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ITEM NO.: 7b Attach DATE OF MEETING: May 8, 2012 PORT OF SEATTLE 2012 FINANCIAL & PERFORMANCE REPORT AS OF MARCH 31, 2012 TABLE OF CONTENTS Page I. Portwide Performance Report 2-4 II. Aviation Division Report 5-9 III. Seaport Division Report 10-14 IV. Real Estate Division Report 15-19 V. Capital Development Division Report 20-22 VI. Corporate Division Report 23-25 1 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 03/31/12 EXECUTIVE SUMMARY Financial Summary The Port's total operating revenues for the first quarter of 2012 were $119.6 million, $293 thousand above budget. Aeronautical revenues were $51.6 million, $1.4 million below budget. Other operating revenues were $68.0 million, $1.7 million higher than budget primarily due to higher revenues from Concessions, Container, Seaport Industrial Properties and Grain, partially offset by lower revenues from Public Parking and Rental Cars businesses. Total operating expenses were $65.0 million, $7.2 million below budget mainly due to timing of spending and some vacant positions. Operating income before depreciation was $54.6 million, $7.5 million above budget. Operating income after depreciation was $14.2 million, $6.4 million higher than budget. The Portwide capital spending is forecasted to be $169.1 million for the year, $0.9 million below the budgeted $169.9 million. Operating Summary At the Airport, enplanements for the first quarter were 2.7% higher and landed weight was 2.1% lower than the same period in 2011. International enplaned passengers in the first quarter attained greater growth (5.4% vs. 2011) than domestic enplanements (2.3% vs. 2011). For the Seaport division, TEU volume was down 2% from Q1 2011. Full year forecasted volume is for 1.75 million TEU's compared to budget of 2.0 million. Grain volume was at 1.6 million metric tons, up by 13.5% from Q1 2011 and 23.0% over budget. For the Real Estate division, occupancy levels at Commercial Properties were at target of 90% and above Seattle market average of 85%. Fishermen's Terminal and Maritime Industrial Center were at 78% occupancy, below target of 89%. Recreational Marinas was at 91% occupancy, below target of 94%. Key Business Events We held a number of events in the community, including the kickoff outreach phase for Century Agenda Business and Community Leaders Breakfast with approximately 80 representatives from business, industry, labor, community, and environmental. On the business side, Emirates daily non-stop service to Dubai began in the first quarter. On the environmental front, we continued to implement the Northwest Ports Clean Air Strategy, 48% of frequent calls meeting the Northwest Ports Clean Airs Standards target in the first quarter of the year. Major Capital Projects We completed the major work for the East Marginal Way Grade Separation and Pier 91 Fender Pile Replacement projects in the first quarter. Rental Car Facility (RCF) and Bus Maintenance Facility (BMF) are on schedule to open in second quarter and Terminal Realignment at the Airport is in progress. Construction has started on the following projects Airfield Pavement/Slot Drains Replacement near South Satellite, FIS booths, PC air. 8th Floor Weather Proofing contractor delayed first submittal by over three months due to other commitments; construction is expected to begin in late April. Scope of FIMS Phase II project has been reduced. Scheidt & Bachmann was selected for the Parking Revenue Control System. Finally, Terminal10 Development construction contract has been awarded and construction is scheduled to begin in July. 2 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 03/31/12 INCOME STATEMENT Report: Income Statement As of Date: 2012-03-31 2011 YTD 2012 YTD 2012 YTD Budget Variance Change from 2011 $ in 000's Actual Actual Budget $ % $ % Revenues: Aviation 83,564 85,154 89,703 (4,549) -5.1% 1,590 1.9% Seaport 22,172 26,786 21,952 4,834 22.0% 4,614 20.8% Real Estate 7,288 7,591 7,652 (61) -0.8% 303 4.2% Capital Development 65 7 - 7 0.0% (57) -88.5% Corporate 242 98 38 60 159.5% (144) -59.5% Total Revenues 113,331 119,637 119,345 293 0.2% 6,306 5.6% Operating & Maintenance: Aviation 29,656 33,380 36,851 3,471 9.4% 3,725 12.6% Seaport 3,083 4,072 4,612 539 11.7% 990 32.1% Real Estate 6,914 7,550 8,442 892 10.6% 636 9.2% Capital Development 2,440 2,909 3,911 1,002 25.6% 470 19.3% Corporate 15,642 17,118 18,372 1,254 6.8% 1,476 9.4% Total O&M Costs 57,734 65,030 72,188 7,158 9.9% 7,296 12.6% Operating Income Before Depreciation 55,597 54,607 47,156 7,451 15.8% (990) -1.8% Depreciation 39,834 40,414 39,328 (1,087) -2.8% 580 1.5% Operating Income after Depreciation 15,762 14,193 7,828 6,364 81.3% (1,570) -10.0% IMPORTANT NOTE: All the numbers in the table above are on an Org basis while the actual numbers for the operating divisions are on a Subclass basis. 3 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 03/31/12 KEY PERFORMANCE METRICS 2011 YTD 2012 YTD 2011 2012 2012 Forecast/Budget Actual Actual Actual Forecast Budget Var. Var. % Enplanements (in 000's) 3,509 3,604 16,396 16,650 16,650 - 0.0% Landed Weight (lbs in 000's) 4,525 4,429 20,123 20,444 20,444 - 0.0% Passenger CPE (in $) n/a n/a 11.75 13.16 13.26 (0.10) -0.8% Container Volume (TEU's in 000's) 486 476 2,034 1,750 2,000 (250) -12.5% Grain Volume (metric tons in 000's) 1,409 1,599 5,027 5,500 5,500 - 0.0% Cruise Passenger (in 000's) - - 886 864 881 (17) -1.9% Commercial Property Occupancy 89% 90% 90% 90% 87% 0 3.4% Shilshole Bay Marina Occupancy 94.8% 92.7% 95.5% 94.3% 95.5% -1.2% -1.2% Fishermen's Terminal Occupancy 87.0% 78.8% 78.2% 81.4% 84.3% -3.0% -3.5% CAPITAL SPENDING RESULTS 2012 2012 Approved Budget Plan of Division Forecast Budget Variance Finance ($ in millions) Aviation 137.3 135.4 (1.9) 261.9 Seaport 16.0 15.5 (0.5) 25.7 Real Estate 5.2 7.3 2.1 10.9 Corporate & CDD 10.5 11.7 1.2 12.0 Total 169.1 169.9 0.9 310.5 PORTWIDE INVESTMENT PORTFOLIO The investment portfolio for first quarter of 2012 earned 1.46% against our benchmark (The Bank of America Merrill Lynch 3-year Treasury/Agency Index) of 0.38%. For the past twelve months the portfolio has earned 1.63% against the benchmark of 0.38%. Since the Port became its own Treasurer in 2002, the Port's portfolio life-to-date has earned 3.34% against our benchmark of 2.38%. 4 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/12 1 FINANCIAL SUMMARY 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Operating Revenues: Aeronautical 207,763 234,543 236,221 (1,677) - n/a -0.7% 26,781 12.9% Non-Aeronautical 142,959 149,618 149,531 - 88 n/a 0.1% 6,660 4.7% Total Operating Revenues 350,722 384,162 385,751 (1,590) -0.4% 33,440 9.5% Expenses: Operating Expenses 190,442 222,245 221,981 (264) -0.1% 31,803 16.7% Environmental Remediation Liability 1,428 3,096 3,096 - 0.0% 1,669 116.9% Total Operating Expenses 191,869 225,341 225,078 (264) -0.1% 33,472 17.4% Net Operating Income 158,853 158,820 160,674 (1,853) -1.2% (33) 0.0% Capital Spending 166,820 137,299 135,419 (1,880) -1.4% (29,521) -17.7% Aeronautical revenues are forecasted lower than budget due to savings from lower variable rate interest and debt refunding. Non-Aeronautical revenues are forecasted greater than budget due to higher energy and water sales from increased usage and volumes. Operating expenses are forecasted greater than budget due to unbudgeted 2011 retro contractual increase in airfield security, higher surface water discharge and higher electricity usage, which are offset by savings in outside services and telecommunications. $137.3 million are forecasted to be spent on capital projects in 2012, which are 1.4% greater than budget. A. BUSINESS EVENTS Rental Car Facility (RCF) and Bus Maintenance Facility (BMF) on schedule to open in Q2 Sea-Tac Airport experienced a significant snow/ice event in Q1 Emirates daily non-stop service to Dubai began in Q1 Thanks Again parking loyalty rewards program implemented in Q1 Terminal realignment in progress B. KEY PERFORMANCE INDICATORS 2011 2012 % 2012 2012 % Figures in 000's YTD YTD Variance Forecast Budget Variance Enplanements 3,509 3,604 2.7% 16,650 16,650 0.0% Landed Weight 4,525 4,429 -2.1% 20,444 20,444 0.0% International enplaned passengers in Q1 2012 attained greater growth (5.4% vs. 2011) than domestic enplanements (2.3% vs. 2011). 5 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/12 1 Total landed weight in Q1 2012 experienced negative growth (-2.1 vs. 2011), which may need reforecast. International air freight cargo metric tons in Q1 2012 experienced negative growth (-9.0% vs. 2011), whereas domestic air freight cargo metric tons in Q1 2012 experienced positive growth (1.5% vs. 2011). Key Performance Measures 2011 2012 2012 Budget Variance Change from 2011 Actual Forecast Budget $ % $ % Key Measures Non-Aero NOI ($ in 000s) 84,173 76,058 75,982 76 0.1% (8,115) -9.6% Passenger Airline CPE 11.75 13.16 13.26 0.10 0.8% 1.41 12.0% Debt / Enplaned Passenger 161.46 152.2 152.2 - 0.0% (9.28) -5.7% Debt Service Coverage 1.47 1.36 1.34 0.02 1.8% (0.11) -7.2% CPE is forecasted to come in lower than budget due to significant savings in debt service. C. OPERATING RESULTS Division Summary 2011 YTD 2012 Year-to-Date YTD Bud Var Year-end Projections $ in 000's Actual Actual Budget $ % Budget Forecast Variance Aeronatical Revenues 48,719 51,634 53,013 (1,379) -2.6% 236,221 234,543 (1,677) Non-Aeronautical Revenues 32,909 33,520 36,690 (3,170) -8.6% 149,531 149,618 88 Total Operating Revenues 81,628 85,154 89,703 (4,549) -5.1% 385,751 384,162 (1,590) Operating Expenses: Salaries & Benefits 19,355 21,715 23,225 1,510 6.5% 93,871 94,069 (198) Outside Services 3,926 4,688 6,830 2,142 31.4% 37,404 37,365 39 Utilities 3,563 3,595 3,396 (199) -5.9% 12,458 12,579 (121) Other Airport Expenses 2,811 3,382 3,400 18 0.5% 14,138 14,122 16 Baseline Airport Expenses 29,656 33,380 36,851 3,471 9.4% 157,873 158,136 (264) Environmental Remediation Liability - - - - n/a 3,096 3,096 - Total Airport Expenses 29,656 33,380 36,851 3,471 9.4% 160,969 161,233 (264) Corporate 7,005 7,935 8,269 334 4.0% 35,566 35,566 - Police Costs 3,650 3,858 4,346 488 11.2% 16,964 16,964 - Capital Development/Other Expenses 1,321 2,353 2,959 605- 20.5%n/a 11,579 11,579 - - Total Operating Expenses 41,631 47,526 52,425 4,899 9.3% 225,078 225,341 (264) NOI Before Depreciation 39,997 37,628 37,278 350 0.9% 160,674 158,820 (1,853) Depreciation Expense 29,465 29,284 29,123 (161) -0.6% 117,072 117,072 - NOI After Depreciation 10,532 8,344 8,155 189 2.3% 43,602 41,749 (1,853) Selected Non-Operating Rev/(Exp): Capital Grants & Donations 126 423 - 423 n/a 28,982 28,982 - Non-Capital Grants & Donations - 0 470 (470) -100.0% 1,479 1,479 - Passenger Facility Charges (PFC) 14,604 16,894 13,641 3,253 23.8% 63,448 63,448 - Customer Facility Charges (CFC) 4,260 4,722 3,957 765 19.3% 21,333 21,333 - Aeronautical revenues are lower than budget by $1.4 million due to budgeted landing fees which assumed a greater percentage of landed weight in Q1 than actual landed weight by 12.7% and 2011 SLOA accounting entries not posted. Non-aeronautical revenues are lower than budget by $3.2 million: o Customer Facility Charge (CFC) reclass to operating revenue is lower than budget by $1.5 million due to the delayed opening of the Rental Car Facility (RCF). 6 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/12 1 o Rental car revenues are lower than budget by $1.9 million due to MAG relief related to the RCF, monthly budget not spread based on seasonality, and actual industry average ticket price lower than the price used in the budget by 9.4% even though transaction days are higher by 4.9%. o Public parking revenues are less than budget primarily due to both the Passport program and garage under by $108k and $66k. Operating expenses are less than budget by $4.9 million due to the net of the following: Savings of $5.8 million: Overspending of $948k: Salaries and benefits $1.5M (delay of RCF opening, open positions) Deicer and ice control supplies $669k Delay in expenditure of contracted services $2.2M Utility surface water discharge $93k Fire department supplies, equipment and medical exams $215k Utility offsite electricity usage $186k Employee training and development not utilized $287k Other savings $245k Corporate and Capital Development Division Allocations $1.4M Aeronautical Business Unit Summary 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Revenues requirement: Capital Costs 81,507 89,947 91,876 1,930 2.1% 8,440 10.4% Operating Costs net Non-Aero 133,083 151,781 151,529 (252) -0.2% 18,698 14.0% Total Costs 214,590 241,728 243,405 1,677 0.7% 27,138 12.6% FIS Offset (7,000) (8,000) (8,000) - 0.0% (1,000) 14.3% Other Offsets (15,417) (14,895) (14,895) - 0.0% 522 -3.4% Net Revenue Requirement 192,173 218,833 220,510 1,677 0.8% 26,660 13.9% Other Aero Revenues 15,590 15,711 15,711 - 0.0% 121 0.8% Total Aero Revenues 207,763 234,543 236,221 1,677 0.7% 26,781 12.9% Less: Non-passenger Airline Costs 15,098 15,392 15,392 - 0.0% 294 1.9% Net Passenger Airline Costs 192,665 219,151 220,828 1,677 0.8% 26,486 13.7% 2011 2012 2012 Budget Variance Change from 2011 Actual Forecast Budget $ % $ % Cost Per Enplanement: Capital Costs / Enpl 4.97 5.40 5.52 0.12 2.1% 0.43 8.7% Operating Costs / Enpl 8.12 9.12 9.10 (0.02) -0.2% 1.00 12.3% Offsets (1.37) (1.38) (1.38) - 0.0% (0.01) 0.6% Other Aero Revenues 0.95 0.94 0.94 - 0.0% (0.01) -0.8% Non-passenger Airline Costs (0.92) (0.92) (0.92) - 0.0% (0.00) 0.4% Passenger Airline CPE 11.75 13.16 13.26 0.10 0.8% 1.41 12.0% Capital costs savings are forecasted to be $1.9 million due to savings from lower variable rate interest and debt refunding. Operating costs are forecasted to be $252k higher than budget due to unbudgeted 2011 retro contractual increase in airfield security, higher surface water discharge and higher electricity usage. 7 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/12 1 Non-Aero Business Unit Summary 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Revenues: Public Parking 49,996 52,480 52,480 - 0.0% 2,484 5.0% Rental Cars 29,969 27,057 27,057 - 0.0% (2,912) -9.7% Customer Facility Charge (RCF) 778 8,576 8,576 - 0.0% 7,799 1002.9% Ground Transportation 7,704 7,519 7,519 - 0.0% (185) -2.4% Concessions 35,404 35,659 35,659 - 0.0% 254 0.7% Other 19,109 18,327 18,240 88 0.5% (781) -4.1% Total Revenues 142,959 149,618 149,531 88 0.1% 6,660 4.7% Operating Expense 59,544 74,626 74,639 13 0.0% 15,082 25.3% Share of terminal O&M 17,610 18,722 18,698 (24) -0.1% 1,112 6.3% Less utility internal billing (18,369) (19,789) (19,789) - 0.0% (1,420) 7.7% Net Operating & Maint 58,786 73,560 73,549 (11) 0.0% 14,774 25.1% Net Operating Income 84,173 76,058 75,982 76 0.1% (8,115) -9.6% 2011 2012 2012 Budget Variance Change from 2011 Actual Forecast Budget $ % $ % Revenues Per Enplanement Parking 3.05 3.15 3.15 - 0.0% 0.10 3.4% Rental Cars (net of CFCs) 1.83 1.63 1.63 - 0.0% (0.20) -11.1% Ground Transportation 0.47 0.45 0.45 - 0.0% (0.02) -3.9% Concessions 2.16 2.14 2.14 - 0.0% (0.02) -0.8% Other 1.21 1.62 1.61 0.01 0.3% 0.40 33.2% Total Revenues 8.72 8.99 8.98 0.01 0.1% 0.27 3.1% Primary Concessions Sales / Enpl 10.30 10.42 10.42 - 0.0% 0.12 1.2% 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Operating CFC Revenues 778 8,576 8,576 - 0.0% 7,799 1002.9% Non-Operating CFC Revenues 23,669 21,333 21,333 - 0.0% (2,336) -9.9% Total CFC Revenues 24,447 29,909 29,909 - 0.0% 5,462 22.3% Non-Aeronautical revenues are forecasted greater than budget due to higher energy and water sales from increased usage and volumes. Share of terminal operating and maintenance costs forecasted greater than budget due to higher surface water discharge and higher electricity usage. Primary concessions sales per enplanement were at $10.59 year-to-date February. CFC revenues higher year-to-date than prior year due to rate increase from $5.0 to $6.0 effective February 1, 2012. 8 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 03/31/12 1 Net Cash Flow: NOI after Debt Service and Interest Income 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Aeronautical Net Operating Income (NOI) 74,679 82,762 84,692 (1,930) -2.3% 8,083 10.8% Debt Service 71,096 75,796 77,726 1,930 2.5% 4,700 6.6% Aero NOI After Debt Service 3,584 6,967 6,966 1 0.0% 3,383 94.4% Non-Aeronautical Net Operating Income (NOI) 84,173 76,058 75,982 76 0.1% (8,115) -9.6% Debt Service 40,845 44,916 45,390 474 1.0% 4,071 10.0% Non-Aero NOI After Debt Service 43,328 31,142 30,592 551 1.8% (12,186) -28.1% Total Aviation NOI 158,852 158,820 160,674 (1,853) -1.2% (32) 0.0% Debt Service 111,940 120,712 123,116 2,405 2.0% 8,771 7.8% NOI After Debt Service 46,912 38,109 37,557 551 1.5% (8,803) -18.8% Add ADF Interest Income 4,771 4,460 3,771 689 18.3% (311) -6.5% Add Non-Operating TSA Grant 1,035 1,479 1,479 - 0.0% 445 43.0% Net Cash Flow after D/S & Interest Inc. 52,717 44,048 42,808 1,240 2.9% (8,670) -16.4% 2012 forecasted net cash flow is less than budget by $1.2 million and down $8.7 million from 2011. D. CAPITAL SPENDING RESULTS 2012 2012 Budget Variance Plan of $ in 000's YTD Actual Forecast Budget $ % Finance Rental Car Fac. Construction 7,801 19,129 29,778 10,649 35.8% 54,114 8th Floor Weather Proofing 38 3,288 5,500 2,212 40.2% 10,482 FIMS Phase II 214 5,214 6,450 1,236 19.2% 4,214 Port-Owned Loading Bridge R&R 2 1,002 - (1,002) - Stage 2 Mech Energy Implement 8 1,058 - (1,058) - New Window Wall Ticket Zone 1 5 1,305 - (1,305) - Single Family Home Sound Insul 279 2,074 - (2,074) - SSAT HVAC,Lights,Ceiling Repl 21 2,521 - (2,521) - All Other 13,611 101,708 93,691 (8,017) 18.4% 193,116 Total Capital Expenses 21,979 137,299 135,419 (1,880) -1.4% 261,926 Rental Car Facility savings have been identified as the project nears completion due to favorable change orders that have been submitted by the construction contractors. 8th Floor Weather Proofing delayed by over three months and construction is expected to begin in Q2. FIMS Phase II project scope has been reduced. Loading Bridges, Stage 2 Mechanical Energy Implementation, New Window Wall Ticket Zone 1, Single Family Home Sound Insulation, SSAT HVAC projects were not anticipated in 2012 Plan of Finance. 9 III. SEAPORT DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 1 FINANCIAL SUMMARY 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Revenues: Operating Revenue 98,910 109,107 96,980 12,127 13% 10,197 10% Security Grants 394 1,598 1,598 0 0% 1,204 305% Total Revenues 99,304 110,705 98,578 12,127 12% 11,401 11% Total Operating Expenses 38,437 46,536 46,536 0 0% 8,099 21% Net Operating Income 60,867 64,169 52,042 12,127 23% 3,302 5% Capital Expenditures 18,837 16,043 15,496 (547) -4% (2,794) -15% Total Seaport revenues were $4,874K favorable for the first quarter primarily due to the Containers. Space/land rent is favorable due to the refunding of Terminal 18 Special Facility Bonds in December 2011 and the related implementation of the GAAP straight-line rent adjustment. Neither of these items were reflected in the 2012 Budget due to the timing of the transaction. Crane rent is favorable due to later certification of the SSA owned cranes than assumed in the Budget. For the full year Seaport is forecasting full year revenue to exceed budget by $12.1 million as a result of the described bond refunding. Total Operating Expenses were $1,324K favorable due to timing. Seaport is forecasting full year operating expenses to be on budget. Forecasted Net Operating Income 2012 is estimated to be $12.1 million and $3.3 million above 2011 Actual. As of the end of the 1st Quarter, total capital spending for 2012 is projected to be $16.0 or 104% of the Approved Annual Budget. A. BUSINESS EVENTS TEU volumes for Seattle Harbor are down (1.9%) as of March 31, 2012 compared to the same period in 2011. Total YTD 2012 volume is 476,304 TEU's. Full year forecasted volume is for 1,750K TEU's compared to budget of 2,000K TEU's. Consolidated West Coast Port results for the 1st Quarter of 2012 show an overall increase in TEU volume of 2.3% compared to volumes in 2011. TEU Volume (in 000's) 2012 2011 % Change Long Beach 1,307 1,346 -2.9% Los Angeles 1,875 1,816 3.2% Oakland 560 555 0.9% Portland 55 48 13.9% Prince Rupert 128 65 95.4% Seattle 476 486 -1.9% Tacoma 346 352 -1.9% Vancouver 619 577 7.3% West Coast - Totals: 5,365 5,245 2.3% Grain vessels shipped 1,599K metric tons of grain through Terminal 86 in the 1st Quarter 2012. Amount is 13.5% above 2011 volumes and 23% favorable to 2012 Budget volume. The 2012 cruise season will commence on May 6th. The Agreed order with Washington State Department of Ecology for environmental remediation at Terminal 91 was approved for execution by the Commission. 10 III. SEAPORT DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 1 B. KEY INDICATORS Container Volume TEU's in 000's 2,500 2,000 1,500 2011 Actuals 2012 Budget 1,000 2012 Actuals 500 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Grain Volume Metric Tons in 000's 6,000 4,000 2011 Actuals 2012 Budget 2,000 2012 Actuals 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Cruise Passengers in 000's 1,000 800 600 2011 Actuals 400 2012 Budget 200 2012 Actuals 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Net Operating Income Before Depreciation By Business $ in 000's 2011 2012 2012 2012 Bud Var Change from 2011 Actual Actual Budget $ % $ % Containers 12,372 15,545 10,570 4,975 47% 3,172 26% Grain 1,311 1,464 1,127 337 30% 153 12% Seaport Industrial Props 1,572 2,067 1,597 470 29% 496 32% Cruise (885) (1,334) (1,354) 19 1% (450) -51% Docks (332) (143) (462) 319 69% 189 57% Security (198) (217) (296) 79 27% (19) -10% Env Grants/Remed Liab/Oth (13) 0 0 0 NA 13 100% Total Seaport 13,827 17,381 11,183 6,198 55% 3,554 26% 11 III. SEAPORT DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 1 C. OPERATING RESULTS 2011 YTD 2012 Year-to-Date YTD Bud Var Year-End Projections $ in 000's Actual Actual Budget $ % Budget Forecast Variance Operating Revenue 22,286 26,115 21,290 4,825 23% 96,980 109,107 12,127 Security Grants 40 816 767 49 6% 1,598 1,598 0 Total Revenues 22,326 26,931 22,057 4,874 22% 98,578 110,705 12,127 Seaport Expenses (excl env srvs) 2,471 2,710 3,204 494 15% 15,236 15,236 0 Environmental Services 361 302 338 36 11% 2,289 2,289 0 Maintenance Expenses 980 1,185 1,323 138 10% 5,817 5,817 0 P69 Facilities Expenses 90 130 129 (1) -1% 531 531 0 Other RE Expenses 49 86 78 (9) -11% 300 300 0 CDD Expenses 1,279 651 1,032 381 37% 4,388 4,388 0 Police Expenses 826 948 1,068 120 11% 4,167 4,167 0 Corporate Expenses 2,373 2,718 2,889 171 6% 12,332 12,332 0 Security Grant Expense 69 821 815 (6) -1% 1,476 1,476 0 Envir Remed Liability 0 0 0 0 NA 0 0 0 Total Expenses 8,498 9,550 10,874 1,324 12% 46,536 46,536 0 NOI Before Depreciation 13,827 17,381 11,183 6,198 55% 52,042 64,169 12,127 Depreciation 7,848 8,633 7,814 (819) -10% 31,713 34,469 (2,756) NOI After Depreciation 5,979 8,748 3,369 5,379 160% 20,330 29,701 9,371 Seaport revenues were $4,874K favorable to budget. Key variances are as follows: Seaport Lease & Asset Management - favorable $4,678K Containers $4,051K favorable. Space Rental favorable $2,376K and GAAP Straight Line rental revenue recognition favorable $692K due to refunding of Terminal 18 Special Facility Revenue Bonds in December 2011. Crane Rent Revenue $984K favorable due to delays in certification of SSA owned cranes at Terminal 18 $736K and above budget tariff crane usage at Terminal 5 $262K. Grain $295K favorable due to volume coming in 23% favorable to budget. Seaport Industrial Properties $332K favorable primarily due to the receipt of concession rent at T91 that was budgeted for the 2nd quarter, higher utility revenue and due to an unbudgeted amortization of lease termination revenue from Terminal 106. Cruise and Maritime Operations - favorable $196K Cruise ($13K) unfavorable primarily due to lower utility revenue than anticipated. Docks $159K favorable primarily due to recognition and payment of minimum guaranteed moorage by Terminal 91 preferential use customers and due to unexpected revenue from wharfage of equipment and supplies. Security Grants $49K favorable due to timing. Total Seaport Division Expenses were $1,324K favorable to budget. Key variances: Seaport Expenses (excluding Environmental Services) were $494K favorable to budget. Major account variances were as follows: Outside Services were $433K favorable due to the timing of the Terminal 18 Pile Cap Repair project $300K, RFID project $39K, crane related work $14K and contract watchmen services at Terminal 91 $74K. Travel & Other Employee Expenses (which includes Subscription expenses) were $168K favorable due to timing with the most significant factor being the payment of the Emodal subscription related to the RFID project $100K. 12 III. SEAPORT DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 1 Equipment Expenses were ($91K) unfavorable due to unbudgeted furniture and equipment acquisitions related to the Cruise CTA lease allowance. Utilities were ($63K) unfavorable due to higher Sewer Expenses partially offset by lower Water Expenses with the most significant variances relating to Terminal 91 facilities. It has been determined that most of the variance relates to overbilling which will be corrected in the 2nd quarter. Maintenance costs, direct and allocated, were favorable $138K due to timing with the budget. CDD costs were favorable $381K due to $204K in Outside Services and Materials costs that were accrued at 2011 year-end, but have not been paid nor were re-accrued. An additional $95K in Outside Service costs were budgeted for Q1 but have not yet been utilized and amounts allocated from the CDD groups are less than were budgeted for Q1. Police costs, direct and allocated were favorable $120K due to below budget spending by the Police for the year-to-date. Corporate costs, direct and allocated were favorable $171K due to lower than anticipated direct charges and allocations from Public Affairs $67K, Accounting and Financial Reporting $37K, and Commission Contingency $26K. All other variances netted to favorable $20K or less than .2% of Total Expenses Budgeted. NOI Before Depreciation was $6,198K favorable to budget. Depreciation was ($819K) or 10% unfavorable to the year-to-date 2012 Budget primarily due to the booking of assets originally funded by Terminal 18 Special Facility Revenue Bonds. Due to refunding the special facility bonds with traditional bonds in December 2011, these formerly "off balance sheet" assets are now reflected on the Port's books together with the related depreciation. The timing of the refunding did not allow inclusion of the transaction in the 2012 Budget. NOI After Depreciation was $5,379K favorable to budget. Forecast As of the end of the 1st Quarter 2012, Seaport anticipates ending the year $12.1 million favorable to Budget for NOI Before Depreciation. The forecasted $12.1 million variance, all of which is revenue, is the result of the refunding of the T18 Special Facility Bonds in December 2011. Of the total, $9.3 million reflects debt payments that are no longer netted against revenue and $2.8 million reflects the GAAP straight line rent adjustment which now applies to the Terminal 18 lease payments. Change from 2011 Actual NOI Before Depreciation for YTD 2012 increased by $3,554K from 2011 due to higher revenue partially offset by higher expenses: Revenue is up $4,606K from the prior year due to increased Container revenue $2,814K resulting from the refunding of the Terminal 18 Special Facility Bonds in December 2011 slightly offset by lower crane rent, increased Security grant activity of $766K, increased Industrial Property $643K revenue due to higher occupancy, increased rental rates and more concession rent, increased Grain $191K revenue due to higher volume and increased Dock $200K revenue due to payment of contract minimums and more wharfage revenue. Expenses, both direct and allocated, increased by $1,052K due to more Security grant activity $752K, higher Corporate and Police expenses $466K and increased Maintenance costs $206K. In addition, Seaport expenses increased $239K primarily due to credits in 2011 for Outside Services costs resulting from the reversal of yearend accruals not matching up with actual expenses, increased Furniture & Equipment Acquisition Expense relating to the CTA lease allowance and increased Utilities. These amounts were partially offset by lower Agency Permits costs in 2012. CDD cost were ($629K) lower in 2012 due to the Terminal 5 Maintenance Dredge work that was done in 2011. 13 III. SEAPORT DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 1 D. CAPITAL SPENDING RESULTS 2012 2012 Budget Variance 2012 Plan Estimated Approved of $ % $ in 000's Actual Budget Finance Cruise 4,253 4,456 203 5% 2,501 Security 4,782 3,500 (1,282) -37% 1,354 Terminal 18 1,638 2,390 752 31% 2,478 Small Projects 1,269 1,374 105 8% 775 Cranes 1,000 1,220 220 18% 13 Terminal 91 - Industrial Properties 744 762 18 2% 2,570 Terminal 5 348 400 52 13% 813 Terminal 10 323 295 (28) -9% 475 N Argo Express - Private Road 518 0 (518) NA 0 Green Port Initiative 170 170 0 0% 470 All Other 998 929 (69) -7% 14,257 Total Seaport 16,043 15,496 (547) -4% 25,706 Comments on Key Projects: Seaport spent 32% of the 2012 Approved Capital Budget in Q1. Projects with significant changes in spending were: Security Projects Security Grant Rounds 9 & 10 were approved by Commission 11/8/11. These projects were included in 2012 Plan of Finance as Business Plan Prospective. Terminal 18: Street Vacation Delays. N Argo Express Private Road Project was approved by Commission 12/13/11. The 2012 Plan of Finance assumed that 100% of the project costs would be Public Expense. Changes between the 2012 Plan of Finance and the 2012 Approved Budget represent modifications in 2012 spending estimates made after determination of 2011 actual spending. 14 IV. REAL ESTATE DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 FINANCIAL SUMMARY 2011 2012 2012 Budget Variance Change from 2011 $ in 000's Actual Forecast Budget $ % $ % Revenues: Operating Revenue 31,569 32,350 32,401 (51) 0% 781 2% Total Revenues 31,569 32,350 32,401 (51) 0% 781 2% Total Operating Expenses 34,784 37,099 37,224 125 0% 2,316 7% Net Operating Income (3,215) (4,749) (4,823) 74 2% (1,534) -48% Capital Expenditures 10,085 5,198 7,294 2,096 29% (4,887) -48% Total Real Estate Division Revenues were ($97K) or about 1% unfavorable to budget for the year-to-date due to unfavorable revenue variances from Fishing and Commercial, Recreational Boating, and Third Party Managed Properties. For the full year, Real Estate is forecasting Revenue to be slightly ($51K) unfavorable to Budget. Total Operating Expenses are $986K, or 11%, favorable to budget primarily due to timing. For the full year, Real Estate is forecasting Operating Expenses to come in $125K favorable to Budget. Net Operating Income for 2011 is $889K favorable to Budget and ($166K) below 2011 Actual. Higher expenses are driving the year over year change. At the end of the first quarter, capital spending for 2012 is currently estimated to be $5.2 million or 71% of the Approved Annual Budget amount of $7.3 million. A. BUSINESS EVENTS Occupancy levels at Commercial Properties were at 90% at the end of the first quarter, which is at the 90% target for the 2012 Budget, and above comparable statistics for the local market of 85%. Recreational marinas averaged 91% occupancy for the first quarter which was below the target of 94%. Fishermen's Terminal and Maritime Industrial Center averaged 78% occupancy which was below the target of 89%. Lower occupancy was due to the commercial fishing season lasting far longer than expected into the first quarter of 2012. Relocating ICT Development group from Pier 66 to Pier 69 freeing up 2,200 square feet of leasable space. Eastside Rail Corridor Final terms of sale agreed to with City of Kirkland for closing in April. Lifesaving water rescue of citizen at Pier 66 involving staff from Harbor Services, Marine Maintenance, and Portfolio Management. 15 IV. REAL ESTATE DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 B. KEY INDICATORS Shilshole Bay Marina Occupancy 120.0% 100.0% 2011 Actual Footage 80.0% 2012 Budget 2012 Actual 60.0% Percent Linear 40.0% 20.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Fishermen's Terminal Moorage Occupancy 120.0% 100.0% 2011 Actual 80.0% 2012 Budget Footage Occupied 60.0% 2012 Actual Percent Linear 40.0% 20.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Commercial Building 100% 90% 89% 90% 90% 90% 90% 90% 90% 90% 90% 2011 Actual 80% Percent 2012 Target 70% 2012 Actual 60% Qtr 1 Qtr 2 Qtr 3 Qtr 4 Net Operating Income Before Depreciation By Business 2011 2012 2012 2012 Bud Var Change from 2011 $ in 000's Actual Actual Budget $ % $ % Recreational Boating 629 488 253 236 93% (140) -22% Fishing & Commercial (449) (523) (691) 169 24% (74) -16% Commercial & Third Party (56) (18) (340) 322 95% 38 68% Eastside Rail (98) (68) (128) 60 47% 30 31% RE Development & Plan (47) (67) (171) 104 61% (20) -42% Envir Grants/Remed Liab/Oth 0 0 0 0 NA 0 NA Total Real Estate (22) (188) (1,077) 889 83% (166) -745% 16 IV. REAL ESTATE DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 C. OPERATING RESULTS 2011 YTD 2012 Year-to-Date YTD Bud Var Year-End Projections $ in 000's Actual Actual Budget $ % Budget Forecast Variance Revenue 5,330 5,414 5,442 -29 -1% 22,389 22,338 (51) BHICC & WTC Revenue 1,804 2,036 2,104 -68 -3% 10,012 10,012 0 Total Revenue 7,134 7,450 7,546 -97 -1% 32,401 32,350 (51) Real Estate Exp(excl Maint,P69,Conf) 2,302 2,471 2,406 -65 -3% 9,920 9,920 0 Real Estate BHICC & WTC 1,640 1,619 1,732 112 6% 7,870 7,870 0 Eastside Rail Corridor 18 24 48 24 51% 203 203 0 Maintenance Expenses 1,401 1,585 2,248 663 29% 9,687 9,562 125 P69 Facilities Expenses 26 48 48 0 -1% 198 198 0 Seaport Expenses 181 239 255 17 7% 1,408 1,408 0 CDD Expenses 208 241 310 69 22% 1,266 1,266 0 Police Expenses 300 328 370 42 11% 1,442 1,442 0 Corporate Expenses 1,079 1,082 1,207 125 10% 5,229 5,229 0 Envir Remed Liability 0 0 0 0 NA 0 0 0 Total Expense 7,157 7,638 8,624 986 11% 37,224 37,099 125 NOI Before Depreciation -22 -188 -1,077 889 83% (4,823) (4,749) 74 Depreciation 2,520 2,498 2,391 -107 -4% 9,694 9,694 0 NOI After Depreciation -2,542 -2,685 -3,468 782 23% (14,517) (14,443) 74 Total Real Estate revenues were ($97K) unfavorable to budget. Key variances are as follows: Harbor Services: Unfavorable ($78K) Recreational Boating unfavorable ($28K) due to an occupancy shortfall of 2.2% at Shilshole Bay Marina or an average of 30 boats per month less than planned. Fishing and Commercial unfavorable ($50K) primarily due to fewer medium and small fishing boats as a result of more time fishing and less time in port than expected. Portfolio Management: Unfavorable ($79K) Commercial Properties favorable $1K primarily due to higher occupancy at Fishermen's Terminal Office & Retail largely offset by lower occupancy at Terminal 102 Marina Corporate Center and Pier 2 than assumed in the Budget. Third Party Managed Properties unfavorable ($80K) due primarily to lower activity at Bell Harbor International Conference Center and World Trade Center Seattle. Eastside Rail Corridor: Favorable $3K Eastside Rail Corridor favorable $3K due to land rental. RE Development and Planning: Favorable $42K Terminal 91 General Industrial favorable $42K due primarily to higher revenue from Pacific Maritime Association as a result of the tenant taking more yard space. Facilities Management: Unfavorable ($2K) Pier 69 Facilities Management unfavorable ($2K). Maintenance: Favorable $17K Maintenance favorable $17K due to unexpected revenue from the City of Seattle for a construction easement. Total Real Estate expenses were $986K favorable to budget. Key variances: Real Estate Expenses (excluding Maintenance, P69 Facilities, and Conference & Event Activity Expense) were unfavorable ($65K). Major account variances were as follows: Outside Services favorable $48K due to timing. Litigated Injuries and Damages unfavorable ($120K) due to unexpected legal claims. 17 IV. REAL ESTATE DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 Real Estate BHICC & WTC favorable $112K due to lower activity and cost controls at Bell Harbor International Conference Center and World Trade Center Seattle. The expense savings more than offset the related revenue shortfall. Maintenance expenses were favorable $663K primarily due to timing differences with the budget. CDD costs, direct and allocated were favorable $69K primarily due to lower direct charges and allocations from Central Procurement and Port Construction Services. Police costs, direct and allocated were favorable $42K due to below budget spending by the Police for the year-to-date. Corporate costs, direct and allocated, were favorable $125K primarily due to Legal $44K, Executive $18K, Human Resources $17K, Public Affairs $14K, and Accounting $12K. All other variances netted to a favorable $40K or less than about 0.5% of Total Expenses budgeted NOI Before Depreciation was $889K favorable to budget. Depreciation was ($107K) or (4%) unfavorable to budget. The lion's share of the variance ($85K) relates to allocated depreciation from ICT that was inadvertently not budgeted. NOI After Depreciation was $782K favorable to budget. Full Year Forecast Real Estate anticipates ending the year slightly favorable, $74K, to Budget for NOI Before Depreciation. Revenue is forecast to be ($51K) unfavorable to Budget due to lower occupancy than budgeted at Pier 2. Expenses are forecasted to be $125K favorable to Budget due to a project that was budgeted as an expense, but is now a capital project. Change from 2011 Actual Net Operating Income Before Depreciation decreased by ($166K) between Q1 year-to-date 2012 and 2011 as a result of higher revenue more than offset by higher expense. Revenues increased by $315K due to more activity at Bell Harbor International Conference Center and overall higher occupancies and lease rates at Commercial Properties. Amounts were partially offset by lower occupancies at the Shilshole Bay and Fishermen's Terminal marinas. Expenses increased by $481K due to higher Real Estate Salaries & Benefits and Utilities, higher Divisional Allocations from Marine Maintenance, and higher charges for storm water related work from Seaport Environmental Services. 18 IV. REAL ESTATE DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 D. CAPITAL SPENDING RESULTS 2012 2012 Budget Variance 2012 Plan Estimated Approved $ % of Finance $ in 000's Actual Budget Small Projects 1,542 1,908 366 19% 815 Tenant Improvements -Capital 1,148 1,148 0 0% 1,148 FT East Portion South Wall 40 760 720 95% 0 Bell Harbor Lighting Ctrl Upgrade 46 633 587 93% 160 RE Maintenance Shop Solution 624 624 0 0% 0 All Other 1,798 2,221 423 19%NA 8,801 Total Real Estate 5,198 7,294 2,096 29% 10,924 Comments on Key Projects: Through first quarter, the Real Estate Division spent 8% of the Approved Capital Budget. Full year spending is estimated to be 71% of the Approved Capital Budget. Projects with significant changes in spending were: FT East Portion South Wall Budget overestimated. Bell Harbor Lighting Upgrade Project cancelled. Changes between the 2012 Plan of Finance and the 2012 Approved Budget represent modifications in 2012 spending estimates made after determination of 2011 actual spending. 19 V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 A. BUSINESS EVENTS AVPMG: Asserted Port lead and close cooperation with Alaska Air Group on North Sea-Tac Airport Renovations project. Developed independent cost estimate & schedule for this $250 mm + effort. Notified by US Green Building Council that Rental Car Facility achieved Silver LEED rating, highest ever achieved for large rental car facility. Common use lounge opened March 1 for first Emirates flight, 5 months ahead of original schedule. Began demolition of former maintenance warehouse and former USPS mail facility. CPO: Implemented Consensus Based Evaluation for RFP procurements. Revised and published new procedure CPO-1. Participated in the Regional Contractors Forum over 1600 suppliers, contractors and consultants attended. Completed FAA Uniform Report of DBE Commitments/Awards and Payments for fiscal years 2009, 2010, and 2011. ENG: Beneficial Occupancy achieved for Rental Car Facility, Bus Wash Facility and Bus Maintenance Facility, and SR 518 on-ramp and off-ramps opened for traffic. RCF Wayfinding project completed ahead of schedule. Participated in joint meetings with AGC. Continued participation in CPARB board and subcommittees. PCS: Prepared the abatement bid documents for zone 5 Airline Tenant Relocation Project. Ten homes were in progress for the Noise Remedy Project during the quarter. Completed approximately $1.6 million in construction during the 1st quarter. Key projects underway included the T-18 pile cap repair, EGSE charging station pilot, airline gate relocations, and escalator abatement monitoring. SPM: Construction Completion Report for the T10 Interim Redevelopment has been issued to EPA. Union Pacific property access permit for Port staff to perform field survey for the Argo Yard Roadway project has been approved and finalized. An emergency declaration was made to repair the T46 Transformer which stopped container operations. Transformer was replaced and put into service utilizing temporary connections. The port received signed License Agreement and Certificate of Insurance for Tunnel Contractor Industrial Hygienist to survey buildings at T46 slated for demolition. Port has signed Liquefaction Covenant and sent to STP - Tunnel Contractor. Received beneficial occupancy for both the T91 Cruise Fender Improvements and second phase of the T18 Fender Damage Replacements. In coordination with tenant, completed mobilization and initiated T-18 Pile Cap Pilot Project. Updated COOP for 1st quarter 2012. 20 V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 B. KEY PERFORMANCE METRICS Key Performance 2012 YTD Notes Metrics Construction Soft ($ in 000's) Limit construction soft costs (design, Costs construction management, project Total Costs $ 711,008 (100%) management, environmental 36 month rolling documentation, allocated overhead) to average from Total Construction: $ 570,448 ( 80%) no more than 25% of total capital improvement costs. Q2 2009 thru Q1 2012 Total Soft: $ 140,560 ( 20%) Cost Growth During Total Completed Projects YTD: 5 Limit average mandatory change cost Construction growth to 5% of construction contract Discretionary Change: 0.5% award. Mandatory Change: 7.5% Limit average discretionary change cost growth to 5% of construction contract award. Design Schedule ($ in 000's) Limit design growth from initial Growth Total Completed Projects YTD: 5 Commission project authorization to Avg Design Growth Completed Proj's: 11.9% construction contract award to no more Cumulative Value YTD: $9,934 than 10% of originally allotted duration. Construction Schedule ($ in 000's) Limit construction growth from Growth Total Completed Projects YTD: 5 contract award to substantially Avg Construction Growth Completed complete to no more than 10% of Projects: 15.2% originally scheduled. Cumulative Value YTD: $9,934 Performance Q1 2012 98% PREPs completed within 30 days Evaluation Timeliness Total PREPs due: 37 37 of anniversary date. Total PREPs on time: 0-30 days (CDD) 28 28 (75.7%) (75.7%) 0-60 days (HRD) 34 34 (92%) (92%) 2012 Procurement Goods & Services 188 days Average number of days, improving Schedule: Major Public Works 53 days from period to period. Total Time Specs - Small Works 49 days Execution Service Agreements 231 days 21 V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PEFORMANCE REPORT 03/31/12 C. OPERATING RESULTS 2011 YTD 2012 YTD Budget Variance Year-End Projections $ in 000's Actual Actual Budget $ % Budget Forecast Variance Total Revenues 65 7 - 7 0.0% - - - Expenses Before Charges To Cap/Govt/Envrs Propects Capital Development Administration 85 89 94 5 5.4% 374 374 1 Engineering 2,588 3,091 3,579 489 13.7% 14,217 14,217 - Port Construction Services 1,353 1,218 1,699 481 28.3% 6,791 6,791 - Central Procurement Office 1,411 1,190 1,053 (137) -13.0% 4,481 4,501 (21) Aviation Project Management 882 1,848 2,148 300 14.0% 7,731 7,731 - Seaport Project Management 438 432 707 275 38.9% 2,987 2,978 9 Total Before Charges to Capital Projects 6,758 7,868 9,281 1,413 15.2% 36,581 36,592 (11) Charges To Capital/Govt/Envrs Projects Capital Development Administration - - - - 0.0% - - - Engineering (1,905) (2,160) (2,473) (313) 12.7% (9,757) (9,757) - Port Construction Services (1,156) (999) (828) 171 -20.6% (3,313) (3,313) - Central Procurement Office (277) (449) (332) 117 -35.3% (1,330) (1,360) 30 Aviation Project Management (691) (1,033) (1,377) (344) 25.0% (5,229) (5,229) - Seaport Project Management (290) (318) (359) (42) 11.6% (1,437) (1,432) (5) Total Charges to Capital/Govt/Envrs Projects (4,318) (4,959) (5,370) (411) 7.7% (21,066) (21,091) 25 Operating & Maintenance Expense Capital Development Administration 85 89 94 5 5.4% 374 374 1 Engineering 683 931 1,106 176 15.9% 4,460 4,460 - Port Construction Services 197 220 871 652 74.8% 3,479 3,479 - Central Procurement Office 1,135 741 721 (20) -2.7% 3,151 3,141 9 Aviation Project Management 191 815 771 (44) -5.7% 2,502 2,502 - Seaport Project Management 149 115 348 233 67.0% 1,550 1,546 4 Total Expenses 2,440 2,909 3,911 1,002 25.6% 15,516 15,501 14 Variance Summary Vacancies: 27.5 = $434K savings from unfilled positions; some hiring projected in Q2. Over Absorption OH Clearing $229K represents costs allocated as overhead above the total actual overhead costs. Actual capital, expensed and net operating costs will decrease to account for the over absorption value. AVPMG ($44K) primarily from reduced capital work/more expense work. CPO ($20K) for more capital work than budgeted/anticipated offset by $200K unplanned legal costs. ENG $176K partially due to under absorption in OH clearing of $98K, unfilled positions and delay in outside services billings. PCS $652K due to more capital work than budgeted/anticipated; over-accrued 2011 materials; timing of outside services; offset by 2011 carryover of Workers Comp expense. SPM $233K due primarily to timing of projects, delaying the use of outside services. 22 VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 03/31/12 A. BUSINESS EVENTS Commission's Century Agenda community outreach support through 11 Commission-led presentations to key external stakeholders. Held kickoff outreach phase for Century Agenda Business and Community Leaders Breakfast with approximately 80 representatives from business, industry, labor, community, and environmental. Produced Employee Forums at Pier 69 and Airport, with focus on Century Agenda goals and what they mean to employees and business units. Produced Portfolio featuring freight mobility, truck safety, Emirates inaugural flight and Music Initiative. Completed redeployment of website and hosted initial training meeting of internal content providers. Held Emirates Airline Inaugural Flight from Dubai to Seattle Reception and Press Conference. Designed and launched of the 2012 Wellness Reward Program and work is underway for developing health care cost containment strategy. Completed 2011 Safety Evaluation during the first quarter of 2012. The Port achieved a 91% completion rate of leading indicators compared to 90% in 2011. Health and Safety team assisted with the development and implementation of training for 75 new employees, bus drivers, mechanics and laborers to support the opening of the new rental car facility. Submitted a nomination for the Freedom Award, which is the highest recognition given by the U.S. Government to employers for their support of their employees who serve in the National Guard and the Reserve. The Port of Seattle was awarded the Washington State Nomination and will compete for the National Award. Port of Seattle Internship Program awarded Internship Employer of the Year by Seattle University. This award acknowledged the Port of Seattle's commitment to fostering the next generation of community leaders and provides an avenue for students to apply their academic learning to jobs that may lead to a Port-related career in the maritime or aviation sectors. Deferred Compensation Record Keeping was successfully transitioned from Great-West to ICMA-RC at the middle of March. ICT introduced the iPhone as a new mobile communications standard and deployed QR codes in the Cellphone Parking Lot allowing the traveling public to quickly access flight information. PeopleSoft Financials Upgrade - Procurement for an implementation vendor is in progress and vendors were short-listed. The Port received a clean, unqualified independent Certified Public Accountant (CPA) audit opinion on its 2011 financial statements, which the AFR department prepares in conformance with industry prescribed accounting & financial reporting standards. Enrolled into CIPFA-GFOA Financial Model in pursuit of world class performance in public financial management. Conducted the Industrial Development Corporation (IDC) Annual Meeting. Refunded $640 million Revenue bonds for $85 million present value savings. Office of Social Responsibility created relevant media ads and updated the external website to promote the Port's Small Contractors and Suppliers Program and the Procurement Roster Management System to encourage more businesses to learn about and participate in Port contracting opportunities. 23 VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 03/31/12 B. KEY PERFORMANCE METRICS Key Performance Metrics 2012 2011 Notes A. High Performance Workplace: 1. Occupational Injury Rate 5.96 5.17, increased by .79 2. Total Lost Work Days 57 85, decreased by 28 3. Contract Administration Issues 25 11, increased by 14 4. Employee Training a) New Employee Orientation 24 22, increased by 2 b) REALeadership Program Recruitment will likely happen 30 this summer c) MIS Training 3 MIS classes, 11 users 2 MIS classes, 3 users, increased by 8 d) Required Safety Training 70% 84%, decreased by 14% 5. Job Openings Created 70 85, decreased by 15 6. Job Applications Received 2,848 2,858, decreased by 10 7. Tuition Reimbursement 21 employees participated n/a B. Transparency: 1. Increase Targeted Outreach Exceeded Q1 goal by 42% with Did not track Contacts 110 new contacts 2. Public Disclosure Requests 89 76, increased by 13 3. Sustainability Communications 51,732 individuals reach New metric for 2012 aggregates reach for website, video, newsletter, social media and events 4. Implement Century Agenda Conducted 11 Commission-led N/A Outreach Campaign stakeholder presentations; 3 staff-led presentations C. Accountability: 1. Internal Audits Completed 5 4, increased by 1 2. % of Audit Plan Completed 19% (26 audits, 5 completed) 13% (31 audits, 4 completed), increased by 6% 3. Preventable Vehicle Incidents 10 15, decreased by 5 4. Incurred Auto Liability Costs $30K $32.5K, decreased by $2.5K D. Other Services and Support: 1. Commission Authorized Projects 100%/55% 100%/54% increased by 1% On Budget/Schedule 2. Police Service Calls 13,665 13,012, increased by 5% 3. Police Arrests 160 with no warrant 129 increased by 31; 93 with warrant 97 with warrant, decreased by 4 4. Attorney Services 41 litigation and claims 27, increased by 14 5. Labor Contracts Negotiated 2 0, increased by 2 6. Account Receivables Collection 93.3% 90.8%, increased by 2.5% (0 30 days) 7. Small Business Roster 742 registered on new PRMS n/a; 1,215, on old Small Business system Roster 24 VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 03/31/12 C. OPERATING RESULTS 2011 YTD 2012 YTD Budget Variance Year-End Projections $ in 000's Notes Actual Actual Budget $ % Budget Forecast Variance Total Revenues 242 98 38 60 159.5% 151 151 - Executive 352 382 425 43 10.1% 1,539 1,539 - Commission 148 194 217 23 10.4% 980 968 12 Legal 512 567 631 64 10.1% 2,901 2,898 3 Risk Services 617 637 714 77 10.8% 2,959 2,899 60 Health & Safety Services 263 256 293 37 12.5% 1,060 1,057 2 Public Affairs 1,253 1,270 1,462 192 13.1% 5,815 5,735 79 Human Resources & Development 1,040 1,188 1,234 46 3.7% 5,484 5,479 5 Labor Relations 208 247 242 (5) -2.1% 961 998 (37) Information & Communications Technology 4,212 4,642 4,639 (3) -0.1% 20,194 20,194 - Finance & Budget 348 376 380 4 1.1% 1,543 1,543 - Accounting & Financial Reporting Services 1,314 1,500 1,610 110 6.8% 6,853 6,821 32 Internal Audit 256 278 294 16 5.4% 1,496 1,495 1 Office of Social Responsibility 194 359 349 (10) -3.0% 1,476 1,461 15 Police 4,880 5,219 5,783 564 9.8% 22,574 22,557 17 Contingency 44 3 100 97 97.2% 700 700 - Total Expenses 15,642 17,118 18,372 1,254 6.8% 76,535 76,345 190 Corporate revenues were $60 thousand favorable compared to budget due to higher operating grants. Corporate expenses for the first three months of 2012 were $17.1 million, $1.3 million or 6.8% favorable compared to the approved budge t and $1.5 million or 9.4% higher than the same period a year ago. The $1.3 million favorable variance is due primarily to timing differences between when the items are paid and when budgeted and not necessarily cost savings. All corporate departments have a favorable variance except for: Labor Relations - unfavorable variance of $5 thousand is due to Project Labor Agreement charging less to capital projects than originally anticipated. Information & Communications Technology unfavorable variance of $3 thousand is due to timing differences since equipment costs are budgeted higher during the second half of the year. Office of Social Responsibility - unfavorable variance of $10 thousand is due to an expense item that was not accrued for in 2011. However, year-end projection is to be within budget. Year-end spending is projected to be $190 thousand under budget due primarily to: Risk Management vacant positions and lower insurance costs. Public Affairs vacant positions. Accounting and Financial Reporting Services vacant position and unbudgeted charges to capital for work performed on the Enterprise Cost Management Project (SKIRE.) D. CAPITAL SPENDING RESULTS ($ Millions) Annual Results: 2012 Plan of Finance $12.0 2012 Approved Budget $11.7 2012 Estimated/Actuals $10.5 Variance (App.Budget vs Est./Acts) $1.2 25
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