Item 9a Supp
ITEM NO. 9a-Supp DATE OF MEETING August 11, 2009 2009 Q2 Financial Performance Port of Seattle August 11, 2009 Portwide Income Summary 2008 YTD 2009 YTD 2009 YTD 2009 Bud vs. Act ($ in thousands) Actual Actual Budget Var $ Var % Operating Revenues 243,631 232,502 231,661 840 0.4% Operating Expenses 116,203 114,014 143,726 29,712 20.7% Income before Depreciation 127,428 118,488 87,936 30,552 34.7% Depreciation 70,220 75,243 77,877 2,634 3.4% Income after Depreciation 57,209 43,245 10,059 33,186 329.9% 2 Portwide Year-End Forecast 2008 2009 2009 2009 Bud vs. Fcst ($ in thousands) Actual Forecast Budget Var $ Var % Operating Revenues 488,996 462,610 486,367 (23,757) -4.9% Operating Expenses 280,278 260,427 277,862 17,435 6.3% Income before Depreciation 208,719 202,183 208,506 (6,323) -3.0% Depreciation 144,208 157,036 157,036 - 0.0% Income after Depreciation 64,510 45,147 51,470 (6,323) -12.3% 3 Total Port 2009 Capital Spending Q1 Q2 Q3 Q4 YE App'd Plan of Division Act. Act. Est. Est. Fcst Budget Var. Finance ($ in millions) Aviation 31.7 36.7 100.9 84.0 253.4 214.7 -38.7 348.2 Seaport 18.8 18.0 9.5 9.6 55.9 100.4 44.5 126.7 Real Estate 0.4 0.5 1.6 98.3 100.8 105.2 4.4 116.3 Corporate 1.9 1.7 5.6 5.7 14.9 15.9 0.9 12.8 Total 52.7 57.0 117.6 197.6 424.9 436.1 11.2 604.0 4 Aviation Division 2009 Q2 Financial Performance Port Commission August 11, 2009 5 Aviation Business Highlights Airline activity: YTD enplanements down 5.1% from 2008. Operating budget: Implemented Aviation Expense Savings Plan of $7.8M. YTD expenses are below budget due to the Expense Savings Plan. 2009 forecast $1M over the targeted expense reductions due to more snow event costs. Non-airline revenues: Decline in non-airline revenues exceeds decline in passengers. Reduced forecast of non-airline revenues by $2.1M for a total of $11.3M below approved budget. Capital budget: Expect to spend more than approved annual budget due to restarting construction of Rental Car Facility. 6 Q2 Activity Enplanements vs. Prior Year Landed Weight vs. Prior Year 0% 2% 0.38% 0.03% Growth Rate -4.02% -3.87% -4.59% -4.65% 0% -6.08% -5% -2% -3.95% -8.11% Growth Rate -4% -6.27% -10% -6% -7.25% -7.37% Jan Feb Mar Apr May Jun -8% Jan Feb Mar Apr May Jun 2008 2009 % 2008 2009 % Figures in 000's YTD YTD Variance Actual Fcst Variance Enplanements 7,774 7,376 -5.1% 16,093 14,959 -7.0% Landed Weight 10,517 10,079 -4.2% 21,515 20,437 -5.0% March and April landed weight augmented by cargo diversion from Anchorage due to volcanic activity. 7 Q2 YTD Operating Revenues 2007 YTD 2008 YTD 2009 YTD 2009 YTD Act/Budget Figures in $ 000's Actual Actual Actual Budget Var $ Var % Revenues Landing Fees 24,855 28,203 27,917 28,875 (958) -3.3% Terminal Rental 66,882 62,148 65,517 59,760 5,758 9.6% Other Aero Revenues 5,698 5,621 6,392 6,050 342 5.7% Total Aero Revenue 97,435 95,972 99,866 94,684 5,182 5.5% Public Parking 27,232 31,060 25,628 28,395 (2,767) -9.7% Rental Cars 16,179 16,271 16,250 14,836 1,414 9.5% Concessions 12,436 15,842 16,410 15,417 992 6.4% Other Non-airline 10,235 11,006 10,027 10,549 (521) -4.9% Total Non-Aeronautical 66,082 74,179 68,314 69,197 (883) -1.3% Other 4,255 4,296 4,177 4,352 (175) -4.0% Total Revenues 167,772 174,447 172,357 168,234 4,124 2.5% Air terminal revenues variance of $5.7M due to increase leased space and incorrect seasonality built into the budget. Public parking revenues down 17% compare to YTD 2008. Rental Cars revenues are higher due to Minimum Annual Guarantees. 8 Q2 YTD Operating Expenses 2007 YTD 2008 YTD 2009 YTD 2009 YTD Actual/Budget Figures in $ 000's Actual Actual Actual Budget Var $ Var % Total Revenues 167,772 174,447 172,357 168,234 4,124 2.4% Expenses Total Salaries & Benefits 36,495 39,914 39,428 41,845 2,418 5.8% Total Utilities 6,514 6,514 6,784 7,258 474 6.5% Total Supplies & Stock 2,312 1,929 2,135 1,816 (320) -17.6% Total Outside Services 11,207 11,416 8,688 12,509 3,821 30.5% Total Other 4 807 1,146 4,151 3,005 72.4% Total Operating Exp 56,533 60,580 58,182 67,579 9,398 13.9% Corporate 12,930 13,681 14,288 18,077 3,790 21.0% Police Costs 6,576 7,377 6,445 8,029 1,584 19.7% Other Charges/CDD 150 2,475 2,183 2,637 454 17.2% Total Operating Expenses 76,189 84,113 81,098 96,323 15,225 15.8% Net Operating Income 91,583 90,334 91,260 71,911 19,349 26.9% YTD total spending under budget due to unfilled positions and delay of expense projects. 9 Aeronautical Business 2008 2009 2009 Forecast/Budget Figures in $000's Actual Forecast Budget Var $ Var % Revenues requirement: Capital Costs 81,535 80,350 80,350 - 0.0% Operating Costs net Non-Aero 131,024 120,754 127,921 7,167 5.6% Total Costs 212,559 201,104 208,271 7,167 3.4% FIS Offset (5,250) (5,550) (5,550) - 0.0% Other Offsets (15,686) (14,398) (14,052) 346 -2.5% Net Revenue Requirement 191,623 181,156 188,670 (7,514) -4.0% Other Aero Revenues 12,738 14,244 14,244 - 0.0% Total Aero Revenues 204,361 195,400 202,913 (7,514) -3.7% Non-passenger Airline Costs 13,039 14,661 14,830 168 1.1% Net Pasenger Airline Costs 191,323 180,738 188,084 7,345 3.9% Operating costs are forecasted to be lower than budgeted due to budget savings from payroll, travel and registration, and outside services. 10 Aeronautical Key Indicators 2008 2009 2009 Forecast/Budget Actual Forecast Budget Var $ Var % CPE: Capital Costs / Enpl 5.07 5.37 5.09 (0.29) -5.6% Operating Costs / Enpl 8.15 8.07 8.10 0.02 0.3% Offsets (0.98) (0.96) (0.89) 0.07 -8.2% Non-passenger Airline Costs (0.81) (0.98) (0.94) (0.04) 4.4% Passenger Airline CPE 11.89 12.08 11.90 (0.18) -1.5% Forecasted passenger airline CPE of $12.08 is higher than budget due to lower enplanements. Forecasted operating costs per enplanement are even with budget due to budget cuts in Q1 2009. 11 Non-Aeronautical Business 2008 2009 2009 Forecast/Budget Figures in $000's Actual Forecast Budget Var $ Var % Revenues: Public Parking 59,111 51,963 57,377 (5,413) -9.4% Rental Cars 35,592 33,850 35,867 (2,018) -5.6% Concessions 33,181 29,998 32,821 (2,824) -8.6% Other 22,644 21,200 22,224 (1,024) -4.6% Total Revenue 150,528 137,011 148,289 (11,278) -7.6% Operating Expense 61,279 57,284 60,329 3,045 5.0% Share of terminal O&M 16,396 17,183 18,105 921 5.1% Less utility internal billing (13,515) (16,848) (16,848) - 0.0% Net Operating & Maint 64,160 57,620 61,586 3,966 6.4% Net Operating Income 86,367 79,391 86,703 (7,312) -8.4% Rental cars forecasted lower due to decrease transactions. Concessions sales forecasted lower in concourses D and A. 12 Non-Aero Key Indicators 2008 2009 2009 Forecast/Budget Actual Forecast Budget Var $ Var % Revenues / Enplanement Parking 3.67 3.47 3.63 (0.16) -4.3% Rental Car 2.21 2.26 2.27 (0.01) -0.3% Concessions 2.06 2.01 2.08 (0.07) -3.5% Other 1.41 1.42 1.41 0.01 0.8% Total Revenue 9.36 9.16 9.39 (0.23) -2.4% Primary Concessions Sales / Enpl 10.29 9.83 10.19 (0.36) -3.5% Primary concessions sales forecasted lower than budgeted. 13 Year-end Expense Forecast Summary 2007 2008 2009 2009 Fcst/Budget Figures in $ 000's Actual Actual Forecast Budget Var $ Var % Total Revenues 347,487 358,329 341,314 360,006 (18,692) -5.2% Expenses Total Salaries & Benefits 71,102 87,605 80,913 84,777 3,864 4.6% Total Equipment 2,616 2,479 1,446 1,591 145 9.1% Total Utilities 12,602 12,636 13,226 13,571 345 2.5% Total Supplies & Stock 3,618 5,667 4,144 3,705 (439) -11.8% Total Outside Services 23,948 29,492 22,264 23,737 1,473 6.2% Total Travel & Other Employee Exp 781 961 626 1,016 390 38.4% Total Other 11,504 3,858 3,178 4,268 1,090 25.5% Total Operating Exp 126,171 142,699 125,797 132,665 6,868 5.2% Corporate Expenses 29,524 34,940 32,921 35,782 2,862 8.0% Police Costs 14,386 15,287 14,420 15,743 1,323 8.4% Real Estate Expenses 1,350 1,234 1,308 1,326 18 1.4% Total O&M Costs 171,624 195,183 178,321 189,521 11,200 5.9% Net Operating Income 175,864 163,146 162,993 170,485 (7,493) -4.4% Expenses are forecasted $7.8M favorable due to implementation of 2009 Aviation Expense Savings Plan offset with $1M overrun for more snow events. Potential FEMA reimbursement for snow event costs of $800k Anticipate $500k over budget due to repairs of elevators and escalators 14 Summary Financial Results 2007 2008 2009 2009 Forecast/Budget Figures in $000's Actual Actual Forecast Budget Var $ Var % Revenues Aeronautical 195,029 204,361 195,499 202,913 (7,414) -3.7% Non-aeronautical 143,975 150,528 137,011 148,289 (11,278) -7.6% Other 8,483 3,440 8,804 8,804 - 0.0% Total Revenues 347,487 358,329 341,314 360,006 (18,692) -5.2% Total O&M Costs 171,624 195,183 178,321 189,521 11,200 5.9% Net Operating Income 175,864 163,146 162,993 170,485 (7,493) -4.4% Capital Expenditures 298,387 209,813 253,462 214,743 (38,719) -18.0% Traffic Enplanements 15,662 16,085 14,959 15,800 (841) -5.3% Landed Weight 21,014 21,516 20,437 21,281 (844) -4.0% Key Measures Non-Aero NOI 87,714 86,474 79,282 86,393 (7,110) -8.2% Passenger Airline CPE 11.73 11.89 12.09 11.90 (0.18) -1.6% Total Operating Cost / Enpl 10.96 12.13 11.95 11.99 0.05 0.4% Debt Service Coverage 1.58 1.42 1.48 1.51 (0.04) -2.3% Expense reductions have mitigated increase in CPE. Deb t service coverage remains strong. 15 Capital Budget Spending 2009 Figures in $ 000's 2009 2009 Forecast/Budget Plan of YTD Actual Forecast Budget Var $ Var % Finance R/W 16L/34R Reconstruction 16,737 71,737 71,000 (737) -1.0% 82,715 Rental Car Facility (1) 20,639 91,997 40,562 (51,435) -126.8% 119,011 MT 100% Baggage Screening (2) 8,125 11,300 18,000 6,700 37.2% 21,727 Third Runway Projects 5,814 15,208 17,281 2,073 12.0% 47,027 All Other 17,081 63,220 67,900 4,680 6.9% 77,722 Total 68,396 253,462 214,743 (38,719) -18.0% 348,202 (1) Restarting Rental Car Facility after having suspended construction in December, 2008. Includes both design and construction costs. (2) Budget had anticipated claims from contractor which Port staff successfully negotiated down. 16 Seaport Division Performance Report 2nd Quarter 2009 August 11, 2009 Seaport Business Goals Provide Compelling Value and Asset Utilization TEU volume was 691K, down (22%) from year-to date 2008. Full inbound TEU's were down (27%) and full outbound down (19%). Grain volume at 2.5 million metric tons down 27% from 2008. Reduction partially due to temporary closures for grain spout upgrades. Smith Cove cruise facility opened on schedule with the first call on April 24th. 18 Seaport Organizational Goals Environmental Stewardship: Zero environmental/regulatory violations. Key elements of the Clean Truck Program approved by the Commission in April. Regional Transportation: East Marginal Way Grade Separation project - Issues resolved with City and BNSF. Prepared to go out for bid. 19 2009 Expense Budget Reductions $1.8 million in Seaport specific expense budget reductions. $2.6 million in expense budget reductions inclusive of direct charges and allocations from other groups. Expense reductions reflected in full year forecasts. 20 Seaport Full Year Operating Forecast In $ Thousands 2008 2009 2009 2009 Bud Var Actual Forecast Budget $ % Operating Revenue 85,453 85,851 90,131 (4,280) -5% Environmental Grants 8,833 850 850 0 0% Security Grants 850 2,648 3,955 (1,307) -33% Total Revenue 95,136 89,348 94,935 (5,587) -6% Direct Expenses 22,265 24,174 27,234 3,061 11% Security Expense 1,715 3,657 5,431 1,774 33% Environmental Reserve 5,872 5,517 3,375 (2,142) -63% Allocations 15,069 15,302 15,888 585 4% Total Expense 44,921 48,650 51,928 3,278 6% Net Operating Income (NOI) 50,215 40,698 43,007 (2,309) -5% NOI Excl Envir Grants/Reserve 47,254 45,365 45,532 (167) 0% 21 Seaport Q2 YTD Operating Results In $ Thousands 2008 YTD 2009 YTD 2009 YTD 2009 Bud Var Actual Actual Budget $ % Operating Revenue 43,268 43,704 44,597 (894) -2% Environmental Grants 7,809 389 213 177 83% Security Grants 744 129 2,537 (2,409) -95% Total Revenue 51,821 44,222 47,347 (3,125) -7% Direct Expenses 8,669 11,023 16,101 5,078 32% Security Expense 564 529 3,307 2,778 84% Environmental Reserve 0 0 1,688 1,688 100% Allocations 7,051 6,736 8,010 1,274 16% Total Expense 16,285 18,287 29,105 10,818 37% Net Operating Income (NOI) 35,537 25,934 18,242 7,693 42% NOI Excl Envir Grants/Reserve 27,727 25,545 19,717 5,828 30% 22 Seaport Division Key Variances Revenue Detail ($'s in Thousands) Q2 YTD Business Unit Variance to Budget Better (Worse) Containers ($1,441) Support Properties ($ 2) Cruise $314 Grain ($120) Docks/Industrial Properties $343 Security ($2,409) Environmental Grants/Other $ 164 Total ($3,125) 23 Seaport Division Key Variances Expense Detail ($'s in Thousands) Q2 YTD Expenses Variance to Budget Better (Worse) Outside Services $3,983 Security Expenses $2,778 T30/T91 Project Exp Component $525 Environmental Reserve $1,688 Corporate/CDD $1,232 Maintenance $251 All Other $361 Total Expense $10,818 24 Seaport Business Groups NOI Before Depreciation ($'s in Millions) Q2 YTD Variance to Budget Actual NOI Better (Worse) Containers $19.1 $3.4 Container Support Props $ .3 ($ .3) Cruise $1.8 $1.2 Grain $2.2 ($ .1) Docks/Indust Props $2.8 $ 1.1 Security $( .6) $ .4 Envir Grants/ Reserve $ .4 $1.9 Total Seaport $25.9 $7.7 25 Seaport Capital 2009 Estimated Approved Variance Est. Act. Plan of Actual Budget to as % of Finance Budget App. Bud $55.9 $100.4 $44.5 56% $126.7 26 Real Estate Division Performance Report 2nd Quarter 2009 August 11, 2009 Real Estate Business Goals Provide Compelling Value and Asset Utilization Occupancy Rates: Commercial property at 95% occupancy, at target of 95% and above 2009 Q2 Seattle market average of 85%. FT/Marina Occupancy: Fishermen's Terminal exceeded the first half occupancy target. Harbor Island Marina at target. Shilshole Bay Marina, Bell Harbor, and Maritime Industrial Center below targets. 2009 Q2 Performance Report 28 2009 Expense Budget Reductions $1.4 million in Real Estate specific expense budget reductions. $2.0 million in expense budget reductions inclusive of direct charges and allocations from other groups. Expense reductions reflected in 2009 full year forecasts. 2009 Q2 Performance Report 29 Real Estate Division Full Year Forecast In $ Thousands 2008 2009 2009 2009 Bud Var Actual Forecast Budget $ % Operating Revenue 34,875 30,381 30,961 (580) -2% Environmental Grants 1 150 150 0 0% Total Revenue 34,877 30,531 31,111 (580) -2% Direct Expenses 36,375 30,599 31,821 1,222 4% Environmental Reserve 604 1,125 1,125 0 0% Allocations 1,840 1,732 2,445 713 29% Total Expense 38,819 33,456 35,391 1,934 5% Net Operating Income (NOI) (3,943) (2,925) (4,279) 1,354 32% NOI Excl Envir Grants/Reserve (3,340) (1,950) (3,304) 1,354 41% 30 Real Estate Division Q2 YTD Operating Results In $ Thousands 2008 YTD 2009 YTD 2009 YTD 2009 Bud Var Actual Actual Budget $ % Operating Revenue 17,040 15,353 15,361 (8) 0% Environmental Grants 0 0 38 (38) -100% Total Revenue 17,040 15,353 15,399 (45) 0% Direct Expenses 14,454 13,126 15,898 2,772 17% Environmental Reserve 0 0 563 563 100% Allocations 620 915 1,250 335 27% Total Expense 15,074 14,041 17,710 3,669 21% Net Operating Income (NOI) 1,966 1,312 (2,312) 3,624 157% NOI Excl Envir Grants/Reserve 1,966 1,312 (1,787) 3,099 173% 31 Real Estate Division Q2 Key Variances Revenue Detail ($'s in Thousands) 2009 Year to Date Variance to Budget Business Unit Better (Worse) Recreational Boating ($86) Fishing & Commercial $5 Commercial Properties ($19) Third Party Management $95 RE Development & Planning $108 Eastside Rail ($125) Facilities/Maintenance/Envir ($23) Total ($45) 32 Real Estate Division Q2 Key Variances Expense Detail ($'s in Thousands) 2009 Year to Date Variance to Budget Expense Better (Worse) Third Party Management $308 Outside Services $734 Corporate /CDD $1,269 Maintenance Expense $556 Environmental Reserve $563 All Other $239 Total Expense $3,669 33 Real Estate Business Groups NOI Before Depreciation ($'s in Thousands) Q2 YTD Variance to Budget Actual NOI Better (Worse) Recreational Boating $1,177 $533 Fishing & Commercial ($657) $547 Commercial & Third Party $1,001 $1,813 RE Development & Planning ($137) $70 Eastside Rail ($72) $136 Environmental Reserve $0 $525 Total Real Estate $1,312 $3,624 2009 Q2 Performance Report 34 Real Estate Capital 2009 Estimated Approved Variance Est. Act. Plan of Actual Budget to as % of Finance Budget App. Bud $100.8 $105.2 $4.4 96% $116.3 2009 Q2 Performance Report 35 Capital Development Division Performance Report Second Quarter August 11, 2009 Capital Development Division YTD Business Events Rental Car facility construction restarted. Slowdown impacted workload and staff assignments Aviation Investment Committee approved three Infrastructure projects. PCS participated in three round table discussions with OSR on small business utilization. PCS direct costs thru Q2 $4.1 million compared to $5.2 m this time in 2008. Uncertainty of capital projects workload and hiring freeze resulted in using more consultant time for greater cost and impact on overhead ratio. 4 CPO-1 classes in Q2. Total of 13 sessions with over 350 attendees. 4 Service Agreement Evaluation Criteria classes scheduled for Q3. T91 Cruise Terminal completed successfully. First vessel in April. T30 Container Terminal Redevelopment complete. First vessel due Aug 7. T115 Berth 1 work received permits. Will advertise for bids Q3. 37 Capital Development Division Key Indicators Construction Soft Costs: 19.1% of total project costs 2004 thru 2009 to date. (Goal: no more than 25%) Cost Growth during Construction: 3 projects closed in 2009 to date averaged 5.5% total cost growth. (Goal: no more than 8%) Schedule: Projects on or ahead of schedule 30, Projects delayed 40. (Goal: no more than 10% schedule growth.) Small Business Participation: SB participation 7.9% for major construction and 19.6% for PCS. (Goal: >8% and 30%) Customer Score Card: Not available Environmental: Not available Safety: PCS incident rate 9.31, major contracts 0.8. (Goal: rate <6) Performance Review Timeliness: 62.5% by 4 weeks. (Goal : 98%) 38 Capital Development Division Operating Results and Forecast Corporate Professional & Technical Services Performance Report Second Quarter August 11, 2009 Corporate Operating Results 2008 YTD 2009 YTD 2009 Bud Var. Year-End Projections In $ Thousands Actual Actual Budget $ % Budget Forecast Var. Total Revenues 313 514 724 (210) -29.0% 1,470 1,417 (53) Executive 876 715 803 89 11.0% 1,540 1,449 92 Commission 477 422 472 50 10.6% 867 844 22 Legal 1,230 975 1,372 397 28.9% 2,703 2,637 67 Risk Services 1,413 1,253 1,430 177 12.4% 2,861 2,833 28 Health & Safety 525 468 503 35 6.9% 985 947 38 Public Affairs 1,815 1,587 2,240 653 29.2% 4,270 3,565 705 External Affairs 518 612 654 42 6.4% 1,347 1,229 118 Eco & Trade Dev 559 660 1,072 412 38.4% 2,099 1,638 462 HR&D 1,927 1,740 2,114 374 17.7% 4,165 3,926 238 Labor Relations 313 319 362 42 11.7% 731 593 138 ICT 5,407 7,722 9,860 2,138 21.7% 19,658 18,404 1,253 Finance & Budget 781 719 889 170 19.1% 1,719 1,482 236 A&FR 2,956 2,928 3,328 400 12.0% 6,541 6,331 210 Internal Audit 318 460 575 115 20.0% 1,211 1,073 138 OSR 341 531 842 311 37.0% 1,647 1,397 249 Regional Transportation 176 208 251 43 17.2% 498 461 37 Police 9,149 8,299 10,186 1,887 18.5% 19,979 18,312 1,666 Contingency 1,371 313 375 62 16.5% 750 750 - Total Expenses 30,154 29,930 37,327 7,397 19.8% 73,572 67,873 5,699 41 Corporate Highlights Implemented the $16.5 million Port-wide Expense Savings Plan and Furlough Program Attended the West Coast Port Executive's meetings in California and Washington, DC. Began the Modified Zero-Base Budgeting process for 2010 budget. Completed several important ICT projects: Aviation Dashboard, Internal Control Software, Microsoft Office 2007 Upgrade, Common Use Terminal Replacement and IP Telephony 42 Corporate Indicators Completed and presented a number of internal audits to the Audit Committee Sea-Air School Programs reached 5,969 folks Occupational injury rate reduced from 6.06 to 4.7% 93% completed the health assessment in the Wellness Incentive Program Received several distinguished awards: - Certificate of Achievement for Excellence in Financial Reporting - Award of Financial Reporting Achievement - Distinguished Budget Presentation Award 43
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