decrease in the operating income from the oil and gas segment of $1.6 million.

Equity in Net Income of Unconsolidated Investment: The Equity in Net Income of unconsolidated investments of fifty eight thousand dollars represents the Company’s share of the earnings of a consulting and management services firm, an investment which the Company completed in fiscal year 2015. (see “Liquidity and Capital Resource-Acquisitions and Investments”).

Net Income: Net income for the Company for the fiscal year 2015 totaled $3.7 million, which included an income tax expense of $0.1 million. Net income for the fiscal year 2014 amounted to $1.4 million, which included a recovery of income tax of $0.4 million. The effective tax rates for the fiscal year 2015 and the fiscal year 2014 were 2.2% and 22.7%, respectively. The decrease in the year to date effective income tax rate year over year was primarily due to the favorable change in the state apportionment factors resulting from the transition to unitary filing in several states and the mix of the statutory Canadian and U.S. tax rates, the apportionment of the Company’s income before income taxes resulting from the operations in each country as well as the bargain gain on acquired assets recorded in the prior year. Basic and diluted net income per common share was $0.04 for the fiscal year 2015 compared to basic and diluted net income per share of $0.02 for the fiscal year 2014.

Liquidity and Capital Resources

As noted in the cautionary language concerning forward-looking disclosures under the heading “Forward-Looking Statements” in this management discussion and analysis, this section contains forward-looking statements, including with respect to the Company’s ability to renew or refinance its various loan facilities as they become due. Such statements involve known and unknown risks, uncertainties and other factors outside of management’s control, including the risk factors set forth in this management discussion and analysis that could cause results to differ materially from those described or anticipated in the forward-looking statements.

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General

School bus transportation revenue has historically been seasonal, based on the school calendar and holiday schedule. During the summer school break, revenue is derived primarily from summer camps and private charter services. As schools are not in session, there is no school bus transportation revenue during this period. The operations of the Company historically generate negative cash flow in the first quarter of the fiscal year reflecting the seasonality of the school bus transportation industry during the school summer break combined with a majority of replacement capital expenditures along with investment capital spending for new bids and contracts awarded for the upcoming school year occurring in the same time period. Replacement capital expenditures have historically been funded by a combination of borrowings on the Company’s senior credit facility and through operating lease financings. Investment capital spending for new bid and contract awards has historically been funded with proceeds from debt and equity financings along with operating lease financing and cash flow from operations. As the Company incurs operating losses during the first three months of the fiscal year, distributions are funded with non-operating cash flows for the first interim quarter of the fiscal year. The subsequent quarters of the fiscal year typically generate excess cash, as schools are in session and the majority of replacement capital expenditures and investment capital spending having occurred in the first quarter. Due to this seasonality, the Company views available cash flow on an annualized basis. The Company has historically funded its distributions with cash from operations on an annual basis.

During the twelve months ended June 30, 2015, net cash provided by operations totaled $49.7 million, which reflects a $12.0 million use of cash for net working capital. Net cash taxes paid during the twelve months ended June 30, 2015 amounted to $0.3 million, which includes refunds of prior year’s tax payments. The Company’s investing activities for the twelve months ended June 30, 2015 resulted in a use of cash of $33.7 million. Included in these investing activities were, (i) $0.4 million in funding for the Dalton Bus Lines acquisition and $1.7 million in funding for the equity investment in a consulting and management services firm, both which closed in the fiscal year 2015, (ii) capital expenditures related to the new bid contracts for fiscal year 2015 of $26.8 million (which includes $1.0 million for oil & gas investments in new wells), (iii) $6.7 million in capital expenditures related to replacement capital spending, (iv) $0.2 million in seller debt payments and (v) $2.1 million in proceeds from sale of equipment. The Company’s financing activities for the twelve months ended June 30, 2015 represented a use of cash of $20.4 million. Included in these financing activities were (i) $181.5 million in credit agreement borrowings and $190.5 million in credit agreement repayments, (ii) $65.7 million in proceeds from the 2015 Bought Deal offering of common shares, (iii) $40.1 million for the repayment of the Cdn$ 6.75% Convertible Debentures, (iv) $33.6 million in dividend payments made, (v) $2.0 million in payments to repurchase Class B common shares, (vi) $0.6 million in other financing fees and (vii) $0.8 million in payments to repurchase common stock.

The Company accrued approximately $21.0 million in fixed assets at June 30, 2015, related to fiscal year 2016 growth vehicles, which has been recorded as a non-cash investing activity for fiscal year 2015.

Loan Facilities

On February 27, 2013, the Company amended its Third Amended and Restated Credit Agreement (as amended the “Credit Agreement”). The amendment extended the maturity date (previously due February 4, 2016) to February 27, 2018, or if earlier, 90 days prior to the maturity of the Senior Secured Notes (as defined below) and increased the commitments to $155.0 million, from the previous commitments of $140.0 million. The increase in the facility was a result of certain existing lenders increasing their commitments as well as a new lender joining the bank group in replacement of an existing lender. During fiscal year 2014, the Company accessed the accordion feature under the Credit Agreement increasing commitments by $10.0 million to $165.0 million with the addition of another new lender joining the bank group.

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On August 19, 2014, the Company entered into another amendment under the Credit Agreement. The amendment increased commitments to $225.0 million from $165.0 million, extended the $100.0 million accordion feature and extended the maturity date of the Credit Agreement to August 19, 2019, or if earlier, 90 days prior to the maturity of the Senior Secured Notes, as defined below. The increase in the size of the facility resulted from the addition of two new lenders to the bank group and certain existing lenders increasing their commitments. The current commitments at June 30, 2015 include a US $180.0 million loan facility and a Cdn$45.0 million loan facility, both of which are available to fund working capital requirements and to fund acquisitions and investment requirements for new revenue and bid-in contracts

Borrowings under the Credit Agreement may be Base Rate Loans or Eurodollar Loans, as defined in the Credit Agreement. Base Rate Loans bear interest at the base rate, as defined in the Credit Agreement (3.25% at June 30, 2015), plus the applicable margin, which ranges from 0.50% to 1.25% depending on STA Holdings’ senior leverage ratio on the pricing date. Eurodollar Loans bear interest at the adjusted LIBOR rate, as defined in the Credit Agreement (0.18650% at June 30, 2015), plus the applicable margin, which ranges from 1.75% to 2.50% depending on STA Holdings’ senior leverage ratio on the pricing date.

On November 10, 2011, the Company rolled over and extended the maturity of the $35 million Senior Secured Notes (as defined below) for a five year term. The Senior Secured Notes now reflect a fixed coupon of 4.246% and a maturity date of November 10, 2016. In December 2006, the Company initially issued the senior secured notes (the “Senior Secured Notes”) under a note purchase agreement (the “Note Purchase Agreement”) with two Canadian insurance companies. The Senior Secured Notes consisted of $35.0 million of five year, fixed rate senior secured notes at an original coupon of 5.941%. The Senior Secured Notes rank pari passu with borrowings under the Credit Agreement.

Borrowings under the Credit Agreement are collateralized by the unencumbered assets of Parkview Transit, STA Holdings and its subsidiaries, and certain shares of the capital stock of STA Holdings and the capital stock of each of its subsidiaries. In addition, payment and performance of the obligations under the Credit Agreement are guaranteed by each of STA Holdings’ subsidiaries and by Parkview Transit. Borrowings under the Senior Secured Notes are collateralized by the unencumbered assets of STA Holdings and its U.S. subsidiaries, and certain shares of the capital stock of STA Holdings and the capital stock of each of its U.S. subsidiaries. In addition, payment and performance of the obligations under the Senior Secured Notes are guaranteed by each of STA Holdings’ U.S. subsidiaries.

At June 30, 2015, debt outstanding under the Credit Agreement and Senior Secured Notes totaled $50.4 million and $35.0 million, respectively. At June 30, 2015, the Company had approximately $172.8 million in borrowing availability under the loan facilities, subject to continued covenant compliance, of the Credit Agreement (excluding the $100.0 million accordion feature in additional commitments the Company may request under the Credit Agreement). In addition, at June 30, 2015, outstanding debt included approximately $119.5 million in Convertible Debentures. The Credit Agreement currently has a five year term with a maturity date of August 19, 2019 or if earlier, 90 days prior to the maturity of the Senior Secured Notes. The Note Purchase Agreement has a five year term with a maturity date of November 10, 2016.

Convertible Debentures

During the fiscal years ended June 30, 2010, 2011 and 2014, STI closed the Convertible Debentures offerings and on December 21, 2009, the Company redeemed for cash all of the outstanding 14% subordinated notes of STA ULC as discussed above under the heading “General”.

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The Cdn$ 6.75% Convertible Debentures had a five year term, were denominated in Canadian dollars, and were due and payable on June 30, 2015. During fiscal year 2015, Cdn $0.1 million of the Company’s Cdn$ 6.75% Convertible Debentures were converted into 18,342 shares of common stock. On June 30, 2015, the Company repaid upon maturity the remaining Cdn $49.9 million in principal amount of Cdn$ 6.75% Convertible Debentures for US$ 40.1 million in cash, The US$ 6.25% Convertible Debentures have a seven year term, are denominated in U.S. dollars, are due and payable on June 30, 2018, and are callable by the Company beginning in July 2014 if certain conditions noted above, are met. The Company did not redeem and none of the holders have converted any of the US$ 6.25% Convertible Debentures as of June 30, 2015. The Cdn$ 6.25% Convertible Debentures have a five and a half year term, are denominated in Canadian dollars, are due and payable on June 30, 2019, and are callable by the Company beginning in July 2017, if certain conditions noted above, are met. None of the holders have converted any of the Cdn$ 6.25% Convertible Debentures as of June 30, 2015.

The functional currency of STI is the Canadian dollar. The Cdn$ 6.75% Convertible Debentures were and the Cdn$ 6.25% Convertible Debentures of STI are denominated in Canadian dollars. As the functional currency of STI is the Canadian dollar, exchange gains or losses related to the Cdn$ 6.75% Convertible Debentures and the Cdn$ 6.25% Convertible Debentures on the translation of the STI financial statements into U.S. dollars, the reporting currency, are deferred as a separate component of shareholders’ equity. The US$ 6.25% Convertible Debentures of STI are denominated in U.S. dollars. As the functional currency of STI is the Canadian dollar, unrealized gains or losses on re-measurement of the US$ 6.25% Convertible Debentures into Canadian dollars are considered transaction gains and losses, at the STI level, and are included in the consolidated statement of operations. On April 1, 2013, the Company put in place an intercompany loan associated with the payments of proceeds on the US$ 6.25% Convertible Debentures by STI to STA Holdings. This intercompany loan is denominated in U.S. dollars, bears interest at a rate of 6.25% per annum and has a set maturity date of June 30, 2018. As such, this intercompany loan is considered a short-term intercompany loan (as the loan is for a definite term), and unrealized gains or losses on re-measurement of the STI intercompany loan receivable are considered transaction gains or losses as STI’s functional currency is the Canadian dollar and are included in the consolidated statement of operations. The re-measurement gains and losses resulting from this intercompany loan offset re-measurement gains and losses resulting from the US$ 6.25% Convertible Debentures in the consolidated statement of operations.

The Company expects to be able to repay, renew or refinance its various loan facilities and Convertible Debentures as they become due with other long term financing options (see “Forward-Looking Statements”).

Leasing Arrangements

During the fiscal year ended June 30, 2014, the Company entered into additional operating leases with seven major financial institutions to lease approximately $24.0 million in replacement school vehicles and $20.4 million in growth vehicles for the 2013-2014 school year. The term of these leases is six years at effective fixed rates in the range of 2.3% to 4.5%. Annual lease payments on these additional leases are approximately $6.3 million per year for the term of the leases.

During the fiscal year ended June 30, 2015, the Company entered into additional operating leases with seven major financial institutions to lease approximately $38.7 million in replacement school vehicles and $38.3 million in growth school vehicles for the 2014-2015 school year. The term of these leases is six years at effective fixed rates in the range of 2.7% to 4.4%. Annual lease payments on these additional leases will approximate $11.2 million per year for the term of the leases.

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During July and August 2015, the Company entered into additional operating leases with ten major financial institutions to lease approximately $46.0 million in replacement school vehicles and $11.5 million in growth school vehicles for the upcoming 2015-2016 school year. The term of these leases is six years at effective fixed rates in the range of 2.7% to 4.2%. Annual lease payments on these additional leases will approximate $8.0 million per year for the term of the leases.

Acquisitions and Investments

On July 23, 2013 the Company acquired Scholastic Bus Co., located in Bergen County, New Jersey for approximately $2.4 million, consisting of $2.2 million in cash and $0.2 million in deferred purchase price. Earnings of the acquired company are included in the Company’s results of operations from the acquisition date.

On August 27, 2013 the Company acquired Williams Bus Lines Co., located in Wilkes Barre, Pennsylvania, for approximately $3.4 million. Earnings of the acquired company are included in the Company’s results of operations from the acquisition date.

On February 10, 2014, the Company acquired certain assets and contracts in California from Atlantic Express Transportation Corporation (“AE”), for approximately $17.2 million. STI’s subsidiary School Wheels Direct (“SWD”) managed the California operations from January 10, 2014 to February 9, 2014. AE had previously filed for protection under the federal bankruptcy protection rules. The SWD management services contract and the agreement to acquire the California assets of AE, including vehicles and school contracts, were both approved by the bankruptcy court. The purchase price was lower than the fair market value of the business acquired. Therefore, the Company recognized a bargain purchase gain of approximately $2.8 million, net of tax, which was included in the consolidated statement of operations for the 2014 fiscal year. Earnings of the acquired company are included in the Company’s results of operations from the acquisition date.

On December 5, 2014 the Company acquired certain assets and a contract of Dalton Bus Lines in Ontario, Canada, for approximately $0.4 million. Earnings of the acquired company were included in the Company’s results of operations from the acquisition date.

On March 11, 2015 a wholly-owned subsidiary of the Company made a non-controlling investment in a consulting and management services firm for cash consideration of $1.7 million. The Company has accounted for this investment under the equity method, in accordance with ASC- 323, Investments-Equity Method and Joint Ventures.

The Company intends to selectively acquire contracts through new bids and conversions and to pursue additional acquisitions to the extent that it is able to finance these from operating cash flows, available financing under our Credit Facility and the potential additional issuance of common shares and debt securities (see “Forward-Looking Statements”).

Fuel Prices

The Company operates a fleet of approximately 12,100 vehicles as at June 30, 2015 and consumes substantial amounts of fuel for its operations. While the Company currently has fuel mitigation features in approximately 60% of its contracts that provide some measure of fuel protection against price increases, ranging from reimbursement by the school district to outright purchase of fuel by school districts, there is no assurance that it will be able to adequately protect itself from increases in such costs other than those contractually obligated. The Company is still exposed to some market price fluctuations under some of these fuel mitigation features. The Company, for fiscal year 2015, entered into fixed price contracts, in August 2014 with fuel suppliers to cover approximately 20% of its remaining fuel exposure. In addition, for fiscal year 2016, the Company entered into fixed price contracts with fuel vendors starting in October 2014, for approximately 20% of its fuel exposure for fiscal year 2016. In August 2015, the Company entered into contracts with its fuel vendors for a portion of that 20% of its fuel exposure for fiscal year 2017.

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Segment Information ($ in 000’s)

As a result of the Canadex Acquisition, the Company has two reportable segments, a transportation segment and an oil and gas segment. The transportation segment provides school bus and management services to public and private schools in North America. The oil and gas segment represents the Company’s investments as a non-operator in oil and gas interests in the United States.

	Three months ended June 30, 2015			Three months ended June 30, 2014		Twelve months ended June 30, 2015			Twelve months ended June 30, 2014
Revenue
Transportation	$	151,973		$	141,194	$	551,861		$	484,316
Oil and gas		481			1,373		2,890			5,183
	$	152,454		$	142,567	$	554,751		$	489,499
Operating earnings (loss)
Transportation	$	10,788		$	11,473	$	17,702		$	14,290
Oil and gas		(219	)		253		(540	)		1,235
		10,569			11,726		17,162			15,525
Unallocated expenses		1,655			5,046		13,423			14,503
Income tax expense (benefit)		1,934			1,973		84			(395	)
Net income	$	6,980		$	4,707	$	3,655		$	1,417

	As at June 30, 2015		As at June 30, 2014
Total Assets
Transportation	$	527,291	$	534,522
Oil and gas		8,636		9,316
	$	535,927	$	543,838

Commitments and Contractual Obligations

Commitments and contractual obligations primarily include obligations associated with outstanding indebtedness and lease obligations. The following table shows contractual obligations and commitments related to the outstanding indebtedness as of June 30, 2015 and the related payment by period due.

Maturities of long-term debt are as follows ($ in 000’s):

	Third Amended Credit Facility		Convertible Debentures		Senior Secured Notes		Total
Year ending June 30,
2016	$	—	$	—	$	—	$	—
2017		—		—		35,000		35,000
2018		—		59,467		—		59,467
2019		—		60,048		—		60,048
2020		50,421		—		—		50,421
thereafter		—		—		—		—
	$	50,421	$	119,515	$	35,000	$	204,936

The maturity date of the Credit Agreement was extended by amendment in August 2014 to August 19, 2019 or if earlier, 90 days prior to the maturity of the Senior Secured Notes.

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The following table represents future minimum rental payments and operating lease payments under non-cancelable operating leases as at June 30, 2015 ($ in 000’s):

	Facility Leases		Vehicle Leases		Total
Year ending June 30,
2016	$	14,422	$	28,024	$	42,446
2017		11,024		25,005		36,029
2018		8,634		21,810		30,444
2019		6,426		17,526		23,952
2020		3,103		11,318		14,421
2021 and thereafter		3,402		233		3,635
Total minimum payments	$	47,011	$	103,916	$	150,927

If the operating leases for vehicles were treated as capital leases, the senior debt and total debt would approximate $257.2 million and $376.7 million, respectively as at June 30, 2015. Further, the senior debt to EBITDA ratio (as defined in the Credit Agreement and adjusted for capitalization of vehicle leases) would increase 0.9:1, and the total debt to EBITDA ratio would increase 0.5:1.

Outstanding Share Data

As at June 30, 2015, the Company had 96,141,516 issued and outstanding common shares, US $60.0 million principal amount of US$ 6.25% Convertible Debentures convertible into approximately 6.3 million common shares and Cdn $75.0 million principal amount of Cdn$ 6.25% Convertible Debentures convertible into approximately 8.3 million common shares. There are no preferred shares issued and outstanding. (see “Liquidity and Capital Resource-Convertible Debentures”).

Quantitative and Qualitative Disclosures About Market Risk

As noted in the cautionary language concerning forward-looking disclosures under the heading “Forward-Looking Statements” in this management discussion and analysis, this section contains forward-looking statements, including with respect to the Company’s anticipated dividends. Such statements involve known and unknown risks, uncertainties and other factors outside of management’s control, including the risk factors set forth in this management discussion and analysis that could cause results to differ materially from those described or anticipated in the forward-looking statements.

In the normal course of business, the Company is exposed to market risks arising from adverse changes in interest rates and the Cdn$/US$ foreign currency exchange rate. Market risk is defined for these purposes as the potential change in the fair market value of financial assets and liabilities resulting from an adverse movement in these rates. Except for the changes in the Cdn$/US$ foreign currency exchange rate during the fiscal year 2015, there have been no other material changes to the Company’s exposure to the above-mentioned market risks during the fiscal year 2015.

As at June 30, 2015, the Company’s material variable rate borrowings included the outstanding borrowings under the Credit Agreement. As at June 30, 2015, the Company had $50.4 million in outstanding indebtedness under the Credit Agreement. The Company has an interest rate swap in place for a notional amount of $50.0 million to swap the variable rate to a fixed rate for $50.0 million in borrowings under the Credit Agreement. (see “Liquidity and Capital Resource-Convertible Debentures”). A 100 basis point change in interest rates, applied to these net borrowings as at June 30, 2015 would result in approximately a $0.5 million annual change in interest expense and a corresponding change in cash flow.

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In connection with the dividends on the common shares issued, the Company was exposed to fluctuations in the exchange rate between the Canadian dollar and the U.S. dollar because the anticipated dividends from STA, Inc. to STA Holdings are in U.S. dollars and the currently anticipated dividends on common shares were paid in Canadian dollars. The Company used foreign currency exchange contracts (“Forward Contracts”) to partially mitigate this exchange rate risk. Given that the majority of the Company’s cash flows continue to be denominated in U.S. dollars, in May 2015, the Board of Directors of the Company approved a change in the currency of the monthly dividend to U.S dollars, effective July 1, 2015. At that time the Forward Contracts outstanding, which had been used to mitigate the exchange risk, were liquidated.

The Cdn$ 6.25% Convertible Debentures due June 30, 2019 are denominated and payable, upon maturity, in Canadian dollars. The Company has not entered into any hedge arrangement with respect to the payment of the Cdn$ 6.25% Convertible Debentures upon maturity. The Company uses it cash flows from its Canadian operations to partially mitigate the exchange risk on the Convertible Debenture interest payments.

The Company is also exposed to changes in the market price of fuel in the ordinary course of business. As a partial mitigation of the impact of fuel price volatility on the Company’s results, approximately 60% of the Company’s revenue contracts have some form of mitigation against fuel price increase, ranging from reimbursement by the school district to outright purchase of fuel by school districts. The Company is still exposed to some market price fluctuations under some of these fuel mitigation features. The Company, for fiscal year 2015, entered into fixed price contracts, in August 2014, with fuel suppliers to cover approximately 20% of its remaining fuel exposure. In addition, for fiscal year 2016, the Company entered into fixed price contracts with fuel vendors starting in October 2014, for approximately 20% of its fuel exposure for fiscal year 2016. In August 2015, the Company entered into contracts with its fuel vendors for a portion of the 20% of its fuel exposure for fiscal year 2017.

Summary of Quarterly Results ($ in 000’s, except per share data)

	1st Qtr 2014			2nd Qtr 2014		3rd Qtr 2014		4th Qtr 2014		1st Qtr 2015			2nd Qtr 2015		3rd Qtr 2015		4th Qtr 2015
Revenues	$	73,140		$	135,529	$	138,263	$	142,567	$	88,532		$	157,451	$	156,314	$	152,454
Net income (loss)	$	(8,792	)	$	2,902	$	2,600	$	4,707	$	(8,755	)	$	3,537	$	1,893	$	6,980
Net income (loss) per share	$	(0.11	)	$	0.04	$	0.03	$	0.06	$	(0.11	)	$	0.04	$	0.02	$	0.07

Seasonality

School bus transportation revenue has historically been seasonal, based on the school calendar and holiday schedule. During the summer school break, revenue is derived primarily from summer camps and private charter services. As schools are not in session, there is minimal school bus transportation revenue during this period. Thus, the Company incurs operating losses during the first three months of the fiscal year, which encompass the summer school break. Depreciation of fixed assets occurs in the months during which schools are in session, which is generally September through June. A full year’s worth of depreciation is recorded in these ten months to correspond to the vehicle’s usage.

Disclosure Controls and Procedures and Internal Controls over Financial Reporting

Under the supervision of, and with the participation of the CEO and the CFO, management performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures,

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which are designed to provide reasonable assurance that material information relating to the Company (including its subsidiaries) is made known to the CEO and the CFO by others within the Company. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of these disclosure controls and procedures as of June 30, 2015 were effective.

Under the supervision of, and with the participation of, the CEO and the CFO of the Company, management performed an evaluation of the effectiveness of the Company’s internal controls over financial reporting in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the internal controls over financial reporting as of June 30, 2015 were effective.

In addition, we have evaluated our internal controls over financial reporting and determined that no changes were made in the Company’s internal controls over financial reporting during the twelve months ended June 30, 2015, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. Management is, however, continually monitoring and seeking to improve the Company’s infrastructure and controls.

Transactions with Related Parties

The Company utilized a transportation equipment dealer, primarily to assist in procurement and disposal of the Company’s fleet under the direction of the Company’s CFO. The transportation equipment dealer also provided consulting services to the Company, assisting with fleet valuations in its acquisition efforts. The transportation equipment dealer is a company controlled by a family member of the Company’s Chairman and CEO. Beginning in fiscal year 2015, the fleet procurement and disposal services were provided for an annual fee including a retainer amount plus a commission per vehicle amount not to exceed $0.5 million per annum. Prior to fiscal year 2015, these services were provided on a non contractual basis. The Company paid the transportation equipment dealer $0.5 million and $0.6 million for each of the fiscal years ended June 30, 2015 and 2014, respectively. In April 2015, the Company terminated the agreement and began to perform these services directly with internal resources.

These transactions are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.

Subsequent Events

As noted in the cautionary language concerning forward-looking disclosures under the heading “Forward-Looking Statements” in this management discussion and analysis, this section contains forward-looking statements, including with respect to the Company’s EIP and lease payments. Such statements involve known and unknown risks, uncertainties and other factors outside of management’s control, including the risk factors set forth in this management discussion and analysis that could cause results to differ materially from those described or anticipated in the forward-looking statements.

On July 2, 2015, STA Holdings granted 173,705 Class B Series Three common shares pursuant to the EIP. The Company will recognize non-cash stock-based expense related to these grants during the quarter ending September 30, 2015.

During July and August 2015, the Company entered into additional operating leases with ten major financial institutions to lease approximately $46.0 million in replacement school vehicles and $11.5 million in growth school vehicles for the upcoming 2015-2016 school year. The term of these leases is six years at effective fixed rates in the range of 2.7% to 4.2%. Annual lease payments on these additional leases will approximate $8.0 million per year for the term of the leases.

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During August 2015 the Company amended its current NCIB to increase the maximum amount of common shares that the Company is permitted to acquire to 6,806,591 common shares from the number of common shares that could be purchased for an aggregate purchase price of Cdn$ 5.0 million, subject to the Company’s senior debt agreement requirements. The amended NCIB still covers the twelve month period commencing October 24, 2014 and ending on October 23, 2015. Upon expiration of the current NCIB, the Company can renew the NCIB for another twelve month period.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Some of the estimates and assumptions management is required to make relate to matters that are inherently uncertain as they may pertain to future events. Management bases these estimates on historical experience and on various other assumptions that it believes to be reasonable and appropriate. Actual results may differ significantly from these estimates. The following is a description of our accounting policies that we believe require subjective and complex judgments, and could potentially have a material effect on reported financial condition and results of operations.

Goodwill and Indefinite Lived- Intangibles. Goodwill represents the excess of cost over fair value of net assets acquired in business combinations accounted for under the purchase method. Goodwill and trade names are not amortized but rather assessed for impairment annually or more frequently if circumstances change and indicators of impairment are present. The annual impairment testing is performed in the fourth quarter.

When assessing goodwill impairment, the Company may at its option perform a qualitative assessment to first assess whether the fair value of a reporting unit is less than its carrying value. If the Company does not choose to perform a qualitative assessment, a two step impairment test is required. The Company first compares the fair value of the reporting unit with its carrying value, including goodwill. If the carrying value exceeds the fair value, the carrying value is then compared to the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss will be recognized in the statement of earnings in an amount equal to the difference and the implied fair value of goodwill becomes the new carrying value of goodwill for that reporting unit which is then used in future impairment tests.

When assessing the impairment for trade names, if the carrying value exceeds the fair value, an impairment loss will be recognized in the statement of earnings in an amount equal to the excess.

Fair values are derived by using discounted cash flow analyses which requires, among other factors, estimates of the amount and timing of projected cash flows and the appropriate discount rate.

Other identifiable intangible assets consist of contract rights and covenants not to compete. Contract rights, which include customer relationships, are amortized on a straight-line basis over an estimated useful life of 20 to 23 years. The useful life for contract rights was determined based on third party valuation reports prepared for the Company. The valuations took into account the average length of the contracts, the expected renewal periods and assumptions regarding future renewals based upon historical customers lives. Covenants not to compete are amortized on a straight-line basis over an estimated useful life of two to five years.

Impairment of Long-Lived Assets. Management continually evaluates whether events or

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circumstances have occurred that indicate that the remaining estimated useful lives of property and equipment, contract rights and covenants not to compete may warrant revision or that the remaining balances may not be recoverable. Events or circumstances that would trigger testing for impairment include, but are not limited to, the loss of a significant school district customer contract, a significant increase in the Company’s expense levels absent a corresponding increase in revenue that causes operating or cash flow losses or projected operating or cash flow losses, significant adverse changes in legal factors or the business climate in which the Company operates that could affect the value of long-lived assets, or the expectation that a long-lived asset will be sold or otherwise disposed of at a loss before the end of its previously estimated useful life. If this review indicates that the assets will not be recoverable, as determined based on the undiscounted future cash flows from the use of the assets, the carrying value of the assets will be reduced to their estimated fair value.

Insurance Reserves. The Company’s insurance reserves reflect the estimated deductible amounts the Company is responsible for under the workers’ compensation and vehicle liability insurance programs. Our insurance expense for these items is largely dependent on our claims experience and our ability to control such claims, the actuarial development of claims to their select ultimate, in addition to third party premiums/expenses associated with this coverage. We have recorded estimated insurance reserves for the anticipated losses on open claims under the workers’ compensation and vehicle liability programs based upon actuarial analysis prepared by an independent third party actuary. Although the estimates of these accrued liabilities are based on the factors mentioned above, it is possible that future cash flows and results of operations could be materially affected by changes in our assumptions or changes in claims experience and development.

Stock Based Compensation. The Company accounts for stock-based compensation and other stock-based payments using the fair value method. Under the fair value method, the fair value of the stock based compensation and other stock-based payments are estimated at the grant date and the total fair value is amortized over the vesting schedule of the awards as compensation expense. The Class B common shares issued by STA Holdings are fully vested on the grant date, and, as such, the Company recognizes compensation expense when the shares are issued. STA Holdings has issued only Class B Series Three common shares pursuant to the EIP during fiscal year 2015 and fiscal year 2014. There are presently no Class B Series Two common shares outstanding. All future share awards under the EIP plan will be in the form of grants of Class B Series Three common shares, and there will be no further issuance of Class B Series Two common shares. These shares are accounted for as a liability upon issuance and re-measured at fair value on a quarterly basis. Changes in fair value are recorded in the Consolidated Statement of Operations.

The Class B common shares are not traded in an active market and have certain restrictions on their transferability. These shares are accounted for as a liability upon issuance, as a result of a put option they contain. In the case of the Class B Series Two common shares issued pursuant to the EIP during the period the IPS structure was in place, the put option provided for a fair market value of Class B Series Two common shares put at an amount equal to the weighted average trading price of the STI common shares for the ten consecutive trading days immediately prior to the date of put, plus Cdn. $3.847 (an amount equivalent to the historical value of the Subordinated Note component of the IPS). In the case of the Class B Series Three common shares to be utilized for EIP share grants subsequent to the end of the IPS structure, the put option provides for a fair market value of Class B Series Three common shares put at an amount equal to the weighted average trading price of the STI common shares for the ten consecutive trading days immediately prior to the date of put. Stock based compensation expense associated with the issuance of Class B Series Two and Class B Series Three common shares is based on the trading value of the STI common shares at the date of grant, similar to the fair value of such common shares in connection with the put option values described above.

Income Taxes. Income taxes have been computed utilizing the asset and liability approach, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates

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expected to be in effect for the years in which those taxes are expected to be realized or settled. A valuation allowance is recorded to reduce deferred tax assets to the amount that is believed to be more likely than not to be realized. The recorded deferred income tax liability results from a difference between the book and tax basis of certain transportation equipment, other equipment and intangible assets.

The Company uses judgment in determining income tax provisions and in evaluating its tax positions under the accounting guidance for income taxes. Additional provisions for income taxes are established when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold, which is a tax position that is more- likely-than-not to be sustained upon examination by the applicable taxing authority. The Company and its subsidiaries are examined by various federal and state tax authorities. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known.

Accounting for Derivatives and Hedging Activities. The Company records its derivatives at fair value on the balance sheet, which requires that a company take into account its own credit risk and the credit risk of the counterparty when determining the fair value of financial assets and financial liabilities, including derivative instruments. Changes in fair value will be recorded in the statement of operations or through other comprehensive income depending on the nature of the derivative instrument. The Company did not elect hedge accounting for any of its derivative financial instruments and therefore records all changes in fair value in the income statement. The Company has offset the fair value amounts recorded on its forward foreign currency contracts executed with the same counterparty under an executed master netting arrangement.

Foreign Currency Translation: Monetary assets and liabilities denominated in a currency other than the functional currency are translated at the rate of exchange prevailing at the balance sheet date. Transactions denominated in a currency other than the functional currency are translated at the rate of exchange prevailing on the transaction date. Gains and losses on translation of these items are considered transaction gain and losses and are included in the consolidated statements of operations in foreign currency (gain) loss.

The functional currency of STI, STA ULC and the Company’s Canadian operations is the Canadian dollar. The functional currency of the Company’s operations in the United States is the U.S. dollar. The Company’s financial statements are reported in U.S. dollars, as the principal operations and cash flows of its subsidiaries are conducted in U.S. dollars. As a result, the assets and liabilities of the Company, STA ULC and the Company’s Canadian operations are translated into U.S. dollars using the exchange rate in effect at the period end and revenues and expenses are translated at the average rate during the period. Exchange gains or losses on translation are deferred as a separate component of shareholders’ equity. The Cdn$ 6.75% Convertible Debentures were and the Cdn$ 6.25% Convertible Debentures of STI are denominated in Canadian dollars. As the functional currency of STI is the Canadian dollar, exchange gains or losses related to the Cdn$ 6.75% Convertible Debentures and the Cdn$ 6.25% Convertible Debentures on the translation of the STI financial statements into U.S. dollars, the reporting currency, are deferred as a separate component of shareholders’ equity. The US$ 6.25% Convertible Debentures of STI are denominated in U.S. dollars. As the functional currency of STI is the Canadian dollar, unrealized gains or losses on re-measurement of the US$ 6.25% Convertible Debentures into Canadian dollars are considered transaction gains and losses, at the STI level, and are included in the consolidated statement of operations.

Foreign currency transactions gains and losses, related to short-term related intercompany loans are recorded in the Consolidated Statement of Operations as incurred. Foreign currency transaction gains and losses for intercompany loans that are considered long-term in nature are recorded in Accumulated Other Comprehensive Loss as incurred.

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Oil and Gas Reserve Estimates. Estimates of oil and gas reserves in the consolidated financial statements are prepared through reserve engineering, which is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. The process relies on interpretations of available geographical, geophysical, engineering and production data. The accuracy of a reserve estimate is a function of the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions and the judgment of the persons preparing the estimate.

The Company’s reserve information is based on estimates prepared by independent oil and gas industry consultants. Estimates prepared by others may be different than these estimates. Because these estimates depend on many assumptions such as projected future rates of production, estimated commodity price forecasts and the timing of future expenditures, all of which may differ from actual results, reserve estimates may be different from the quantities of oil and gas that are ultimately recovered. In addition, the results of drilling, testing and production after the date of an estimate may justify revisions to the estimate.

The present value of future net oil and gas revenues should not be assumed to be the current market value of the Company’s estimated oil and gas reserves. Actual future prices, costs and reserves may be materially higher or lower than the prices, costs and reserves used for the future net revenue calculations. Reserve estimates can have a significant impact on earnings, as they are a key component in the calculation of oil and gas depreciation and depletion.

A downward revision in the reserve estimate could result in a higher depreciation and depletion charge to earnings. In addition, if the net capitalized costs are determined to be in excess of the calculated ceiling, which is based largely on reserve estimates, the excess must be written off as an expense charged against earnings.

Asset Retirement Obligations. The asset retirement obligation provision recorded in the consolidated financial statements is based on estimates of total costs for future restoration and abandonment of oil and natural gas wells and facilities, as well as estimates of when these costs will occur. The estimates are based on the Company’s net ownership interest in the wells. Estimating these future costs requires management to make estimates and judgments that are subject to future revisions based on numerous factors, including changing technology and political and regulatory environments.

Risk Factors

The following section describes both general and specific risks that could affect our financial performance. The risks described below are not the only risks facing the Company. Additional risks and uncertainties that are not currently known or that are currently considered to be immaterial may also materially and adversely affect the Company and our business operations. If any of these risks actually occur, the Company’s business, financial conditions, results of operations and cash flow could be adversely affected, in which case the trading prices of the Common Shares and the Convertible Debentures would decline.

Risks Related to our Business

We cannot control certain of our operating expenses

The price of fuel, insurance costs and maintenance costs are operating expenses over which we have little or no control. Although certain of our customer contracts provide for automatic price

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increases or other forms of protection against fuel price and/or insurance cost increases, significant increases in the price of fuel, insurance or maintenance could affect our costs as well as the affordability of our services to our customers of our services. Similarly, depending on the availability of qualified drivers and the level of competition with other businesses for their services, we may have little control over the labour costs for our drivers. Any difficulties in attracting and retaining qualified drivers could affect our costs and, ultimately, result in the loss of customer contracts due to the inability to service the contract. Accordingly, a significant escalation in our operating expenses or in the inability to attract and retain qualified drivers could have a material adverse effect on us, our financial condition, results of operations and cash flows.

We have significant capital expenditure requirements

In order to maintain our school bus fleet, and to expand our business pursuant to our business strategy, we are required to make significant capital expenditures. There can be no assurance that cash flow from operations will enable us to acquire a sufficient number of new vehicles or make capital expenditures necessary to implement any expansion of service. If we are required to obtain additional financing, there can be no assurance that we can obtain financing on terms acceptable to us. Our inability to have sufficient cash flows or procure the financing necessary to acquire additional school buses or make needed capital improvements could delay or prevent us from implementing our business strategy and would have a material adverse effect on us. Future maintenance capital expenditures are dependent on a number of future events. The future replacement of school vehicles will be dependent on contract retention and renewal and will also be dependent on the number of new contracts secured through acquisitions, new bids and conversions and the renewal of current contracts. If current contracts are not renewed, or only a portion are renewed, i.e. the number of net new contracts is higher or lower than expected, the assumed level of maintenance capital expenditures will be significantly different from the level currently anticipated. In addition, future expenditures will also depend on future vehicle pricing, negotiating ability with regard to future vehicles pricing, and future vehicle specifications.

Our ability to achieve our business objectives depends on many factors, many of which are beyond our control

Some of the factors that may affect our ability to successfully achieve our business objectives are the following:

• notwithstanding our high retention rate of renewable contracts, we may be unable to retain certain of our existing customer contracts, or we may only be able to renew them at minimal or no price increase, or price reductions, reducing profitability. Specifically, the decision to renew contracts is not made solely by us and may be based upon factors beyond our control. Accordingly, there can be no assurance that any of our current or future contracts will be extended, or if extended, that the rates of compensation for such extensions will be acceptable to us. Moreover, there can be no assurance that the school districts that currently employ our services will not seek to satisfy their transportation needs in the future by alternative means, including reducing or eliminating transportation services. We had 80 contracts that were up for renewal for fiscal year 2015. The approximate percentages of fiscal year 2015 revenue that are up for renewal (including annual contract renewals in New Jersey) for fiscal years 2016 and 2017 are 26% and 29%, respectively.

• we may be unable to find suitable businesses to acquire or to successfully complete acquisitions on profitable terms or to successfully integrate acquired businesses; and

• we may be unable to identify conversion opportunities or win bid contracts on profitable terms or to find adequate facilities to operate conversion or bid contracts won.

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The Company’s consolidated indebtedness could negatively impact the business

On June 30, 2015, the Company had total indebtedness of $204.9 million (including $119.5 million indebtedness to holders of Debentures).

The degree to which the Company is leveraged on a consolidated basis could have important consequences to the holders of Common Shares and Debentures, including:

• the Company’s ability in the future to obtain additional financing for working capital, capital expenditures or other purposes may be limited;

• the Company may be unable to refinance indebtedness on terms acceptable to it or at all;

• a significant portion of the Issuer’s cash flow (on a consolidated basis) is likely to be dedicated to the payment of the principal of and interest on the Company’s indebtedness, including the Convertible Debentures, thereby reducing funds available for future operations, capital expenditures and/or dividends on the Common Shares;

• the Company may be more vulnerable to economic downturns and be limited in our ability to withstand competitive pressures;

• the Company may be limited in its ability to plan for or react to changes in its business or the industry in which it operates; and

• the Company may be at a competitive disadvantage to its competitors that have less indebtedness.

The restrictive covenants in the Credit Agreement and the Note Purchase Agreement could impact the Company’s business and affect its ability to pursue its business strategies

The Credit Agreement and the Note Purchase Agreement feature restrictive covenants that limit the Company’s ability, among other things, to:

• incur additional indebtedness;

• pay dividends and make distributions in respect of the Equity Interest or to make certain other restrictive payments or investments;

• sell assets;

• consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets;

• enter into transactions with the Company’s and/or the Issuer’s affiliates;

• create liens; and

• enter into new lines of businesses.

In addition, the Credit Agreement and the Note Purchase Agreement include other and more restrictive covenants and prohibit the Company and certain of its affiliates from prepaying its other indebtedness, while debt under the Credit Agreement and Note Purchase Agreement is outstanding. The Credit Agreement and the Note Purchase Agreement also require the Company to achieve specified financial and operating results and maintain compliance with specified financial ratios. The Company’s ability to comply with these ratios may be affected by events beyond its control.

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A breach of any of the restrictive covenants in the Credit Agreement or under the Note Purchase Agreement or in the Company’s ability to comply with the required financial ratios could result in a default under the Credit Agreement or under the Note Purchase Agreement. If a default occurs, the lenders under the Credit Agreement and/or the Note Purchase Agreement may elect to declare all borrowings outstanding under either facility, together with accrued interest and other fees, to be immediately due and payable.

We may not be able to make all principal payments on the Convertible Debentures

The US$ 6.25% Convertible Debentures will mature on June 30, 2018 and the Cdn$ 6.25% Convertible Debentures will mature on June 30, 2019. STI may not be able to refinance the principal amount of the Convertible Debentures in order to repay the principal outstanding or may not have generated enough cash from operations to meet this obligation. There is no guarantee that STI will be able to repay the outstanding principal amount upon maturity of the Convertible Debentures.

As a result of the subordinated nature of the guarantees of the Debentures, upon any distribution to creditors of the Company in a bankruptcy, liquidation or reorganization or similar proceeding relating to the Company or its property or assets, the holders of the Company’s senior indebtedness will be entitled to be paid in full in cash before any payment may be made with respect to the Debentures.

We face a number of risks in connection with our acquisition strategy

As part of our business strategy, we have expanded through acquisitions and will likely acquire additional businesses in the future. The acquisition and development of existing businesses to be operated by us will be dependent on our ability to identify, acquire and develop suitable acquisition targets in both new and existing markets. While we are careful in selecting the businesses that we acquire, and while the sellers of these businesses routinely execute indemnities in our favour relating to pre-closing liabilities, acquisitions involve a number of risks, including (i) the possibility that we, as successor owner, may be legally and financially responsible for liabilities of prior owners if the indemnities are inapplicable or the former owner has limited assets; (ii) the possibility that we pay more than the acquired company or assets are worth; (iii) the additional expense associated with completing an acquisition and amortizing any acquired intangible assets; (iv) the difficulty of assimilating the operations and personnel of the acquired business; (v) the challenge of implementing uniform standards, controls, procedures and policies throughout the acquired business; (vi) the inability to integrate, train, retain and motivate key personnel of the acquired business; (vii) the potential disruption of our ongoing business and the distraction of management from its day-to-day operations; and (viii) the inability to incorporate the acquired business successfully into our operations. Such risks, if they materialize, could have a material adverse effect on us, our financial condition, results of operations and cash flows.

In addition, we may not be able to maintain the levels of operating efficiency that any of the acquired businesses had achieved or might have achieved separately. Successful integration of each of their operations would depend upon our ability to manage those operations and to eliminate redundant and excess costs. As a result of difficulties associated with combining operations, we may not be able to achieve the cost savings and other benefits that we would hope to achieve with these acquisitions. Any difficulties in this process could disrupt our ongoing business, distract management, result in the loss of key personnel, increase our expenses and otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows. There can be no assurance that the acquired businesses will achieve anticipated levels of profitability.

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We may be adversely affected by substantial competition in the school bus transportation industry and increased consolidation within the industry

The school bus transportation industry is highly competitive and we expect that there will continue to be substantial competition for contract bidding and for prospective acquisitions. Such competition may decrease the profitability associated with any contract and increase the cost of acquisitions. Contracts are generally awarded pursuant to public bidding, where price is the primary criteria for a contract award. We have many competitors in the school bus transportation business, including transportation companies with resources and facilities substantially greater than ours and school districts that operate their own buses. There can be no assurance that we will be able to identify, acquire or profitably manage additional contracts or that the assumptions underlying the contract price and / or expense levels included in the bid process will be realized. Although we have historically been competitive in the market for new contracts as well as for acquisitions of other companies, there can be no assurance that we will be able to compete effectively in the future.

In particular, the school bus transportation industry is undergoing significant consolidation, which has intensified the competition for contracts and acquisitions. From time to time, we make unsolicited inquiries with respect to possible acquisitions. Whether such inquiries will result in further communications or, ultimately, an acquisition, has depended, and will continue to depend upon the facts and circumstances in each case, including whether our competitors make bids for such contracts and acquisitions. Any failure to compete effectively could have a material adverse effect on our company, our financial condition, results of operations and cash flows.

Our business depends on certain key personnel

We believe that our success depends, in part, on the retention of senior executive and regional management. There can be no assurance that we would be able to find qualified replacements for the individuals who make up our senior management team if their services were no longer available. The loss of services of one or more members of the senior management team could adversely affect our business, results of operations and our ability to effectively pursue our business strategy. We do not maintain key-man life insurance for any of our employees.

A greater number of our employees may join unions

Although some of our employees are subject to collective bargaining agreements, there are no assurances that the number of our employees who are members of unions will not increase in the future. A significant increase in the number of our employees becoming members of unions could result in increased labour costs and have a material adverse effect on us, our financial condition, results of operations and cash flows.

We may be adversely affected by rising insurance costs

Our cost of maintaining vehicle liability, personal injury, property damage and workers’ compensation insurance is significant. We could experience higher insurance premiums as a result of adverse claims experience or because of general increases in premiums by insurance carriers for reasons unrelated to our own claims experience. As an operator of school buses, we are exposed to claims for personal injury or death and property damage as a result of accidents. Generally, our insurance policies must be renewed annually. Our ability to continue to obtain insurance at affordable premiums also depends upon our ability to continue to operate with an acceptable safety record. A significant increase in the number of claims against us, the assertion of one or more claims in excess of our policy limits or the inability to obtain adequate insurance coverage at acceptable rates, or at all, could have a material adverse effect on us. In addition, the running of statutes of limitations for personal injuries to minor children typically is suspended during the children’s legal minority. Therefore, it is possible that accidents causing injuries to minors on school buses may not give rise to lawsuits until a number of years later, which could also have a material adverse effect on us.

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We may not be insured for certain losses

We may become subject to liabilities for claims for which insurance is not normally obtained, hazards that we cannot or may not elect to insure because of high premium costs or other reasons or for occurrences that exceed maximum coverage under our policies. For example, we do not have insurance to guard against claims for breach of contract. The occurrence of any liability for which we are not insured, any liability for a claim that exceeds our maximum coverage under our policies, or a multiplicity of otherwise insured claims for amounts within the deductible levels in our policies, could have a material adverse effect on us, our financial condition, results of operations and cash flows.

We may be adversely affected by current and new governmental laws and regulations

We are required to comply with laws and regulations relating to safety, driver qualifications, insurance, worker overtime and other matters promulgated by various federal, state, provincial and local regulatory agencies including, among others, state motor vehicle agencies, state departments of education, the Federal Highway and Safety Administration, the National Highway Traffic Safety Administration and the Occupational Safety and Health Administration. We are also required to comply with certain statutes, such as the Americans with Disabilities Act. We have incurred, and expect to incur, costs for our operations to comply with these legal requirements, and these costs could increase in the future. Many of these legal requirements provide for substantial fines, orders, including orders to cease operations, and criminal sanctions for violations. Although we believe that we are in material compliance with applicable safety laws and regulations, it is difficult to predict the future development of such laws and regulations or their impact on our business or results of operations. We anticipate that standards under these types of laws and regulations will continue to tighten and that compliance will require increased capital and other expenditures. Furthermore, we cannot predict whether new laws or regulations will be adopted and, if adopted, no assurance can be given that the implementation of such laws or regulations and any additional compliance costs associated therewith will not have a material adverse effect on us. Also, a significant order or judgment against us, the loss of a significant permit or license or the imposition of a significant fine or any other liability in excess of, or not covered by, our reserves or our insurance could adversely affect our business, financial condition and results of operations.

We may be adversely affected by environmental requirements

Our facilities and operations are subject to extensive and constantly evolving federal, state, provincial and local environmental and occupational health and safety laws and regulations, including laws and regulations governing air emissions, wastewater discharges, the storage and handling of chemicals and hazardous substances and cleanup of contaminated soil and groundwater. Additional expenditures, beyond those currently included in capital and operating budgets, may be incurred in order to comply with either new environmental legislation and regulations, new interpretations of existing laws and regulations or more rigorous enforcement of such laws and regulations, most of which are difficult to pass on to the customer. It is not possible to predict whether these new expenditures will be material. We are also subject to liability for the investigation and remediation of environmental contamination (including contamination caused by other parties) at properties that we own or operate and at other properties where we or our predecessors liabilities or environmental compliance or cleanup obligations will have a material adverse effect on our business or operations, there can be no assurance that such liabilities or compliance or cleanup obligations will not increase in the future or will not have a material adverse effect on us.

The school bus transportation industry is highly seasonal

The school bus transportation industry is subject to seasonal variations in operations. As a result,

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school bus contractors, including us, historically experience a significant decline in operating income during the summer months. Specifically, because customers often pay for the annual amount due under a contract in 10 installments ending in June, our revenues and cash flows sharply decrease in July and August. Additionally, many school districts have dramatically cut back on summer programs in recent years, including summer camp and charter programs, compounding this effect. Our quarterly operating results have also fluctuated due to a variety of factors, including variation in the number of school days in each quarter (which is affected by the timing of the first and last days of the school year, holidays, the month in which spring break occurs and adverse weather conditions, which can close schools). Consequently, interim results are not necessarily indicative of the full fiscal year and quarterly results may vary substantially, both within a fiscal year and between comparable fiscal years.

We may not be able to maintain letters of credit or performance bonds required by our transportation contracts

Our school bus transportation contracts generally provide for performance security in one or more of the following forms: performance bonds, letters of credit or cash retainages. The contracts also require the maintenance of minimum amounts of insurance coverage, the maintenance of appropriate facilities and transportation equipment, and the implementation of various operating rules and regulations. There can be no assurance that either letters of credit or performance bonds will continue to be available to us as security for our contracts or, if available, at a cost that does not adversely affect our margins or cash flow. If adequate performance security is not available or if the terms of such security are too onerous, our company, our financial condition, results of operations and cash flows could be materially adversely affected.

Some of our customer contracts may be terminated due to factors beyond our control

Some of our school bus transportation contracts may be terminated due to factors beyond our control, such as decreases in funding for our customers. All school bus contracts can also be terminated by school districts for not meeting certain performance criteria. Although we believe we have established strong relationships with our customers, there can be no assurance that our contracts will not be affected by circumstances beyond our control. The number of school buses to be provided under our contracts generally may decrease, and hence the revenues generated under such contracts may decrease based on the requirements of our customers.

We face uncertain risks associated with the Company’s oil and gas operations

The exploration of oil and gas involves risk that exploration efforts may not find oil and natural gas resources and even when they have been discovered, they may not be economically extracted. Factors affecting economic extraction of oil and natural gas include fluctuations in the price of oil and natural gas, technical extraction difficulties, the ability to bring the oil and natural gas to market, the quality of the oil and natural gas resources, the availability of water used in the extraction process, and the ability to dispose of water associated with the extraction process in an environmentally acceptable manner. In addition, other related uncertainties include and are not limited to geopolitical maneuvering on an international level, terrorist activities, governmental regulations and restrictions, functional obsolescence through widespread migration to alternative non petroleum based fuels, such as those that are hydrogen or nuclear based environmental and other considerations that are hypothetically possible. Oil and gas revenues are dependent on the commodity prices of oil and natural gas. Market changes in the price of these commodities will have a corresponding effect on the revenues and cash flows of the Company’s oil and gas segment.

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As a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our shareholders

STI is a “foreign private issuer” under applicable U.S. federal securities laws and, therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. As a result, we do not file the same reports that a U.S. domestic issuer would file with the SEC, although we are required to file or furnish to the SEC the continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In addition, our officers, directors, and principal shareholders are exempt from the reporting and “short swing” profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell their Common Shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements are longer and filing thresholds differ. In addition, as a foreign private issuer, we are exempt from the proxy rules under the Exchange Act.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us

We may in the future lose our foreign private issuer status if a majority of our Common Shares are held in the U.S. and we fail to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than the costs incurred as a Canadian foreign private issuer eligible to use the Multi-Jurisdictional Disclosure System (“MJDS”) adopted by the United States and Canada. If we are not a foreign private issuer, we would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are generally more detailed and extensive than the forms available to a foreign private issuer.

We are an “emerging growth company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Common Shares less attractive to investors

We are an “emerging growth company,” as defined in the Jumpstart Our Business Start-ups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act. In addition, should we remain an emerging growth company at a time we are no longer eligible to use the MJDS, we would be able to take advantage of reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Common Shares less attractive because we rely or decide in the future to rely on these exemptions. If some investors find our Common Shares less attractive as a result, there may be a less active trading market for our Common Shares and our stock price may be more volatile.

We will remain an “emerging growth company” until June 30, 2017 (the last day of our fiscal year following the fifth anniversary of the first registered US public sale of our Common Stock), although we would lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of May 30 of any year.

The financial reporting obligations of being a public company in the U.S. are expensive and time consuming, and place significant additional demands on our management

With the listing of our Common Shares on the NASDAQ Global Select Market in September 2011, we became subject to public company reporting obligations in the United States. The additional

34

obligations of being a public company in the United States require significant additional expenditures and place additional demands on our management. In particular, at such time we are no longer an “emerging growth company” under the JOBS Act, section 404 of the Sarbanes-Oxley Act of 2002 and the SEC rules and regulations implementing section 404 will require an annual evaluation of our internal controls over financial reporting to be attested to by an independent auditing firm. If an independent auditing firm is unable to provide us with an attestation and an unqualified report as to the effectiveness of our internal controls, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our Common Shares. In addition, future acquisitions of companies by us may create challenges in implementing the required processes, procedures and controls in the acquired operations, as acquired companies (in particular, privately held companies) may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those required under the securities law applicable to STI.

Economic and financial market conditions have resulted in reduced spending by school districts and other governmental agencies

The 2008 global economic crisis and continuing economic instability resulted in a reduction in revenues to various state and local governmental entities, including school districts and other purchasers of our services. This reduction in revenues to our customers may negatively affect the revenues received by the Company in connection with annual rate increases on its school district customer contracts and non contracted ancillary revenues due to potential cutbacks by customers in these spending areas. If the Company’s financial condition is materially impacted, then impairment charges with respect to the Company’s goodwill and other long-lived assets could be necessary.

We may be adversely affected by terrorism attacks and, man-made or natural disasters

The potential for terrorism exists in the countries in which we operate. Public transportation has previously been subject to terrorist attacks and may be the target of future attacks, which could have a negative impact on our operations. Man-made and natural disasters, including adverse weather conditions, from which we are experiencing greater and more frequent disruptions, could negatively impact our operations through, among other things, increased costs, business disruptions and increased accidents. The occurrence of any of these events could have a material adverse effect on us, our financial condition, results of operations and cash flows.

We may be adversely affected by cyber terrorism or other data security breaches and are subject to data privacy risks

In the normal course of our business we rely on information technology systems. These systems, among other things, collect and safeguard confidential information regarding our employees, customers and the users of our services, including information collected through our SafeStop^TM application. Cyber terrorists, hackers and data thieves have become increasingly sophisticated and have the ability to operate large-scale and complex data attacks that could lead to breaches of our systems and the security of our data and information. These attacks could also lead to other significant disruptions. Such breaches and disruptions may result in service interruptions or the loss of confidential information and could give rise to unwanted media attention, material damage to our customer relationships and reputation and fines or lawsuits. The occurrence of any of these events could have a material adverse effect on us, our financial condition, results of operations and cash flows.

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Risks Related to the Capital Structure

The Company is dependent on STA Holdings and Parkview Transit for all cash available for dividends and interest

STI is dependent on the operations and assets of STA Holdings and Parkview Transit the ownership of common shares. Cash distributions to the holders of Common Shares and the Convertible Debentures will be dependent on the ability of STA Holdings and Parkview Transit to make dividend payments on its Common Shares held by STI. The actual amount of cash available for payments to holders of Common Shares and the Convertible Debentures will depend upon numerous factors relating to the business of STA Holdings and Parkview Transit, including profitability, changes in revenue, fluctuations in working capital, capital expenditure levels, applicable laws, compliance with contracts and contractual restrictions contained in the instruments governing any indebtedness. Any reduction in the amount of cash available for distribution, or actually distributed, by the Company will reduce the amount of cash available to STI for dividends to holders of Common Shares. Cash dividends by STI on the Common Shares are not guaranteed and will fluctuate with the performance of the business of STA Holdings and Parkview Transit. Cash available for distribution is not intended to be representative of cash flow or results of operations determined in accordance with generally accepted accounting principles in the United States and does not have a standardized meaning prescribed by US GAAP.

A significant amount of our cash is distributed, which may restrict potential growth

The payout of substantially all of our operating cash flow will make additional capital and operating expenditures dependent on increased cash flow or additional financing in the future. Lack of these funds could limit the Company’s future growth and its cash flow. In addition, the Company may be precluded from pursuing otherwise attractive acquisitions or investments because they may not be accretive on a short-term basis.

STI may not receive dividends from STA Holdings and Parkview Transit provided for in the dividend policy adopted by the board of directors of the Company, or any dividends at all

STI’s only source of cash flow for payment of dividends on the Common Shares and interest payments on the Convertible Debentures is distributions on its equity ownership of STA Holdings and Parkview Transit. The board of directors of STI may, in its discretion, amend or repeal the dividend policy. STI’s board of directors may decrease the level of dividends provided for in this dividend policy or entirely discontinue the payment of dividends. Future dividends with respect to the common shares of STI, if any, will depend on, among other things, the results of operations, cash requirements, financial condition, contractual restrictions, business opportunities, provisions of applicable law and other factors that the board of directors of STI may deem relevant. The Credit Agreement and the Note Purchase Agreement contain significant restrictions on the Company’s ability to make dividend payments.

Fluctuations in the exchange rate may impact the amount of cash available to the Company for distribution and the Company’s results of operations

The Cdn$ 6.25% Convertible Debentures are denominated in Canadian dollars, and payment of these Debentures upon maturity will be payable in Canadian dollars. The Company has not entered into any hedge arrangement with respect to the payment of these Debentures upon maturity in 2019. Interest payments on the Cdn$ 6.25% Convertible Debentures are denominated in Canadian dollars. Conversely, approximately 78% of the Company’s revenue and expenses for fiscal year 2015, together with distributions received from the Company’s subsidiaries are denominated in U.S. dollars. As a result, the Company is exposed to currency exchange rate risks.

Although the Company intends to fund the interest payment on the Cdn$ 6.25% Convertible Debentures with cash flows from the Company’s Canadian operations to mitigate the exchange rate risk with respect to the total amount of currently anticipated interest payments on those Convertible Debentures, there can be no assurance that these arrangements will be sufficient to fully protect against this risk. If the Canadian dollar cash flow do not fully protect against this risk, changes in the

36

currency exchange rate between U.S. and Canadian dollars could have a material adverse effect on the Company’s financial condition, results of operations and cash flow, and may adversely affect the Company’s cash distributions.

In addition, the Company prepares its financial statements in U.S. dollars. In connection with the Company’s Canadian operations, approximately 22% of the Company’s consolidated income before taxes for fiscal year 2015 is incurred in Canadian dollars. The results of the Canadian operations are translated into U.S. dollars for financial statement reporting purposes. Changes in the Canadian dollar / U.S. dollar currency exchange rate from period to period will impact the translated U.S. dollar equivalent results of the Canadian operations. A weakening Canadian dollar will have a negative impact on the translation of the results of the Canadian operations in U.S. dollars for financial reporting purposes. Conversely, a strengthening Canadian dollar will have a positive impact on the translation of the results of the Canadian operations in U.S. dollars for financial reporting purposes.

Changes in the Company’s creditworthiness may affect the value of the Common Shares and Convertible Debentures

The perceived creditworthiness of the Issuer, the Company and their respective subsidiaries may affect the market price or value and the liquidity of the Common Shares and the Convertible Debentures.

Future sales or the possibility of future sales of a substantial amount of Common Shares may impact the price of the Common Shares and could result in dilution

Future sales or the possibility of future sales of a substantial amount of Common Shares in the public market by the Company or an existing shareholder could adversely affect the prevailing market price of the Company’s Common Shares, and could impair the Issuer’s ability to raise capital through future sales of those securities. For example, the Company understands that SNCF Participations S.A., which held approximately 15.0 million of the Company’s Common Shares on June 30, 2015, sold 4.0 million of those shares on August 6, 2015 in market transactions at a discount to the market trading price at that time, which we believe had an adverse impact on the price of the Common Shares.

Additionally, the issuance of additional Common Shares may dilute an investor’s investment in the Issuer and reduce distributable cash per Common Share. The Company may issue Common Shares or other securities from time to time, in order to raise capital or as consideration for future acquisitions and investments. If an acquisition or investment is significant, the number of Common Shares or the number or aggregate principal amount, as the case may be, of other securities that may be issued may in turn be significant. In addition, the Issuer may also grant registration rights covering those Common Shares or other securities in connection with any acquisitions or investments.

Further, the Company may determine to redeem outstanding Debentures for Common Shares or to repay outstanding principal amounts thereunder at maturity of the Convertible Debentures by issuing additional Common Shares. The issuance of additional Common Shares may have a dilutive effect on shareholders and an adverse impact on the price of Common Shares.

Investment eligibility

There can be no assurance that the Common Shares will continue to be qualified investments for trusts governed by registered retirement savings plans, registered retirement income funds, registered disability savings plans, deferred profit sharing plans and registered education savings plans and for arrangements that are tax-free savings accounts.

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The Company may not be able to make all interest payments on the Convertible Debentures

The likelihood that holders of the Convertible Debentures will receive the payments owing to them in connection with the Convertible Debentures will be dependent upon the financial health and creditworthiness of the Company and the ability of the Company to earn revenues.

The Company may not be able to purchase the Convertible Debentures on a change of control

The Company will be required to offer to purchase all outstanding Convertible Debentures upon the occurrence of a change of control. However, it is possible that following a change of control, the Company will not have sufficient funds at that time to make the required purchase of outstanding Convertible Debentures or that restrictions contained in other indebtedness will restrict those purchases.

Redemption prior to maturity

The Convertible Debentures may be redeemed in accordance with their respective terms, upon payment of the principal, together with any accrued and unpaid interest. Holders of Convertible Debentures should assume that this redemption option will be exercised if the Company is able to refinance at a lower interest rate or it is otherwise in the interest of the Company to redeem the Convertible Debentures.

Conversion following certain transactions

In the case of certain transactions, each Convertible Debenture will become convertible into securities, cash or property receivable by a holder of Convertible Debentures in the kind and amount of securities, cash or property into which the Convertible Debenture was convertible immediately prior to the transaction. This change could substantially lessen or eliminate the value of the conversion privilege associated with the Convertible Debentures in the future.

Prevailing yields on similar securities

Prevailing yield on similar securities will affect the market value of the Convertible Debentures. Assuming all other factors remain unchanged, the market value of the Convertible Debentures will decline as prevailing yields for similar securities rise, and will increase as prevailing yields for similar securities decline.

There is a limited active public market for the Common Shares and Convertible Debentures and holders may have limited liquidity

Although the Common Shares and Convertible Debentures are listed and posted for trading on the TSX and the Common Shares also trade on the NASDAQ Global Select Market, they trade in markets with modest trading volumes. Although the Issuer has taken a number of steps to increase the liquidity of the Common Shares through additional common share offerings and debt to equity exchanges, there is no guarantee that an active trading market will further emerge and/or continue.

The market price for the Common Shares or Convertible Debentures may be volatile

Factors such as variations in the Company’s financial results, announcements by the Company or others, developments affecting the Company’s business or the North America school bus

38

transportation industry, general interest rate levels, general fuel price levels, the market price of the Common Shares and general market volatility could cause the market price of the Common Shares or the Convertible Debentures to fluctuate significantly.

Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” under the JOBS Act, we may be less attractive to investors, which may make it more difficult for us to raise additional capital as and when we need it. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

STA Holdings’ interest deductions on the 14% subordinated notes originally issued in connection with the IPS Offering were likely “dual consolidated losses” for U.S. federal income tax purposes and may result in disallowance of interest deductions under U.S. tax law if certain “triggering events” occur

Pursuant to Section 1503(d) of the Code and the Treasury Regulations thereunder, the interest deductions generated on the Notes likely generated a “dual consolidated loss” (“DCL”) for U.S. federal income tax purposes and therefore were deductible by STA Holdings only if STA Holdings and STA ULC made the appropriate election and complied with all applicable requirements, including annual reporting and certification requirements. STA Holdings and STA ULC made, and intend to continue to make, such election and have complied with all applicable requirements to date. Even though such an election was made, however, if any of several “triggering events” occurs (e.g., the use of such losses to offset the income of any other non-U.S. person, or, in certain circumstances, a disposition of STA ULC stock or assets), STA Holdings will generally be required to report the amount of any prior interest deductions on the Notes (plus interest thereon) as gross income in the year of the triggering event. STA Holdings and STA ULC intend to comply with all of the DCL reporting and certification requirements and to conduct their affairs such that no DCL triggering event occurs. However, if STA Holdings and STA ULC fail to satisfy such reporting and certification requirements, or if a DCL triggering event occurs and no exception applies, STA Holdings’ taxable income may be increased and if so, it’s U.S. federal income tax liability would be increased, perhaps materially. This would adversely affect the Company’s financial position, cash flow, and liquidity, and could affect the Issuer’s ability to make interest or dividend payments on the Debentures and the Common Shares and the Company’s ability to continue as a going concern.

Application of U.S. federal income tax corporate “inversion” rules is uncertain

U.S. federal income tax legislation enacted in October 2004 dealing with corporate “inversions” (e.g., certain transactions in which a non-U.S. corporation acquires substantially all of the equity interests in, or the assets of, a U.S. corporation or partnership, if, after the transaction, former equity owners of the U.S. corporation or partnership own a specified level of stock in the non-U.S. corporation) provides in certain cases that a non-U.S. corporation may be treated as a U.S. corporation for U.S. federal income tax purposes. As enacted, this legislation does not appear to apply to STI, because the Existing Investors did not own any stock in STI as a result of the original offering and related transactions or subsequent IPS or Common Share offerings. The legislation grants authority to the U.S. Treasury, however, to write implementing regulations, which could, if exercised broadly and retroactively, cause the inversion provisions to apply to STI and result in, among other things, U.S. withholding taxes being imposed on dividends paid on the Common Shares to non-U.S. Holders, and the potential inability of U.S. holders to claim a foreign tax credit for Canadian withholding tax on dividends paid on the Common Shares to them. The Internal Revenue Service subsequently issued regulations to provide further guidance on when a non-U.S. corporation may be treated as a U.S. corporation for U.S. federal income tax. Those regulations would not cause STI to be treated as a U.S. corporation for U.S. federal income tax purposes, but there can be no assurance such regulation may not be modified in the future.

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EX-99.4

Exhibit 99.4

Consent of Independent Registered Public Accounting Firm

We consent to the use of our report dated September 14, 2015, with respect to the consolidated financial statements of Student Transportation Inc. as of and for the years ended June 30, 2015 and 2014, included as an exhibit to this Annual Report on Form 40-F filed with the U.S. Securities and Exchange Commission.

MetroPark, New Jersey	/s/ Ernst & Young LLP
September 14, 2015

EX-99.5

Exhibit 99.5

CERTIFICATIONS

I, Denis J. Gallagher, certify that:

1. I have reviewed this annual report on Form 40-F of Student Transportation Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: September 25, 2015

/s/ Denis J. Gallagher

Name: Denis J. Gallagher

Title: Chief Executive Officer

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EX-99.6

Exhibit 99.6

CERTIFICATIONS

I, Patrick J. Walker, certify that:

1. I have reviewed this annual report on Form 40-F of Student Transportation Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: September 25, 2015

/s/ Patrick J. Walker

Name: Patrick J. Walker

Title: Executive Vice President and Chief Financial Officer

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EX-99.7

Exhibit 99.7

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report of Student Transportation Inc. (the “Company”) on Form 40-F for the fiscal year ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Denis J. Gallagher, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 25, 2015

/s/ Denis J. Gallagher

Name: Denis J. Gallagher

Title: Chief Executive Officer

EX-99.8

Exhibit 99.8

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report of Student Transportation Inc. (the “Company”) on Form 40-F for the fiscal year ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick J. Walker, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 25, 2015

/s/ Patrick J. Walker

Name: Patrick J. Walker

Title: Executive Vice President and

          Chief Financial Officer

EX-99.9

Exhibit 99.9

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, Denis Gallagher, Chief Executive Officer of Student Transportation Inc., certify the following:

1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Student Transportation Inc. (the “issuer”) for the financial year ended June 30, 2015.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (2013 COSO Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer(s) and I have

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) N/A

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2015 and ended on June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date: September 25, 2015

“Denis Gallagher”

Denis Gallagher

Chief Executive Officer

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EX-99.10

Exhibit 99.10

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, Patrick Walker, Chief Financial Officer of Student Transportation Inc., certify the following:

1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Student Transportation Inc. (the “issuer”) for the financial year ended June 30, 2015.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control – Integrated Framework (2013 COSO Framework) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 ICFR – material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer(s) and I have

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) N/A

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2015 and ended on June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date: September 25, 2015

“Patrick Walker”

Patrick Walker

Chief Financial Officer

- 2 -

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Lease Commitments (Tables)

12 Months Ended

Jun. 30, 2015

Future Minimum Rental Payments and Operating Lease Payments under Non Cancelable Operating Leases

The following represent future minimum rental payments and operating lease payments under non cancelable operating leases:

	Facility Leases		Vehicle Leases		Total
Year ending June 30,
2016	$	14,422	$	28,024	$	42,446
2017		11,024		25,005		36,029
2018		8,634		21,810		30,444
2019		6,426		17,526		23,952
2020		3,103		11,318		14,421
2021 and thereafter		3,402		233		3,635
Total minimum payments	$	47,011	$	103,916	$	150,927

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Reconciliation of Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Income Tax Rate Reconciliation [Line Items]
Provision for income taxes at statutory rate	$ 561	$ 158
Provincial taxes	(332)	112
Foreign rate differential	1,097	264
Canadian rate difference	(59)	168
Effect of U.S. state rate changes	(1,268)
Gain on bargain purchase		(1,105)
Permanent items	121	96
Uncertain tax position adjustments	(192)
Other	156	(88)
Total expense (benefit)	$ 84	$ (395)

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Oil and Gas Interests - Additional Information (Detail) - 12 months ended Jun. 30, 2015	$ / ft³ $ / Boe
Per Barrel Of Oil
Capitalized Costs of Unproved Properties Excluded from Amortization [Line Items]
Sales prices used for the ceiling test	73.88
Natural Gas, Per Thousand Cubic Feet
Capitalized Costs of Unproved Properties Excluded from Amortization [Line Items]
Sales prices used for the ceiling test | $ / ft³	4.17

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Fair Values of Company's Financial Assets and Liabilities Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 30, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency exchange contracts		$ 83
Interest rate swap	$ 337	408
Class B Series Three common share liability	7,349	9,951
Conversion right on US$ 6.25% Convertible Debentures	9	236
Liabilities, Fair Value Disclosure, Recurring, Total	7,695	10,678
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign currency exchange contracts		83
Interest rate swap	337	408
Class B Series Three common share liability	7,349	9,951
Liabilities, Fair Value Disclosure, Recurring, Total	7,686	10,442
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Conversion right on US$ 6.25% Convertible Debentures	9	236
Liabilities, Fair Value Disclosure, Recurring, Total	$ 9	$ 236

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Significant Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 30, 2014
Deferred tax liabilities
Intangibles	$ (24,873)	$ (25,055)
Property and equipment	(55,588)	(52,082)
Total deferred tax liabilities	(80,461)	(77,137)
Deferred tax assets:
Net operating loss carry forward	25,779	21,675
Other	13,461	14,276
Total deferred tax assets	39,240	35,951
Valuation allowance	(337)	(337)
Net deferred tax assets	38,903	35,614
Net deferred tax liabilities	$ (41,558)	$ (41,523)

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Related Party Transactions - Additional Information (Detail) - USD ($)	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Related Party Transaction [Line Items]
Commission paid for fleet procurement and disposal services	$ 500,000	$ 600,000
Maximum
Related Party Transaction [Line Items]
Commission paid for fleet procurement and disposal services	$ 500,000

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Components of Property and Equipment (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Property, Plant and Equipment [Line Items]
Cost	$ 481,937	$ 456,813
Accumulated Depreciation	(250,641)	(225,461)
Net Book Value	231,296	231,352
Land
Property, Plant and Equipment [Line Items]
Cost	5,629	6,076
Accumulated Depreciation	0	0
Net Book Value	5,629	6,076
Buildings
Property, Plant and Equipment [Line Items]
Cost	5,982	5,065
Accumulated Depreciation	(1,086)	(882)
Net Book Value	$ 4,896	$ 4,183
Useful Life	40 years	40 years
Transportation equipment
Property, Plant and Equipment [Line Items]
Cost	$ 432,826	$ 414,325
Accumulated Depreciation	(226,513)	(205,292)
Net Book Value	$ 206,313	$ 209,033
Transportation equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful Life	7 years	7 years
Transportation equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful Life	11 years	11 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Cost	$ 7,826	$ 6,510
Accumulated Depreciation	(3,702)	(2,693)
Net Book Value	$ 4,124	$ 3,817
Useful Life	The shorter of the life of lease or the useful life of the asset	The shorter of the life of lease or the useful life of the asset
Other machinery and equipment
Property, Plant and Equipment [Line Items]
Cost	$ 29,674	$ 24,837
Accumulated Depreciation	(19,340)	(16,594)
Net Book Value	$ 10,334	$ 8,243
Other machinery and equipment | Minimum
Property, Plant and Equipment [Line Items]
Useful Life	3 years	3 years
Other machinery and equipment | Maximum
Property, Plant and Equipment [Line Items]
Useful Life	5 years	5 years

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Jun. 30, 2015

Components of Intangible Assets

Intangible assets consist of the following:

	2015
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Remaining Life Years
Contract rights	$	65,102	$	(25,428	)	$	39,674	12
Covenants not to compete		14,800		(14,774	)		26	1
Trade names		22,199		—			22,199	None (Indefinite Life)
Total	$	102,101	$	(40,202	)	$	61,899

	2014
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Remaining Life Years
Contract rights	$	67,627	$	(22,868	)	$	44,759	14
Covenants not to compete		14,995		(14,952	)		43	—
Trade names		22,918		—			22,918	None (Indefinite Life)
Total	$	105,540	$	(37,820	)	$	67,720

Estimated Annual Amortization Expense for Intangible Assets

Estimated annual amortization expense for intangibles assets is as follows:

Year ending June 30,
2016	$	3,162
2017		3,152
2018		3,147
2019		3,146
2020		3,146
	$	15,753

Changes in Carrying Amount of Goodwill

The following table represents the changes in the carrying amount of goodwill for the years ended June 30, 2015 and 2014 (see Note 8):

Balance as of June 30, 2013	$	138,312
Goodwill related to acquisitions	$	3,360
Goodwill reduction related to prior acquisitions	$	(1,826	)
Foreign currency effects on Goodwill	$	(688	)
Balance as of June 30, 2014	$	139,158
Goodwill additions related to prior acquisitions	$	1,826
Foreign currency effects on Goodwill	$	(6,045	)
Balance as of June 30, 2015	$	134,939

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Commitments and Contingencies- Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2015	Jun. 30, 2014
Commitments and Contingencies [Line Items]
Letters of credit outstanding	$ 0.7	$ 0.9
Cash deposits	0.9	$ 0.7
Surety bonds	$ 94.6

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Revenue and Assets by Geographical Area for Transportation Segment (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2013
Segment Reporting Information [Line Items]
Revenues	$ 554,751	$ 489,499
Property and Equipment (net)	231,296	231,352
Goodwill	134,939	139,158	$ 138,312
Transportation
Segment Reporting Information [Line Items]
Revenues	551,861	484,316
Property and Equipment (net)	231,296	231,352
Goodwill	134,939	139,158
Transportation | United States
Segment Reporting Information [Line Items]
Revenues	480,936	409,683
Property and Equipment (net)	198,135	187,218
Goodwill	99,484	99,484
Transportation | Canada
Segment Reporting Information [Line Items]
Revenues	70,925	74,633
Property and Equipment (net)	33,161	44,134
Goodwill	$ 35,455	$ 39,674

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Gross Amount of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Income Tax Contingency [Line Items]
Beginning Balance	$ 1,704	$ 1,704
Additions for tax position related to prior year	190	0
Effective settlements with tax authorities	(1,439)	0
Ending Balance	$ 455	$ 1,704

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Future Minimum Rental Payments and Operating Lease Payments under Non Cancelable Operating Leases (Detail) $ in Thousands	Jun. 30, 2015 USD ($)
Operating Leased Assets [Line Items]
2016	$ 42,446
2017	36,029
2018	30,444
2019	23,952
2020	14,421
2021 and thereafter	3,635
Total minimum payments	150,927
Facility Leases
Operating Leased Assets [Line Items]
2016	14,422
2017	11,024
2018	8,634
2019	6,426
2020	3,103
2021 and thereafter	3,402
Total minimum payments	47,011
Vehicle Leases
Operating Leased Assets [Line Items]
2016	28,024
2017	25,005
2018	21,810
2019	17,526
2020	11,318
2021 and thereafter	233
Total minimum payments	$ 103,916

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Subsequent Events - Additional Information (Detail) $ in Millions		2 Months Ended
	Jul. 02, 2015 shares	Aug. 31, 2015 USD ($) shares	Aug. 31, 2015 CAD shares	Oct. 24, 2014 CAD shares
Maximum
Subsequent Event [Line Items]
Amount of shares authorized to be repurchased				4,158,553
Amount of shares authorized to be repurchased | CAD				CAD 5,000,000
Subsequent Event
Subsequent Event [Line Items]
Shares granted as EIP	173,705
Operating lease for replacement of school vehicle | $		$ 57.5
Operating lease term		6 years
Annual lease payments | $		$ 8.0
Subsequent Event | Minimum
Subsequent Event [Line Items]
Operating lease fixed interest rate		2.70%	2.70%
Subsequent Event | Maximum
Subsequent Event [Line Items]
Operating lease fixed interest rate		4.20%	4.20%
Amount of shares authorized to be repurchased		6,806,591	6,806,591
Amount of shares authorized to be repurchased | CAD			CAD 5,000,000

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Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Defined Benefit Plan Disclosure [Line Items]
Defined contribution benefit plan expenses	$ 0.6	$ 0.6

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Summary of Changes in Level Three Financial Instruments (Detail) - 6.25% Convertible Debenture - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Level 3 Liabilities, beginning balance	$ 236	$ 954
Non-cash gain on conversion feature	(231)	(714)
FX impact on conversion feature	4	(4)
Level 3 Liabilities, ending balance	$ 9	$ 236

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Related Party Transactions

12 Months Ended

Jun. 30, 2015

Related Party Transactions

18. Related Party Transactions

The Company utilized a transportation equipment dealer, primarily to assist in procurement and disposal of the Company’s fleet under the direction of the Company’s CFO. The transportation equipment dealer also provided consulting services to the Company, assisting with fleet valuations in its acquisition efforts. The transportation equipment dealer is a company controlled by a family member of the Company’s Chairman and CEO. Beginning in fiscal year 2015, the fleet procurement and disposal services were provided for an annual fee including a retainer amount plus a commission per vehicle amount not to exceed $0.5 million per annum. Prior to fiscal year 2015, these services were provided on a non-contractual basis. The Company paid the transportation equipment dealer $0.5 million and $0.6 million for each of the years ended June 30, 2015 and 2014, respectively. In April 2015, the Company terminated the agreement and began to perform these services directly with internal resources.

These transactions are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.

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Estimated Annual Amortization Expense for Intangible Assets (Detail) $ in Thousands	Jun. 30, 2015 USD ($)
Expected Amortization Expense [Line Items]
2016	$ 3,162
2017	3,152
2018	3,147
2019	3,146
2020	3,146
Finite Lived Intangible Assets, Amortization Expense, Net, Total	$ 15,753

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Acquisition - Additional Information (Detail) - USD ($) $ in Thousands						12 Months Ended
	Dec. 05, 2014	Feb. 10, 2014	Aug. 27, 2013	Jul. 23, 2013	Feb. 10, 2012	Jun. 30, 2015	Jun. 30, 2014
Business Acquisition [Line Items]
Acquisition expenses						$ 3	$ 282
Gain on bargain purchase of acquired assets (net of tax)							$ 2,762
Covenants not to compete
Business Acquisition [Line Items]
Estimated useful life of intangible assets						1 year
Contract rights
Business Acquisition [Line Items]
Estimated useful life of intangible assets						12 years	14 years
Dalton Bus Line Limited
Business Acquisition [Line Items]
Business acquisition aggregate purchase price	$ 400
Purchase price, cash paid	400
Gain on acquisition						$ 100
Purchase price allocated to amortizable intangible assets	$ 10
Dalton Bus Line Limited | Covenants not to compete
Business Acquisition [Line Items]
Acquisition expenses						$ 3
Atlantic Express Transportation Corporation
Business Acquisition [Line Items]
Business acquisition aggregate purchase price		$ 17,200
Purchase price, cash paid		17,200
Acquisition expenses							$ 200
Purchase price allocated to amortizable intangible assets		1,736
Gain on bargain purchase of acquired assets (net of tax)					$ 2,800
Atlantic Express Transportation Corporation | Contract rights
Business Acquisition [Line Items]
Purchase price allocated to amortizable intangible assets		$ 1,736
Estimated useful life of intangible assets		20 years
Williams Bus Lines Co
Business Acquisition [Line Items]
Business acquisition aggregate purchase price			$ 3,400
Purchase price, cash paid			$ 3,400
Acquisition expenses							47
Scholastic Bus Co
Business Acquisition [Line Items]
Business acquisition aggregate purchase price				$ 2,400
Purchase price, cash paid				2,200
Acquisition expenses							$ 27
Purchase price, deferred payments				$ 200

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Lease Commitments - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Facility Leases
Operating Leased Assets [Line Items]
Operating lease, rent expense	$ 13.8	$ 12.0
Vehicle Leases
Operating Leased Assets [Line Items]
Operating lease, rent expense	$ 29.6	$ 19.9

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Financial Instruments (Tables)

12 Months Ended

Jun. 30, 2015

Financial Assets and Liabilities

The Company’s financial assets and financial liabilities are as follow:

	As at June 30, 2015		As at June 30, 2014
Cash	$	5,333	$	10,858
Accounts receivable	$	55,275	$	47,731
Accounts payable	$	2,230	$	1,656
Other accrued liabilities		62,040		41,382
Class B Series Two and Three share liability		7,349		9,951
Long-term debt (including portion due within one year)		204,936		274,098
Conversion right on 6.25% Convertible Debentures		9		236
Derivative financial instrument		—		83
Other long term liabilities		17,423		15,431
	$	293,987	$	342,837

Fair Values of Financial Assets and Liabilities Measured on Recurring Basis

The fair values of the Company’s financial assets and liabilities measured on a recurring basis were categorized as follows:

As at June 30, 2015
	Level 1		Level 2		Level 3		Total
Interest rate swap		—	$	337		—	$	337
Class B Series Three common share liability		—		7,349		—		7,349
Conversion right on US$ 6.25% Convertible Debentures		—		—		9		9
	$	—	$	7,686	$	9	$	7,695

As at June 30, 2014
	Level 1		Level 2		Level 3		Total
Foreign currency exchange contracts	$	—	$	83	$	—	$	83
Interest rate swap		—		408		—		408
Class B Series Two and Three common share liability		—		9,951		—		9,951
Conversion right on US$ 6.25% Convertible Debentures		—		—		236		236
	$	—	$	10,442	$	236	$	10,678

Summary of Changes in Level 3 Financial Instrument

The following tables summarize the changes in the Company’s level 3 financial instrument for the twelve months ended June 30, 2015 and 2014, respectively.

Conversion rights on US$ 6.25% Convertible Debentures For the twelve months ended June 30,	2015			2014
Balance at June 30,	$	236		$	954
Total unrealized gain:
Non-cash gain on conversion feature		(231	)		(714	)
FX impact on conversion feature		4			(4	)
Balance at June 30,	$	9		$	236

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Components of Expense (Benefit) for Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Federal: Canada
Current	$ (432)	$ (1,388)
Deferred	(21)	1,964
Federal Income Tax Expense (Benefit), Continuing Operations, Total	(453)	576
Provincial: Canada
Current	(332)	94
Deferred	(16)	(423)
State and Local Income Tax Expense (Benefit), Continuing Operations, Total	(348)	(329)
Foreign:
Current	566	786
Deferred	319	(1,428)
Foreign Income Tax Expense (Benefit), Continuing Operations, Total	885	(642)
Total expense (benefit)	$ 84	$ (395)

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Summary of Class B Series Three Common Shares Granted (Detail) - shares	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Redemptions	(161,415)	0
Class B Series Three Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
B2/B3 Share exchange	80,009
Before Income Tax Withheld | Class B Series Three Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding, beginning of the period	2,071,993	1,634,452
Grants	663,620	635,074
Redemptions	(322,019)	(197,533)
B2/B3 Share exchange	80,009
Shares outstanding at June 30, 2015	2,493,603	2,071,993
Income Tax Withheld | Class B Series Three Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding, beginning of the period	(666,151)	(470,862)
Grants	(236,241)	(195,289)
Redemptions	0	0
B2/B3 Share exchange	0
Shares outstanding at June 30, 2015	(902,392)	(666,151)
After Income Tax Withheld | Class B Series Three Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding, beginning of the period	1,405,842	1,163,590
Grants	427,379	439,785
Redemptions	(322,019)	(197,533)
B2/B3 Share exchange	80,009
Shares outstanding at June 30, 2015	1,591,211	1,405,842

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Asset Retirement Obligation - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Reconciliation of Changes in Asset Retirement Obligations [Line Items]
Accretion expense	$ 27	$ 37
Asset retirement obligation	$ 600
Discounted obligation payable period	50 years
Discount rate	7.20%
Undiscounted Cash Flow
Reconciliation of Changes in Asset Retirement Obligations [Line Items]
Asset retirement obligation	$ 1,100

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Components of Oil and Gas Interests (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 30, 2014
Gas and Oil Acreage [Line Items]
Oil and gas interests	$ 18,098	$ 17,094
Less accumulated depletion	(10,385)	(9,223)
Oil and gas interests, net	$ 7,713	$ 7,871

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Basis of Presentation

12 Months Ended

Jun. 30, 2015

Basis of Presentation

2. Basis of Presentation

These consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“US GAAP”). The accompanying consolidated financial statements include the accounts of the Company and all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The significant accounting policies used to prepare the financial statements are described below:

Foreign Currency Translation

Monetary assets and liabilities denominated in a currency other than the functional currency are translated at the rate of exchange prevailing at the balance sheet date. Transactions denominated in a currency other than the functional currency are translated at the rate of exchange prevailing on the transaction date. Gains and losses on translation of these items are considered transaction gain and losses and are included in the consolidated statements of operations in foreign currency (gain) loss.

The functional currency of STI, the parent, STA ULC and the Company’s Canadian operations, is the Canadian dollar. The functional currency of STA Holdings and the Company’s operations in the United States is the U.S. dollar. The Company’s financial statements are reported in U.S. dollars, as the principal operations and cash flows of its subsidiaries are conducted in U.S. dollars.

As a result, the assets and liabilities of the STI, STA ULC and the Company’s Canadian operations are translated into U.S. dollars using the exchange rate in effect at the period end and revenues and expenses are translated at the average rate during the period. Exchange gains or losses on translation are deferred as a separate component of shareholders’ equity. The Company’s Cdn$ 6.75% convertible subordinated unsecured debentures (the “Cdn$ 6.75% Convertible Debentures”) and the Cdn$ 6.25% convertible subordinated unsecured debentures (the “Cdn$ 6.25% Convertible Debentures”), as described in Note 9, of STI are denominated in Canadian dollars. As the functional currency of STI is the Canadian dollar, exchange gains or losses related to the Cdn$ 6.75% Convertible Debentures and the Cdn$ 6.25% Convertible Debentures on the translation of the STI financial statements into U.S. dollars, the reporting currency, are deferred as a separate component of shareholders’ equity. The US$ 6.25% convertible subordinated unsecured debentures (the “6.25% Convertible Debentures”) of STI as described in Note 9 are denominated in U.S. dollars. As the functional currency of STI is the Canadian dollar, unrealized gains or losses on re-measurement of the US$ 6.25% Convertible Debentures into Canadian dollars are considered transaction gains and losses, at the STI level, and are included in the consolidated statement of operations.

Foreign currency transactions gains and losses, related to short-term related intercompany loans are recorded in the Consolidated Statement of Operations as incurred. Foreign currency transaction gains and losses for intercompany loans that are considered long-term in nature are recorded in Accumulated Other Comprehensive Loss as incurred.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with maturities of three months or less from the date of purchase. At June 30, 2015 and June 30, 2014 there were no cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company bases its estimates on historical experience, actuarial evaluations and on various other assumptions that it believes are reasonable under the circumstances.

Amounts reported based upon these estimates include, but are not limited to, insurance reserves, income taxes, goodwill and intangible assets, derivatives, certain components of long term debt, Class B common share liability and impairment testing of long-lived assets.

Allowance for Doubtful Accounts

The Company establishes provisions for losses on accounts receivable if it is determined that all or part of the outstanding balance is not collectable. Collectability is reviewed regularly and an allowance is established or adjusted, as necessary, using the specific identification method.

Concentration of Credit Risk

Credit is extended based on an evaluation of the customer’s financial condition and, generally, advance payment is not required. The Company has no individual customers which account for more than 10% of its revenues.

Anticipated credit losses are provided for in the financial statements. Management monitors the financial condition of its customers to reduce the risk of loss.

Inventories

Inventories, consisting primarily of repair parts and vehicle accessories, are valued at the lower of cost or market determined on a first-in, first-out (FIFO) method.

Property and Equipment

Property and equipment is recorded at cost or at fair value if obtained as part of a business acquisition, less accumulated depreciation. Ordinary maintenance and repairs are expensed as costs are incurred. Depreciation on transportation equipment is computed on a usage basis over the estimated useful lives of the assets, which approximate a range from seven to eleven years.

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Buildings are depreciated on a straight line basis over 40 years. Other property and equipment is depreciated on a straight line basis over three to five years.

The Company recorded depreciation expense of $46.6 million and $45.2 million for the years ended June 30, 2015 and 2014, respectively.

The Company accrued approximately $21.0 million in fixed assets at June 30, 2015, related to fiscal year 2016 growth vehicles, which has been recorded as a non-cash investing activity for fiscal year 2015.

Goodwill and Indefinite Lived Intangibles

Goodwill represents the excess of cost over fair value of net assets acquired in business combinations accounted for under the purchase method. Goodwill and trade names are not amortized but rather assessed for impairment annually or more frequently if circumstances change and indicators of impairment are present. The annual impairment testing is performed in the fourth quarter.

The annual assessment of goodwill impairment, may be performed either on a quantitative or qualitative basis. In accordance with Accounting Standards Codification (“ASC”) 350-20, Intangibles-Goodwill and Other, the quantitative assessment is a two step impairment test. The Company first compares the fair value of the reporting unit with its carrying value, including goodwill. If the carrying value exceeds the fair value, the carrying value is then compared to the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss will be recognized in the statement of earnings in an amount equal to the difference and the implied fair value of goodwill becomes the new carrying value of goodwill for that reporting unit which is then used in future impairment tests.

ASC 350-20 was amended in September 2011, and gives the Company the option to perform a qualitative assessment for goodwill impairment. Under the qualitative assessment, consideration is given to both external factors (including the macroeconomic and industry conditions) and the Company’s own internal factors (including internal costs, recent financial performance, management, business strategy, customers, and stock price). Facts and circumstances are evaluated each year to determine whether to use the qualitative or quantitative assessment. We performed a qualitative assessment during the fourth quarter of 2015, and there was no indication of impairment for goodwill.

Other Identifiable Intangible Assets

When assessing the impairment for indefinite-lived trade names, the Company performs the assessment in accordance with ASC 350-30, Intangibles other than Goodwill which states that when the carrying value exceeds the fair value, an impairment loss will be recognized in the statement of earnings in an amount equal to the excess. Fair values are derived by using discounted cash flow analyses which requires, among other factors, estimates of the amount and timing of projected cash flows and the appropriate discount rate. ASC 350-30, Intangibles Other than Goodwill, was amended in July 2012, and gives the Company the option to first assess qualitative factors to determine if a quantitative impairment test of the indefinite-live intangible asset is necessary. If the qualitative assessment reveals that it’s more likely than not that the asset is impaired, a calculation of the assets’ fair value is required. Otherwise, no quantitative calculation is necessary. The Company performed the quantitative assessment of trade names and there was no

indication of impairment. Definite-lived intangible assets consist of contract rights and covenants not to compete. Contract rights, which include customer relationships, are amortized on a straight-line basis over an estimated useful life of 20 to 23 years. The useful life for contract rights was determined based on third party valuation reports prepared for the Company. The valuations took into account the average length of the contracts, the expected renewal periods and assumptions regarding future renewals based upon historical customers lives. Covenants not-to-compete are amortized on a straight-line basis over an estimated useful life of two to five years. The Company recorded amortization expense associated with its intangible assets of $3.4 million and $3.6 million for the years ended June 30, 2015 and 2014, respectively.

Convertible Debentures

The principal amounts of the Cdn$ 6.75% Convertible Debentures, which were redeemed on June 30, 2015, and the Cdn$ 6.25% Convertible Debentures are convertible into common shares of the Company at the option of the holders and the Company under certain conditions. The Company has determined that the debentures are not required to be bifurcated into separate debt and equity components. In accordance with ASC 470-20, Debt with Conversion and Other Options, if the conversion feature of the debenture is non-beneficial (i.e. “out of the money”) upon issuance and the Company cannot settle conversions in cash, the full proceeds from these debentures should be recorded as a liability with no value attributed to the conversion feature. As such, the Company has recorded the full amount of the debentures as a liability.

In accordance with ASC 815, Derivatives and Hedging, as the conversion feature on STI’s US$ 6.25% Convertible Debentures provides that the US dollar denominated notes can be converted at a US dollar denominated strike price into common shares of STI, a Canadian dollar functional currency entity, the conversion feature represents an embedded derivative that must be bifurcated and accounted for separately. The embedded conversion feature is recorded at fair value in other liabilities at each reporting period end with the non-cash changes in fair value included in the consolidated statement of operations. The Company recorded a non-cash gain for the year ended June 30, 2015 of $0.2 million in connection with the change in fair value of the embedded conversion feature during the 2015 fiscal year. The value of the embedded conversion feature represents a liability of nine thousand dollars and $0.2 million as at June 30, 2015 and 2014, respectively, which are included within other liabilities in the consolidated balance sheet.

Deferred Financing Costs

The Company incurred costs related to obtaining debt financing. The Company capitalized costs associated with its Credit Agreement, Senior Secured Notes and costs related to the issuances of the Convertible Debentures. These costs have been capitalized and are being amortized to interest expense over the term of the related debt using the effective interest rate method. The carrying

value of the deferred financing costs was $5.8 million and $7.4 million as of June 30, 2015 and 2014 respectively. Amortization expense totaled $1.9 million and $1.6 million for the years ended June 30, 2015 and 2014, respectively. Deferred financing costs are included in other assets in the consolidated balance sheet.

Impairment of Long-Lived Assets

Management continually evaluates whether events or circumstances have occurred that indicate that the remaining estimated useful lives of property and equipment, contract rights and covenants not to compete may warrant revision or that the remaining balances may not be recoverable. Events or circumstances that would trigger testing for impairment include, but are not limited to, the loss of a significant school district customer contract, a significant increase in the Company’s expense levels absent a corresponding increase in revenue that causes operating or cash flow losses or projected operating or cash flow losses, significant adverse changes in legal factors or the business climate in which the Company operates that could affect the value of long-lived assets, or the expectation that a long-lived asset will be sold or otherwise disposed of at a loss before the end of its previously estimated useful life. If this review indicates that the assets will not be recoverable, as determined based on the undiscounted future cash flows from the use of the assets, the carrying value of the assets will be reduced to their estimated fair value. There were no indicators of impairment during the years ended June 30, 2015 and 2014.

Business Combinations

The Company accounts for business combinations under the principles codified in ASC 805, Business Combinations. The principles set forth how an acquirer recognizes and measures assets acquired, liabilities assumed, non-controlling interest and goodwill in a business combination. Key components include: (i) recognition of transaction costs in current period earnings and included in the consolidated statement of operations in acquisition expense; (ii) recognition of the estimated fair value of all contingent consideration at the acquisition date and an adjustment to fair value at each reporting date with an offset to current period earnings included in the consolidated statement of operations in other (income) expense; (iii) adjustments to deferred tax asset valuation allowances and income tax uncertainties recorded at the acquisition date to be recognized in current period earnings; (iv) acquisition method accounting is applied on the date that control is obtained in step acquisitions; (v) re-measurement of previously acquired non-controlling equity investments at fair value as at the acquisition date with an offset to current period earnings; and (vi) any excess of fair value of acquired net assets over the acquisition consideration results in a bargain purchase which is recognized in the statement of operations.

Income Taxes

Income taxes have been computed utilizing the asset and liability approach, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates expected to be in effect for the years in which those taxes are expected to be realized or settled. A valuation allowance is recorded to reduce deferred tax assets to the amount that is believed to be more likely than not to be realized. The recorded deferred income tax liability results from a difference between the book and tax basis of certain transportation equipment, other equipment and intangible assets.

The Company uses judgment in determining income tax provisions and in evaluating its tax positions under the accounting guidance for income taxes. Additional provisions for income taxes are established when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold, which is a tax position that is more-likely-than-not to be sustained upon examination by the applicable taxing authority. The Company and its subsidiaries are examined by various federal and state tax authorities. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known. The Company recognizes interest and penalties related to underpayment of income taxes in income tax provision (benefit) (see Note 8).

Revenue Recognition

Revenue from the Company’s school bus operations is recognized when the following criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed and determinable, and collectability is reasonably assured. The Company bills customers on a monthly basis upon the completion of school bus routes, which are based on contracts or extension agreements with customers.

Revenue from oil and gas interests is derived from the Company’s partial ownership in various oil and gas wells. As a non-operator, the Company records revenue from its oil and gas interests based on its share of the sales value of production from producing wells. Revenue is received from the well operators and is recognized when the commodities are delivered to customers, the price is fixed or determinable and collectability is assured.

Insurance Reserves

The Company had approximately $25.9 million and $22.1 million in recorded insurance reserves at June 30, 2015 and 2014, respectively. These reserves reflect the estimated deductible amounts the Company is responsible for under its workers’ compensation and vehicle liability insurance programs. Insurance expense for these items is largely dependent on the Company’s claims experience and the Company’s ability to control such claims, in addition to third party premiums/expenses associated with this coverage. The Company has recorded estimated insurance reserves for the anticipated losses on open claims and estimated reserves for incurred but not recorded claims under the workers’ compensation and vehicle liability programs based upon actuarial analysis prepared by an independent third party actuary. Although the estimates of these accrued liabilities are based on the factors mentioned above; it is possible that future cash flows and results of operations could be materially affected by changes in our assumptions or changes in claims experience. Insurance reserves are included in accrued expenses and other current liabilities and other liabilities on the consolidated balance sheet.

Stock-Based Compensation

The Company accounts for stock-based compensation and other stock-based payments using the fair value method. Under the fair value method, the fair value of stock-based compensation and other stock-based payments are estimated at the grant date and the total fair value is amortized over the vesting schedule of the awards as compensation expense. The Class B Series Two and Class B Series Three common shares issued by STA Holdings are fully vested on the grant date, and, as such, the Company recognizes compensation expense when the shares are issued. STA Holdings has issued only Class B Series Three common shares pursuant to the EIP during fiscal year 2015 and fiscal year 2014. In May 2015 the Company redeemed all of the remaining Class B Series Two common shares by exchanging them for Class B Series Three common shares, based on the fair market value of each class of shares. Subsequent to March 2010, all new share awards under the EIP have only been in the form of grants of Class B Series Three common shares. These shares are accounted for as a liability upon issuance and remeasured at fair value on a quarterly basis (see Note 13). The Company recognized $4.2 million and $3.9 million in non-cash stock- based compensation expense based on the estimated fair value on the date of grant of the shares issued, for the years ended June 30, 2015 and 2014, respectively.

The Class B common shares are not traded in an active market and have certain restrictions on their transferability. These shares are accounted for as a liability upon issuance, as a result of a put option they contain. In the case of the Class B Series Two common shares issued pursuant to the EIP during the period the IPS structure was in place, the put option provided for a fair market value of Class B Series Two common shares put at an amount equal to the weighted average trading price of the STI common shares for the ten consecutive trading days immediately prior to the date of put, plus Cdn. $3.847 (an amount

equivalent to the historical value of the Subordinated Note component of the IPS). In the case of the Class B Series Three common shares utilized for EIP share grants subsequent to the end of the IPS structure, the put option provides for a fair market value of Class B Series Three common shares put at an amount equal to the weighted average trading price of the STI common shares for the ten consecutive trading days immediately prior to the date of put.

Stock-based compensation expense associated with the issuance of Class B Series Three common shares is based on the trading value of the STI common shares at the date of grant, similar to the fair value of such common shares in connection with the put option values described above.

Accounting for Derivatives and Hedging Activities

Derivatives are recorded at fair value on the balance sheet, which, in accordance with ASC 820, Fair Value Measurements and Disclosure, requires that a company take into account its own credit risk and the credit risk of the counterparty when determining the fair value of financial assets and financial liabilities, including derivative instruments. Changes in fair value will be recorded in the income statement or through other comprehensive income depending on the nature of the derivative instrument. The Company did not elect hedge accounting for any of its derivative financial instruments and therefore records all changes in fair value in the income statement. The Company has offset the fair value amounts recorded on its forward foreign currency contracts executed with the same counterparty under an executed master netting arrangement.

Segment Reporting

The Company has two reportable segments, a transportation segment and an oil and gas segment. The transportation segment provides school bus and management services to public and private schools in North America. The oil and gas segment represents the Company’s investments as a non-operator in oil and gas interests.

Oil and Gas Interests

The Company holds non-operating interests in oil and gas properties, which are jointly owned with others. The financial statements reflect the Company’s proportionate interest in the oil and gas activities as a non-operator.

The Company uses the full-cost method of accounting for oil and gas interests to determine the capitalized cost, whereby certain expenditures related to the acquisition, exploration and development of oil and gas properties are capitalized. Capitalized costs include the cost of land acquired or leased, intangible drilling costs such as those for equipment, casing and attachments on

both productive and non-productive wells. These costs, net of salvage values, are accumulated in a single cost center and are depleted and amortized using the units-of production method. Natural gas reserves and production are converted, at a ratio of six thousand cubic feet of natural gas to one barrel of oil, for depletion and depreciation purposes.

In connection with the oil and gas interests, the Company has an asset retirement obligation which represents the liability associated with the retirement of long-lived assets that arise from the acquisition, construction, development or normal operation of such assets.

Under US GAAP, the impairment test for oil and gas assets (the “ceiling test”) requires the Company to use tax effected discounted cash flow using a present value technique. Under ASC 932, Extractive Industries – Oil and Gas, the pricing assumption to be used in the ceiling test calculation is defined as the twelve month average of realized prices.

Earnings per Share

Basic and diluted earnings per share are calculated by dividing the net income for the period by the weighted number of shares outstanding during each period. The shares used in the calculation of basic earnings per share are based on the weighted average number of shares outstanding. Shares used in the calculation of diluted earnings per share are based on the weighted average number of shares outstanding plus an adjustment for the incremental shares that would be outstanding assuming the exercise of the Company’s Convertible Debentures. The net income for basic earnings per share is net earnings available to common stockholders. The net income for diluted earnings per share is net earnings available to common stockholders with interest expense associated with the Convertible Debentures added back (net of tax) for the assumed conversion of the Convertible Debentures into common stock.

Seasonality

The Company’s operations are seasonal and follow the school calendars of the public and private schools it serves. During the summer school break, revenue is derived primarily from summer camps and private charter services. Since schools are not in session, there is no school bus transportation revenue. Depreciation of fixed assets occurs in the months during which schools are in session, which is generally September through June. A full year’s worth of depreciation is recorded in these ten months to match the vehicles’ usage.

Recent Adopted Accounting Standards

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss or a Tax Credit Carryforward Exists. This ASU provides for the presentation of all or a portion of an unrecognized tax benefit as a reduction

to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward unless such balances are not available at the reporting date at which point the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The Company adopted this standard prospectively for all unrecognized tax benefits that existed beginning in the first quarter of fiscal 2015. This presentation is consistent with how the Company historically presents unrecognized tax benefits; therefore the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards

In January 2014, the FASB issued ASU 2015-05, Service Concession Arrangements. This ASU applies to an operating entity of a service concession arrangement entered into with a public-sector entity grantor when the arrangement meets both of the following conditions: (i) the grantor controls or has the ability to modify or approve the services that the operating entity must provide with the infrastructure, to whom it must provide them and at what price and (ii) the grantor controls, through ownership, beneficial entitlement, or otherwise, any residual interest in the infrastructure at the end of the term of the arrangement. This is effective for annual periods beginning after December 15, 2014 (including interim periods within those fiscal years) and should be applied on a modified retrospective basis to service concession arrangements in existence at the beginning of the fiscal year of adoption. The Company is required to adopt this standard for the first quarter of fiscal 2016. Early adoption is permitted. The Company is currently evaluating the requirements of this ASU to determine the impact on their consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In April 2014, the FASB issued ASU 2014-08, an update modifying the criteria under which asset disposal activities qualify for presentation as a discontinued operation. The amendment restricts presentation as a discontinued operation to disposals that represent a strategic shift that has, or will have a major effect on an entity’s operations and financial results. The amendments in this update are to be applied prospectively to all disposals or classifications as held for sale of components of an entity. The Company is required to adopt this standard for the first quarter of fiscal 2016. Early adoption is permitted, but only for disposals or classifications as held for sale that have not been reported in financial statements previously issued. This standard is not anticipated to have an impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers. This new revenue recognition standard will supersede most existing revenue recognition guidance and is intended to improve revenue recognition and related financial reporting requirements. The standard will require companies to review contract arrangements with customers and ensure that all separate performance obligations are properly recognized in the compliance with the new guidance. The standard allows for either “full retrospective” or “cumulative effect” adoption. In

July 2015, the FASB delayed the effective date of this standard. The Company is now required to adopt this standard effective July 1, 2018. Early adoption is permitted beginning with the original effective date of July 1, 2017. The Company is currently evaluating both the method of adoption as well as the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The guidance is effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In January 2015, The FASB issued ASU 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which simplifies income statement presentation by eliminating the need to determine whether to classify an item as an extraordinary item. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis, to improve the targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations similar entities and reduce the number of consolidation models. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30)-Simplifying the Presentation of Debt Issuance Costs, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05 Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement which requires that if a cloud computing arrangement includes a software license, then a customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

Certain amounts have been reclassified in our prior period consolidated balance sheets to conform to current year presentation and such amounts were not material to current and prior periods.

XML

Common Shares - Additional Information (Detail) $ in Thousands				12 Months Ended
	Jun. 30, 2015 CAD shares	Mar. 06, 2015 USD ($) shares	Mar. 06, 2015 CAD shares	Jun. 30, 2015 USD ($) shares	Jun. 30, 2015 CAD shares	Jun. 30, 2014 USD ($) shares	Oct. 24, 2014 CAD shares
Class of Stock [Line Items]
Preferred shares issued	0			0	0
Preferred shares outstanding	0			0	0
Shares issued during period for Dividend Reinvestment Plan				1,485,040	1,485,040	1,458,258
Shares issued during period for Dividend payment | $				$ 8,500		$ 8,900
Dividend Reinvestment Plan description				The common shares issued under the Plan are issued at a price based on the volume weighted average of the closing price of the common shares for the five trading days immediately preceding the relevant dividend date, less a 3% discount.	The common shares issued under the Plan are issued at a price based on the volume weighted average of the closing price of the common shares for the five trading days immediately preceding the relevant dividend date, less a 3% discount.
Dividend Reinvestment Plan, discount percentage				3.00%	3.00%	3.00%
Common stock issued, shares		11,983,000	11,983,000
Common stock issuance | $				$ 75,200		$ 8,864
Common shares repurchased, shares				161,415	161,415	0
Common shares repurchased | $				$ 800
Gross Proceeds from issuance of Common stock		$ 69,100	CAD 86,300,000
Offering of common shares, net of expenses		66,700	CAD 83,200,000	$ 65,743
Common shares issued	96,141,516			96,141,516	96,141,516	82,816,549
Common shares outstanding	96,141,516			96,141,516	96,141,516	82,816,549
Maximum
Class of Stock [Line Items]
Amount of shares authorized to be repurchased | CAD							CAD 5,000,000
No of shares authorized to be repurchased							4,158,553
6.75% Convertible Debentures
Class of Stock [Line Items]
Common stock issued, shares				18,342	18,342
Common stock issuance | $				$ 100
Convertible debenture converted	CAD 49,900,000	$ 40,100		$ 40,100	CAD 100,000

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Purchase Price Allocation (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 05, 2014	Jun. 30, 2014	Feb. 10, 2014	Aug. 27, 2013	Jul. 23, 2013	Jun. 30, 2013
Business Acquisition [Line Items]
Goodwill	$ 134,939		$ 139,158				$ 138,312
Dalton Bus Line Limited
Business Acquisition [Line Items]
Property and equipment		$ 520
Intangible Assets		10
Fair value of net assets acquired		$ 530
Atlantic Express Transportation Corporation
Business Acquisition [Line Items]
Current assets, less current liabilities				$ 294
Property and equipment				19,807
Intangible Assets				1,736
Deferred Taxes				(1,841)
Fair value of net assets acquired				$ 19,996
Williams Bus Lines Co
Business Acquisition [Line Items]
Current assets, less current liabilities					$ 29
Property and equipment					1,343
Deferred Taxes					(525)
Fair value of net assets acquired					847
Goodwill					2,557
Total					$ 3,404
Scholastic Bus Co
Business Acquisition [Line Items]
Current assets, less current liabilities						$ 298
Property and equipment						2,104
Deferred Taxes						(772)
Fair value of net assets acquired						1,630
Goodwill						803
Total						$ 2,433

XML

Basis of Presentation (Policies)

12 Months Ended

Jun. 30, 2015

Foreign Currency Translation

Foreign Currency Translation

Monetary assets and liabilities denominated in a currency other than the functional currency are translated at the rate of exchange prevailing at the balance sheet date. Transactions denominated in a currency other than the functional currency are translated at the rate of exchange prevailing on the transaction date. Gains and losses on translation of these items are considered transaction gain and losses and are included in the consolidated statements of operations in foreign currency (gain) loss.

The functional currency of STI, the parent, STA ULC and the Company’s Canadian operations, is the Canadian dollar. The functional currency of STA Holdings and the Company’s operations in the United States is the U.S. dollar. The Company’s financial statements are reported in U.S. dollars, as the principal operations and cash flows of its subsidiaries are conducted in U.S. dollars.

As a result, the assets and liabilities of the STI, STA ULC and the Company’s Canadian operations are translated into U.S. dollars using the exchange rate in effect at the period end and revenues and expenses are translated at the average rate during the period. Exchange gains or losses on translation are deferred as a separate component of shareholders’ equity. The Company’s Cdn$ 6.75% convertible subordinated unsecured debentures (the “Cdn$ 6.75% Convertible Debentures”) and the Cdn$ 6.25% convertible subordinated unsecured debentures (the “Cdn$ 6.25% Convertible Debentures”), as described in Note 9, of STI are denominated in Canadian dollars. As the functional currency of STI is the Canadian dollar, exchange gains or losses related to the Cdn$ 6.75% Convertible Debentures and the Cdn$ 6.25% Convertible Debentures on the translation of the STI financial statements into U.S. dollars, the reporting currency, are deferred as a separate component of shareholders’ equity. The US$ 6.25% convertible subordinated unsecured debentures (the “6.25% Convertible Debentures”) of STI as described in Note 9 are denominated in U.S. dollars. As the functional currency of STI is the Canadian dollar, unrealized gains or losses on re-measurement of the US$ 6.25% Convertible Debentures into Canadian dollars are considered transaction gains and losses, at the STI level, and are included in the consolidated statement of operations.

Foreign currency transactions gains and losses, related to short-term related intercompany loans are recorded in the Consolidated Statement of Operations as incurred. Foreign currency transaction gains and losses for intercompany loans that are considered long-term in nature are recorded in Accumulated Other Comprehensive Loss as incurred.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with maturities of three months or less from the date of purchase. At June 30, 2015 and June 30, 2014 there were no cash equivalents.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company bases its estimates on historical experience, actuarial evaluations and on various other assumptions that it believes are reasonable under the circumstances.

Amounts reported based upon these estimates include, but are not limited to, insurance reserves, income taxes, goodwill and intangible assets, derivatives, certain components of long term debt, Class B common share liability and impairment testing of long-lived assets.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The Company establishes provisions for losses on accounts receivable if it is determined that all or part of the outstanding balance is not collectable. Collectability is reviewed regularly and an allowance is established or adjusted, as necessary, using the specific identification method.

Concentration of Credit Risk

Concentration of Credit Risk

Credit is extended based on an evaluation of the customer’s financial condition and, generally, advance payment is not required. The Company has no individual customers which account for more than 10% of its revenues.

Anticipated credit losses are provided for in the financial statements. Management monitors the financial condition of its customers to reduce the risk of loss.

Inventories

Inventories

Inventories, consisting primarily of repair parts and vehicle accessories, are valued at the lower of cost or market determined on a first-in, first-out (FIFO) method.

Property and Equipment

Property and Equipment

Property and equipment is recorded at cost or at fair value if obtained as part of a business acquisition, less accumulated depreciation. Ordinary maintenance and repairs are expensed as costs are incurred. Depreciation on transportation equipment is computed on a usage basis over the estimated useful lives of the assets, which approximate a range from seven to eleven years.

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets. Buildings are depreciated on a straight line basis over 40 years. Other property and equipment is depreciated on a straight line basis over three to five years.

The Company recorded depreciation expense of $46.6 million and $45.2 million for the years ended June 30, 2015 and 2014, respectively.

The Company accrued approximately $21.0 million in fixed assets at June 30, 2015, related to fiscal year 2016 growth vehicles, which has been recorded as a non-cash investing activity for fiscal year 2015.

Goodwill and Indefinite Lived Intangibles

Goodwill and Indefinite Lived Intangibles

Goodwill represents the excess of cost over fair value of net assets acquired in business combinations accounted for under the purchase method. Goodwill and trade names are not amortized but rather assessed for impairment annually or more frequently if circumstances change and indicators of impairment are present. The annual impairment testing is performed in the fourth quarter.

The annual assessment of goodwill impairment, may be performed either on a quantitative or qualitative basis. In accordance with Accounting Standards Codification (“ASC”) 350-20, Intangibles-Goodwill and Other, the quantitative assessment is a two step impairment test. The Company first compares the fair value of the reporting unit with its carrying value, including goodwill. If the carrying value exceeds the fair value, the carrying value is then compared to the implied fair value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss will be recognized in the statement of earnings in an amount equal to the difference and the implied fair value of goodwill becomes the new carrying value of goodwill for that reporting unit which is then used in future impairment tests.

ASC 350-20 was amended in September 2011, and gives the Company the option to perform a qualitative assessment for goodwill impairment. Under the qualitative assessment, consideration is given to both external factors (including the macroeconomic and industry conditions) and the Company’s own internal factors (including internal costs, recent financial performance, management, business strategy, customers, and stock price). Facts and circumstances are evaluated each year to determine whether to use the qualitative or quantitative assessment. We performed a qualitative assessment during the fourth quarter of 2015, and there was no indication of impairment for goodwill.

Other Identifiable Intangible Assets

Other Identifiable Intangible Assets

When assessing the impairment for indefinite-lived trade names, the Company performs the assessment in accordance with ASC 350-30, Intangibles other than Goodwill which states that when the carrying value exceeds the fair value, an impairment loss will be recognized in the statement of earnings in an amount equal to the excess. Fair values are derived by using discounted cash flow analyses which requires, among other factors, estimates of the amount and timing of projected cash flows and the appropriate discount rate. ASC 350-30, Intangibles Other than Goodwill, was amended in July 2012, and gives the Company the option to first assess qualitative factors to determine if a quantitative impairment test of the indefinite-live intangible asset is necessary. If the qualitative assessment reveals that it’s more likely than not that the asset is impaired, a calculation of the assets’ fair value is required. Otherwise, no quantitative calculation is necessary. The Company performed the quantitative assessment of trade names and there was no

indication of impairment. Definite-lived intangible assets consist of contract rights and covenants not to compete. Contract rights, which include customer relationships, are amortized on a straight-line basis over an estimated useful life of 20 to 23 years. The useful life for contract rights was determined based on third party valuation reports prepared for the Company. The valuations took into account the average length of the contracts, the expected renewal periods and assumptions regarding future renewals based upon historical customers lives. Covenants not-to-compete are amortized on a straight-line basis over an estimated useful life of two to five years. The Company recorded amortization expense associated with its intangible assets of $3.4 million and $3.6 million for the years ended June 30, 2015 and 2014, respectively.

Convertible Debentures

Convertible Debentures

The principal amounts of the Cdn$ 6.75% Convertible Debentures, which were redeemed on June 30, 2015, and the Cdn$ 6.25% Convertible Debentures are convertible into common shares of the Company at the option of the holders and the Company under certain conditions. The Company has determined that the debentures are not required to be bifurcated into separate debt and equity components. In accordance with ASC 470-20, Debt with Conversion and Other Options, if the conversion feature of the debenture is non-beneficial (i.e. “out of the money”) upon issuance and the Company cannot settle conversions in cash, the full proceeds from these debentures should be recorded as a liability with no value attributed to the conversion feature. As such, the Company has recorded the full amount of the debentures as a liability.

In accordance with ASC 815, Derivatives and Hedging, as the conversion feature on STI’s US$ 6.25% Convertible Debentures provides that the US dollar denominated notes can be converted at a US dollar denominated strike price into common shares of STI, a Canadian dollar functional currency entity, the conversion feature represents an embedded derivative that must be bifurcated and accounted for separately. The embedded conversion feature is recorded at fair value in other liabilities at each reporting period end with the non-cash changes in fair value included in the consolidated statement of operations. The Company recorded a non-cash gain for the year ended June 30, 2015 of $0.2 million in connection with the change in fair value of the embedded conversion feature during the 2015 fiscal year. The value of the embedded conversion feature represents a liability of nine thousand dollars and $0.2 million as at June 30, 2015 and 2014, respectively, which are included within other liabilities in the consolidated balance sheet.

Deferred Financing Costs

Deferred Financing Costs

The Company incurred costs related to obtaining debt financing. The Company capitalized costs associated with its Credit Agreement, Senior Secured Notes and costs related to the issuances of the Convertible Debentures. These costs have been capitalized and are being amortized to interest expense over the term of the related debt using the effective interest rate method. The carrying value of the deferred financing costs was $5.8 million and $7.4 million as of June 30, 2015 and 2014 respectively. Amortization expense totaled $1.9 million and $1.6 million for the years ended June 30, 2015 and 2014, respectively. Deferred financing costs are included in other assets in the consolidated balance sheet.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Management continually evaluates whether events or circumstances have occurred that indicate that the remaining estimated useful lives of property and equipment, contract rights and covenants not to compete may warrant revision or that the remaining balances may not be recoverable. Events or circumstances that would trigger testing for impairment include, but are not limited to, the loss of a significant school district customer contract, a significant increase in the Company’s expense levels absent a corresponding increase in revenue that causes operating or cash flow losses or projected operating or cash flow losses, significant adverse changes in legal factors or the business climate in which the Company operates that could affect the value of long-lived assets, or the expectation that a long-lived asset will be sold or otherwise disposed of at a loss before the end of its previously estimated useful life. If this review indicates that the assets will not be recoverable, as determined based on the undiscounted future cash flows from the use of the assets, the carrying value of the assets will be reduced to their estimated fair value. There were no indicators of impairment during the years ended June 30, 2015 and 2014.

Business Combinations

Business Combinations

The Company accounts for business combinations under the principles codified in ASC 805, Business Combinations. The principles set forth how an acquirer recognizes and measures assets acquired, liabilities assumed, non-controlling interest and goodwill in a business combination. Key components include: (i) recognition of transaction costs in current period earnings and included in the consolidated statement of operations in acquisition expense; (ii) recognition of the estimated fair value of all contingent consideration at the acquisition date and an adjustment to fair value at each reporting date with an offset to current period earnings included in the consolidated statement of operations in other (income) expense; (iii) adjustments to deferred tax asset valuation allowances and income tax uncertainties recorded at the acquisition date to be recognized in current period earnings; (iv) acquisition method accounting is applied on the date that control is obtained in step acquisitions; (v) re-measurement of previously acquired non-controlling equity investments at fair value as at the acquisition date with an offset to current period earnings; and (vi) any excess of fair value of acquired net assets over the acquisition consideration results in a bargain purchase which is recognized in the statement of operations.

Income Taxes

Income Taxes

Income taxes have been computed utilizing the asset and liability approach, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the currently enacted tax rates expected to be in effect for the years in which those taxes are expected to be realized or settled. A valuation allowance is recorded to reduce deferred tax assets to the amount that is believed to be more likely than not to be realized. The recorded deferred income tax liability results from a difference between the book and tax basis of certain transportation equipment, other equipment and intangible assets.

The Company uses judgment in determining income tax provisions and in evaluating its tax positions under the accounting guidance for income taxes. Additional provisions for income taxes are established when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold, which is a tax position that is more-likely-than-not to be sustained upon examination by the applicable taxing authority. The Company and its subsidiaries are examined by various federal and state tax authorities. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known. The Company recognizes interest and penalties related to underpayment of income taxes in income tax provision (benefit) (see Note 8).

Revenue Recognition

Revenue Recognition

Revenue from the Company’s school bus operations is recognized when the following criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price to the buyer is fixed and determinable, and collectability is reasonably assured. The Company bills customers on a monthly basis upon the completion of school bus routes, which are based on contracts or extension agreements with customers.

Revenue from oil and gas interests is derived from the Company’s partial ownership in various oil and gas wells. As a non-operator, the Company records revenue from its oil and gas interests based on its share of the sales value of production from producing wells. Revenue is received from the well operators and is recognized when the commodities are delivered to customers, the price is fixed or determinable and collectability is assured.

Insurance Reserves

Insurance Reserves

The Company had approximately $25.9 million and $22.1 million in recorded insurance reserves at June 30, 2015 and 2014, respectively. These reserves reflect the estimated deductible amounts the Company is responsible for under its workers’ compensation and vehicle liability insurance programs. Insurance expense for these items is largely dependent on the Company’s claims experience and the Company’s ability to control such claims, in addition to third party premiums/expenses associated with this coverage. The Company has recorded estimated insurance reserves for the anticipated losses on open claims and estimated reserves for incurred but not recorded claims under the workers’ compensation and vehicle liability programs based upon actuarial analysis prepared by an independent third party actuary. Although the estimates of these accrued liabilities are based on the factors mentioned above; it is possible that future cash flows and results of operations could be materially affected by changes in our assumptions or changes in claims experience. Insurance reserves are included in accrued expenses and other current liabilities and other liabilities on the consolidated balance sheet.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for stock-based compensation and other stock-based payments using the fair value method. Under the fair value method, the fair value of stock-based compensation and other stock-based payments are estimated at the grant date and the total fair value is amortized over the vesting schedule of the awards as compensation expense. The Class B Series Two and Class B Series Three common shares issued by STA Holdings are fully vested on the grant date, and, as such, the Company recognizes compensation expense when the shares are issued. STA Holdings has issued only Class B Series Three common shares pursuant to the EIP during fiscal year 2015 and fiscal year 2014. In May 2015 the Company redeemed all of the remaining Class B Series Two common shares by exchanging them for Class B Series Three common shares, based on the fair market value of each class of shares. Subsequent to March 2010, all new share awards under the EIP have only been in the form of grants of Class B Series Three common shares. These shares are accounted for as a liability upon issuance and remeasured at fair value on a quarterly basis (see Note 13). The Company recognized $4.2 million and $3.9 million in non-cash stock- based compensation expense based on the estimated fair value on the date of grant of the shares issued, for the years ended June 30, 2015 and 2014, respectively.

The Class B common shares are not traded in an active market and have certain restrictions on their transferability. These shares are accounted for as a liability upon issuance, as a result of a put option they contain. In the case of the Class B Series Two common shares issued pursuant to the EIP during the period the IPS structure was in place, the put option provided for a fair market value of Class B Series Two common shares put at an amount equal to the weighted average trading price of the STI common shares for the ten consecutive trading days immediately prior to the date of put, plus Cdn. $3.847 (an amount equivalent to the historical value of the Subordinated Note component of the IPS). In the case of the Class B Series Three common shares utilized for EIP share grants subsequent to the end of the IPS structure, the put option provides for a fair market value of Class B Series Three common shares put at an amount equal to the weighted average trading price of the STI common shares for the ten consecutive trading days immediately prior to the date of put.

Stock-based compensation expense associated with the issuance of Class B Series Three common shares is based on the trading value of the STI common shares at the date of grant, similar to the fair value of such common shares in connection with the put option values described above.

Accounting for Derivatives and Hedging Activities

Accounting for Derivatives and Hedging Activities

Derivatives are recorded at fair value on the balance sheet, which, in accordance with ASC 820, Fair Value Measurements and Disclosure, requires that a company take into account its own credit risk and the credit risk of the counterparty when determining the fair value of financial assets and financial liabilities, including derivative instruments. Changes in fair value will be recorded in the income statement or through other comprehensive income depending on the nature of the derivative instrument. The Company did not elect hedge accounting for any of its derivative financial instruments and therefore records all changes in fair value in the income statement. The Company has offset the fair value amounts recorded on its forward foreign currency contracts executed with the same counterparty under an executed master netting arrangement.

Segment Reporting

Segment Reporting

The Company has two reportable segments, a transportation segment and an oil and gas segment. The transportation segment provides school bus and management services to public and private schools in North America. The oil and gas segment represents the Company’s investments as a non-operator in oil and gas interests.

Oil and Gas Interests

Oil and Gas Interests

The Company holds non-operating interests in oil and gas properties, which are jointly owned with others. The financial statements reflect the Company’s proportionate interest in the oil and gas activities as a non-operator.

The Company uses the full-cost method of accounting for oil and gas interests to determine the capitalized cost, whereby certain expenditures related to the acquisition, exploration and development of oil and gas properties are capitalized. Capitalized costs include the cost of land acquired or leased, intangible drilling costs such as those for equipment, casing and attachments on both productive and non-productive wells. These costs, net of salvage values, are accumulated in a single cost center and are depleted and amortized using the units-of production method. Natural gas reserves and production are converted, at a ratio of six thousand cubic feet of natural gas to one barrel of oil, for depletion and depreciation purposes.

In connection with the oil and gas interests, the Company has an asset retirement obligation which represents the liability associated with the retirement of long-lived assets that arise from the acquisition, construction, development or normal operation of such assets.

Under US GAAP, the impairment test for oil and gas assets (the “ceiling test”) requires the Company to use tax effected discounted cash flow using a present value technique. Under ASC 932, Extractive Industries – Oil and Gas, the pricing assumption to be used in the ceiling test calculation is defined as the twelve month average of realized prices.

Earnings per Share

Earnings per Share

Basic and diluted earnings per share are calculated by dividing the net income for the period by the weighted number of shares outstanding during each period. The shares used in the calculation of basic earnings per share are based on the weighted average number of shares outstanding. Shares used in the calculation of diluted earnings per share are based on the weighted average number of shares outstanding plus an adjustment for the incremental shares that would be outstanding assuming the exercise of the Company’s Convertible Debentures. The net income for basic earnings per share is net earnings available to common stockholders. The net income for diluted earnings per share is net earnings available to common stockholders with interest expense associated with the Convertible Debentures added back (net of tax) for the assumed conversion of the Convertible Debentures into common stock.

Seasonality

Seasonality

The Company’s operations are seasonal and follow the school calendars of the public and private schools it serves. During the summer school break, revenue is derived primarily from summer camps and private charter services. Since schools are not in session, there is no school bus transportation revenue. Depreciation of fixed assets occurs in the months during which schools are in session, which is generally September through June. A full year’s worth of depreciation is recorded in these ten months to match the vehicles’ usage.

Recent Adopted Accounting Standards

Recent Adopted Accounting Standards

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss or a Tax Credit Carryforward Exists. This ASU provides for the presentation of all or a portion of an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward unless such balances are not available at the reporting date at which point the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The Company adopted this standard prospectively for all unrecognized tax benefits that existed beginning in the first quarter of fiscal 2015. This presentation is consistent with how the Company historically presents unrecognized tax benefits; therefore the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In January 2014, the FASB issued ASU 2015-05, Service Concession Arrangements. This ASU applies to an operating entity of a service concession arrangement entered into with a public-sector entity grantor when the arrangement meets both of the following conditions: (i) the grantor controls or has the ability to modify or approve the services that the operating entity must provide with the infrastructure, to whom it must provide them and at what price and (ii) the grantor controls, through ownership, beneficial entitlement, or otherwise, any residual interest in the infrastructure at the end of the term of the arrangement. This is effective for annual periods beginning after December 15, 2014 (including interim periods within those fiscal years) and should be applied on a modified retrospective basis to service concession arrangements in existence at the beginning of the fiscal year of adoption. The Company is required to adopt this standard for the first quarter of fiscal 2016. Early adoption is permitted. The Company is currently evaluating the requirements of this ASU to determine the impact on their consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In April 2014, the FASB issued ASU 2014-08, an update modifying the criteria under which asset disposal activities qualify for presentation as a discontinued operation. The amendment restricts presentation as a discontinued operation to disposals that represent a strategic shift that has, or will have a major effect on an entity’s operations and financial results. The amendments in this update are to be applied prospectively to all disposals or classifications as held for sale of components of an entity. The Company is required to adopt this standard for the first quarter of fiscal 2016. Early adoption is permitted, but only for disposals or classifications as held for sale that have not been reported in financial statements previously issued. This standard is not anticipated to have an impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers. This new revenue recognition standard will supersede most existing revenue recognition guidance and is intended to improve revenue recognition and related financial reporting requirements. The standard will require companies to review contract arrangements with customers and ensure that all separate performance obligations are properly recognized in the compliance with the new guidance. The standard allows for either “full retrospective” or “cumulative effect” adoption. In

July 2015, the FASB delayed the effective date of this standard. The Company is now required to adopt this standard effective July 1, 2018. Early adoption is permitted beginning with the original effective date of July 1, 2017. The Company is currently evaluating both the method of adoption as well as the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. The guidance is effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In January 2015, The FASB issued ASU 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which simplifies income statement presentation by eliminating the need to determine whether to classify an item as an extraordinary item. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), Amendments to the Consolidation Analysis, to improve the targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations similar entities and reduce the number of consolidation models. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements, but currently does not anticipate this standard having a significant impact.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30)-Simplifying the Presentation of Debt Issuance Costs, which simplifies the presentation of debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

In April 2015, the FASB issued ASU 2015-05 Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement which requires that if a cloud computing arrangement includes a software license, then a customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance is effective for the annual period ending after December 15, 2015 and for annual and interim periods thereafter, with early adoption permitted. The Company is in the process of evaluating the impact of this guidance on its consolidated financial statements.

Certain amounts have been reclassified in our prior period consolidated balance sheets to conform to current year presentation and such amounts were not material to current and prior periods.

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Subsequent Events

12 Months Ended

Jun. 30, 2015

Subsequent Events

21. Subsequent Events

On July 2, 2015, STA Holdings granted 173,705 Class B Series Three common shares pursuant to the EIP. The Company will recognize non-cash stock-based expense related to these grants during the quarter ending September 30, 2015.

During July and August 2015, the Company entered into additional operating leases with ten major financial institutions to lease approximately $57.5 million in growth and replacement school vehicles for the upcoming 2015-2016 school year. The term of these leases is six years at effective fixed rates in the range of 2.7% to 4.2%. Annual lease payments on these additional leases will approximate $8.0 million per year for the term of the leases.

During August 2015 the Company amended its current NCIB to increase the maximum amount of common shares that the Company is permitted to acquire to 6,806,591 common shares from the number of common shares that could be purchased for an aggregate purchase price of Cdn$ 5.0 million, subject to the Company’s senior debt agreement requirements. The amended NCIB will still cover the twelve month period commencing October 24, 2014 and ending on October 23, 2015. Upon expiration of the current NCIB, the Company can renew the NCIB for another twelve month period.

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Income Taxes [Line Items]
Increase (decrease) in goodwill to correct the purchase price allocation	$ 1,826	$ (1,826)
Increase (decrease) in net non-current deferred income tax liability	1,900
Total amount of unrecognized tax benefits, if recognized would favorably impact effective tax rate	500
Interest and penalties	70	200
Uncertain tax position	200
Deferred tax assets valuation allowance	337	$ 337
United States
Income Taxes [Line Items]
Non-capital loss carry forwards	$ 62,200
Non-capital loss carry forwards, expiration date	Years 2022 through 2034
Canada
Income Taxes [Line Items]
Non-capital loss carry forwards	$ 4,400
Non-capital loss carry forwards, expiration date	Years 2025 through 2035

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Unaudited Pro Forma and Actual Financial Information of 2012 acquisition (Detail) - 12 months ended Jun. 30, 2014 - 2014 acquisitions - USD ($) $ / shares in Units, $ in Thousands	Total
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Revenue	$ 505,609
Net income	$ 1,688
Basic and diluted net income per common share	$ 0.02

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Business Combinations (Tables)

12 Months Ended

Jun. 30, 2015

Unaudited Pro Forma Financial Information Combines Consolidated Results of Operation

The following unaudited pro forma financial information combines the consolidated results from operations for fiscal year 2014 as if all of the 2014 acquisitions had occurred as of July 1, 2013. Pro forma adjustments include the bargain gain, the adjustment for amortization on acquired intangibles and the adjustment to record the tax impact on the pro forma financial results. The unaudited results are as follows:

	Pro Forma Basis for fiscal year Ended June 30, (unaudited)
	2014
Revenue	$	505,609
Net income		1,688
Basic and diluted net income per common share	$	0.02

Dalton Bus Line Limited

Purchase Price Allocation

The aggregate purchase price of these assets was approximately $0.4 million.

Property and equipment	$	520
Intangible Assets		10
Total	$	530

Atlantic Express Transportation Corporation

Purchase Price Allocation

The aggregate purchase price of these assets was approximately $17.2 million.

Current assets, less current liabilities	$	294
Property and equipment		19,807
Intangible assets		1,736
Deferred taxes		(1,841	)
Fair value of net assets acquired	$	19,996

Williams Bus Lines Co

Purchase Price Allocation

The aggregate purchase price of this acquisition was $3.4 million.

Current assets, less current liabilities	$	29
Property and equipment		1,343
Deferred Taxes		(525	)
Subtotal		847
Goodwill		2,557
Total	$	3,404

Scholastic Bus Co

Purchase Price Allocation

The aggregate purchase price of this acquisition was $2.4 million.

Current assets, less current liabilities	$	298
Property and equipment		2,104
Deferred taxes		(772	)
Subtotal		1,630
Goodwill		803
Total	$	2,433

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Property and Equipment (Tables)

12 Months Ended

Jun. 30, 2015

Components of Property and Equipment

Property and equipment consist of the following:

June 30, 2015	Cost		Accumulated Depreciation			Net Book Value		Useful Life in years
Land	$	5,629	$	—		$	5,629
Buildings		5,982		(1,086	)		4,896	40
Transportation equipment		432,826		(226,513	)		206,313	7 to 11
Leasehold improvements		7,826		(3,702	)		4,124	The shorter of the life of lease or the useful life of the asset
Other machinery and equipment		29,674		(19,340	)		10,334	3 to 5
	$	481,937	$	(250,641	)	$	231,296

June 30, 2014	Cost		Accumulated Depreciation			Net Book Value		Useful Life in years
Land	$	6,076	$	—		$	6,076
Buildings		5,065		(882	)		4,183	40
Transportation equipment		414,325		(205,292	)		209,033	7 to 11
Leasehold improvements		6,510		(2,693	)		3,817	The shorter of the life of lease or the useful life of the asset
Other machinery and equipment		24,837		(16,594	)		8,243	3 to 5
	$	456,813	$	(225,461	)	$	231,352

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General

12 Months Ended

Jun. 30, 2015

General

1. General

Student Transportation Inc. (“STI” or the “Company”) is a corporation established under the laws of the Province of Ontario. STI together with its indirect subsidiary Student Transportation of America ULC (“STA ULC” and together with STI the “Issuer”), completed an Initial Public Offering (the “IPS Offering”) on December 21, 2004 through the issuance of income participating securities (“IPSs”). Each IPS consisted of one common share of STI and Cdn $3.847 principal amount of 14% subordinated notes of STA ULC (the “Subordinated Notes”). On December 21, 2009, the Company redeemed the remaining Subordinated Notes, originally issued as a component of the IPSs, as the final step in the process of converting from the IPS structure to a traditional common share structure. STI owns 100% of the Class A common shares of Student Transportation of America Holdings, Inc. (“STA Holdings”). Management owns 100% of the Class B Series Two and Class B Series Three common shares (collectively the “Class B” common shares) of STA Holdings pursuant to the grant of shares under the STA Holdings Equity Incentive Plan (“EIP”) (see Note 13). STI currently holds a 98.5% interest in STA Holdings, through its ownership of the Class A shares of STA Holdings. STI also owns 100% of the outstanding shares of Parkview Transit.

STA Holdings owns 100% of the outstanding shares of Student Transportation of America, Inc. (“STA, Inc.”). The Company, through its ownership of STA Holdings and Parkview Transit, is the third largest provider of school bus transportation services in North America.

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Oil and Gas Interests (Tables)

12 Months Ended

Jun. 30, 2015

Components of Oil and Gas interest

Oil and gas interests consist of the following:

	2015			2014
Oil and gas interests	$	18,098		$	17,094
Less accumulated depletion		(10,385	)		(9,223	)
	$	7,713		$	7,871

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General - Additional Information (Detail) - CAD / Note	12 Months Ended
	Jun. 30, 2015	Dec. 21, 2004
Organization and Nature of Operations [Line Items]
Income participating securities, principal amount of subordinated notes	3.847	3.847
Subordinated Notes
Organization and Nature of Operations [Line Items]
Debt instrument, stated percentage		14.00%
STA, Inc.
Organization and Nature of Operations [Line Items]
Ownership of common stock shares	100.00%
STA Holdings
Organization and Nature of Operations [Line Items]
Ownership of common stock shares	98.50%
STA Holdings | Common Class A
Organization and Nature of Operations [Line Items]
Ownership of common stock shares	100.00%
Parkview Transit
Organization and Nature of Operations [Line Items]
Ownership of common stock shares	100.00%
Management | STA Holdings | Class B Series Two Common Shares
Organization and Nature of Operations [Line Items]
Ownership of common stock shares	100.00%
Management | STA Holdings | Class B Series Three Common Shares
Organization and Nature of Operations [Line Items]
Ownership of common stock shares	100.00%

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Components of Income before Income Tax Expense (Benefit) for Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Schedule of Components of Income Before Income Tax Expense (Benefit) [Line Items]
Domestic	$ (8,361)	$ 196
Foreign	12,100	826
Income before income taxes and equity in net income of unconsolidated investment	$ 3,681	$ 1,022

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Segment Information - Additional Information (Detail) $ in Thousands	12 Months Ended
	Jun. 30, 2015 USD ($) Segment	Jun. 30, 2014 USD ($)	Jun. 30, 2013 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | Segment	2
Revenues	$ 554,751	$ 489,499
Oil and gas interests, net	7,713	7,871
Goodwill	134,939	139,158	$ 138,312
Oil and gas
Segment Reporting Information [Line Items]
Revenues	2,890	5,183
Oil and gas | United States
Segment Reporting Information [Line Items]
Revenues	2,900	5,200
Oil and gas interests, net	7,700	7,900
Goodwill	$ 0	$ 0

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 30, 2014
Current assets:
Cash and cash equivalents	$ 5,333	$ 10,858
Accounts receivable, net of allowance for doubtful accounts of $126 and $152 at June 30, 2015 and 2014, respectively	55,275	47,731
Inventory	4,148	3,858
Prepaid expenses	9,721	9,619
Other current assets	3,443	4,788
Total current assets	77,920	76,854
Investment in investee	1,776
Other assets	20,384	20,883
Property and equipment, net	231,296	231,352
Oil and gas interests, net	7,713	7,871
Other intangible assets, net	61,899	67,720
Goodwill	134,939	139,158
Total assets	535,927	543,838
Current liabilities:
Accounts payable	2,230	1,656
Accrued expenses and other current liabilities	67,396	48,682
Current portion of long-term debt		200
Total current liabilities	69,626	50,538
Long-term debt	204,936	273,898
Asset retirement obligation	575	438
Deferred income tax liability	41,558	41,523
Class B Series Three common share liability	1,993	2,734
Other liabilities	17,432	15,667
Total liabilities	336,120	384,798
Shareholders' equity
Paid in Share Capital	517,560	443,100
Accumulated deficit	(315,633)	(276,938)
Accumulated other comprehensive loss	(2,120)	(7,122)
Total shareholders' equity	199,807	159,040
Total liabilities and shareholders' equity	$ 535,927	$ 543,838

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Equity Method Investments - Additional Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Mar. 11, 2015
Schedule of Equity Method Investments [Line Items]
Investment in investee	$ 1,776	$ 1,776

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Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Share Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Balance (in shares) at Jun. 30, 2013		81,358,291
Balance at Jun. 30, 2013	$ 194,482	$ 434,236	$ (7,904)	$ (231,850)
Net income	1,417			1,417
Dividends	(46,505)			(46,505)
Common stock issuance (in shares)		1,458,258
Common stock issuance	8,864	$ 8,864
Other comprehensive income	782		782
Balance (in shares) at Jun. 30, 2014		82,816,549
Balance at Jun. 30, 2014	159,040	$ 443,100	(7,122)	(276,938)
Net income	3,655			3,655
Dividends	(42,350)			(42,350)
Common stock issuance (in shares)		13,468,040
Common stock issuance	75,200	$ 75,200
Conversion of debt to common stock (in shares)		18,342
Conversion of debt to common stock	108	$ 108
Repurchase of common stock (in shares)		(161,415)
Repurchase of common stock	(848)	$ (848)
Other comprehensive income	5,002		5,002
Balance (in shares) at Jun. 30, 2015		96,141,516
Balance at Jun. 30, 2015	$ 199,807	$ 517,560	$ (2,120)	$ (315,633)

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Maturities of long-term Debt (Detail) $ in Thousands	Jun. 30, 2015 USD ($)
Debt Instrument [Line Items]
2016	$ 0
2017	35,000
2018	59,467
2019	60,048
2020	50,421
thereafter	0
Long-term Debt, Total	204,936
Third Amended And Restated Credit Agreement
Debt Instrument [Line Items]
2020	50,421
Long-term Debt, Total	50,421
Convertible Debentures
Debt Instrument [Line Items]
2018	59,467
2019	60,048
Long-term Debt, Total	119,515
Senior Secured Notes
Debt Instrument [Line Items]
2017	35,000
Long-term Debt, Total	$ 35,000

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Earnings Per Share (Tables)

12 Months Ended

Jun. 30, 2015

Basic and Diluted Weighted Average Share Amounts

The following table sets forth the basic and diluted weighted average share amounts:

	Twelve months ended June 30, 2015		Twelve months ended June 30, 2014
Weighted-average shares outstanding-basic		87,345,708		82,096,947
Potential dilutive effect of shares to be issued to settle the debentures		21,478,722		18,457,176
Weighted-average shares outstanding-diluted		108,824,430		100,554,123

Computations for Basic and Diluted Income Per Common Share

The computations for basic and diluted income per common share are as follows:

	Twelve months ended June 30, 2015		Twelve months ended June 30, 2014
Net income–basic	$	3,655	$	1,417
Add back: Interest expense on debentures (net of tax)		6,541		5,907
Net income used for diluted earnings per share		10,196		7,324
Basic income per share	$	0.04	$	0.02
Diluted income per share	$	0.04	$	0.02

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Stock Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands			12 Months Ended
	Nov. 08, 2012	Nov. 13, 2008	Jun. 30, 2015	Jun. 30, 2014	Dec. 08, 2005
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Income (expense) related to change in fair value of share based compensation			$ 3,300	$ (900)
Dividend paid on shares granted			$ 900	$ 800
Number of shares put back to the company			161,415	0
Payments for shares put back to the company			$ 800
Fair value of common share outstanding			7,349	$ 9,951
Recognized stock based compensation expense			$ 4,170	$ 3,942
Class B Series Two Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Initial allotment					717,747
Additional allotment		1,446,291
Number of shares put back to the company			10,777	3,050
B2/B3 Share exchange			50,689
Class B Series Three Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional allotment	2,265,000
Fair value of common share outstanding			$ 7,300	$ 9,300
B2/B3 Share exchange			80,009
Class B Series Three Common Shares | Other Current Liabilities
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of common share outstanding			$ 5,400	$ 6,600
Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares put back to the company				197,533
Payments for shares put back to the company			1,900	$ 1,200
Recognized stock based compensation expense			$ 4,200	$ 3,900
Equity Incentive Plan | Class B Series Two Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares put back to the company			10,777	3,050
Payments for shares put back to the company			$ 100	$ 31
Equity Incentive Plan | Class B Series Two Common Shares | Other Current Liabilities
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of common share outstanding				$ 600
Equity Incentive Plan | Class B Series Three Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares put back to the company			322,019

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Segment Information

12 Months Ended

Jun. 30, 2015

Segment Information

15. Segment Information

The Company has two reportable segments, a transportation segment and an oil and gas segment. The Company reassesses its reportable segments at least annually. The transportation segment provides school transportation and management services to public and private schools in both the United States and Canada.

The table below summarizes revenue and assets by geographical area for the transportation segment for the years ended June 30, 2015 and 2014:

2015
	Revenues		Property and Equipment (net)		Goodwill
United States	$	480,936	$	198,135	$	99,484
Canada		70,925		33,161		35,455
Total	$	551,861	$	231,296	$	134,939

For the year ended June 30, 2015, the oil and gas segment, which is located in the United States, had revenues of $2.9 million and net oil and gas interests of $7.7 million. There is no goodwill associated with this segment.

2014
	Revenues		Property and Equipment (net)		Goodwill
United States	$	409,683	$	187,218	$	99,484
Canada		74,633		44,134		39,674
Total	$	484,316	$	231,352	$	139,158

For the year ended June 30, 2014, the oil and gas segment, which is located in the United States, had revenues of $5.2 million and net oil and gas interests of $7.9 million. There is no goodwill associated with this segment.

The accounting policies of the segments are the same as those described in the basis of presentation. There are no inter-segment sales.

Reportable operating segments:

	2015			2014
Revenue
Transportation	$	551,861		$	484,316
Oil and gas		2,890			5,183
	$	554,751		$	489,499
Operating earnings (losses)
Transportation	$	17,702		$	14,290
Oil and gas		(540	)		1,235
		17,162			15,525
Unallocated expenses		13,423			14,503
Tax expense (benefit)		84			(395	)
Net Income	$	3,655		$	1,417

	2015		2014
Capital Expenditures
Transportation	$	32,467	$	36,271
Oil and gas		1,003		1,523
	$	33,470	$	37,794
Depreciation, depletion and amortization
Transportation	$	49,969	$	48,896
Oil and gas		1,162		1,121
	$	51,131	$	50,017
Total Assets
Transportation	$	527,291	$	534,522
Oil and gas		8,636		9,316
	$	535,927	$	543,838
Total Liabilities
Transportation	$	334,333	$	383,114
Oil and gas		1,787		1,684
	$	336,120	$	384,798

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Stock-Based Compensation (Tables)

12 Months Ended

Jun. 30, 2015

Class B Series Two Common Shares

Common Shares Granted, Shares Withheld for Income Tax Withholdings, Shares Redeemed and Shares Outstanding

The following tables summarize the Class B Series Two common shares redeemed and shares outstanding pursuant to the EIP:

For the year ended June 30, 2015 Net shares outstanding
Shares outstanding at June 30, 2014	61,466
Redemptions	(10,777	)
B2/B3 Share exchange	(50,689	)
Shares outstanding at June 30, 2015	—

	For the year ended June 30, 2014
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2013		254,965			(190,449	)		64,516
Redemptions		(3,050	)		—			(3,050	)
Shares outstanding at June 30, 2014		251,915			(190,449	)		61,466

Class B Series Three Common Shares

Common Shares Granted, Shares Withheld for Income Tax Withholdings, Shares Redeemed and Shares Outstanding

The following tables summarize the Class B Series Three common shares granted, shares withheld for income tax withholdings at the election of the participants, shares redeemed and shares outstanding pursuant to the EIP:

	For the year ended June 30, 2015
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2014		2,071,993			(666,151	)		1,405,842
Grants		663,620			(236,241	)		427,379
Redemptions		(322,019	)		—			(322,019	)
B2/B3 Share exchange		80,009			—			80,009
Shares outstanding at June 30, 2015		2,493,603			(902,392	)		1,591,211

	For the year ended June 30, 2014
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2013		1,634,452			(470,862	)		1,163,590
Grants		635,074			(195,289	)		439,785
Redemptions		(197,533	)		—			(197,533	)
Shares outstanding at June 30, 2014		2,071,993			(666,151	)		1,405,842

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Employee Benefit Plans

12 Months Ended

Jun. 30, 2015

Employee Benefit Plans

17. Employee Benefit Plans

The Company has a qualified defined contribution benefit plan, which allows for voluntary pre-tax contributions by the employees. The Company makes a matching contribution on behalf of the employees. The Company incurred $0.6 million in expenses related to the plan for both of the years ended June 30, 2015 and 2014.

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Financial Assets and Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash	$ 5,333	$ 10,858	$ 6,929
Accounts receivable	55,275	47,731
Accounts payable	2,230	1,656
Other accrued liabilities	62,040	41,382
Class B Series Two and Three share liability	7,349	9,951
Long-term debt (including portion due within one year)	204,936	274,098
Conversion right on 6.25% Convertible Debentures	9	236
Derivative financial instrument		83
Other long term liabilities	17,423	15,431
Financial and Nonfinancial Liabilities, Fair Value Disclosure, Total	$ 293,987	$ 342,837

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Consolidated Statements of Cash Flows $ in Thousands, CAD in Millions	12 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)
Operating activities
Net income	$ 3,655	$ 1,417
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	282	112
Unrealized gain on forward contracts	(83)	(737)
Non-cash gain on US$ 6.25% Convertible Debentures conversion feature	(231)	(714)
Unrealized foreign currency loss	79	431
Amortization of deferred financing costs	1,866	1,642
Non-cash stock compensation	4,170	3,942
Equity in net income from unconsolidated investment	(58)
Gain on Bargain purchase of businesses acquired, net of tax		(2,762)
Gain on disposal of fixed assets	(1,036)	(532)
Depreciation and depletion expense	47,757	46,444
Amortization expense	3,374	3,573
Changes in current assets and liabilities:
Accounts receivable	(11,879)	(3,163)
Prepaid expenses, inventory and other current assets	3,576	(9,545)
Accounts payable	673	(60)
Accrued expenses and other current liabilities	(4,177)	3,853
Changes in other assets and liabilities	1,751	2,509
Net cash provided by operating activities	49,719	46,410
Investing activities
Business acquisitions, net of cash acquired	(391)	(22,756)
Equity investment	(1,718)
Payments on seller debt	(200)
Purchases of property and equipment	(33,470)	(37,794)
Proceeds on sale of equipment	2,081	1,153
Net cash used in investing activities	(33,698)	(59,397)
Financing activities
Offering of common shares, net of expenses	65,743
Redemption of Cdn$ 6.75% Convertible Debentures	(40,083)
Redemption of Class B Series Two and Three common shares	(2,014)	(1,266)
Repurchase of common stock	(848)
Financing fees	(618)	(3,559)
Cdn$ 6.25% Convertible Debenture Offering		71,442
Common stock dividends	(33,657)	(34,147)
Borrowings on credit facility	181,505	164,150
Payments on credit facility	(190,448)	(179,712)
Net cash (used in) provided by financing activities	(20,420)	16,908
Effect of exchange rate changes on cash	(1,126)	8
Net (decrease) increase in cash and cash equivalents	(5,525)	3,929
Cash and cash equivalents at beginning of period	10,858	6,929
Cash and cash equivalents at end of period	5,333	10,858
Supplemental information
Cash paid for interest	15,586	14,762
Cash paid for income taxes	$ 1,082	$ 1,594

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 30, 2014
Accounts receivable, allowance for doubtful accounts	$ 126	$ 152

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Asset Retirement Obligation

12 Months Ended

Jun. 30, 2015

Asset Retirement Obligation

10. Asset Retirement Obligation

ASC 410-20, Asset Retirement Obligation, establishes standards for the recognition, measurement and disclosure of liabilities for asset retirement obligations and the associated asset retirement costs. The standards apply to legal obligations associated with the retirement of long-lived tangible assets that arise from the acquisition, construction, development or normal operation of such assets. The standards require that a liability for an asset retirement obligation be recognized in the period in which it is incurred and when a reasonable estimate of the fair value of the liability can be made. Furthermore, a corresponding asset retirement cost should be recognized by increasing the carrying amount of the long lived asset. The asset retirement cost is subsequently allocated in a rational and systematic method over the underlying asset’s useful life. The initial fair value of the liability is accreted, by charges to operations, to its estimated normal fair value. The obligation relates to the cost associated with shutting down oil and gas wells. The Company recorded accretion expense of twenty seven thousand dollars and thirty seven thousand dollars for the years ended June 30, 2015 and 2014, respectively.

At June 30, 2015, the present value of the Company’s asset retirement obligation was $0.6 million. The Company expects the discounted obligation to become payable over the next 50 years. A discount rate of 7.2% was used to calculate the present value of the asset retirement obligation. If the Company had estimated the asset retirement obligation using undiscounted cash flows it would amount to approximately $1.1 million.

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Document and Entity Information - Jun. 30, 2015 - shares	Total
Document Information [Line Items]
Document Type	40-F
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Trading Symbol	STB
Entity Registrant Name	STUDENT TRANSPORTATION INC.
Entity Central Index Key	0001419465
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding	96,141,516

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Common Shares

12 Months Ended

Jun. 30, 2015

Common Shares

11. Common Shares

The authorized share capital of the Company consists of an unlimited number of no par value common and preferred shares. At June 30, 2015 there are no preferred shares issued and outstanding.

Pursuant to its Dividend Reinvestment Plan (the “Plan”), the Company issued 1,485,040 and 1,458,258 common shares during the fiscal years ended June 30, 2015 and 2014, respectively. The shares issued pursuant to the plan represent non-cash dividends with values of $8.5 million and $8.9 million, for the fiscal years ended June 30, 2015 and 2014, respectively, which have been recorded as a non-cash financing activity in each year. The Plan was established to enable eligible shareholders of the Company to reinvest dividends paid on their common shares to acquire additional common shares of the Company. The common shares issued under the Plan are issued at a price based on the volume weighted average of the closing price of the common shares for the five trading days immediately preceding the relevant dividend date, less a 3% discount.

During the 2015 fiscal year, the Company issued 18,342 common shares, having an approximate value of $0.1 million in connection with the conversion of the Company’s Cdn$ 6.75% Convertible Debentures, which were recorded as a non-cash financing activity (see Note 9).

The Company renewed its normal course issuer bid (“NCIB”) on October 21, 2014. Pursuant to the notice, the Company is permitted to acquire up to a maximum amount of Common Shares equal to the lesser of 4,158,553 Common Shares or the number of Common Shares that can be purchased for an aggregate purchase price of Cdn $5.0 million in the twelve month period commencing October 24, 2014 and ending on October 23, 2015. Under the renewed NCIB, the Company repurchased 161,415 shares with a value of $0.8 million during fiscal year 2015. The Company did not repurchase any shares during the 2014 fiscal year. The Company amended the NCIB in August 2015 (see Note 21).

On March 6, 2015, the Company issued 11,983,000 common shares for total gross cash proceeds of $69.1 million (Cdn $86.3 million) pursuant to the 2015 Bought Deal. The net proceeds of $66.7 million (Cdn $83.2 million) after commission and fees, were used to redeem the remaining $40.1 million in principal amount of Cdn$ 6.75% Convertible Debentures, with the balance used to pay down debt on the Company’s senior credit facility.

On May 8, 2015, the Board of Directors of the Company approved a change in the currency of the monthly dividend to U.S dollars, effective July 1, 2015, with the first U.S. dollar dividend payable August 17, 2015 to shareholders of record on July 31, 2015.

Common shares issued and outstanding are 96,141,516 and 82,816,549 million at June 30, 2015 and 2014, respectively.

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Balance Sheet Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 30, 2014
Prepaid Expenses
Prepaid Insurance	$ 7,098	$ 6,924
Other	2,623	2,695
Prepaid expenses	9,721	9,619
Other Current Assets
Fuel Tax Receivable	1,799	1,249
Other Receivables	1,644	3,539
Other current assets	3,443	4,788
Accrued Expenses and Accounts Payable
Accrued Accounts Payable	8,483	8,711
Dividends Payable	14,096	14,255
Insurance	9,111	7,532
Wages and Benefits	5,175	6,237
Class B Shares	5,356	7,217
Taxes Payable	1,259	1,335
Deferred Revenue	655	774
Accrued Fixed Assets	20,983
Other	2,278	2,621
Accrued expenses and other current liabilities	67,396	48,682
Other liabilities
Insurance	16,756	14,565
Other	676	1,102
Other liabilities	$ 17,432	$ 15,667

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Consolidated Statements of Operations $ in Thousands	12 Months Ended
	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2015 CAD / shares	Jun. 30, 2014 USD ($) $ / shares shares	Jun. 30, 2014 CAD / shares
Revenues	$ 554,751		$ 489,499
Costs and expenses:
Cost of operations	427,536		373,060
General and administrative	54,749		46,673
Non-cash stock compensation	4,170		3,942
Acquisition expenses	3		282
Depreciation and depletion expense	47,757		46,444
Amortization expense	3,374		3,573
Total operating expenses	537,589		473,974
Income from operations	17,162		15,525
Interest expense	17,412		16,641
Foreign currency (gain) loss	(136)		424
Unrealized gain on foreign currency exchange contracts	(83)		(737)
Non-cash gain on US$ 6.25% Convertible Debentures conversion feature	(231)		(714)
Gain on Bargain purchase of businesses acquired, net of tax			(2,762)
Other (income) expense , net	(3,481)		1,651
Income before income taxes and equity in net income of unconsolidated investment	3,681		1,022
Equity in net income of unconsolidated investment	58
Income tax expense (benefit)	84		(395)
Net income	$ 3,655		$ 1,417
Weighted average number of shares outstanding-basic | shares	87,345,708		82,096,947
Weighted average number of shares outstanding-diluted | shares	108,824,430		100,554,123
Basic and diluted net income per common share | $ / shares	$ 0.04		$ 0.02
Dividends declared per common share | (per share)	$ 0.11	CAD 0.42		CAD 0.61

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Property and Equipment

12 Months Ended

Jun. 30, 2015

Property and Equipment

5. Property and Equipment

Property and equipment consist of the following:

June 30, 2015	Cost		Accumulated Depreciation			Net Book Value		Useful Life in years
Land	$	5,629	$	—		$	5,629
Buildings		5,982		(1,086	)		4,896	40
Transportation equipment		432,826		(226,513	)		206,313	7 to 11
Leasehold improvements		7,826		(3,702	)		4,124	The shorter of the life of lease or the useful life of the asset
Other machinery and equipment		29,674		(19,340	)		10,334	3 to 5
	$	481,937	$	(250,641	)	$	231,296

June 30, 2014	Cost		Accumulated Depreciation			Net Book Value		Useful Life in years
Land	$	6,076	$	—		$	6,076
Buildings		5,065		(882	)		4,183	40
Transportation equipment		414,325		(205,292	)		209,033	7 to 11
Leasehold improvements		6,510		(2,693	)		3,817	The shorter of the life of lease or the useful life of the asset
Other machinery and equipment		24,837		(16,594	)		8,243	3 to 5
	$	456,813	$	(225,461	)	$	231,352

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Equity Method Investments

12 Months Ended

Jun. 30, 2015

Equity Method Investments

4. Equity Method Investments

On March 11, 2015 a wholly-owned subsidiary of the Company made a non-controlling investment in a consulting and management services firm for cash consideration of $1.7 million. The Company has accounted for this investment under the equity method, in accordance with ASC- 323, Investments-Equity Method and Joint Ventures.

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Lease Commitments

12 Months Ended

Jun. 30, 2015

Lease Commitments

16. Lease Commitments

The Company leases certain facilities under non-cancelable operating leases. Rent expense associated with the leases facilities totaled $13.8 million and $12.0 million for the years ended June 30, 2015 and 2014, respectively. The Company also leases certain school vehicles under non-cancelable operating leases. Operating lease expense associated with these leased school vehicles totaled $29.6 million and $19.9 million for the years ended June 30, 2015 and 2014, respectively. The terms of these and other leases expire at various times through 2024.

The following represent future minimum rental payments and operating lease payments under non cancelable operating leases:

	Facility Leases		Vehicle Leases		Total
Year ending June 30,
2016	$	14,422	$	28,024	$	42,446
2017		11,024		25,005		36,029
2018		8,634		21,810		30,444
2019		6,426		17,526		23,952
2020		3,103		11,318		14,421
2021 and thereafter		3,402		233		3,635
Total minimum payments	$	47,011	$	103,916	$	150,927

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Earnings Per Share

12 Months Ended

Jun. 30, 2015

Earnings Per Share

12. Earnings Per Share

The following table sets forth the basic and diluted weighted average share amounts:

	Twelve months ended June 30, 2015		Twelve months ended June 30, 2014
Weighted-average shares outstanding-basic		87,345,708		82,096,947
Potential dilutive effect of shares to be issued to settle the debentures		21,478,722		18,457,176
Weighted-average shares outstanding-diluted		108,824,430		100,554,123

The computations for basic and diluted income per common share are as follows:

	Twelve months ended June 30, 2015		Twelve months ended June 30, 2014
Net income–basic	$	3,655	$	1,417
Add back: Interest expense on debentures (net of tax)		6,541		5,907
Net income used for diluted earnings per share		10,196		7,324
Basic income per share	$	0.04	$	0.02
Diluted income per share	$	0.04	$	0.02

The conversion of the convertible debentures is anti-dilutive for both years ended June 30, 2015 and 2014.

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Income Taxes

12 Months Ended

Jun. 30, 2015

Income Taxes

8. Income Taxes

The components of the expense (benefit) for income taxes are as follows:

	2015			2014
Federal: Canada
Current	$	(432	)	$	(1,388	)
Deferred		(21	)		1,964
		(453	)		576
Provincial: Canada
Current		(332	)		94
Deferred		(16	)		(423	)
		(348	)		(329	)
Foreign:
Current		566			786
Deferred		319			(1,428	)
		885			(642	)
Total expense (benefit)	$	84		$	(395	)

The components of income before income tax expense (benefit) for income taxes are as follows:

	2015			2014
Domestic	$	(8,361	)	$	196
Foreign		12,100			826
Total		3,739			1,022

The difference between the effective rate reflected in the income tax expense (benefit) for income taxes and the amount determined by applying the Canadian statutory rate to income before income taxes for the fiscal year ended June 30, 2015 and June 30, 2014 is analyzed below:

	2015			2014
Provision for income taxes at statutory rate	$	561		$	158
Provincial taxes		(332	)		112
Foreign rate differential		1,097			264
Canadian rate difference		(59	)		168
Effect of U.S. state rate changes		(1,268	)		—
Gain on bargain purchase		—			(1,105	)
Permanent items		121			96
Uncertain tax position adjustments		(192	)		—
Other		156			(88	)
	$	84		$	(395	)

Deferred taxes arise because of the differences in the book and tax basis of certain assets and liabilities. Significant components of deferred tax assets and (liabilities) are as follows:

	2015			2014
Deferred tax liabilities
Intangibles	$	(24,873	)	$	(25,055	)
Property and equipment		(55,588	)		(52,082	)
Total deferred tax liabilities		(80,461	)		(77,137	)
Deferred tax assets:
Net operating loss carry forward		25,779			21,675
Other		13,461			14,276
Total deferred tax assets		39,240			35,951
Valuation allowance		(337	)		(337	)
Net deferred tax assets		38,903			35,614
Net deferred tax liabilities	$	(41,558	)	$	(41,523	)

In fiscal 2015, the Company increased goodwill and net non-current deferred income tax liabilities by $1.9 million to correct the adjustment for purchase price allocation associated with the acquisition of the school bus division of Ayr Coach Lines in July 2006 that was recorded in the fourth quarter of 2014.

It is the Company’s intention to reinvest the undistributed earning of its foreign subsidiaries and thereby indefinitely postpone their remittance. As a result, deferred income taxes have not been provided on undistributed earnings of foreign subsidiaries of the Company. It is not practical to compute the deferred tax liability and as such is not recorded.

The following table summarizes the gross amounts of unrecognized tax benefits without regard to reduction in tax liabilities if such unrecognized tax benefits were settled.

	2015			2014
Balance at July 1,	$	1,704		$	1,704
Additions for tax position related to prior year		190			—
Effective settlements with tax authorities		(1,439	)		—
Balance at June 30,	$	455		$	1,704

The total amount of the unrecognized tax benefits, if recognized would favorably impact the effective tax rate by $0.5 million. Included in the amounts above are approximately seventy thousand dollars and $0.2 million of interest and penalties for the fiscal years ended June 30, 2015 and 2014, respectively, which are also included as a component of the income tax benefit on the consolidated statement of operations. During fiscal year 2015, the Company reviewed its state tax filing positions in various states. As a result, the Company established a $0.2 million uncertain tax position related to a filing position not more-likely-than-not to succeed.

The Company recently concluded a full scope examination of one of its Canadian entities and a limited scope examination for two of its Canadian entities for the years ended June 30, 2011 and June 30, 2012. As a result, the corresponding uncertain tax position associated with these entities for the years under examination, have been effectively settled with tax authorities and therefore recognized. All tax years starting with June 30, 2012 are currently open in the United States. All tax years starting with June 30, 2013 are currently open in Canada.

At June 30, 2015, the Company has available U.S. net operating loss carry forwards of approximately $62.2 million expiring in the years 2022 through 2034 and Canadian non-capital loss carry forwards of approximately $4.4 million expiring in the years 2025 through 2035. These deferred tax assets are offset by a valuation allowance of approximately $0.3 million.

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Debt - Additional Information (Detail)										12 Months Ended
	Jun. 30, 2015 CAD	Mar. 06, 2015 USD ($)	Aug. 19, 2014 USD ($)	Nov. 12, 2013 USD ($) shares	Nov. 12, 2013 CAD shares	Nov. 10, 2011 USD ($)	Jun. 07, 2011 USD ($) shares $ / shares	Jun. 21, 2010 USD ($)	Jun. 21, 2010 CAD	Jun. 30, 2015 USD ($) shares	Jun. 30, 2015 CAD shares	Jun. 30, 2014 USD ($)	Jun. 30, 2015 CAD CAD / shares	Nov. 12, 2013 CAD CAD / shares
Debt Instrument [Line Items]
Proceeds from issuance of convertible debentures												$ 71,442,000
Issued costs										$ 5,800,000		$ 7,400,000
Debentures outstanding purchase price, percentage										101.00%	101.00%
Senior Secured Notes
Debt Instrument [Line Items]
Senior notes						$ 35,000,000
Senior notes additional year term						5 years
Maturity date						Nov. 10, 2016
Fixed coupon rate						4.246%
6.25% Convertible Debenture
Debt Instrument [Line Items]
Maturity date				Jun. 30, 2019	Jun. 30, 2019		Jun. 30, 2018
Interest rate				6.25%	6.25%		6.25%
Price per debenture				$ 1,000			$ 1,000
Proceeds from issuance of convertible debentures				71,400,000	CAD 75,000,000		60,000,000
Issued costs				$ 3,500,000			$ 3,000,000							CAD 3,600,000
Convertible debenture conversion price | (per share)							$ 9.50							CAD 9.05
Shares of common stock into which each $1,000 principal amount of notes may convert | shares				110.4972	110.4972		105.2632
Principal amount of each convertible note							$ 1,000							CAD 1,000
Debt instrument redemption date				Jun. 30, 2017	Jun. 30, 2017		Jun. 30, 2014
Consecutive trading days				20 days	20 days		20 days
6.25% Convertible Debenture | Minimum
Debt Instrument [Line Items]
Debt conversion premium percentage				125.00%	125.00%		125.00%
Third Amended And Restated Credit Agreement
Debt Instrument [Line Items]
Borrowing availability under the credit agreement										$ 172,800,000
Interest rate										4.00%	4.00%
Third Amended And Restated Credit Agreement | United States
Debt Instrument [Line Items]
Line of credit facility										$ 180,000,000
Third Amended And Restated Credit Agreement | Canada
Debt Instrument [Line Items]
Line of credit facility										$ 45,000,000
Third Amended And Restated Credit Agreement | Base Rate Loans
Debt Instrument [Line Items]
Interest base rate										3.25%	3.25%
Third Amended And Restated Credit Agreement | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Interest rate										0.1865%	0.1865%
Third Amended And Restated Credit Agreement | Minimum | Base Rate Loans
Debt Instrument [Line Items]
Debt instrument interest rate										0.50%	0.50%
Third Amended And Restated Credit Agreement | Minimum | Eurodollar Loans
Debt Instrument [Line Items]
Debt instrument interest rate										1.75%	1.75%
Third Amended And Restated Credit Agreement | Maximum | Base Rate Loans
Debt Instrument [Line Items]
Debt instrument interest rate										1.25%	1.25%
Third Amended And Restated Credit Agreement | Maximum | Eurodollar Loans
Debt Instrument [Line Items]
Debt instrument interest rate										2.50%	2.50%
Third Amended And Restated Credit Agreement | After Amendment
Debt Instrument [Line Items]
Debt instrument maturity description			The amendment extended the maturity date (previously due February 27, 2018) to August 19, 2019, or if earlier, 90 days prior to the maturity
Maturity date			Aug. 19, 2019
Line of credit facility			$ 225,000,000
Third Amended And Restated Credit Agreement | Before Amendment
Debt Instrument [Line Items]
Maturity date			Feb. 27, 2018
Line of credit facility			$ 165,000,000
Third Amended And Restated Credit Agreement | Accordion Feature
Debt Instrument [Line Items]
Line of credit facility			$ 100,000,000
Third Amended And Restated Credit Agreement | Accordion Feature | Maximum
Debt Instrument [Line Items]
Line of credit facility										$ 100,000,000
Original Term Loan | Senior Secured Notes
Debt Instrument [Line Items]
Maturity date						Dec. 14, 2011
Fixed coupon rate						5.941%
6.75% Convertible Debentures
Debt Instrument [Line Items]
Maturity date								Jun. 30, 2015	Jun. 30, 2015
Interest rate								6.75%	6.75%
Price per debenture | CAD									CAD 1,000
Proceeds from issuance of convertible debentures								$ 48,200,000	CAD 50,000,000
Convertible debenture conversion price | CAD / shares													CAD 7.25
Shares of common stock into which each $1,000 principal amount of notes may convert | shares										137.9310	137.9310
Principal amount of each convertible note | CAD													CAD 1,000
Debt instrument redemption date										Jun. 30, 2013	Jun. 30, 2013
Consecutive trading days										20 days	20 days
Debt conversion premium percentage										125.00%	125.00%
Convertible debenture converted	CAD 49,900,000	$ 40,100,000								$ 40,100,000	CAD 100,000
Shares issued upon conversion of convertible debenture | shares										18,342	18,342

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Oil and Gas Interests

12 Months Ended

Jun. 30, 2015

Oil and Gas Interests

6. Oil and Gas Interests

Oil and gas interests consist of the following:

	2015			2014
Oil and gas interests	$	18,098		$	17,094
Less accumulated depletion		(10,385	)		(9,223	)
	$	7,713		$	7,871

The Company does not capitalize any of its own administrative or interest costs and accounts for these costs as expenses during the year. There were no costs excluded from costs subject to depletion and depreciation at the balance sheet dates.

Under full cost accounting many costs incurred will be capitalized even though they have not resulted in an increase in the future revenue generating capacity of the enterprise. Accordingly, it is widely recognized that there should be a limit on the aggregate costs that may be carried forward for amortization against revenue of future periods (the “ceiling test”); the Company performed a ceiling test calculation at both June 30, 2015 and 2014. The ceiling test requires the Company to use tax effected discounted cash flows using a present value technique. The sales prices used for the ceiling test at June 30, 2015 were $73.88 per barrel for oil and $4.17 per thousand cubic feet of natural gas. Based on the calculations under the first step of the ceiling test, the Company determined that its oil and gas interests are recoverable.

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Goodwill and Other Intangible Assets

12 Months Ended

Jun. 30, 2015

Goodwill and Other Intangible Assets

7. Goodwill and Other Intangible Assets

Intangible assets consist of the following:

	2015
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Remaining Life Years
Contract rights	$	65,102	$	(25,428	)	$	39,674	12
Covenants not to compete		14,800		(14,774	)		26	1
Trade names		22,199		—			22,199	None (Indefinite Life)
Total	$	102,101	$	(40,202	)	$	61,899

	2014
	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Remaining Life Years
Contract rights	$	67,627	$	(22,868	)	$	44,759	14
Covenants not to compete		14,995		(14,952	)		43	—
Trade names		22,918		—			22,918	None (Indefinite Life)
Total	$	105,540	$	(37,820	)	$	67,720

Estimated annual amortization expense for intangibles assets is as follows:

Year ending June 30,
2016	$	3,162
2017		3,152
2018		3,147
2019		3,146
2020		3,146
	$	15,753

The following table represents the changes in the carrying amount of goodwill for the years ended June 30, 2015 and 2014 (see Note 8):

Balance as of June 30, 2013	$	138,312
Goodwill related to acquisitions	$	3,360
Goodwill reduction related to prior acquisitions	$	(1,826	)
Foreign currency effects on Goodwill	$	(688	)
Balance as of June 30, 2014	$	139,158
Goodwill additions related to prior acquisitions	$	1,826
Foreign currency effects on Goodwill	$	(6,045	)
Balance as of June 30, 2015	$	134,939

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Debt

12 Months Ended

Jun. 30, 2015

Debt

9. Debt

Indebtedness of the Company includes the following:

	Amounts Outstanding at
	June 30, 2015				June 30, 2014
	Current		Long Term		Current		Long Term
Third Amended and Restated Credit Agreement
Revolving credit facility	$	—	$	50,421	$	—	$	62,436
Convertible Debentures		—		119,515		—		176,462
Senior Secured Notes		—		35,000		—		35,000
Promissory notes due to former owners		—		—		200		—
	$	—	$	204,936	$	200	$	273,898

Maturities of long-term debt are as follows:

	Third Amended Credit Facility		Convertible Debentures		Senior Secured Notes		Total
Year ending June 30,
2016	$	—	$	—	$	—	$	—
2017		—		—		35,000		35,000
2018		—		59,467		—		59,467
2019		—		60,048		—		60,048
2020		50,421		—		—		50,421
thereafter		—		—		—		—
	$	50,421	$	119,515	$	35,000	$	204,936

Third Amended and Restated Credit Agreement and Senior Secured Notes

On August 19, 2014, the Company amended its Third Amended and Restated Credit Agreement (the “Credit Agreement”). The amendment extended the maturity date (previously due February 27, 2018) to August 19, 2019, or if earlier, 90 days prior to the maturity of the Senior Secured Notes, extended the $100.0 million accordion feature and increased the commitments to $225.0 million, from the previous commitments of $165.0 million. The increase in the size of the facility resulted from the addition of two new lenders to the bank group and certain existing lenders increasing their commitments. The extension was accounted for as a modification of debt, and as such, transaction costs related to the modification have been recorded in other assets in the consolidated balance sheet and are being amortized over the term of the Credit Agreement. The current commitments at June 30, 2015, include a US $180.0 million loan facility and a Canadian $45.0 million loan facility both of which are available to fund working capital requirements and to fund acquisitions and investment requirements for new revenue and bid-in contracts.

The Company may request an increase to the $225.0 million in commitments for up to an additional $100.0 million in additional commitments (the “Accordion Feature”), so long as no default or event of default has occurred and is continuing. Each lender under the Credit Agreement shall have the option to subscribe for a portion of the remaining Accordion Feature and any portion not so subscribed may be assumed by one or more of the existing lenders or by another financial institution as agreed by the Company and the Agent under the agreement. At June 30, 2015 the Company had approximately $172.8 million in borrowing availability under the Credit Agreement.

On November 10, 2011, the Company rolled over and extended the maturity of its $35.0 million of fixed rate Senior Secured Notes (previously due December 14, 2011), for an additional five year term, carrying a fixed coupon of 4.246% (the previous fixed coupon was 5.941%). The Senior Secured Notes rank pari-passu with borrowings under the Credit Agreement and have a maturity date of November 10, 2016. The extension was accounted for as a modification of debt, and as such, transaction costs related to the modification have been recorded in other assets in the consolidated balance sheet and are being amortized over the term of the notes.

Borrowings under the Credit Agreement are collateralized by (i) the unencumbered assets of STA Holdings and its subsidiaries, and certain shares of the capital stock of STA Holdings and the capital stock of each of its subsidiaries and (ii) by the unencumbered assets of Parkview Transit and its subsidiaries and the capital stock of Parkview Transit and the capital stock of each of its subsidiaries. In addition, payment and performance of the obligations under the Credit Agreement are guaranteed by each of STA Holdings’ subsidiaries. Borrowings under the Senior Secured Notes are collateralized by the unencumbered assets of STA Holdings and its US subsidiaries, and certain shares of the capital stock of STA Holdings and the capital stock of each of its US subsidiaries. In addition, payment and performance of the obligations under the Senior Secured Notes are guaranteed by each of STA Holdings US subsidiaries.

Borrowings under the Credit Agreement may be Base Rate Loans or Eurodollar Loans, as defined in the Credit Agreement. Base Rate Loans bear interest at the base rate, as defined in the Credit Agreement (3.25% at June 30, 2015), plus the applicable margin, which ranges from 0.50% to 1.25% depending on STA Holdings’ senior leverage ratio on the pricing date. Eurodollar Loans bear interest at the adjusted LIBOR rate, as defined in the Credit Agreement (0.18650% at June 30, 2015), plus the applicable margin, which ranges from 1.75% to 2.50% depending on STA Holdings’ senior leverage ratio on the pricing date. The effective interest rate on the Credit Agreement was 4.0% for the year ended June 30, 2015.

The Company was in compliance with all debt covenants related to both the Third Amended and Restated Credit Agreement and the Senior Secured Notes at June 30, 2015.

Convertible Debentures

On November 12, 2013, the Company issued the Cdn$ 6.25% Convertible Debentures due June 30, 2019 at a price of $1,000 per debenture, for total gross proceeds of $71.4 million (Cdn $75.0 million). The issue costs of approximately $3.5 million (Cdn $3.6 million) have been recorded in other assets in the consolidated balance sheet and are being amortized over the term of the Cdn$ 6.25% Convertible Debentures due June 30, 2019, using the effective interest method.

Interest on the Cdn$ 6.25% Convertible Debentures due June 30, 2019 is payable semi-annually, in arrears, on June 30 and December 31 of each year.

Each Cdn$ 6.25% Convertible Debenture due June 30, 2019 is convertible into common shares of the Company at the option of the holder at any time prior to the close of business on the earlier of the business day immediately preceding the maturity date or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of Cdn $9.05 per common share (the “Cdn$ 6.25% Convertible Debenture Conversion Price”) which is equivalent to 110.4972 common shares for each Cdn $1,000 principal amount of the Cdn$ 6.25% Convertible Debentures due June 30, 2019.

The Cdn$ 6.25% Convertible Debentures due June 30, 2019 are not redeemable prior to June 30, 2017. The Company will have the right, at its option, to redeem the Cdn$ 6.25% Convertible Debentures due June 30, 2019 in whole or in part, from time to time, on or after June 30, 2017 but prior to June 30, 2018, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the Cdn$ 6.25% Convertible Debenture Conversion Price. After June 30, 2018 and prior to maturity the Company will have the right, at its option to redeem the Cdn$ 6.25% Convertible Debentures due June 30, 2019 in whole or in part, from time to time, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest.

On June 7, 2011, the Company issued the US$ 6.25% Convertible Debentures due June 30, 2018 at a price of $1,000 per debenture, for total gross proceeds of $60.0 million. The issue costs of approximately $3.0 million have been recorded in other assets in the consolidated balance sheet and are being amortized over the term of the US$ 6.25% Convertible Debentures due June 30, 2018, using the effective interest method. The conversion feature of this debenture provides that these US dollar denominated notes can be converted into Canadian denominated common shares of the Company. As such, the conversion feature represents on embedded derivative that is required to be bifurcated and accounted for separately.

The Company recorded the embedded derivative liability as a component of other liabilities in the consolidated balance sheet. The embedded conversion liability is recorded at fair value in other liabilities at each reporting period end with the non-cash changes in fair value included in the consolidated statement of operations. In addition, as the functional currency of STI is the Canadian dollar, unrealized gains or losses on re-measurement of the US$ 6.25% Convertible Debentures into Canadian dollars are considered transaction gains and losses, at the STI level, and are also included in the consolidated statement of operations.

Interest on the US$ 6.25% Convertible Debentures is payable semi-annually, in arrears, on June 30 and December 31 of each year.

Each US$ 6.25% Convertible Debenture is convertible into common shares of the Company at the option of the holder at any time prior to the close of business on the earlier of the business day immediately preceding the maturity date or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of $9.50 per common share (the “US$ 6.25% Convertible Debenture Conversion Price”) which is equivalent to 105.2632 common shares for each $1,000 principal amount of the US$ 6.25% Convertible Debenture.

The US$ 6.25% Convertible Debentures were not redeemable prior to June 30, 2014. The Company had the right, at its option, to redeem the US$ 6.25% Convertible Debentures in whole or in part, from time to time, on or after July 1, 2014 but prior to June 30, 2016, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the US$ 6.25% Convertible Debenture Conversion Price. After June 30, 2016 and prior to maturity the Company will have the right, at its option to redeem the US$ 6.25% Convertible Debentures in whole or in part, from time to time, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest.

On June 21, 2010, the Company issued the Cdn$ 6.75% Convertible Debentures which were due June 30, 2015 at a price of Cdn $1,000 per debenture, for total gross proceeds of $48.2 million (Cdn $50 million). The Cdn$ 6.75% Convertible Debentures matured on June 30, 2015, at which time the Company redeemed the remaining balance of Cdn$ 6.75% Convertible Debentures for cash, as discussed below. The Cdn$ 6.75% Convertible Debentures of STI were denominated in Canadian dollars, and as such, they were not required to be bifurcated into separate debt and equity components.

Interest on the Cdn$ 6.75% Convertible Debentures was payable semi-annually, in arrears, on June 30 and December 30 of each year.

The Cdn$ 6.75% Convertible Debentures were convertible into common shares of the Company at the option of the holder at any time prior to the close of business on the earlier of the business day immediately preceding the maturity date or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of Cdn $7.25 per common share (the “Cdn$ 6.75% Convertible Debenture Conversion Price”) which is equivalent to 137.9310 common shares for each Cdn $1,000 principal amount of the Cdn$ 6.75% Convertible Debenture.

The Company redeemed the Cdn$ 6.75% Convertible Debentures at June 30, 2015 as discussed below. The Cdn$ 6.75% Convertible Debentures were not redeemable prior to June 30, 2013. The Company had the right, at its option, to redeem the Cdn$ 6.75% Convertible Debentures in whole or in part, from time to time, after July 1, 2013, on at least 30 days prior notice at a redemption price equal to par plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on a recognized exchange for the 20 consecutive trading days ending five trading days prior to the date on which the redemption notice is given is at least 125% of the Cdn$ 6.75% Convertible Debenture Conversion Price.

During fiscal year 2015, Cdn $0.1 million of the Company’s Cdn$ 6.75% Convertible Debentures were converted into 18,342 shares of common stock. On June 30, 2015, the Company redeemed the remaining Cdn $49.9 million in principal amount of Cdn$ 6.75% Convertible Debentures for US$ 40.1 million in cash, in accordance with the terms of the trust indenture dated as of June 21, 2010 between STI and Computershare Trust Company of Canada governing the Cdn$ 6.75% Convertible Debentures.

The Cdn$ 6.75% Convertible Debentures, the US$ 6.25% Convertible Debentures and the Cdn$ 6.25% Convertible Debentures are collectively referred to as the “Convertible Debentures”. The Convertible Debentures are subordinate to both the Third Amended and Restated Credit Agreement and the Senior Secured Notes.

The Company may at its option, subject to applicable regulatory approval, elect to satisfy its obligation to pay the outstanding principal amount of the Convertible Debentures in whole, by issuing and delivering common shares for each US $1,000 principal amount of the US$ 6.25% Convertible Debentures and Cdn $1,000 principal amount of the Cdn$ 6.25% Convertible Debentures. The amount of common shares delivered is obtained by dividing each principal amount of Convertible Debentures by 95% of the current market price of the common shares on the date set for redemption or the maturity date.

The Company may elect, subject to applicable regulatory approval, to issue and deliver common stock of the Company to the indenture trustee under the Convertible Debentures indentures, to sell in the open market, to satisfy the Company’s obligation to pay interest on the Convertible Debentures on each interest payment date. The Convertible Debenture holders will receive a cash payment in satisfaction of the interest obligation equal to the interest payable from the sale of such common shares.

The Company must commence, within 30 days of a Change in Control (as defined in the Convertible Debenture indentures), an offer to purchase all of the Convertible Debentures then outstanding at a purchase price equal to 101% of the principal amount of the Convertible Debentures, plus accrued and unpaid interest thereon.

The Company expects to be able to repay, renew or refinance its various loan facilitates and Convertible Debentures as they become due with other long term financing options.

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Computation for Basic and Diluted Income Per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Schedule Of Earnings Per Share Basic And Diluted [Line Items]
Net income-basic	$ 3,655	$ 1,417
Add back: Interest expense on debentures (net of tax)	6,541	5,907
Net income used for diluted earnings per share	$ 10,196	$ 7,324
Basic income per share	$ 0.04	$ 0.02
Diluted income per share	$ 0.04	$ 0.02

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Summary of Class B Series Two Common Shares Granted (Detail) - shares	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Redemptions	(161,415)	0
Class B Series Two Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding, beginning of the period	61,466	64,516
Redemptions	(10,777)	(3,050)
B2/B3 Share exchange	(50,689)
Shares outstanding at June 30, 2015	0	61,466
Before Income Tax Withheld | Class B Series Two Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding, beginning of the period	251,915	254,965
Redemptions		(3,050)
Shares outstanding at June 30, 2015		251,915
Income Tax Withheld | Class B Series Two Common Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding, beginning of the period	(190,449)	(190,449)
Redemptions		0
Shares outstanding at June 30, 2015		(190,449)

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Basic and Diluted Weighted Average Share Amounts (Detail) - shares	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Weighted Average Number of Shares Outstanding [Line Items]
Weighted-average shares outstanding-basic	87,345,708	82,096,947
Potential dilutive effect of shares to be issued to settle the debentures	21,478,722	18,457,176
Weighted-average shares outstanding-diluted	108,824,430	100,554,123

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Income Taxes (Tables)

12 Months Ended

Jun. 30, 2015

Components of Expense (Benefit) for Income Taxes

The components of the expense (benefit) for income taxes are as follows:

	2015			2014
Federal: Canada
Current	$	(432	)	$	(1,388	)
Deferred		(21	)		1,964
		(453	)		576
Provincial: Canada
Current		(332	)		94
Deferred		(16	)		(423	)
		(348	)		(329	)
Foreign:
Current		566			786
Deferred		319			(1,428	)
		885			(642	)
Total expense (benefit)	$	84		$	(395	)

Components of Income before Income Tax Expense (Benefit) for Income Taxes

The components of income before income tax expense (benefit) for income taxes are as follows:

	2015			2014
Domestic	$	(8,361	)	$	196
Foreign		12,100			826
Total		3,739			1,022

Reconciliation of Income Taxes

The difference between the effective rate reflected in the income tax expense (benefit) for income taxes and the amount determined by applying the Canadian statutory rate to income before income taxes for the fiscal year ended June 30, 2015 and June 30, 2014 is analyzed below:

	2015			2014
Provision for income taxes at statutory rate	$	561		$	158
Provincial taxes		(332	)		112
Foreign rate differential		1,097			264
Canadian rate difference		(59	)		168
Effect of U.S. state rate changes		(1,268	)		—
Gain on bargain purchase		—			(1,105	)
Permanent items		121			96
Uncertain tax position adjustments		(192	)		—
Other		156			(88	)
	$	84		$	(395	)

Significant Components of Deferred Tax Assets and (Liabilities)

Significant components of deferred tax assets and (liabilities) are as follows:

	2015			2014
Deferred tax liabilities
Intangibles	$	(24,873	)	$	(25,055	)
Property and equipment		(55,588	)		(52,082	)
Total deferred tax liabilities		(80,461	)		(77,137	)
Deferred tax assets:
Net operating loss carry forward		25,779			21,675
Other		13,461			14,276
Total deferred tax assets		39,240			35,951
Valuation allowance		(337	)		(337	)
Net deferred tax assets		38,903			35,614
Net deferred tax liabilities	$	(41,558	)	$	(41,523	)

Gross Amounts of Unrecognized Tax Benefits

The following table summarizes the gross amounts of unrecognized tax benefits without regard to reduction in tax liabilities if such unrecognized tax benefits were settled.

	2015			2014
Balance at July 1,	$	1,704		$	1,704
Additions for tax position related to prior year		190			—
Effective settlements with tax authorities		(1,439	)		—
Balance at June 30,	$	455		$	1,704

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Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Goodwill [Line Items]
Beginning Balance	$ 139,158	$ 138,312
Goodwill related to acquisitions		3,360
Goodwill additions related to prior acquisitions	1,826	(1,826)
Foreign currency effects on Goodwill	(6,045)	(688)
Ending Balance	$ 134,939	$ 139,158

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Financial Instruments

12 Months Ended

Jun. 30, 2015

Financial Instruments

14. Financial Instruments

The Company’s financial assets and financial liabilities are as follow:

	As at June 30, 2015		As at June 30, 2014
Cash	$	5,333	$	10,858
Accounts receivable	$	55,275	$	47,731
Accounts payable	$	2,230	$	1,656
Other accrued liabilities		62,040		41,382
Class B Series Two and Three share liability		7,349		9,951
Long-term debt (including portion due within one year)		204,936		274,098
Conversion right on 6.25% Convertible Debentures		9		236
Derivative financial instrument		—		83
Other long term liabilities		17,423		15,431
	$	293,987	$	342,837

The carrying amounts of cash, accounts receivable, accounts payable, and other accrued liabilities approximate fair value because of the short-term maturity of these items. The carrying amount of long-term debt, which bears interest at both fixed and floating rates, also approximates fair value.

Foreign currency exchange contracts were measured at fair value based on appropriate valuation methodologies. The fair value of the Class B Series Two common share liability was based upon an amount equal to the weighted average trading price of the STI common shares for the 10 consecutive trading days immediately prior to the date of valuation plus Cdn $3.847 (reflecting the equivalent value of the Subordinated Note component of the IPS) and the fair value of the Class B Series Three common share liability is based upon an amount equal to the weighted average trading price of the STI common shares for the 10 consecutive trading days immediately prior to the date of valuation. Other long term liabilities consist primarily of insurance reserves which are valued upon actuarial analysis.

The fair value of a financial instrument is the amount of consideration that could be agreed upon in an arm’s length transaction between knowledgeable willing parties who are under no compulsion to act. In certain circumstances, however, the initial fair value may be based upon other observable current market transactions in the same instrument, without modification or on a valuation technique using market-based inputs.

Fair value measurements are categorized using a fair value hierarchy that reflects the significance of inputs used in determining the fair values:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Quoted prices in active markets for similar assets or liabilities or valuation techniques where significant inputs are based on observable market data.

Level 3: Valuation techniques for which any significant input is not based on observable market data.

Each type of fair value is categorized based on the lowest level input that is significant to the fair value measurement in its entirety.

The fair values of the Company’s financial assets and liabilities measured on a recurring basis were categorized as follows:

As at June 30, 2015
	Level 1		Level 2		Level 3		Total
Interest rate swap		—	$	337		—	$	337
Class B Series Three common share liability		—		7,349		—		7,349
Conversion right on US$ 6.25% Convertible Debentures		—		—		9		9
	$	—	$	7,686	$	9	$	7,695

As at June 30, 2014
	Level 1		Level 2		Level 3		Total
Foreign currency exchange contracts	$	—	$	83	$	—	$	83
Interest rate swap		—		408		—		408
Class B Series Two and Three common share liability		—		9,951		—		9,951
Conversion right on US$ 6.25% Convertible Debentures		—		—		236		236
	$	—	$	10,442	$	236	$	10,678

The following tables summarize the changes in the Company’s level 3 financial instrument for the twelve months ended June 30, 2015 and 2014, respectively.

Conversion rights on US$ 6.25% Convertible Debentures For the twelve months ended June 30,	2015			2014
Balance at June 30,	$	236		$	954
Total unrealized gain:
Non-cash gain on conversion feature		(231	)		(714	)
FX impact on conversion feature		4			(4	)
Balance at June 30,	$	9		$	236

The decrease in fair value of the conversion rights was driven by an increase in the bond yield from 2.83% to 6.01% in the twelve months ended June 30, 2015. The decrease in fair value of the conversion rights, in the twelve months ended June 30, 2014, was driven largely by the change in the Company’s stock price volatility which decreased to 17.0% from 23.0%.

The Company uses a binomial model to fair value the conversion rights on the 6.25% Convertible Debentures which takes into account the Company’s stock price volatility, the bond yield and other market factors. This is considered a level 3 value due to the sensitivity of the model to movements in volatility which is not directly observable. The change in fair value of the conversion rights led to income of $0.2 million in the consolidated statement of operations for the year ended June 30, 2015.

The Company has exposure to interest rate risk, foreign currency exchange risk, credit risk and liquidity risk. The Company’s management has overall responsibility for the establishment of the Company’s risk management framework, with oversight provided by the Board of Directors.

Interest Rate Risk

The Company’s interest rate risk primarily arises from its variable rate borrowings under the senior credit facility, which bears a floating rate of interest. The Company manages its interest rate exposure by using a combination of fixed and variable rate debt as well as through an interest rate swap that the Company has in place for a notional amount of $50.0 million of credit facility borrowings. The swap has not been designated as a hedge for accounting purposes therefore the changes in fair value of the interest rate swap are recorded in the condensed consolidated statement of operations. The Company recorded a non cash gain for the year ended June 30, 2015, of $0.1 million in connection with the changes in fair value of the swap, which is included in the consolidated statement of operations as a component of interest expense. The value of the interest rate swap represents a liability of $0.3 million as at June 30, 2015. The Company has secured fixed rate financing in the form of its Senior Secured Notes and its Convertible Debentures.

At June 30, 2015, the Company had $85.4 million in outstanding senior indebtedness (comprised of $50.4 million in revolving credit facility borrowings and $35.0 million in fixed rate Senior Secured Notes) as well as $119.5 million in fixed rate Convertible Debentures.

A 100 basis point change in interest rates, with all other variables held constant, applied to the outstanding credit facility borrowings as at June 30, 2015, would result in an annual change in interest expense and a corresponding change in cash flows of approximately $0.5 million.

Foreign Currency Exchange Risk

The Company managed its exposure to currency fluctuations through foreign currency exchange contracts (“Forward Contracts”) primarily to mitigate the exchange rate risk on the common share dividends. In May 2015, the Company announced that the Board of Directors had approved a change in the currency of the monthly dividend to U.S dollars, effective July 1, 2015. Effective with the announcement, the Company liquidated all of the Forwards Contracts that were outstanding, which had a notional value of $17.5 million. This liquidation resulted in a realized loss of $0.4 million which is recorded in foreign currency (gain) loss in the consolidated statement of operations.

In June 2015, the Company liquidated the foreign exchange forward contract it had in place to cover the principal amount of the Cdn$ 6.75% Convertible Debentures that matured on June 30, 2015. This liquidation resulted in a realized gain of $0.1 million which is recorded in foreign currency (gain) loss in the consolidated statement of operations.

The Company uses cash flows from its Canadian operations to partially mitigate the exchange rate risk on the Convertible Debentures interest payments.

The Company prepares its financial statements in U.S. dollars. In connection with the Company’s Canadian operations, approximately 21.7% of the Company’s consolidated income before taxes are incurred in Canadian dollars. The results of the Canadian operations are translated into U.S. dollars for financial statement reporting purposes.

Changes in the Canadian dollar / U.S. dollar currency exchange rate from period to period will impact the translated U.S. dollar equivalent results of the Canadian operations. The Company recorded a gain of $0.1 million on the translation of its monthly dividends into U.S. dollars (which included the liquidation of the monthly currency contracts used to hedge the dividends). Both of these transactions are recorded in foreign currency (gain) loss in the consolidated statements of operations.

Credit Risk

The Company is exposed to credit risk in its cash and cash equivalents, accounts receivable and to the credit risk of its derivative financial instrument counterparties if they do not meet their obligations. The Company minimizes the credit risk of cash by depositing such with only reputable financial institutions with federally insured backing. The Company minimizes the credit risk of its derivative financial instruments by dealing only with reputable financial institutions and monitoring the credit risk of these financial institutions. As the Company does not utilize credit derivatives or similar instruments, the maximum exposure to credit risk is the full carrying value of the financial instrument or face value of open derivative financial instruments.

Receivables from the transportation segment are secured by the creditworthiness of local municipalities and agencies. The majority of the customers are local school districts that are funded through a combination of local taxes and funding from state/provincial and federal governments. The Company has historically had excellent collections experience with these customers and believes that these receivables are collectable. Receivables from the oil and gas segment are due from reputable general partners operating large partnerships in the oil and gas industry. Consistent with the Company’s history there were minimal write-offs of accounts receivable during the fiscal years ended June 30, 2015 and 2014.

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Commitments and Contingencies

12 Months Ended

Jun. 30, 2015

Commitments and Contingencies

19. Commitments and Contingencies

The Company is subject to certain claims and lawsuits arising in the normal course of business, most of which involve claims for personal injury and property damage incurred in connection with its operations. The Company maintains automobile, workers’ compensation and general liability insurance coverage with deductible amounts for each incident that is the financial responsibility of the Company. The Company accrues for estimated deductible amounts when the incident occurs. The Company’s insurance program is designed to minimize the financial risk associated with claims. The primary risks in the Company’s operations are bodily injury and property damage to third parties.

In the opinion of management, uninsured losses related to deductible amounts resulting from the ultimate resolution of these matters will not have a material effect on the Company’s financial position, results of operations or cash flows.

As part of collateral agreements supporting its insurance programs, the Company had $0.7 million and $0.9 million of letters of credit outstanding at June 30, 2015 and 2014, respectively and $0.9 million and $0.7 million of cash deposits at June 30, 2015 and 2014, respectively which are included in other assets in the consolidated balance sheet.

Certain of the Company’s contracts contain performance or surety bond requirements. These bonds are written by certified surety underwriters. For the most recent fiscal year, outstanding performance bonds aggregated $94.6 million. There are no collateral requirements for these surety bonds.

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Components of Intangible Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 102,101	$ 105,540
Accumulated Amortization	(40,202)	(37,820)
Net Book Value	61,899	67,720
Trade names
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount, Indefinite	22,199	22,918
Net Book Value, Indefinite	22,199	22,918
Contract rights
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	65,102	67,627
Accumulated Amortization	(25,428)	(22,868)
Net Book Value, Finite	$ 39,674	$ 44,759
Amortization Period	12 years	14 years
Covenants not to compete
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 14,800	$ 14,995
Accumulated Amortization	(14,774)	(14,952)
Net Book Value, Finite	$ 26	$ 43
Amortization Period	1 year

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Basis of Presentation - Additional Information (Detail) CAD in Millions	12 Months Ended
	Jun. 30, 2015 USD ($) CAD / Note Segment Customer	Jun. 30, 2014 USD ($)	Nov. 12, 2013 USD ($)	Nov. 12, 2013 CAD	Jun. 07, 2011 USD ($)	Dec. 21, 2004 CAD / Note
Basis Of Presentation And Significant Accounting Policies [Line Items]
Cash equivalents	$ 0	$ 0
Customers which account for more than 10% of its revenues | Customer	0
Depreciation Expense	$ 46,600,000	45,200,000
Capital expenditures incurred but not yet paid	21,000,000
Amortization expense related to intangible assets	3,400,000	3,600,000
Deferred financing cost	5,800,000	7,400,000
Amortization of deferred financing costs	1,866,000	1,642,000
Impairment of Long-Lived Assets	0	0
Insurance reserves	25,900,000	22,100,000
Non-cash stock compensation	$ 4,170,000	$ 3,942,000
Weighted average trading price of common shares trading days	10 days
Historical value of Subordinated Note component of the IPS | CAD / Note	3.847					3.847
Number of reportable segments | Segment	2
Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Highly liquid investments maturities	3 months	3 months
6.25% Convertible Debenture
Basis Of Presentation And Significant Accounting Policies [Line Items]
Value of embedded conversion feature represents a liability	$ 9,000	$ 200,000
Deferred financing cost			$ 3,500,000	CAD 3.6	$ 3,000,000
6.25% Convertible Debenture | Non Cash
Basis Of Presentation And Significant Accounting Policies [Line Items]
Non cash gain in connection with change in fair value of notes	$ 200,000
Contract rights
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of intangible assets	12 years	14 years
Contract rights | Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of intangible assets	20 years
Contract rights | Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of intangible assets	23 years
Non Compete Covenant | Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of intangible assets	2 years
Non Compete Covenant | Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Estimated useful life of intangible assets	5 years
Transportation equipment | Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property and equipment useful life	7 years	7 years
Transportation equipment | Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property and equipment useful life	11 years	11 years
Buildings
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property and equipment useful life	40 years	40 years
Other Property and Equipment | Minimum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property and equipment useful life	3 years
Other Property and Equipment | Maximum
Basis Of Presentation And Significant Accounting Policies [Line Items]
Property and equipment useful life	5 years

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Net income :	$ 3,655	$ 1,417
Other comprehensive income :
Unrealized gain on currency translation adjustments	5,002	782
Other comprehensive income :	5,002	782
Comprehensive income	$ 8,657	$ 2,199

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Business Combinations

12 Months Ended

Jun. 30, 2015

Business Combinations

3. Business Combinations

2015 Acquisition

Dalton Bus Lines Limited

On December 5, 2014 the Company acquired certain assets and a contract of Dalton Bus Lines in Ontario, Canada. Earnings of the acquired company were included in the Company’s results of operations from the acquisition date. The aggregate purchase price of these assets was approximately $0.4 million.

Property and equipment	$	520
Intangible Assets		10
Total	$	530

The purchase price consisted of $0.4 million in cash. Identifiable intangible assets consisted primarily of a non compete agreement that will be amortized over 3 years. The fair value of the assets acquired was greater than the purchase price; therefore the Company recognized a gain of approximately $0.1 million which is included in the statement of operations for fiscal year 2015. Approximately three thousand dollars of acquisition-related costs were recognized as an expense in the statement of operations during fiscal year 2015.

2014 Acquisitions

Atlantic Express Transportation Corporation

On February 10, 2014, the Company closed the acquisition of certain assets and contracts in California from Atlantic Express Transportation Corporation (“AE”). STI’s subsidiary School Wheels Direct (“SWD”) managed the California operations from January 10, 2014 to February 9, 2014. Earnings of the acquired company were included in the Company’s results of operations from February 10, 2014. The aggregate purchase price of these assets was approximately $17.2 million.

Current assets, less current liabilities	$	294
Property and equipment		19,807
Intangible assets		1,736
Deferred taxes		(1,841	)
Fair value of net assets acquired	$	19,996

The purchase price consisted of $17.2 million in cash. Identifiable intangible assets consisted of contracts rights of $1.7 million that will be amortized over 20 years. Approximately $0.2 million of acquisition-related costs were recognized as an expense in the statement of operations during fiscal year 2014.

Prior to the acquisition, AE had filed for protection under the federal bankruptcy protection rules. The SWD management services contract and the agreement to acquire the California assets of AE, including vehicles and school contracts, were both approved by the bankruptcy court. The purchase price was lower than the fair market value of the business acquired. Therefore, the Company recognized a gain of approximately $2.8 million, net of tax, which was included in the consolidated statement of operations for fiscal year 2014.

Williams Bus Line Co.

On August 27, 2013, the Company closed its acquisition of all of the outstanding common stock of Williams Bus Lines Co., (“Williams”), located in Wilkes Barre, Pennsylvania. Earnings of the acquired company were included in the Company’s results of operations from August 27, 2013. The aggregate purchase price of this acquisition was $3.4 million.

Current assets, less current liabilities	$	29
Property and equipment		1,343
Deferred Taxes		(525	)
Subtotal		847
Goodwill		2,557
Total	$	3,404

The purchase price consisted of $3.4 million in cash. Approximately forty-seven thousand dollars of acquisition-related costs were recognized as an expense in the statement of operations during the fiscal year 2014. The goodwill attributed to this acquisition includes the value of the workforce acquired, the opportunity to expand within the marketplace and other key competitive advantages. None of the goodwill related to this acquisition was deductible for tax purposes.

Scholastic Bus Co.

On July 23, 2013, the Company closed its acquisition of all of the outstanding common stock of Scholastic Bus Co., (“Scholastic”), located in Fairlawn, New Jersey. Earnings of the acquired company were included in the Company’s results of operations from the acquisition date. The aggregate purchase price of this acquisition was $2.4 million.

Current assets, less current liabilities	$	298
Property and equipment		2,104
Deferred taxes		(772	)
Subtotal		1,630
Goodwill		803
Total	$	2,433

The purchase price consisted of $2.2 million in cash and $0.2 million in deferred payments. Approximately twenty-seven thousand dollars of acquisition-related costs were recognized as an expense in the statement of operations during fiscal year 2014. The goodwill attributed to this acquisition includes the value of the workforce acquired, the opportunity to expand within the marketplace and other key competitive advantages. None of the goodwill related to this acquisition was deductible for tax purposes.

The following unaudited pro forma financial information combines the consolidated results from operations for fiscal year 2014 as if all of the 2014 acquisitions had occurred as of July 1, 2013. Pro forma adjustments include the bargain gain, the adjustment for amortization on acquired intangibles and the adjustment to record the tax impact on the pro forma financial results. The unaudited results are as follows:

	Pro Forma Basis for fiscal year Ended June 30, (unaudited)
	2014
Revenue	$	505,609
Net income		1,688
Basic and diluted net income per common share	$	0.02

The pro forma financial information is not necessarily indicative of operating results that would have occurred had the 2014 acquisitions been consummated as of July 1, 2013, nor is it indicative of future operating results.

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Components of Indebtedness (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Jun. 30, 2014
Debt Instrument [Line Items]
Current		$ 200
Long Term	$ 204,936	273,898
Convertible Debentures
Debt Instrument [Line Items]
Long Term	119,515	176,462
Senior Secured Notes
Debt Instrument [Line Items]
Long Term	35,000	35,000
Promissory Notes Due to Former Owner
Debt Instrument [Line Items]
Current		200
Revolving Credit Facility | Third Amended And Restated Credit Agreement
Debt Instrument [Line Items]
Long Term	$ 50,421	$ 62,436

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Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2013
Fair Value, Option, Quantitative Disclosures [Line Items]
Consecutive trading days	10 days
Stock price volatility		17.00%	23.00%
Bond yield	6.01%	2.83%
Change in fair value of derivatives	$ (400)
Notional amount of derivative liabilities	$ 17,500
Percentage of revenue and expenses incurred in Canadian currency	21.70%
Loss on translation	$ 136	$ (424)
6.25% Convertible Debenture
Fair Value, Option, Quantitative Disclosures [Line Items]
Change in fair value of derivatives	200
Fixed Rate Debt
Fair Value, Option, Quantitative Disclosures [Line Items]
Fixed rate convertible debenture	119,500
Interest Rate Swap
Fair Value, Option, Quantitative Disclosures [Line Items]
Change in fair value of derivatives	100
Notional amount of derivative liabilities	50,000
Interest rate swap liability	300
Forward Contracts
Fair Value, Option, Quantitative Disclosures [Line Items]
Change in fair value of derivatives	100
Monthly Dividend
Fair Value, Option, Quantitative Disclosures [Line Items]
Loss on translation	100
Fixed Rate Senior Notes
Fair Value, Option, Quantitative Disclosures [Line Items]
Senior debt outstanding	$ 85,400
Change in interest expense in cash flow	1.00%
Change in cash flows resulting from change in interest rates	$ 500
Fixed Rate Senior Notes | Revolving Credit Facility
Fair Value, Option, Quantitative Disclosures [Line Items]
Senior debt outstanding	50,400
Fixed Rate Senior Notes | Secured Debt
Fair Value, Option, Quantitative Disclosures [Line Items]
Senior debt outstanding	$ 35,000
Class B Series Two Common Shares
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value measurements valuation techniques	The fair value of the Class B Series Two common share liability was based upon an amount equal to the weighted average trading price of the STI common shares for the 10 consecutive trading days immediately prior to the date of valuation plus Cdn $3.847 (reflecting the equivalent value of the Subordinated Note component of the IPS)
Consecutive trading days	10 days
Class B Series Three Common Shares
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair value measurements valuation techniques	The fair value of the Class B Series Three common share liability is based upon an amount equal to the weighted average trading price of the STI common shares for the 10 consecutive trading days immediately prior to the date of valuation.

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Additional Financial Information

12 Months Ended

Jun. 30, 2015

Additional Financial Information

20. Additional Financial Information

Select additional financial information consists of the following:

Balance Sheet Information At June 30	2015		2014
Prepaid Expenses
Prepaid Insurance	$	7,098	$	6,924
Other		2,623		2,695
	$	9,721	$	9,619
Other Current Assets
Fuel Tax Receivable	$	1,799	$	1,249
Other Receivables		1,644		3,539
	$	3,443	$	4,788
Accrued Expenses and Accounts Payable
Accrued Accounts Payable	$	8,483	$	8,711
Dividends Payable		14,096		14,255
Insurance		9,111		7,532
Wages and Benefits		5,175		6,237
Class B Shares		5,356		7,217
Taxes Payable		1,259		1,335
Deferred Revenue		655		774
Accrued Fixed Assets		20,983		—
Other		2,278		2,621
	$	67,396	$	48,682
Other liabilities
Insurance	$	16,756	$	14,565
Other		676		1,102
	$	17,432	$	15,667

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Reportable Operating Segments (Detail) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Segment Reporting Information [Line Items]
Revenue	$ 554,751	$ 489,499
Operating earnings (losses)	17,162	15,525
Unallocated expenses	13,423	14,503
Capital Expenditures	33,470	37,794
Tax expense (benefit)	84	(395)
Depreciation, depletion and amortization	51,131	50,017
Net income	3,655	1,417
Total Assets	535,927	543,838
Total Liabilities	336,120	384,798
Transportation
Segment Reporting Information [Line Items]
Revenue	551,861	484,316
Operating earnings (losses)	17,702	14,290
Capital Expenditures	32,467	36,271
Depreciation, depletion and amortization	49,969	48,896
Total Assets	527,291	534,522
Total Liabilities	334,333	383,114
Oil and gas
Segment Reporting Information [Line Items]
Revenue	2,890	5,183
Operating earnings (losses)	(540)	1,235
Capital Expenditures	1,003	1,523
Depreciation, depletion and amortization	1,162	1,121
Total Assets	8,636	9,316
Total Liabilities	$ 1,787	$ 1,684

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Segment Information (Tables)

12 Months Ended

Jun. 30, 2015

Revenue and Assets by Geographical Area for Transportation Segment

The table below summarizes revenue and assets by geographical area for the transportation segment for the years ended June 30, 2015 and 2014:

2015
	Revenues		Property and Equipment (net)		Goodwill
United States	$	480,936	$	198,135	$	99,484
Canada		70,925		33,161		35,455
Total	$	551,861	$	231,296	$	134,939

2014
	Revenues		Property and Equipment (net)		Goodwill
United States	$	409,683	$	187,218	$	99,484
Canada		74,633		44,134		39,674
Total	$	484,316	$	231,352	$	139,158

Reportable Operating Segments

Reportable operating segments:

	2015			2014
Revenue
Transportation	$	551,861		$	484,316
Oil and gas		2,890			5,183
	$	554,751		$	489,499
Operating earnings (losses)
Transportation	$	17,702		$	14,290
Oil and gas		(540	)		1,235
		17,162			15,525
Unallocated expenses		13,423			14,503
Tax expense (benefit)		84			(395	)
Net Income	$	3,655		$	1,417

	2015		2014
Capital Expenditures
Transportation	$	32,467	$	36,271
Oil and gas		1,003		1,523
	$	33,470	$	37,794
Depreciation, depletion and amortization
Transportation	$	49,969	$	48,896
Oil and gas		1,162		1,121
	$	51,131	$	50,017
Total Assets
Transportation	$	527,291	$	534,522
Oil and gas		8,636		9,316
	$	535,927	$	543,838
Total Liabilities
Transportation	$	334,333	$	383,114
Oil and gas		1,787		1,684
	$	336,120	$	384,798

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Stock-Based Compensation

12 Months Ended

Jun. 30, 2015

Stock-Based Compensation

13. Stock-Based Compensation

The shareholders of the Company approved the adoption by STA Holdings of the EIP, at the annual general meeting held on December 8, 2005. As part of the 2005 EIP formation, the shareholders approved an initial allotment of 717,747 Class B Series Two common shares of STA Holdings. On November 13, 2008, an additional allotment of 1,446,291 Class B Series Two common shares was approved by the shareholders, which have been granted to management.

These shares are accounted for as a liability upon issuance, as a result of a put option they contain, which may be granted to management.

On March 5, 2010, STA Holdings amended its Certificate of Incorporation in order to differentiate those Class B common shares issued pursuant to the EIP while the Company was under the IPS structure from those issued and those to be issued subsequent to the end of the IPS structure. Pursuant to the amendment, the authorized Class B Series Two common shares were split into Class B Series Two common shares, which have been issued pursuant to the EIP during the period the IPS structure was in place, and Class B Series Three common shares, which will be utilized for all future share grants under the EIP, subsequent to March 5, 2010. On November 8, 2012, an additional allotment of 2,265,000 Class B Series Three common shares was approved by the shareholders. In May 2015, the Company redeemed all of the remaining Class B Series Two common shares by exchanging the outstanding Class B Series Two common shares for Class B Series Three common shares, based on the fair market value of each class of shares. This non-cash exchange resulted in approximately 1.57 Class B Series Three common shares being issued for each Class B Series Two common share outstanding. The holders of the Class B Series Two common shares were entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the distributions per IPS that were paid historically to the holders of IPS’s. The holders of the Class B Series Three common shares are entitled to receive dividends, as and when declared by the board of directors of STA Holdings, approximately equivalent to the dividends received by the holders of STI common shares.

Pursuant to the liquidity provisions of the EIP, the holders of Class B Series Three common shares will have an option to “put” up to one third of the shares awarded each year back to the Company, starting one year immediately following the grant.

Class B common shares granted are fully vested on the grant date. These shares are classified as a liability and re-measured at fair value at the end of each reporting period. Changes in fair value and dividends on the Class B common shares are recorded as a component of other (income) expense, in the consolidated statement of operations. The Company recorded income of $3.3 million and an expense of $0.9 million for the years ended June 30, 2015 and 2014, respectively, associated with the change in fair value on the Class B common shares, which are recorded as a component of other (income) expense, in the consolidated statement of operations. The Company recorded $0.9 million and $0.8 million in dividend payments for the years ended June 30, 2015 and 2014, respectively, which are recorded as a component of other (income) expense, in the consolidated statement of operations.

The following tables summarize the Class B Series Two common shares redeemed and shares outstanding pursuant to the EIP:

For the year ended June 30, 2015 Net shares outstanding
Shares outstanding at June 30, 2014	61,466
Redemptions	(10,777	)
B2/B3 Share exchange	(50,689	)
Shares outstanding at June 30, 2015	—

Pursuant to the liquidity provision of the EIP plan, 10,777 shares were “put” back to the Company during the year ended June 30, 2015 for which the Company paid $0.1 million. The remaining Class B Series Two common shares were exchanged for Class B Series Three common shares as discussed above.

	For the year ended June 30, 2014
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2013		254,965			(190,449	)		64,516
Redemptions		(3,050	)		—			(3,050	)
Shares outstanding at June 30, 2014		251,915			(190,449	)		61,466

Pursuant to the liquidity provision of the EIP plan, 3,050 shares were “put” back to the Company during the year ended June 30, 2014 for which the Company paid thirty one thousand dollars. The fair value of the Class B Series Two common shares outstanding at June 30, 2014 represents a liability of $0.6 million all of which is recorded in other current liabilities. This amount represents the current value of those shares eligible to put in the next twelve months pursuant to the EIP plan.

The following tables summarize the Class B Series Three common shares granted, shares withheld for income tax withholdings at the election of the participants, shares redeemed and shares outstanding pursuant to the EIP:

	For the year ended June 30, 2015
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2014		2,071,993			(666,151	)		1,405,842
Grants		663,620			(236,241	)		427,379
Redemptions		(322,019	)		—			(322,019	)
B2/B3 Share exchange		80,009			—			80,009
Shares outstanding at June 30, 2015		2,493,603			(902,392	)		1,591,211

The Company recognized $4.2 million in non-cash stock based compensation expense related to the above grants during the year ended June 30, 2015, based on the estimated fair value of these shares on the grant date. The additional 80,009 Class B Series Three common shares were issued in exchange for the remaining Class B Series Two common shares outstanding as discussed above. Pursuant to the liquidity provision of the EIP plan, 322,019 shares were “put” back to the

Company during the year ended June 30, 2015 for which the Company paid $1.9 million. The fair value of the Class B Series Three common shares outstanding at June 30, 2015 represents a liability of $7.3 million, of which $5.4 million is recorded in other current liabilities and represents the current value of those shares eligible to be put in the next twelve months pursuant to the EIP plan. The remaining balance is recorded in Class B Series Three common share liability.

	For the year ended June 30, 2014
	Shares			Taxes			Total outstanding
Shares outstanding at June 30, 2013		1,634,452			(470,862	)		1,163,590
Grants		635,074			(195,289	)		439,785
Redemptions		(197,533	)		—			(197,533	)
Shares outstanding at June 30, 2014		2,071,993			(666,151	)		1,405,842

The Company recognized $3.9 million in non-cash stock based compensation expense related to the above grants during the year ended June 30, 2014, based on the estimated fair value of these shares on the grant date. Pursuant to the liquidity provision of the EIP plan, 197,533 shares were “put” back to the Company during the year ended June 30, 2014 for which the Company paid $1.2 million. The fair value of the Class B Series Three common shares outstanding at June 30, 2014 represents a liability of $9.3 million, of which $6.6 million is recorded in other current liabilities and represents the current value of those shares eligible to be put in the next twelve months pursuant to the EIP plan. The remaining balance is recorded in Class B Series Three common share liability.