7b supp
ITEM NO. 7b_Supp DATE OF MEETING March 6, 2012 2011 Financial Performance Port of Seattle Commission Briefing March 6, 2012 2011 Financial Highlights Total Port Operating Revenues increased by $21.3 million, or 4.6%, over 2010 2011 Operating Revenues were 1.8% below budget due to lower Aeronautical and Seaport Security Grant revenues, both of which are based on cost recovery and therefore reflect lower than budgeted expenses All Other Operating Revenues were $3.4 million over budget and $13.1 million, or 5% higher than 2010 Port wide Operating Expenses were $17.1 million, or 6% below budget - all divisions' expenses were under budget for the year 2 2011 Financial Highlights Net Income Before Depreciation was 4% above budget and 2.9% higher than 2010 Net Income After Depreciation was 23% above budget and 18% higher than 2010 The Port's total bottom line (Change in Net Assets), which reflects both operating and non-operating performance, amounted to $107 million, 61% above budget and more than double that of 2010 Capital spending of $200 million was 30% below budget for the year 3 2011 Financial Highlights 2011 Airline Cost Per Enplanement (CPE) was $11.79, 1.4% higher than 2010 but 7.6% below the budgeted CPE of $12.76 Non-airline Net Operating Income was 3.3% above budget and 7.3% higher than 2010 Seaport Operating Revenues (excluding Security Grants) were $2.8 million, or 4.1% above budget and 2.9% higher than 2010 Seaport NOI Before Depreciation was $9.4 million, or 18.4% above budget and 4.2% higher than 2010 Real Estate Operating Revenues were 2.8% above budget and 5.8% higher than 2010 4 Self Funded Medical Program Results The Port's self-funded medical and dental programs performed well in 2011 Actual medical costs were $1.1 million, or 9% below projections due to favorable claims experience Dental costs were $136 thousand, or 9.4% below projections These savings are in addition to the approximately $1 million per year of estimated cost savings vs. being fully insured The Port is also being refunded $2.7 million in retained reserves from former insured programs 5 Background on 2010 Budget & Actual Zero Based Budgeting for 2010 Budget: Reduced and eliminated some programs and functions Implemented Voluntary Separation Program (VSP) Introduced premium sharing for Port sponsored medical plan Eliminated 110 positions (6.2% of the total workforce) 2010 budget was very lean * 2010 actual came in $9.5M lower than budget 6 Background on 2011 Budget Capital policy change Port Centennial Deferred maintenance New Rental Car Facility expense Spending requested by airlines The baseline increase is $8M or 3.0% in the 2011 budget 7 2011 Major Revenue Variances 2010 2011 2011 Budget Change Major Revenues (In $ '000) Actual Actual Budget Variance from 2010 Aero Revenues 198,843 208,363 217,714 (9,350) 9,520 Seaport Security Grants 1,791 394 3,415 (3,020) (1,396) Other Operating Revenues Public Parking 49,416 49,996 52,847 (2,851) 580 Rental Cars 30,309 30,803 33,833 (3,031) 494 Concessions 33,765 35,404 33,275 2,129 1,639 Ground Transportation 4,912 7,704 6,936 768 2,792 Container 61,332 64,114 62,054 2,060 2,782 Cruise 11,862 12,287 10,215 2,072 425 Grain 6,035 5,613 6,087 (474) (422) Third Party Management 11,117 12,237 11,907 330 1,120 Other 53,197 56,928 54,513 2,415 3,731 Subtotal 261,945 275,087 271,669 3,417 13,141 TOTAL* 462,579 483,844 492,798 (8,953) 21,265 Note: * Total operating revenues are adjusted for the Fuel Hydrant Special Facility Rent reclassification. 8 2011 Major Expense Variances 2010 2011 2011 Budget Change Major Expenses (In $ '000) Actual Actual Budget Variance from 2010 %,FACCOUNT,TALL_ACCOUNTS2,NA5210Salaries & Benefits 81,702 84,948 88,091 (3,144) 3,246 %,FACCOUNT,TALL_ACCOUNTS2,NA5410Wages & Benefits 77,199 82,862 83,909 (1,046) 5,663 %,FACCOUNT,TALL_ACCOUNTS2,X,NA5990Payroll to Capital Projects 16,113 19,150 20,761 (1,611) 3,037 %,FACCOUNT,TALL_ACCOUNTS2,NA6120Equipment Expense 6,443 7,093 6,416 677 650 %,FACCOUNT,TALL_ACCOUNTS2,NA6310Supplies & Stock 6,711 7,277 6,407 870 566 %,FACCOUNT,TALL_ACCOUNTS2,NA6410Outside Services 41,406 47,390 56,866 (9,476) 5,983 %,FACCOUNT,TALL_ACCOUNTS2,NA6210Utilities 19,259 21,392 20,695 697 2,133 %,FACCOUNT,TALL_ACCOUNTS2,NA6510Travel & Other Employee Exps 3,461 3,863 5,036 (1,173) 402 %,FACCOUNT,TALL_ACCOUNTS2,NA6610Promotional Expenses 1,120 1,618 1,739 (121) 498 %,FACCOUNT,TALL_ACCOUNTS2,NA6650,NA6670,NA6690,NA6710Other Expenses 27,326 23,494 28,058 (4,564) (3,832) %,FACCOUNT,TALL_ACCOUNTS2,NA6850Charges to Capital Projects (28,493) (30,354) (33,197) 2,843 (1,861) %,FACCOUNT,TALL_ACCOUNTS2,NA5000TOTAL 253,464 268,711 285,844 (17,133) 15,247 9 Operating Income Summary 2010 2011 2011 2011 Act vs. Bud ($ in thousands) Actual Actual Budget Var $ Var % Aeronautical Revenues 198,843 208,363 217,714 (9,350) -4.3% Other Operating Revenues 263,736 275,481 275,084 397 0.1% Total Operating Revenues 462,579 483,844 492,798 (8,953) -1.8% Total Operating Expenses 253,464 268,711 285,844 17,133 6.0% Income before Depreciation 209,115 215,133 206,954 8,179 4.0% Depreciation 160,775 158,107 160,491 2,384 1.5% Income after Depreciation 48,340 57,026 46,463 10,563 22.7% Income before Depreciation was $215.1M, $8.2M higher than budget and $6.0M higher than 2010 actual. Income after Depreciation was $57.0M, $10.6M higher than budget and $8.7M higher than 2010 actual. 10 Net Operating Income Comparison The Port generated a record $483.8M operating revenue in 2011. NOI before depreciation for 2011 was $215.1M, highest since 2008. 11 Comprehensive Financial Summary ($ in '000) 2010 2011 2011 Actual/Budget Revenues Actual Actual Budget Var. $ Var. % Explanations 1. Aeronautical Revenues 198,843 208,363 217,714 (9,350) -4.3% Cost recovery 2. Operating Revenues 263,736 275,481 275,084 397 0.1% See slide #8 for details 3. Tax Levy 73,125 73,179 73,500 (321) -0.4% 4. PFCs 59,744 62,358 60,379 1,979 3.3% Higher enplanements 5. CFCs 23,243 23,669 22,237 1,433 6.4% Higher transaction days 6. Fuel Hydrant 7,912 7,683 7,839 (156) -2.0% Reclassified to non-op in 2011 7. Non-Capital Grants and Donations 12,473 8,482 8,493 (11) -0.1% 8. Capital Contributions 30,518 21,180 32,106 (10,925) -34.0% Lower LOI and unused eGSE 9. Interest Income 13,096 18,884 13,654 5,230 38.3% Higher fund balance Total 682,690 699,280 711,006 (11,726) -1.6% Expenses 1. O&M Expense 253,464 268,711 285,844 17,133 6.0% See slide #9 for details 2. Depreciation 160,775 158,107 160,491 2,384 1.5% 3. Revenue Bond Interest Expense 133,239 127,579 148,206 20,627 13.9% Lower rates & CP amount 4. PFC Bond Interest Expense 10,187 6,758 10,191 3,433 33.7% Savings in refunded bonds 5. GO Bond Interest Expense 17,463 15,774 13,780 (1,994) -14.5% Issued $30M new GO bond 6. Public Expense 25,085 18,786 17,205 (1,581) -9.2% Moved EMW spending to 2011 7. Other Non-Op Expense 7,276 (7,782) 2,521 10,303 408.7% Env cleanup insurance recovery 8. Non-Op Environmental Expense 22,730 4,335 6,200 1,865 30.1% Total 630,220 592,268 644,438 52,171 8.1% Change In Net Assets 52,470 107,013 66,568 40,445 60.8% 2011 Total Revenues were $699.3M, $11.7M lower than the budget but $16.6M higher than 2010 actual. 2011 Total Expenses were $592.3M, $52.2M less than the budget and $38.0 lower than 2010 actual. Change in Net Assets for 2011 was $107.0M, $40.4M above the budget and $54.5M higher than 2010 actual. 12 Capital Spending by Division 2010 2011 2011 Budget Plan of Division Actual Actual Budget Variance Finance ($ in millions) Aviation 183.60 166.82 223.75 56.93 231.41 Seaport 11.17 18.84 33.95 15.12 29.49 Real Estate 3.97 10.09 16.34 6.25 15.36 Corporate & CDD 3.82 4.40 13.19 8.79 12.07 Total 202.56 200.14 287.23 87.09 288.33 13 Aviation Division 2011 Financial Performance Commission Briefing March 6, 2012 14 Aviation Business Highlights Airline activity: 2011 enplanements up 3.9% from 2010 2011 landed weight up 1.7% from 2010 Operating Expenses: Total O&M expenses were 4.0% below budget Non-airline NOI: 2011 revenues up 5.6% over 2010, but down 1.4% vs. budget Non-airline NOI was $2.6 million or 3.2% greater than budget Airline costs: Final 2011 cost per enplanement (CPE) of $11.79 vs. budget of $12.76 Airline operating cost savings of $3.6 million vs. budget Lower variable rate interest on debt service, increased PFC offsets saved $5.6 million in airline capital costs Capital program: 2011 capital spending totaled $166.8 million, or 74.6% of budgeted capital expenses 15 Activity Enplanements vs. Prior Year Landed Weight vs. Prior Year 10% 5% 3.61%3.91% 4% 3.11% 2.63% Growth Rate 3% 6.10% 3.78% 2% 3.44% 6.54% 3.72% 0.73% 5% 4.24% 3.91% 3.30% 4.05% 1% 3.73% Growth Rate 1.11% 2.15% 0.39% -0.58% 5.27% 2.80% 0% 1.54% Jan Feb Mar Apr May Jun Jul Aug Sept -1.75%Oct Nov Dec -1% 0.46% -2% 0% -3% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2010 2011 % 2010 2011 % Figures in 000's Q4 Q4 Variance Actual Actual Variance Enplanements 3,842 3,930 2.3% 15,773 16,396 3.9% Landed Weight 4,874 4,847 -0.5% 19,786 20,123 1.7% International enplaned passengers saw greater year-over-year growth (5.2% vs. 2010) than domestic enplanements (3.8% vs. 2010) There was an overall growth of 3.9% in enplanements and 1.7% in landed weight from compared to 2010 16 Division Summary 2010 2011 2011 Budget Variance Change from 2010 $ in 000's Notes Actual Actual Budget $ % $ % Operating Revenues: Aeronautical 198,329 207,849 217,200 (9,351) -4.3% 9,520 4.8% Non-Aeronautical 135,418 143,089 144,965 (1,876) -1.3% 7,670 - 5.7% Fuel Hydrant 514 514 514 - 0.0% - 0.0% Total Operating Revenues 1 334,262 351,452 362,678 (11,227) -3.1% 17,190 5.1% Expenses: Operating Expenses 177,871 191,403 199,180 7,776 3.9% 13,532 7.6% Environmental Remediation Liability 3,271 1,428 1,771 343 19.4% (1,843) -56.4% Total Operating Expenses 181,142 192,831 200,951 8,120 4.0% 11,689 6.5% Net Operating Income 1 153,120 158,621 161,728 (3,107) -1.9% 5,502 3.6% Capital Expenditures 183,578 166,820 223,746 56,926 25.4% (16,758) -9.1% Traffic Enplanements 15,773 16,396 15,845 550 3.5% 622 3.9% Landed Weight 19,786 20,123 20,089 34 0.2% 336 1.7% Key Measures Non-Aero NOI ($ in 000s) 78,203 83,895 81,209 2,686 3.3% 5,692 7.3% Passenger Airline CPE 11.63 11.79 12.76 0.98 7.6% 0.16 1.4% Debt / Enplaned Passenger 172.96 161.46 166.79 5.34 3.2% (11.50) -6.6% Debt Service Coverage 1.39 1.47 1.40 0.06 4.6% 0.08 5.8% 2010 Actual Revenues and 2011 Budget restated to reflect reclassification of Fuel System revenues to non-operating 17 Operating Expense 2010 2011 2011 Budget Variance Change from 2010 $ in 000's Notes Actual Actual Budget $ % $ % Total Operating Revenues 1 334,262 351,452 362,678 (11,227) -3.1% 17,190 5.1% Operating Expenses: Salaries & Benefits 76,036 80,577 81,673 1,096 1.3% 4,541 6.0% Outside Services 22,519 25,228 29,453 4,225 14.3% 2,709 12.0% Utilities 11,381 13,202 12,576 (626) -5.0% 1,821 16.0% Other Airport Expenses 13,275 15,730 14,102 (1,628) -11.5% 2,455 18.5% Baseline Airport Expenses 123,211 134,737 137,804 3,067 2.2% 11,526 9.4% Environmental Remediation Liability 3,271 1,428 1,771 343 19.4% (1,843) -56.4% Total Airport Expenses 126,481 136,164 139,575 3,410 2.4% 9,683 7.7% Corporate 32,558 32,583 34,043 1,461 4.3% 24 0.1% Police Costs 14,317 15,913 16,389 475 2.9% 1,596 11.2% Capital Development/Other Expenses 7,785 8,171 10,944 2,773 25.3% 385 5.0% Total Operating Expenses 181,142 192,831 200,951 8,120 4.0% 11,689 6.5% Net Operating Income 1 153,120 158,621 161,728 (3,107) -1.9% 5,502 3.6% Notes: 2010 Actual and 2011 Budget revenues and NOI restated to reflect the reclassification of fuel system revenues to non-operating Detailed list of variances are shown in the next slide 18 Expense Variances Savings of $12.9 million: Overspending of $4.8 million: Payroll vacancies and delayed hiring $493K Equipment fuel costs, repair and maintenance $865K Terminal realignment delayed $2.9M Utility surface water and sewer $626K Noise Program Part 150 delayed $357K Snow/Ice deicer and control and other maintenance materials $869K Emergency backup generators installation cancelled $897K Contracted janitorial services $246K Other contracted and outside services $711K B&O taxes due to increased revenues and budget error $732K Aviation Division contingency not utilized $636K Kone elevator/escalator increased coverage $317K Training and development funds not utilized $531K Litigated injuries and damages $356K Environmental remediation liability $343K SLOA security fund not budgeted $796K Emergency preparedness and other supplies $141K Other savings $1.2M Corporate and Capital Development Division Allocations $4.7M 19 Aeronautical Business 2010 2011 2011 Budget Variance Change from 2010 2011 actuals $ in 000's Actual Actual Budget $ % $ % includes lower Revenues requirement: variable rate Capital Costs 82,083 81,506 87,111 5,604 6.4% (576) -0.7% debt service Operating Costs net Non-Aero 122,985 133,638 137,195 3,557 2.6% 10,653 8.7% Total Costs 205,067 215,144 224,305 9,161 4.1% 10,077 4.9% $2.3M, FIS Offset (7,000) (7,000) (7,000) - 0.0% - 0.0% additional Other Offsets (14,825) (15,371) (14,821) 550 -3.7% (546) 3.7% debt service Net Revenue Requirement 183,243 192,773 202,485 9,711 4.8% 9,531 5.2% offsets paid Other Aero Revenues 15,086 15,076 14,715 (361) -2.5% (11) -0.1% for by PFC Total Aero Revenues 198,329 207,849 217,200 9,351 4.3% 9,520 4.8% collections Less: Non-passenger Airline Costs 14,885 14,584 15,130 547 3.6% 302 2.0% $3.3M. Net Passenger Airline Costs 183,444 193,265 202,069 8,804 4.4% 9,822 5.4% Operating expense 2010 2011 2011 Budget Variance Change from 2010 savings of Actual Actual Budget $ % $ % $3.5 million Cost Per Enplanement: from delayed Capital Costs / Enpl 5.20 4.97 5.51 0.54 9.7% (0.23) -4.5% in hiring new Operating Costs / Enpl 7.80 8.15 8.66 0.51 5.9% 0.35 4.5% positions and Offsets (1.38) (1.36) (1.38) (0.01) 0.9% 0.02 -1.4% late start of Other Aero Revenues 0.96 0.92 0.93 0.01 1.0% (0.04) -3.9% terminal Non-passenger Airline Costs (0.94) (0.89) (0.95) (0.07) 6.8% 0.05 -5.7% Passenger Airline CPE 11.63 11.79 12.76 0.98 7.6% 0.16 1.4% realignment project. 20 Non Aeronautical Business 2010 2011 2011 Budget Variance Change from 2010 Public parking up 1.2% $ in 000's Actual Actual Budget $ % $ % over 2010, but Revenues: transaction 2.5% less than forecasted. Public Parking 49,416 49,996 52,847 (2,851) -5.4% 580 1.2% Revenue growth Customer Facility Charge (RCF) - 798 1,543 (745) -48.3% 798 n/a impacted by off-site Rental Cars 30,309 30,005 32,290 (2,285) -7.1% (304) -1.0% competition. Ground Transportation 4,912 7,704 6,936 768 11.1% 2,792 56.8% Rental Cars: Concessions 33,765 35,404 32,640 2,764 8.5% 1,639 4.9% Transactions up 4.7% Other 17,017 19,182 18,707 475 2.5% 2,165 12.7% over 2010, but decline Total Revenues 135,418 143,089 144,965 (1,876) -1.3% 7,670 5.7% in actual average ticket price of $210 vs. $226 Operating Expense 54,743 59,878 64,397 4,519 7.0% 5,134 9.4% budgeted impacted lower overall revenues. Share of terminal O&M 16,935 17,685 17,729 44 0.2% 749 4.4% Less utility internal billing (14,464) (18,369) (18,370) (1) 0.0% (3,905) -27.0% Ground Transportation: total trips were up Net Operating & Maint 57,215 59,194 63,756 4,562 7.2% 1,979 3.5% 13.1% vs. 2010 and Net Operating Income 78,203 83,895 81,209 2,686 3.3% 5,692 7.3% 9.5% vs. budget. New STILA contract. Concessions revenues better than expected 2010 2011 2011 Budget Variance Change from 2010 due to primary Actual Actual Budget $ % $ % concessions sales. Operating expense Revenues Per Enplanement savings from payroll Parking 3.13 3.05 3.34 (0.29) -8.6% (0.08) -2.7% $996K, not installing Rental Cars (net of CFCs) 1.92 1.83 2.04 (0.21) -10.2% (0.09) -4.8% emergency generator Ground Transportation 0.31 0.47 0.44 0.03 7.3% 0.16 50.9% $870K, Corporate & Concessions 2.14 2.16 2.06 0.10 4.8% 0.02 0.9% CDD allocations $1.2M, Other 1.08 1.22 1.28 (0.06) -4.6% 0.14 13.0% less $500K in janitorial Total Revenues 8.59 8.73 9.15 (0.42) -4.6% 0.14 1.7% services to concession than budgeted. Primary Concessions Sales / Enpl 9.99 10.30 10.12 0.18 1.8% 0.31 3.1% 21 Net Cash Flow: NOI After Debt Service & Interest Income 2010 2011 2011 Budget Variance Change from 2010 $ in 000's Actual Actual Budget $ % $ % Aeronautical Net Operating Income (NOI) 74,402 74,212 80,005 (5,793) -7.2% (190) -0.3% Debt Service 73,080 71,096 76,700 5,604 7.3% (1,984) -2.7% Aero NOI After Debt Service 1,323 3,117 3,305 (188) -5.7% 1,794 135.6% Non-Aeronautical Net Operating Income (NOI) 78,203 83,895 81,209 2,686 3.3% 5,692 7.3% Debt Service 41,752 40,845 42,469 1,625 3.8% (907) -2.2% Non-Aero NOI After Debt Service 36,451 43,050 38,739 4,311 11.1% 6,599 18.1% Fuel Hydrant Revenue 8,426 514 8,353 (7,839) -93.8% (7,912) -93.9% Less Non-Cash Fuel Hydrant Revenue (7,912) - (7,839) 7,839 -100.0% 7,912 -100.0% Other NOI After Debt Service 514 514 514 (0) -0.1% (0) -0.1% Total Aviation NOI 153,120 158,621 161,728 (3,107) -1.9% 5,501 3.6% Debt Service 114,831 111,940 119,169 7,229 6.1% (2,891) -2.5% NOI After Debt Service 38,288 46,681 42,559 4,122 9.7% 8,392 21.9% Add ADF Interest Income 6,297 4,771 4,167 603 14.5% (1,526) -24.2% Add Non-Operating TSA Grant 752 1,035 1,470 (435) -29.6% 283 37.7% Net Cash Flow after D/S & Interest Inc. 45,337 52,486 48,196 4,290 8.9% 7,149 15.8% 22 Capital Spending 2011 2011 2011 Actual/Budget Plan of $ in 000's Actual Budget Var $ Var % Finance Rental Car Facility Construction 84,363 97,488 13,125 13.5% 98,616 Central Plant Preconditioned Air 18,815 20,000 1,185 5.9% 8,000 Airfield Pavement Replacement 5,333 10,500 5,167 49.2% 10,500 Parking System Replacement 1,769 9,137 7,368 80.6% 8,994 EGSE Rolling Stock - 5,110 5,110 100.0% - South Satellite Delta Sky Club Expansion 7,207 5,250 (1,957) -37.3% 5,038 Aircraft RON Parking USPS Site 300 5,050 4,750 94.1% 5,661 Third Runway Construction 3,418 5,025 1,607 32.0% 5,078 All Other 45,615 66,186 20,571 31.1% 89,521 Total Aviation 166,820 223,746 56,926 25.4% 231,408 Construction costs for the entire RCF program are below budget due to allowances for claims and change orders that will not occur. Soft costs are also below forecast. Unused contingency funds have been pushed out and program savings are likely to be realized. The opening date has been delayed until May 17. The PC Air contractor continues to have delays in the delivery of major equipment. Project completion date is not expected to be impacted. A portion of the project was shifted from 4th quarter 2011 to the 1st quarter of 2012 to avoid rolling out a new system during the holiday season. Amount originally budgeted for Airfield Pavement Replacement was not needed for the scope of the project. Additional budget was authorized by Commission to reimburse Delta due to increased Port scope. Delays in Parking System Replacement have resulted from a change in the bidding approach, longer than anticipated contract negotiations, and avoiding impacts to the existing parking system during the holiday season. Favorable bids resulted in project savings of over $3 million. Airlines have decided to acquire EGSE rolling stock directly. 23 Seaport Division 2011 Financial Performance Commission Briefing March 6, 2012 Seaport 2011 Key Events 2011 Net Operating Income came in at record $60.7 million Exceeded 2011 Net Operating Income Budget by $9.4 million $2.5 million Increase over 2010 Actual Net Operating Income Completed Major Work Condition assessments on docks systems at Terminals 18, 5 and 46 substantially complete Terminal 10 Redevelopment Project North Harbor Island Mooring Dolphins Phase 1 Dredging at Terminal 5 Executed leases with Washington State Department of Transportation at Terminal 106 and Terminal 46 Lower Duwamish Feasibility Study comment period closed and comments received from EPA 25 Seaport Business Goals TEU volume was 2,034K, down 5.0% compared to 2010 record year; second consecutive year over 2 million TEU's. Cruise season ended on September 27th with a total of 196 sailings and 886,000 passengers. Passenger volumes were 11% above budget. Grain volume at 5.0 million metric tons down 8.5% from 2010 and 8.6% under 2011 budget. At or above 5.0 million metric tons for seventh consecutive year. 26 Seaport Organizational Goals Environmental Stewardship 73% of frequent calls meeting Northwest Ports Clean Air Standards target. Environmental Awards AAPA - Stakeholder Awareness, Education and Involvement Award for T117. Comprehensive Environmental Management Award for implementation of NWPCA strategy. Puget Sound Regional Council - 2011 VISION 2040 Award for NWPCA strategy. Regional Transportation Closely engaged in mobility management for south harbor road construction projects and detour routes. 27 Seaport 2011 Operating Results 2010 2011 2011 Budget Change $ in 000's Actual Actual Budget Variance from 2010 Operating Revenue 96,060 98,868 94,972 3,895 2,808 Security Grants 1,791 394 3,415 (3,020) (1,396) Total Revenues 97,850 99,262 98,387 875 1,412 Seaport Expenses (excl env srvs) 12,937 13,166 15,749 2,582 230 Environmental Services 1,999 1,772 2,208 436 (227) Maintenance Expenses 4,981 4,637 4,761 124 (344) P69 Facilities Expenses 527 508 532 25 (19) Other RE Expenses 147 181 293 112 34 CDD Expenses 1,998 3,595 3,412 (183) 1,597 Police Expenses 3,201 3,603 3,713 110 402 Corporate Expenses 10,378 11,239 12,487 1,249 861 Security Grant Expense 1,983 481 3,451 2,970 (1,502) Envir Remed Liability 1,439 (633) 500 1,133 (2,072) Total Expense 39,590 38,549 47,108 8,558 (1,040) Net Operating Income 58,261 60,713 51,280 9,433 2,4520 28 Seaport Division Key Variances Revenue Detail ($'s in Thousands) 2011 Revenue Variance to Budget Business Unit Better (Worse) Containers $2,060 Grain ($474) Industrial Properties ($99) Cruise $2,072 Docks $336 Security Grants ($3,020) Total $875 29 Seaport Division Key Variances Expense Detail ($'s in Thousands) 2011 Expenses Variance to Budget Better (Worse) Security Grant Expense $2,970 Outside Services $1,738 Corporate $1,359 Envir Remediation Liability Exp $1,133 OH Allocations Envir Services $826 All Other $532 Total Expense $8,558 30 Seaport Business Groups NOI Before Depreciation ($'s in Millions) 2011 Variance to Budget Actual NOI Better (Worse) Containers $44.7 $3.9 Grain $4.4 ($ .2) Sea Industrial Properties $5.3 $1.2 Cruise $7.6 $2.9 Docks ($1.1) $.2 Security ($ .8) $.3 Envir Grants/Liability Exp $ .6 $1.1 Total Seaport $60.7 $9.4 31 Seaport Capital 2011 2011 Approved Variance Actual as Plan of Actual Budget to % of App. Finance Budget Budget $18.8 $34.0 $15.1 55% $29.5 32 Real Estate Division 2011 Financial Performance Commission Briefing March 6, 2012 Real Estate 2011 Key Events Exceeded 2011 Net Operating Income Budget by $1.9 million: Revenue $846K favorable to budget Expenses $1,075K favorable to budget Major construction projects completed: Fishermen's Terminal NW Docks Fender Replacement Maritime Industrial Center Seawall Replacement Fishermen's Terminal South Wall Replacement Portfolio Management executed 15 new leases, 23 lease renewals, and 7 agreements 34 Real Estate 2011 Key Events Facility and site long-term planning Commission briefed on Fishermen's Terminal 25-Year Plan/Net Shed Buildings Code Compliance Improvements in December Commission briefed on preliminary Terminal 91 site development options in August Marine Maintenance Twenty-two deferred maintenance projects completed. Program now ~ 42% complete. North-end maintenance facility established 35 Real Estate 2011 Key Events 48% of Pier 69 employees using alternative modes of transportation for commuting to and from work Real Estate Development & Planning: Signed letter of intent with potential tenant for 18-acre City of SeaTac site Executed letter of intent for long-term ground lease of Des Moines Business Park site Issued RFI for hotel development at SeaTac Airport Completed assemblage of Lora Lake and Des Moines Business Park sites 36 Real Estate Business Goals Provide Compelling Value and Asset Utilization Occupancy Rates: Commercial property at 90% occupancy, at target and above 2011 Q4 Seattle market average of 86%. Activity at Bell Harbor International Conference Center exceeded Budget. Marina Occupancy: Fishermen's Terminal and Maritime Industrial Center at 78% YTD occupancy, below target of 81%. Recreational Marinas at 94%, above target of 93%. 37 Real Estate Division 2011 Operating Results 2010 2011 2011 Budget Change $ in 000's Actual Actual Budget Variance from 2010 Revenue 21,500 22,055 21,780 275 555 BHICC & WTC Revenue 8,320 9,498 8,927 571 1,178 Total Revenue 29,820 31,553 30,707 846 1,732 Real Estate Exp (excl Maint,P69,Conf) 9,305 9,781 9,473 (308) 476 Real Estate BHICC & WTC 6,964 7,600 7,613 13 637 Eastside Rail Corridor 504 1,585 484 (1,101) 1,082 Maintenance Expenses 6,652 7,245 8,934 1,689 592 P69 Facilities Expenses 226 151 159 9 (75) Seaport Expenses 1,178 1,346 1,328 (19) 169 CDD Expenses 803 934 1,266 332 131 Police Expenses 1,198 1,310 1,350 40 112 Corporate Expenses 4,671 5,045 5,472 427 373 Envir Remed Liability (2) 7 0 (7) 8 Total Expense 31,499 35,004 36,079 1,075 3,505 Net Operating Income (1,678) (3,451) (5,372) 1,921 (1,773)0 38 Real Estate Division 2011 Key Variances Revenue Detail ($'s in Thousands) 2011 Revenue Variance to Budget Business Unit Better (Worse) Recreational Boating $157 Fishing & Commercial ($104) Commercial Properties $180 Third Party Management $330 RE Development & Planning $194 Eastside Rail $40 Facilities/Maintenance $49 Total $846 39 Real Estate Division 2011 Key Variances Expense Detail ($'s in Thousands) 2011 Variance to Budget Expense Better (Worse) Maintenance $1,689 Outside Services $203 Corporate $467 CDD $332 Litigated Damages ($1,528) All Other ($88) Total Expense $1,075 40 Real Estate Business Groups NOI Before Depreciation ($'s in Thousands) 2011 Variance to Budget Actual NOI Better (Worse) Recreational Boating $1,720 $875 Fishing & Commercial ($2,597) $163 Commercial & Third Party ($56) $1,689 RE Development & Planning ($558) $504 Eastside Rail ($1,953) ($1,304) Envir Grant/Remed Liability ($7) ($7) Total Real Estate ($3,451) $1,921 41 Real Estate Capital 2011 2011 Approved Variance Est. Act. Plan of Actual Budget to as % of Finance Budget App. Bud $10.1 $16.3 $6.3 62% $15.4 42 Capital Development Division 2011 Financial Performance Commission Briefing March 6, 2012 Capital Development Division Q4 2011 Business Events Signed contracts for airport USPS building demolition; old maintenance warehouse demolition; parking revenue control system replacement; and parking garage 8th floor waterproofing projects. Completed Continuous Process Improvement/Accelerated Improvement workshop; moving forward with Consensus Based Evaluation process. Issued Substantial Completion Certification on Terminal 10 development. Completed 2 under dock inspection studies for Seaport. Completed first year of revised overhead budgeting, learning lessons and providing greater visibility to costs. Q4 2011 44 Project Hard/Soft Costs Q4 2011 45 Cost Growth During Construction Q4 2011 46 Design Schedule Growth * Information not reported in the initial Commission Authorization for all projects Initial Commission Planned Actual Construction Design Authorized Start Construction Contract Award Project Schedule of Design Contract Award (Execution) Growth (Execution) 4th Quarter 2011 Comprehensive Stormwater 27-Oct-09 1-May-10 15-Mar-11 171% Management/Bioswales Garage Escalator Safety Upgrades 11-Sep-07 01-May-08 21-Oct-10 388% Q4 2011 47 Construction Schedule Growth Planned Actual Construction Planned Substantial Actual Substantial Construction Project Construction Contract Award Completion of Completion of Schedule Contract Award (Execution) Construction Construction Growth (Execution) 4th Quarter 2011 Comprehensive Stormwater 1-May-10 15-Mar-11 1-Sep-10 26-Oct-11 82.9% Management/Bioswales Garage Escalator Safety Upgrades 01-May-08 21-Oct-10 1-Feb-09 21-Sep-11 21.4% Q4 2011 48 CPO Procurement Time Procurement Schedule Total Time Receipt of Scope to Execution (Avg # Days) 2010 2011 Goods & Services 81 days 84 days Major Public Works 62 days 75 days Small Works 56 days 58 days Service Agreements 256 days *214 days *Pulled out 1 non-urgent procurement that resulted in 2 contracts (averaged 450 days for each contract to be executed). Q4 2011 49 CDD Gross Operating Results 2011 Budget Change In $ '000 2010 Actual 2011 Actual Budget Variance from 2010 Engineering - 63 - 63 63 Port Construction Services 23 16 - 16 (7) Aviation Project Management 13 - - - (13) Total Revenues 36 79 - 79 43 Expenses Before Charges to Capital Capital Development 380 354 359 4 (26) Engineering 9,963 12,712 15,225 2,513 2,750 Port Construction Services 7,886 7,304 7,554 250 (582) Central Procurement Office 3,287 3,878 4,394 516 591 Aviation Project Management 5,134 6,616 8,637 2,022 1,482 Seaport Project Management 2,693 2,419 2,493 74 (274) TOTAL BEFORE CHARGES TO CAPITAL 29,343 33,283 38,662 5,379 3,941 Q4 2011 50 CDD Key Variances to Net Budget Q4 2011 Expenses Variance to Budget YTD Var. F/(UNF) $ in 000's Better (Worse) % Salaries and Benefits 2,325 8.2% Outside Services 1,894 24.4% Travel and Other 221 50.3% Telecommunications 5 3.6% Property Rentals 7 7.5% General Expenses (7) (12.0%) All Other 934 54.2% Charges to Capital Projects (2,319) 9.5% Total 3,060 21.4% Q4 2011 51 Corporate 2011 Financial Performance Commission Briefing March 6, 2012 Corporate 2011 Key Events Hosted 9 Century Agenda Roundtables with panelists composed of members of the public who have particular expertise in each area. Held a numbers of events to celebrate the Port's100 Year Anniversary. Successfully completed 100th annual AAPA conference from September 11 15 held here in Seattle. Finished building the Port's new website including interactive maps and videos. Finalized 2012 premium rates for the Port's self funded medical and dental programs. Developed plan for financing POS contribution to Viaduct Replacement. Received 14 awards in the Port's environmental leadership, centennial products, budgeting, financial reporting, and other areas. 53 Corporate 2011 Key Metrics 935 employees completed the Health Assessment and Wellness Reward Goals. 37 employees participated in the Tuition Reimbursement Program. Posted 243 job openings and received 12,607 job applications. Completed 97% of annual safety training. Responded to 298 public disclosure requests. Provided orientation to 124 new employees. Negotiated 5 labor contracts. Completed 23 internal audits. Handled 37 litigations and claims. 576 small businesses registered on new roster system. 54 Corporate Year End Variance 2010 2011 2011 $ in 000's Actual Actual Budget Bud Var Explanations Total Revenues 610 1,559 1,025 534 Unbudgeted Police Grants Executive 1,356 1,494 1,500 6 Savings from equipment and supplies Commission 831 743 931 189 Travel and other savings Legal 3,475 2,990 2,906 (84) Due to litigations and WR investigations Risk Services 2,618 2,618 2,789 171 Savings from insurance costs and vacancy Health & Safety Services 1,001 1,059 1,129 69 Savings from outside services and travel Public Affairs 5,553 6,519 7,012 493 Vacant positions and other savings Human Resources & Development 4,107 4,950 5,285 335 Vacant positions and credit from state Labor Relations 675 948 922 (27) Less charges to capital for PLA Information & Communications Technology 18,765 19,237 19,511 274 Vacant positions and outside services Finance & Budget 1,455 1,445 1,493 48 Savings from travel and training Accounting & Financial Reporting 5,939 5,817 6,596 780 Vacant positions and bank rebate Internal Audit 990 1,087 1,215 128 Vacant positions Office of Social Responsibility 1,280 1,353 1,567 214 Vacant position and outside services Police 19,273 21,297 21,452 155 Savings due to reduced jail costs Contingency 21 105 700 595 Savings due to lower costs Total Expenses 67,391 71,828 75,008 3,180 55 Corporate Major Expense Variances 2010 2011 2011 Budget Change Major Expenses (In $ '000) Actual Actual Budget Variance from 2010 %,FACCOUNT,TALL_ACCOUNTS2,NA5210Salaries & Benefits 33,198 34,165 34,876 (711) 967 %,FACCOUNT,TALL_ACCOUNTS2,NA5410Wages & Benefits 17,010 18,639 19,211 (572) 1,628 %,FACCOUNT,TALL_ACCOUNTS2,X,NA5990Payroll to Capital Projects 2,304 2,407 2,966 (559) 103 %,FACCOUNT,TALL_ACCOUNTS2,NA6120Equipment Expense 1,618 1,409 1,181 228 (209) %,FACCOUNT,TALL_ACCOUNTS2,NA6310Supplies & Stock 575 669 673 (4) 94 %,FACCOUNT,TALL_ACCOUNTS2,NA6410Outside Services 9,995 10,194 11,292 (1,098) 199 %,FACCOUNT,TALL_ACCOUNTS2,NA6210Utilities 8 9 10 (1) 1 %,FACCOUNT,TALL_ACCOUNTS2,NA6510Travel & Other Employee Exps 1,985 2,232 2,402 (169) 247 %,FACCOUNT,TALL_ACCOUNTS2,NA6610Promotional Expenses 309 968 882 86 660 %,FACCOUNT,TALL_ACCOUNTS2,NA6650,NA6670,NA6690,NA6710Other Expenses 3,187 3,458 4,683 (1,225) 271 %,FACCOUNT,TALL_ACCOUNTS2,NA6850Charges to Capital Projects (2,914) (2,407) (3,283) 876 507 %,FACCOUNT,TALL_ACCOUNTS2,NA5000TOTAL 67,391 71,828 75,008 (3,180) 4,436 56 Corporate Cost Analysis 2010 2011 2011 2012 ($ in 000's) Actual Actual Budget Budget Corporate Cost 67,391 71,828 75,008 76,535 Total Revenue 462,579 483,844 492,798 516,882 Total Expense 253,464 268,711 285,844 309,844 Corporate Cost as % of Revenues* 14.6% 14.9% 15.2% 14.8% * Excluding the $1.2M expenses for Port Centennial and AAPA Conference, Corporate cost as % of revenues for 2011 remained at 14.6%, same as 2010. 57
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