7b supp long
ITEM NO: 7b_Supp_1_Long DATE OF MEETING: March 24, 2015 2014 Performance Report Aviation Division Commission Briefing March 24, 2015 2014 Aviation Business Overview Updated and refined cost estimate for International Arrivals Facility Sustainable Airport Master Plan developed terminal expansion concepts Airport Dining and Retail program: ' Presented leasing plan to commission ' Commission approved modifications to prime operator leases in December Completed Cargo 5 hardstand project to add much needed aircraft parking positions Steady progress on Strategic Initiatives 2 Airport Activity 2013 2014 % Change Enplaned Passengers (000's) Growth in Passenger Volume: Domestic 15,604 16,824 7.8% Both Alaska and Delta added domestic flights International 1,772 1,892 6.8% Delta added new internaltional service to Hong Kong, Seoul, Total 17,376 18,717 7.7% and London Operations 317,186 340,478 7.3% Landed Weight (million lbs.) Cargo 1,388 1,574 13.4% All other 19,561 20,926 7.0% Total 20,949 22,500 7.4% Cargo - metric tons Growth in Cargo Activity: Domestic freight 155,868 161,140 3.4% International passenger flights provide new cargo capacity. International freight 88,580 107,606 21.5% Fruit exports, especially cherries, strong in 2014. Mail 48,262 50,612 4.9% Air trade to Asia & Europe up significantly in 2014, across Total 292,710 319,358 9.1% a range of commodities. Passenger growth driven by Alaska and Delta 3 Aviation Financial Summary Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Operating Revenues: Aeronautical Revenues 238,633 228,769 241,443 (12,674) -5.2% (9,864) -4.1% SLOA III Incentive Straight Line Adj (1) 14,304 (3,576) (3,576) (0) 0.0% (17,880) -125.0% Non-Aeronautical Revenues 161,075 180,806 166,453 14,353 8.6% 19,731 12.2% Total Operating Revenues 414,011 405,999 404,320 1,679 0.4% (8,012) -1.9% Total Airport Expenses 163,807 161,357 163,935 2,578 1.6% (2,449) -1.5% Total Charges from Other Divisions 62,113 69,305 75,048 5,743 7.7% 7,192 11.6% Total Operating Expense 225,920 230,663 238,983 8,320 3.5% 4,743 2.1% Net Operating Income 188,092 175,336 165,337 9,999 6.0% (12,755) -6.8% (1) For Accounting purposes, the 2013 reduction in the airline revenue requirement of $17.9 million was treated as a lease incentive and is being amortized over the five year SLOA III agreement. Net Operating Income $10 million above Budget 4 Key Measures Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 Actual Actual Budget $ % $ % Performance Metrics Cost per Enplanement (CPE) 11.88 11.49 12.68 1.19 9.4% (0.39) -3.3% O&M Cost per Enplanement 13.00 12.32 13.42 1.09 8.1% (0.68) -5.2% Non-Aero Revenue per Enplanement 9.27 9.66 9.34 0.32 3.4% 0.39 4.2% Debt per Enplanement 141 126 142 16 11.5% (15) -10.7% Debt Service Coverage 1.33 1.38 1.30 0.09 6.6% 0.06 4.2% Days cash on hand (10 months = 304 days) 437 405 309 95 30.8% (32) -7.4% Aeronautical Revenue Sharing ($ in 000's) 9,901 16,996 6,136 10,859 177.0% 7,094 71.7% Activity (in 000's) Enplanements 17,376 18,717 17,813 903 5.1% 1,340 7.7% Cost per Enplanement lowest since 2009 Non-Aero Revenue per Enplanement at an all time high Enplaned passengers increased due to new scheduled flights, primarily by Alaska & Delta All Key Measures Favorable 5 Non-Aeronautical Business Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Non-Aero Revenues Rental Car 39,839 46,104 41,167 4,937 12.0% 6,265 15.7% Public Parking 52,225 57,128 52,138 4,990 9.6% 4,903 9.4% Ground Transportation 7,958 8,333 7,881 451 5.7% 374 4.7% Airport Dining & Retail 41,551 46,954 43,714 3,240 7.4% 5,403 13.0% Other 19,502 22,287 21,553 734 3.4% 2,786 14.3% Total Non-Aero Revenues 161,075 180,806 166,453 14,353 8.6% 19,731 12.2% Total Non-Aero Expenses 74,140 80,656 86,233 5,577 6.5% 6,516 8.8% Net Operating Income 86,934 100,150 80,220 19,930 24.8% 13,216 15.2% Less: CFC Surplus (4,594) (6,497) (4,623) 1,874 40.5% (1,903) 41.4% Adjusted Non-Aero NOI 82,340 93,653 75,597 18,056 23.9% 11,313 13.7% Debt Service (46,434) (45,209) (46,504) 1,295 2.8% 1,225 2.6% Net Cash Flow 35,906 48,443 29,093 19,350 66.5% 12,538 34.9% Year over Year Revenue growth drives increased cash flow 6 Aeronautical Business Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Revenues: Movement Area 77,028 75,784 74,590 1,195 1.6% (1,244) -1.6% Apron Area 7,909 11,569 10,214 1,355 13.3% 3,660 46.3% Terminal Rents 147,339 142,001 144,641 (2,640) -1.8% (5,338) -3.6% Federal Inspection Services (FIS) 7,771 9,205 8,617 588 6.8% 1,434 18.5% Total Rate Base Revenues 240,047 238,559 238,063 497 0.2% (1,488) -0.6% Commercial Area 8,487 8,133 9,517 (1,384) -14.5% (354) -4.2% Subtotal before Revenue Sharing 248,534 246,692 247,580 (887) -0.4% (1,842) -0.7% Revenue Sharing (9,901) (16,996) (6,136) (10,859) -177.0% (7,094) 71.7% Other Prior Year Revenues - (927) - (927) 0.0% (927) 0.0% Total Aeronautical Revenues 238,633 228,769 241,443 (12,674) -5.2% (9,864) -4.1% Total Aeronautical Expenses 151,779 150,007 152,750 2,743 1.8% (1,773) -1.2% Net Operating Income 86,853 78,763 88,693 (9,931) - -11.2% (8,091) -9.3% Debt Service (81,397) (82,029) (82,234) 205 0.2% (633) 0.8% Net Cash Flow 5,457 (3,267) 6,459 (9,726) -150.6% (8,724) -159.9% Aeronautical Revenues Down Due to Increased Revenue Sharing 7 Capital Budget $ in 000's 2014 2014 Budget Variance Description Actual Budget $ % Rental Car Fac. Construction (1) 13,207 1,998 (11,209) -561.0% International Arrivals Fac-IAF (2) 5,688 16,000 10,312 64.5% GSE Electrical Chrg Stations (3) 2,041 12,000 9,959 83.0% Aircraft RON Parking USPS Site (4) 25,488 33,000 7,512 22.8% Single Family Home Sound Insul (5) 1,750 5,972 4,222 70.7% NS Conc C Vertical Circulation 7,070 9,287 2,217 23.9% NS NSAT Renov NSTS Lobbies 6,524 8,127 1,603 19.7% Highline School Insulation 11,365 11,360 (5) 0.0% All Other 82,837 139,576 56,739 40.7% Total Spending 155,970 237,320 81,350 34% (1) $12.4 million settlement with the Rental Car Facility contractor occurred in Q3 2014. Project still came in under budget. (2) Baseline cash flow was developed very early in the program definition phase. (3) Port was planning on purchasing the chargers in 2014, but decided to include it in the contractor's scope that will occur in 2015. (4) Project realized savings of $5 million, combined with cash flow timing later than expected. (5) Realized project savings of $3 million. Number of applications received from homeowners has been less than anticipated. Spent 66% of 2014 Budget Due to Savings and Delays 8 2014 Performance Report Seaport Division Commission Briefing March 24, 2015 Seaport 2014 Business Overview Net Operating Income exceeded budget by $1.0 million Business Volume TEU Volume was 1,388K, down 11% from 2013. Grain volume was at 3,618K metric tons, up 168% from 2013 and 64% over 2014 budget. Cruise passengers totaled 824K which was 2% favorable to budget, but down 5% from 2013. Ships sailed at 107% occupancy. Seattle and Tacoma commissions approved an interlocal agreement outlining the framework of a Seaport Alliance between the two ports and filed it with the Federal Maritime Commission. Due diligence in process. Commission approved design funding for the modernization of Terminal 5. The terminal closed at the end of July. Port of Seattle was awarded a $20 million Tiger Grant for the Terminal 46 Modernization project. Agreement was signed with the U.S. Army Corp of Engineers moving forward with feasibility study related to potential deepening of the East and West Waterways. 10 Seaport 2014 Business Overview (continued) Environmental 64 drayage trucks have been replaced with model-year 2007 or newer engines under the Seaport Truck Scrappage and Replacements for Air in Puget Sound (ScRAPS 2) program (largely grant funded). Terminal 117 and Terminal 91 clean up projects largely complete. The formation of a Port of Seattle Stormwater Utility was approved by Commission in 2014 and legally established effective January 1, 2015. $7.9 million in clean-up project costs were recovered from grants and insurance. 11 Seaport 2014 Financial Summary Fav (UnFav) Incr (Decr) 2013 2014 2014 Bud Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Operating Revenue 99,628 96,272 101,553 (5,281) -5% (3,356) -3% Security Grants 0 0 0 0 NA 0 NA Total Revenues 99,628 96,272 101,553 (5,281) -5% (3,356) -3% Seaport Expenses (excl env srvs) 14,257 14,602 17,812 3,210 18% 345 2% Environmental Services 2,269 2,119 2,581 462 18% (150) -7% Maintenance Expenses 6,317 6,135 6,637 502 8% (182) -3% P69 Facilities Expenses 510 407 414 6 2% (102) -20% Other RE Expenses 289 316 386 70 18% 26 9% CDD Expenses 3,575 1,827 2,190 363 17% (1,749) -49% Police Expenses 4,169 4,161 4,286 125 3% (7) 0% Corporate Expenses 11,722 8,423 8,440 17 0% (3,299) -28% Security Grant Expense 23 0 0 0 NA (23) -100% Envir Remed Liability 1,248 (378) 1,180 1,558 132% (1,626) -130% Total Expenses 44,379 37,613 43,926 6,314 14% (6,767) -15% NOI Before Depreciation 55,249 58,659 57,626 1,033 2% 3,410 6% Container Revenue: ($8,135K) primarily due to the closure of Terminal 5 and elimination of Terminal 18 MHI crane minimum annual guarantee. Grain Revenue: $1,419K due to volume exceeding budget by 64%. Net Operating Income $1 million above Budget 12 Seaport 2014 Capital 2014 2014 Budget Variance $ in 000's Actual Budget $ % Seaport $10,489 $27,858 $17,369 62% Significant Variances: T46 Development - $6.4M due to postponement of the final phase of the stormwater project to 2017-2018 and revised schedules for other projects. Contingency Renewal and Replacement $5.0M spending of contingency was not needed in 2014. Terminal 5 Berth Modernization ($.2M) reflects accelerated design/permit schedule. Terminal 18 Dock Rehabilitation $.7M delay due to reprioritization of T46 projects. Spent 38% of Budget Due to Revised Schedules and Unused Contingency 13 2014 Performance Report Real Estate Division Commission Review March 24, 2015 Real Estate 2014 Business Overview Full Year Net Operating Income exceeded budget by $1,847K Occupancy Rates/Activity Commercial property at 93% occupancy, above target of 92% and above year-end 2014 Seattle market average of 92%. Marinas: Fishermen's Terminal and Maritime Industrial Center at 82% average occupancy, above target of 78%. Recreational marinas at target occupancy of 96%. Conference and Event Center revenue exceeded budget by 10% and 2013 actual results by 13%. Real Estate Development & Planning Commission approved an option/ground lease agreement with Panattoni Development Company for the Des Moines Creek Business Park project. The option agreement was executed in August. Commission approved an option to ground lease agreement with Credit Lease Investments, LLC for the Federal Aviation Administration office project. Executed a purchase and sale agreement to sell the Tsubota Steel site. Sale to close in 2015. 15 Real Estate 2014 Business Overview (continued) Eastside Rail Corridor Commission authorized the sale of approximately 12 mile section of the corridor to Snohomish County. Sale is expected to close in 2015. Washington State Court of Appeals affirmed trial court's dismissal of all substantive claims in the Lane case. A lawsuit was filed against the Port by a group of Eastside property owners disputing the Port's authority to grant an easement to Puget Sound Energy. Executed a Termination of Agreement and Release with the City of Seattle in connection with Memorandum of Understanding originating in 1994 for Bell Harbor Marina. 16 Real Estate 2014 Financial Summary Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Revenue 22,904 23,356 23,244 113 0% 452 2% Conf & Event Ctr Revenue 7,958 8,957 8,132 825 10% 999 13% Total Revenue 30,862 32,313 31,376 937 3% 1,451 5% Real Estate Exp (excl Co nf,Maint,P 69) 10,372 11,114 11,553 439 4% 742 7% Conf & Event Ctr Expense 6,473 7,374 6,858 (515) -8% 901 14% Eastside Rail Corridor 205 1,036 170 (866) -508% 831 406% Maintenance Expenses 8,928 8,778 9,311 534 6% (150) -2% P69 Facilities Expenses 172 125 126 2 1% (47) -27% Seaport Expenses 1,282 1,140 1,310 170 13% (142) -11% CDD Expenses 1,364 2,314 2,582 268 10% 950 70% Police Expenses 1,378 1,353 1,391 38 3% (26) -2% Corporate Expenses 5,087 5,181 5,417 237 4% 94 2% Envir Remed Liability 2 (3) 600 603 100% (5) -239% Total Expense 35,262 38,410 39,320 910 2% 3,148 9% NOI Before Depreciation (4,399) (6,096) (7,944) 1,847 23% (1,697) -39% Real Estate expense variance reflects underspending of Outside Services with most significant components relating to broker fees and tenant improvements. Eastside Rail Corridor expense variance reflects a reserve for litigation expenses. Envir Remed Liability expense variance reflects no spending on certain Fishermen's Terminal projects that were expected to have an operating environmental remediation component. Net Operating Income $1.8 million favorable to Budget 17 Real Estate 2014 Capital $ in 000's 2014 2014 Budget Variance Actual Budget $ % Real Estate Division 10,922 18,101 7,179 40% Significant Variances: Shilshole Bay Marina Central Seawall Replacement delayed to 2015 due to material lead time. Pier 69 North Apron Corrosion Control project closeout costs lower than expected. No change orders and contingency not needed. Pier 69 Built-Up Roof Replacement due to bid was lower than anticipated Reduced scope for Fishermen's Terminal C15 Building Subsidence and East Sewer Line projects. Pier 69 Carpet project start was delayed and construction bid lower than anticipated. Several other projects delayed to 2015. Spent 60% of Budget Due to Savings and Delays 18 2014 Performance Report Capital Development Division Commission Briefing March 24, 2015 2014 Key Business Events Completion of NSAT 30% design and concurrence by Alaska Airlines. NSAT GC/CM selected (Hensel Phelps). IAF cost estimate validated and updated. Six design build teams submitted statements of qualifications. Runway 16C/34C replacement Advertised for construction bids. Successfully completed a public works audit by the State Auditor's Office (SAO). Opened new Engineering office at Terminal 102. PCS worked 409 projects during 2014. Implemented 811 One-Call per RCW19.122 Dig Law. Gained Agency Approval for General Contractor/Construction Manager (GC/CM) and Design-Build (DB) valid for 3 years (effective 1/23/14). 20 Capital Development Key Metrics Project Hard/Soft Costs CDD Construction Soft Costs % 100% 90% 27% 80% 35% 29% 25% 29% 70% 60% 50% 40% 73% 65% Total Soft Costs 30% 71% 75% 71% Total Construction Costs 20% 10% 0% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2012 - Q4 2014 (36 month average) 21 Capital Development Key Metrics (continued) Procurement Timeliness Total Time Receipt of Scope to Execution (Avg # Days) 2013 2014 Goods & Services 55 days 118 days Major Public Works 78 days 67 days Small Works 56 days 44 days Service Agreements 169 days 142 days 22 2014 Capital Development Financials Summary Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Total Revenues 26 21 - 21 0.0% (5) -19.6% Expenses Before Charges To Cap/Govt/Envrs Propects Capital Development Administration 380 394 404 10 2.4% 14 3.8% Engineering 13,304 13,877 15,878 2,001 12.6% 573 4.3% Port Construction Services 7,192 8,186 7,556 (630) -8.3% 994 13.8% Central Procurement Office 5,020 4,616 5,332 716 13.4% (404) -8.0% Aviation Project Management 7,285 11,622 13,260 1,639 12.4% 4,337 59.5% Seaport Project Management 2,518 2,998 3,236 238 7.4% 480 19.1% Total Before Charges to Capital Projects 35,699 41,693 45,666 3,973 8.7% 5,995 16.8% Total Expenses before Charges to Capital Projects were $4.0M below budget mainly due to savings in Payroll, Outside Services, and Travel & Other Employee expenses. 23 2014 Performance Report Corporate Commission Briefing March 24, 2015 2014 Key Business Events Successfully launched the SODO Business Improvement District with the City of Seattle and SODO businesses and property owners. Achieved agreements with the Muckleshoot Indian Tribe and the Suquamish Tribe to return to the tribes Native American cultural materials. Finalized a project list as part of the joint Freight Access Project and launched the Freight Master Plan with the City of Seattle. Successfully negotiated updates to the City of Seattle's Shoreline Master Plan. Completed the Economic Impact Study of the Port of Seattle. Upgraded/replaced a number of systems: Enterprise Risk and Claims Management System, ID Badge System, Roster Management System, Applicant Tracking System, Learning Management System, etc. Received a number of awards in the Port's budgeting, financial reporting, environmental, and other areas. 25 2014 Corporate Key Metrics 2013 2014 Apprenticeship Opportunity Project Placements 156 150 Employment through Airport Jobs Center 1,274 1,143 Small Business and Workforce Dev. Outreaches Conducted 42 39 Small Business Participation (as % of Eligible Expenditures) 30% 32% Employee Development Class Attendees 2,376 2,201 Completed Required Safety Training 97% 98% Responded to Public Disclosure Requests 310 329 Percentage of Annual Audit Work Plan Completed 105% 82% 26 2014 Budget Variances by Department Fav (UnFav) 2013 2014 2014 Budget Variance $ in 000's Actual Actual Budget $ % Explanations Total Revenues 479 398 155 243 156.9% Unbudgeted reveues from Police grants & PA Executive 1,728 1,710 1,818 108 5.9% Savings in travel & misc. Commission 1,013 1,353 1,645 292 17.8% Payroll, travel & misc. savings Legal 3,545 3,731 3,264 (467) -14.3% Unanticipated outside legal expenses Risk Services 2,901 3,051 3,173 122 3.8% Savings in outside svcs and insurance Health & Safety Services 1,078 1,067 1,190 123 10.4% Outside svcs, supplies, travel and payroll savings Public Affairs 5,890 5,554 6,069 515 8.5% Saving in payroll, outside svcs, travel & promo Human Resources & Development 5,259 5,356 5,655 300 5.3% Payroll, travel, outside svcs savings Labor Relations 1,151 1,222 1,319 97 7.4% Payroll, travel, outside svcs & promo savings Information & Communications Technology 20,323 20,458 20,850 392 1.9% Outside svcs, telecommunications & payroll savings Finance & Budget 1,543 1,803 1,856 54 2.9% Savings in outside svcs & travel Accounting & Financial Reporting Services 5,724 6,039 7,081 1,041 14.7% Savings in outside svcs, travel, payroll & misc. Internal Audit 1,201 1,372 1,422 49 3.5% Savings in payroll and travel Office of Social Responsibility 1,644 2,115 2,187 72 3.3% Payroll, travel & misc. savings Police 22,458 22,231 22,658 427 1.9% Outside svcs, payroll & equipment savings Contingency 266 410 450 40 9.0% Miscellaneous savings Total Expenses 75,725 77,471 80,637 3,166 3.9% Corporate Expenses $3.2M favorable to Budget 27 2014 Major Expense Variances Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Salaries & Benefits 36,316 37,624 39,790 2,166 5.4% 1,308 3.6% Wages & Benefits 20,003 19,689 20,202 513 2.5% (313) -1.6% Payroll to Capital Projects 2,850 2,277 2,940 663 22.6% (573) -20.1% Equipment Expense 1,992 1,452 1,216 (235) -19.3% (541) -27.1% Supplies & Stock 464 481 551 71 12.9% 16 3.6% Outside Services 10,920 11,682 11,326 (356) -3.1% 762 7.0% Travel & Other Employee Exps 2,231 2,015 2,653 638 24.1% (216) -9.7% Insurance Expense 2,156 2,237 2,300 64 2.8% 80 3.7% Other 1,637 2,292 2,597 305 11.7% 655 40.0% Charge to Capital (2,843) (2,277) (2,940) (663) -22.6% (566) -19.9% Total 75,725 77,471 80,637 3,166 3.9% 1,746 2.3% Corporate expenses were $3.2M below budget mainly due to savings in Payroll and Travel & Other Employee expenses, partially offset by higher equipment purchases and unanticipated legal expenses. 28 2014 Performance Report Portwide Commission Briefing March 24, 2015 2014 Major Revenue Variances Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Aero Revenues 238,633 228,769 241,443 (12,674) -5.2% (9,864) -4.1% SLOA III Incentive 14,304 - (3,576) - (3,576) - - 0.0% (17,880) -125.0% Public Parking 52,225 57,128 52,138 4,990 9.6% 4,903 9.4% Rental Cars 39,839 46,104 41,167 4,937 12.0% 6,265 15.7% Airport Dining and Retail 41,551 46,954 43,714 3,240 7.4% 5,403 13.0% Employee Parking 5,461 6,538 6,292 246 3.9% 1,077 19.7% Ground Transportation 7,958 8,333 7,881 451 5.7% 374 4.7% Airport Commercial Properties 6,089 6,638 6,383 255 4.0% 549 9.0% Utilities 6,332 6,736 6,891 (155) -2.3% 404 6.4% Container 63,046 56,901 65,036 (8,135) -12.5% (6,145) -9.7% Seaport Industrial Properties 16,371 17,509 16,555 955 5.8% 1,138 7.0% Cruise 13,216 12,993 12,705 288 2.3% (223) -1.7% Grain 1,634 3,785 2,366 1,419 60.0% 2,151 131.7% Dock 5,330 5,083 4,891 192 3.9% (247) -4.6% Recreational Boating 9,220 9,433 9,386 46 0.5% 212 2.3% Commercial Properties 10,020 10,022 10,360 (338) -3.3% 2 0.0% Conference & Event Centers 7,958 8,957 8,132 825 10.1% 999 12.5% Other 5,790 6,666 5,639 1,027 18.2% 876 15.1% Operating Rev w/o Aero 292,041 309,780 299,536 10,244 3.4% 17,739 6.1% TOTAL 544,978 534,973 537,403 (2,430) -0.5% (10,005) -1.8% Operating Revenues without Aeronautical $10.2M favorable to Budget 30 2014 Major Expense Variances Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Salaries & Benefits 96,506 98,567 104,179 5,611 5.4% 2,061 2.1% Wages & Benefits 92,520 94,501 97,982 3,481 3.6% 1,981 2.1% Payroll to Capital Projects 20,112 22,530 24,048 1,518 6.3% 2,418 12.0% Equipment Expense 7,152 6,761 6,219 (542) -8.7% (390) -5.5% Supplies & Stock 7,183 7,722 6,641 (1,080) -16.3% 538 7.5% Outside Services 54,911 57,172 63,782 6,610 10.4% 2,261 4.1% Utilities 22,544 24,304 23,695 (609) -2.6% 1,760 7.8% Travel & Other Employee Exps 4,183 3,900 5,677 1,777 31.3% (283) -6.8% Promotional Expenses 1,410 1,779 2,026 247 12.2% 368 26.1% Other Expenses 28,924 24,993 26,238 1,245 4.7% (3,931) -13.6% Charges to Capital Projects (28,457) (34,214) (37,095) (2,881) 7.8% (5,757) 20.2% TOTAL 306,989 308,015 323,391 15,377 4.8% 1,026 0.3% Operating expenses were $15.4M below budget mainly due to savings in Payroll, Outside Services, and Travel & Other Employee expenses; partially offset by higher equipment & maintenance materials purchases and utilities cost. 31 2014 Operating Income Summary Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Aeronautical Revenues 238,633 228,769 241,443 (12,674) -5.2% (9,864) -4.1% SLOA III Incentive 14,304 (3,576) (3,576) () 0.0% (17,880) -125.0% Other Operating Revenues 292,041 309,780 299,536 10,244 3.4% 17,739 6.1% Total Operating Revenues 544,978 534,973 537,403 (2,430) -0.5% (10,005) -1.8% Total Operating Expenses 306,989 308,015 323,391 15,377 4.8% 1,026 0.3% NOI before Depreciation 237,989 226,958 214,012 12,946 6.0% (11,030) -4.6% Depreciation 171,374 166,337 164,386 (1,952) -1.2% (5,037) -2.9% NOI after Depreciation 66,614 60,621 49,627 10,994 22.2% (5,993) -9.0% Excluding Aeronautical revenues, other operating revenues were $309.8M, $10.2M higher than budget and $17.7M higher than 2013 actual. Total Operating Expenses were $308.0M, $15.4M below budget. Net Operating Income before Depreciation $13 million above Budget 32 Net Operating Income by Division Fav (UnFav) Incr (Decr) 2013 2014 2014 Budget Variance Change from 2013 $ in 000's Actual Actual Budget $ % $ % Aviation 188,092 175,336 165,337 9,999 6.0% (12,755) -6.8% Seaport 55,249 58,659 57,626 1,033 1.8% 3,410 6.2% Real Estate (4,399) (6,096) (7,944) 1,847 23.3% (1,697) -38.6% (1) Corp & CDD (952) (941) (1,007) 67 6.6% 12 1.2% TOTAL 237,989 226,958 214,012 12,946 6.0% (11,030) -4.6% (1) Corp & CDD are not operating divisions so "NOI" is the net of the operating revenues and non-allocable costs, such as Tourism expenses. All operating divisions had favorable NOI's to Budget 33 Net Operating Income Comparison 34 Capital Spending by Division 2013 2014 2014 Budget Variance $ in 000's Actual Actual Budget $ % Aviation 108,841 155,970 237,320 81,350 34.3% Seaport 5,673 10,489 27,858 17,369 62.3% Real Estate 6,060 10,922 18,101 7,179 39.7% Corporate & CDD 9,657 6,538 15,955 9,417 59.0% TOTAL 130,231 183,919 299,234 115,315 38.5% Capital spending for each division came in below budget in 2014. Total capital spending was $183.9M for 2014, $115.3M or 38.5% lower than budget. Spent 61.5% of 2014 Budget Due to Savings and Delays 35 Comprehensive Financial Summary Fav (UnFav) 2013 2014 2014 Budget Variance ($ in 000's) Actual Actual Budget $ % Explanation Revenues 1. Operating Revenues 544,978 534,973 537,403 (2,430) -0.5% See details in the previous slides 2. Tax Levy 72,738 72,801 73,000 (199) -0.3% 3. PFCs 64,661 69,803 67,879 1,924 2.8% Higher enplanement than budgeted 4. CFCs 20,389 19,889 20,568 (679) -3.3% 5. Fuel Hydrant 7,417 7,130 6,953 176 2.5% 6. Non-Capital Grants & Donations 3,771 9,899 6,688 3,210 48.0% More state grants than budgeted 7. Capital Contributions 21,381 16,746 10,393 6,353 61.1% More FAA grants than budgeted. 8. Interest Income (1,107) 11,202 7,615 3,588 47.1% Due to unrealized gain on investments Total Revenues 734,227 742,443 730,500 11,943 1.6% Expenses 1. O&M Expense 306,989 308,015 323,391 15,377 4.8% See details in the previous slides 2. Depreciation 171,374 166,337 164,386 (1,952) -1.2% 3. Revenue Bond Interest Expense 115,340 108,910 128,987 20,078 15.6% No new bond & previous refunding savings 4. GO Bond Interest Expense 11,479 9,475 9,806 330 3.4% 5. PFC Bond Interest Expense 6,212 5,906 5,953 47 0.8% 6. Public Expense 6,226 6,854 7,121 267 3.7% 7. Non-Op Environmental Expense 4,765 9,142 9,300 158 1.7% 8. Other Non-Op Expense 411 (3,653) 3,738 7,392 197.7% Due to award for W.R. bankruptcy claim Total Expenses 622,796 610,986 652,682 41,696 6.4% Increase In Net Position 111,431 131,457 77,817 53,639 68.9% 2014 Total Revenues were $742.4M, $11.9M higher than the budget and $8.2M higher than 2013 actual. 2014 Total Expenses were $611.0M, $41.7M lower than the budget and $11.8M lower than 2013 actual. Net Position increased by $131.4M, $53.6M above the budget and $20.0M higher than 2013 actual. 36
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