7b supp
ITEM NO: 7b_Supp______ DATE OF MEETING: March 8, 2016 Port of Seattle 2015 Financial Performance Report February 23, 2016 2015 Operating Income Summary Fav (UnFav) Incr (Decr) 2014 2015 2015 Budget Variance Change from 2014 $ in 000's Actual Actual Budget $ % $ % Aeronautical Revenues 228,864 229,470 242,352 (12,882) -5.3% 606 0.3% SLOA III Incentive (3,576) (3,576) (3,576) - 0.0% - 0.0% Other Operating Revenues 309,650 332,884 312,989 19,895 6.4% 23,234 7.5% Total Operating Revenues 534,938 558,779 551,766 7,013 1.3% 23,840 4.5% Total Operating Expenses 309,334 317,186 332,914 15,728 4.7% 7,852 2.5% NOI before Depreciation 225,605 241,593 218,852 22,741 10.4% 15,988 7.1% Depreciation 166,337 163,338 162,082 (1,256) -0.8% (2,999) -1.8% NOI after Depreciation 59,267 78,255 56,770 21,485 37.8% 18,987 32.0% Aeronautical Revenues were $229.5M, $12.9M lower than budget mainly due to higher non- aeronautical revenues sharing with the airlines. Other operating revenues (w/o Aeronautical) were $332.9M, $19.9M or 6.4% higher than budget and $23.2Mor 7.5% higher than 2014 actual. Total Operating Expenses were $317.20M, $15.7M or 4.7% below budget mainly due to savings in Payroll, Outside Services, and Travel & Other Employee expense. Net Operating Income before Depreciation $22.7M or 10.4% above Budget. 2 Net Operating Income Comparison Record Net Operating Income (NOI) of $241.6 million in 2015. 3 Comprehensive Financial Summary Fav (UnFav) 2014 2015 2015 Budget Variance ($ in 000's) Actual Actual Budget $ % Explanation Revenues 1. Operating Revenues 534,938 558,779 551,766 7,013 1.3% See details in the previous slides 2. Tax Levy 72,801 72,819 73,000 (181) -0.2% In line with budget 3. PFCs 69,803 79,209 73,752 5,457 7.4% Higher enplanements 4. CFCs 19,889 23,540 23,614 (74) -0.3% In line with budget 5. Fuel Hydrant 6,935 6,957 7,202 (246) -3.4% In line with budget 6. Non-Capital Grants & Donations 10,158 5,358 6,263 (905) -14.5% Less Dept. of Ecology state grants 7. Capital Contributions 16,746 22,804 40,949 (18,145) -44.3% Less FAA and TSA grants 8. Interest Income 11,202 9,122 7,094 2,028 28.6% Higher balance due to new issuance Total 742,473 778,587 783,639 (5,052) -0.6% Expenses 1. O&M Expense 309,334 317,186 332,914 15,728 4.7% See details in the previous slides 2. Depreciation 166,337 163,338 162,082 (1,256) -0.8% In line with budget 3. Revenue Bond Interest Expense 108,910 110,128 133,468 23,340 17.5% Savings from refunding bond 4. GO Bond Interest Expense 9,475 10,490 14,706 4,215 28.7% Refunding bond and early payment 5. PFC Bond Interest Expense 5,906 5,584 5,633 49 0.9% In line with budget 6. Public Expense 6,854 5,023 9,572 4,549 47.5% Timing of cashflow moved out to 2016 7. Non-Op Environmental Expense 9,142 2,888 5,600 2,712 48.4% Less in T91 cleanup than budgeted 8. Other Non-Op Expense/(Revenue) (2,110) 22,563 3,657 (18,905) -516.9% Loss on retirement of assets Total 613,849 637,200 667,632 30,432 4.6% Special Item - (120,000) - (120,000) 0.0% AWV contribution Increase In Net Position 128,624 21,387 116,007 (94,620) -81.6% 2015 Total Revenues were $778.6M, $5.1M lower than the budget but $36.1M higher than 2014 actual. 2015 Total Expenses (before Special Item) were $637.2M, $30.4M lower than the budget but $23.4M higher than 2014 actual. 4 Aviation Division 2015 Financial Performance Report February 12, 2016 Airport Activity 2014 2015 % Change Passengers: Enplaned Passengers (000's) Alaska +12% Domestic 16,824 18,944 12.6% Delta +40% International 1,892 2,165 14.4% Total 18,717 21,109 12.8% Southwest +8% Operations 340,478 381,408 12.0% United -7% Landed Weight (million lbs.) Passenger Market Cargo 1,575 1,588 0.9% Share: All other 20,930 23,169 10.7% Alaska 51.0% Total 22,505 24,757 10.0% Delta 19.4% Cargo - metric tons Southwest 7.7% Domestic freight 167,729 162,013 -3.4% International freight 107,752 115,357 7.1% United 6.8% Mail 51,758 55,266 6.8% Total 327,239 332,636 1.6% Increase in enplanements driven by Delta and Alaska 6 Aviation Financial Summary Fav (UnFav) Incr (Decr) 2014 2015 2015 Budget Variance Change from 2014 $ in 000's Actual Actual Budget $ % $ % Operating Revenues: Aeronautical Revenues 228,864 229,470 242,352 (12,882) -5.3% 606 0.3% SLOA III Incentive Straight Line Adj (1) (3,576) (3,576) (3,576) (0) 0.0% 0 0.0% Non-Aeronautical Revenues 180,791 196,844 188,465 8,378 4.4% 16,053 8.9% Total Operating Revenues 406,079 422,738 427,242 (4,504) -1.1% 16,659 4.1% Total Operating Expense 230,704 237,655 248,141 10,486 4.2% 6,951 3.0% Net Operating Income 175,375 185,083 179,101 5,982 3.3% 9,708 5.5% Capital Expenditures 155,970 164,931 225,435 60,504 26.8% 8,961 5.7% Aeronautical revenues are largely based on cost recovery formulas and are net of revenue sharing. Negative variance vs. budget actually reflects lower costs to airlines and thus indicates good performance. 2015 NOI $9.7M higher than 2014 7 Key Performance Measures Fav (UnFav) Incr (Decr) 2014 2015 2015 Budget Variance Change from 2014 Actual Actual Budget $ % $ % Performance Metrics Cost per Enplanement (CPE) 11.48 10.12 11.78 1.66 14.1% (1.37) -11.9% O&M Cost per Enplanement 12.33 11.26 12.82 1.56 12.2% (1.07) -8.7% Non-Aero Revenue per Enplanement 9.66 9.33 9.74 (0.41) -4.2% (0.33) -3.5% Debt per Enplanement 126 119 129 10 7.7% (6) -5.1% Debt Service Coverage 1.38 1.49 1.40 0.08 5.9% 0.10 7.3% Days cash on hand (10 months = 304 days) 405 469 305 164 53.8% 64 15.7% Aeronautical Revenue Sharing ($ in 000's) 17,034 29,436 19,488 9,948 51.0% 12,401 72.8% Activity (in 000's) Enplanements 18,717 21,109 19,354 1,754 9.1% 2,392 12.8% 2015 enplaned passengers up 12.8% above 2014. This reflects new scheduled flights, primarily by Delta and Alaska Reduction in CPE reflects lower airline costs due to higher revenue sharing (driven by increased nonairline revenues), and increased enplaned passengers Improved debt service coverage compared to budget reflects increased cash flow from growth in enplanements Enplanement growth drives improved performance 8 Non-Aeronautical Business Fav (UnFav) Incr (Decr) 2014 2015 2015 Budget Variance Change from 2014 $ in 000's Actual Actual Budget $ % $ % Non-Aero Revenues Rental Cars - Operations 32,496 33,851 32,772 1,079 3.3% 1,355 4.2% Rental Cars - CFC 13,702 12,663 12,172 491 4.0% (1,039) -7.6% Public Parking 57,128 63,059 58,925 4,134 7.0% 5,931 10.4% Ground Transportation 8,333 8,809 8,244 565 6.9% 476 5.7% Airport Dining & Retail 46,954 51,607 49,883 1,723 3.5% 4,653 9.9% Commercial Properties 6,638 8,007 8,204 (197) -2.4% 1,369 20.6% Utilities 6,736 7,000 8,279 (1,279) -15.4% 264 3.9% Other 8,805 11,848 9,986 1,862 18.6% 3,043 34.6% Total Non-Aero Revenues 180,791 196,844 188,465 8,378 4.4% 16,053 8.9% Total Non-Aero Expenses 80,405 84,057 91,270 7,213 7.9% 3,652 4.5% Net Operating Income 100,386 112,787 97,195 15,591 16.0% 12,401 12.4% Less: CFC Surplus (6,497) (5,159) (4,760) 399 8.4% 1,339 -20.6% Adjusted Non-Aero NOI 93,889 107,628 92,436 15,192 16.4% 13,740 14.6% Debt Service (45,209) (42,812) (43,847) 1,035 2.4% 2,397 5.3% Net Cash Flow 48,679 64,816 48,589 16,227 33.4% 16,137 33.1% Revenue growth driven by increased enplanements 9 Aeronautical Business Fav (UnFav) Incr (Decr) 2014 2015 2015 Budget Variance Change from 2014 $ in 000's Actual Actual Budget $ % $ % Revenues: Movement Area 75,428 78,318 78,635 (317) -0.4% 2,890 3.8% Apron Area 11,558 10,840 11,233 (394) -3.5% (718) -6.2% Terminal Rents 142,381 150,299 153,167 (2,868) -1.9% 7,918 5.6% Federal Inspection Services (FIS) 9,218 9,965 10,360 (395) -3.8% 746 8.1% Total Rate Base Revenues 238,585 249,422 253,395 (3,973) -1.6% 10,837 4.5% Commercial Area 8,328 9,519 8,445 1,074 12.7% 1,191 14.3% Subtotal before Revenue Sharing 246,913 258,941 261,840 (2,899) -1.1% 12,028 4.9% Revenue Sharing (17,034) (29,436) (19,488) (9,948) -51.0% (12,401) 72.8% Other Prior Year Revenues (1,014) (35) - (35) 0.0% 979 -96.5% Total Aeronautical Revenues 228,864 229,470 242,352 (12,882) -5.3% 606 0.3% Total Aeronautical Expenses 150,299 153,598 156,871 3,273 2.1% 3,299 2.2% Net Operating Income 78,565 75,872 85,481 (9,609) - -11.2% (2,693) -3.4% Debt Service (82,029) (82,341) (84,496) 2,155 2.6% (311) 0.4% Net Cash Flow (3,465) (6,469) 985 (7,454) -756.5% (3,004) 86.7% Expense savings and higher revenue sharing compared to Budget 10 2015 Capital Budget (1) Paid an additional invoice that was not expected until Q1 2016 (accelerated spending); however, $ in 000's 2015 2015 Budget Variance project has returned $21.7 million of savings todate. Description Actual Budget $ % (2) Design Builder billings for Validation Services RW16C-34C Design and Reconst (1) 62,264 52,850 (9,414) -17.8% several months behind (delayed spending) International Arrivals Fac-IAF (2) 6,593 12,088 5,495 45.5% (3) Slowdown with design decision gyrations and submittal delays causing overall delay to project NS NSAT Renov NSTS Lobbies (3) 12,965 18,076 5,111 28.3% schedule (delayed spending) Alaska Hangar One Roof (4) 108 3,875 3,767 97.2% (4) Reduction in scope and delay due to SAMP (5) evaluation (delayed spending). Project budget was CCTV Camera/Data Improvements 182 3,065 2,883 94.1% reduced by $2.5 million in 2015 due to scope C4 UPS System Improvements (6) 227 3,025 2,798 92.5% changes. So. 160th St. GT Lot Expansion (7) 9 2,375 2,366 99.6% (5) Delay in design procurement (delayed spending) (6) Changes in procurement strategy impacted Parking System Replacement (8) 59 2,150 2,091 97.3% timeliness of obtaining Commission authorization NS Conc C Vertical Circulation (9) 6,858 8,490 1,632 19.2% and getting contract executed (delayed spending) NS Refurbish Baggage Systems (10) 11,506 12,966 1,460 11.3% (7) Mid-year scope change at 100% design pushed out project timeline (delayed spending). Project has Checked Bag Recap/Optimization (11) 7,676 8,800 1,124 12.8% returned $1.6 million of savings to-date. All Other 56,484 97,674 41,190 42.2% (8) Procurement schedule extended to allow additional vendors to bid (delayed spending) Total Spending 164,931 225,435 60,504 26.8% (9) Project has returned $2.1 million of savings to- date to the NorthSTAR Program Reserve (project savings) (10) Project has returned $2 million of savings to-date to the NorthSTAR Program Reserve (project savings) (11) Decision was made to have the contractor (versus PCS) perform enabling project work as part of the Phase 1 work package, pushing that work into 2016 and 2017 (delayed spending) 2015 spending is 27% below budget 11 Seaport Division 2015 Financial Performance Report February 23, 2016 Seaport 2015 Business Overview Full Year Net Operating Income exceeded budget. Business Volume: TEU volume was 1,404K, up 1.2% from 2014 and 8.8% above budget. Grain volume was 3,778K metric tons, up 4% from 2014 but (6%) below 2015 budget. Cruise passengers totaled 898K which was about 9% above 2014 and approximately equal to budget. Signed Pier 66 lease agreement with Norwegian Cruise Lines Environmental: Terminal 91 clean up construction complete. Over 126 drayage trucks have been replaced with model-year 2007 or newer engines under the Seaport Truck Scrappage and Replacements for Air in Puget Sound (ScRAPS 2) program (largely grant funded). $4.2M in clean-up project costs were recovered from grants, insurance, and cost sharing agreements. Solid growth in Cruise passengers and TEU volume. 13 Seaport 2015 Financial Summary Fav (UnFav) Incr (Decr) 2014 2015 Budget Variance Change from 2014 $ in 000's Actual Actual Budget $ % $ % Operating Revenue 96,157 98,063 91,635 6,429 7% 1,906 2% Security Grants 0 0 0 0 NA 0 NA Total Revenues 96,157 98,063 91,635 6,429 7% 1,906 2% Seaport Expenses (excl env srvs) 14,531 13,788 18,165 4,377 24% (743) -5% Environmental Services 2,119 2,373 2,452 79 3% 254 12% Maintenance Expenses 6,083 7,172 7,067 (105) -1% 1,089 18% P69 Facilities Expenses 407 389 446 58 13% (19) -5% Other RE Expenses 316 380 433 53 12% 65 20% CDD Expenses 1,862 1,895 1,847 (48) -3% 32 2% Police Expenses 4,161 3,639 3,990 352 9% (523) -13% Corporate Expenses 8,388 9,019 8,953 (66) -1% 631 8% Security Grant Expense 0 0 0 0 NA 0 NA Envir Remed Liability (378) 114 250 136 54% 4920 Total Expenses 37,490 38,768 43,603 4,835 11% 1,278 3% NOI Before Depreciation 58,667 59,295 48,031 11,264 23% 628 1% Depreciation 33,154 31,423 32,754 1,331 4% (1,731) -5% NOI After Depreciation 25,513 27,873 15,278 12,595 82% 2,360 9% Operating Revenue $6.4M favorable to budget and up $1.9M from 2014: Foss Maritime $5,580K in unbudgeted revenue and $1,362K T46 Mag Overage. Grain Revenue unfavorable ($382K) and Surface Water Utility Revenue unfavorable ($1,588K). Surface Water fees are now paid directly by tenants to Stormwater Utility. Seaport Expenses favorable $4,377K due to Outside Services related to Terminal 91 Maintenance Dredging, Surface Water expense related to tenants' occupied sites which will be expensed by the new Stormwater Utility, and open positions. Full Year Net Operating Income $11.3 million favorable to Budget. 14 2015 Seaport Capital $ in 000's 2015 2015 Budget Variance Actual Budget $ % Seaport 12,520 20,068 7,548 38% Significant Variances: Terminal 46: Variance relates to T46 Development Crane Rail & Berth Extension- design schedule accelerated to accommodate customer's request. Stormwater Improvement- Q4 2014 construction activities were delayed & proceed in Q1 2015; additional costs were added for change order in 2015. Contingency Renewal & Replace: Variance reflects adjustment of amounts available in 2015 to reflect utilization of funds for T5 Modernization project and T46 Development. T18 Stormwater Infrastructure- Project delayed to 2016. All Other Primarily due to T18 South Gate Rail Spur Westway project that was postponed while waiting to finalize the associated lease and later start date for Bell Street Cruise Terminal Roof Fall Protection system. Seaport spent 62% of Capital Budget. 15 Real Estate Division 2015 Financial Performance Report February 23, 2016 Real Estate 2015 Business Overview Full Year Net Operating Income exceeds budget. P69 Roof Beam Rehab Approved by Commission and local contractor chosen. Eastside Rail Corridor Sale of 2.6 miles of the rail corridor in King County to City of Woodinville closed in November. Occupancy Rates/Activity Commercial property at 93% occupancy at end of Q4, below target of 95% and Seattle market average of 94%. Marinas: Fishermen's Terminal and Maritime Industrial Center at 83% average occupancy, above target of 79%. Recreational marinas at 96% above 95% target. Conference and Event Center revenue exceeded budget by 21% and 2014 by 16%. Financial and occupancy measures are largely favorable to Budget. 17 Real Estate 2015 Financial Summary Fav (UnFav) Incr (Decr) 2014 2015 Budget Variance Change from 2014 $ in 000's Actual Actual Budget $ % $ % Revenue 23,356 24,282 23,970 312 1% 925 4% Conf & Event Ctr Revenue 8,957 10,396 8,580 1,817 21% 1,439 16% Total Revenue 32,313 34,678 32,550 2,128 7% 2,365 7% Real Estate Exp(excl Co nf,Maint,P 69) 11,114 10,683 11,967 1,284 11% (431) -4% Conf & Event Ctr Expense 7,374 8,541 7,504 (1,037) -14% 1,167 16% Eastside Rail Corridor 2,436 (1,263) 210 1,473 701% (3,699) -152% Maintenance Expenses 8,778 8,735 9,976 1,241 12% (43) 0% P69 Facilities Expenses 125 116 133 17 13% (8) -7% Seaport Expenses 1,140 1,467 1,377 (90) -7% 327 29% CDD Expenses 2,318 1,938 1,777 (162) -9% (380) -16% Police Expenses 1,353 1,182 1,291 109 8% (171) -13% Corporate Expenses 5,176 5,122 4,921 (201) -4% (54) -1% Envir Remed Liability (3) 0 250 250 100% 03 -105% Total Expense 39,810 36,522 39,407 2,886 7% (3,288) -8% NOI Before Depreciation (7,496) (1,844) (6,858) 5,014 73% 5,653 75% Depreciation 9,599 10,043 10,120 77 1% 444 5% NOI After Depreciation (17,095) (11,886) (16,977) 5,091 30% 5,209 30% Facility/Property Revenue favorable due to Bell Street Garage, lump sum early termination payment for Fishermen's Terminal tenant, and retroactive lease payment for Terminal 34. Conference and Event Center activity favorable to budget resulting in a favorable revenue variance and a partially offsetting unfavorable expense variance. Real Estate expense variance reflects open positions, below budget electricity and sewer utility expenses, under spending on tenant improvements, and an insurance payment for the Eastside Rail Corridor. More tenant improvements have qualified for capitalization than assumed in 2015 Budget. Maintenance expense variance driven by delay on permit for demolishing W50 Building at T91. Full Year Net Operating Income $5 million favorable to Budget. 18 2015 Real Estate Capital $ in 000's 2015 2015 Budget Variance Actual Budget $ % Real Estate 4,870 12,194 7,324 60% Significant Variances: Fleet Replacement Due to delay in procurement process. C15 Building Tunnel Improvement Project delayed to 2016. Pier 69 Roof Beam Rehabilitation Project construction phase delayed to 2016. Tenant Improvements Capital Spending exceeded budget due to more tenant improvements for World Trade Center West that qualified for capitalization than anticipated in 2015 Budget. Fishermen's Terminal C-2 (Nordby) Roof & HVAC Pier 69 Built-Up Roof Replacement 2015 Budget was understated as variances reflect payments related to 2014 work not paid until 2015. Fishermen's Terminal C14 (Downie) Roof & HVAC - Project is on hold while waiting for further direction from the Fishermen's Terminal long term plan. RE BHICC Roof Fall Protection Delayed in start date for Conference Center Roof Fall Protection system (shared project with Seaport Bell Street Cruise Terminal). Real Estate spent 40% of Capital Budget. 19 Capital Development 2015 Financial Performance Report February 23, 2016 Q4 2015 Key Business Events Runway 16C/34C replacement completed and $21.3M in project savings returned. International Arrivals Facility (IAF) Clark/SOM under contract as design builder, validation period complete. NorthSTAR Hensel Phelps awarded general contractor/construction manager contract for North Satellite renovation and expansion, 60% design completed. 100% design of baggage optimization system completed for TSA submittal. 60 Port Construction Services projects reached substantial completion. Executed Terminal 5 test pile program construction contract. Terminal 91 tank farm remediation reached substantial completion. Major projects are moving ahead. 21 2015 Capital Development Financials Summary Fav (UnFav) Incr (Decr) 2014 2015 2015 Budget Variance Change from 2014 $ in 000's Notes Actual Actual Budget $ % $ % Total Revenues 21 87 - 87 0.0% 67 322.5% Expenses Before Charges To Cap/Govt/Envrs Propects Capital Development Administration 394 428 419 (9) -2.2% 34 8.6% Engineering 14,305 16,447 17,524 1,077 6.1% 2,142 15.0% Port Construction Services 8,186 6,944 8,165 1,222 15.0% (1,242) -15.2% Central Procurement Office 4,616 4,716 5,604 888 15.8% 100 2.2% Aviation Project Management 11,622 13,862 16,350 2,488 15.2% 2,240 19.3% Seaport Project Management 2,998 2,594 2,550 (44) -1.7% (403) -13.5% Total Before Charges to Capital Projects 42,121 44,991 50,612 5,621 11.1% 2,870 6.8% 85% personnel fill. 85% personnel fill. 22 Corporate 2015 Financial Performance Report February 23, 2016 2015 Corporate Key Metrics 2015 2014 Employment through Airport Jobs Center 1,373 1,143 Small businesses registered on the Procurement Roster Mgmt. System 135 130 Apprenticeship Opportunity Project Placements 84 150 % of Eligible Dollars Spent with Small Businesses 54.0% 28.0% Employee Development Class Attendees 1,486 2,201 Occupational Injury Rate 5.11 6.17 Total Lost work days 1,151 2,010 Responded to Public Disclosure Requests 486 232 Customer Survey for Police Service Excellent or Very Good 88% 92% Strong performance results for Corporate in 2015. 24 2015 Budget Variances by Department Fav (UnFav) Incr (Decr) 2014 2015 2015 Budget Variance Change from 2014 $ in 000's Actual Actual Budget $ % $ % Total Revenues 398 332 340 (7) -2.1% (66) -16.5% Executive 1,710 2,198 1,798 (399) -22.2% 488 28.5% Commission 1,353 1,270 1,545 275 17.8% (83) -6.1% Legal 3,731 3,501 3,156 (345) -10.9% (229) -6.2% Risk Services 3,051 3,217 3,249 32 1.0% 166 5.4% Health & Safety Services 1,067 1,186 1,190 4 0.4% 119 11.2% Public Affairs 5,554 5,349 5,937 589 9.9% (206) -3.7% Human Resources & Development 5,356 5,534 5,958 424 7.1% 178 3.3% Labor Relations 823 1,191 1,024 (167) -16.3% 368 44.8% Information & Communications Technology 20,458 21,887 21,435 (452) -2.1% 1,429 7.0% Finance & Budget 1,803 1,692 1,713 21 1.2% (111) -6.2% Accounting & Financial Reporting Services 6,039 6,780 7,350 570 7.8% 740 12.3% Internal Audit 1,372 1,280 1,552 273 17.6% (93) -6.8% Office of Social Responsibility 2,115 2,145 2,312 167 7.2% 29 1.4% Office of Strategic Initiatives - 637 - (637) 0.0% 637 0.0% Police 22,231 20,948 22,879 1,931 8.4% (1,283) -5.8% Contingency 410 653 1,050 397 37.8% 243 59.4% Total Expenses 77,072 79,441 82,149 2,708 3.3% 2,369 3.1% Corporate expenses were $2.7M or 3.3% below budget mainly due to lower Payroll costs, Outside Services and Travel & Other Employee expenses. Corporate Expenses $2.7M favorable to Budget. 25
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