7b Report
ITEM NO.: 7b_Report DATE OF MEETING: Aug 2, 2011 PORT OF SEATTLE 2011 FINANCIAL & PERFORMANCE REPORT AS OF JUNE 30, 2011 TABLE OF CONTENTS Page I. Portwide Performance Report 3-5 II. Aviation Division Report 6-11 III. Seaport Division Report 12-17 IV. Real Estate Division Report 18-22 V. Capital Development Division Report 23-25 VI. Corporate Division Report 26-28 2 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 06/30/11 EXECUTIVE SUMMARY Financial Summary The Port's total operating revenues for the first half of 2011 were $243.3 million, $4.4 million below budget. Aeronautical revenues were $107.5 million, $1.06 million below budget. Other operating revenues were $135.8 million, $3.3 million below budget primarily due to lower revenues from Pass-Through Security Grants, Public Parking, and Rental Cars, partially offset by higher revenues from Concessions and Container businesses. Total operating expenses were $125.5 million, $18.0 million below budget mainly due to timing of spending, some vacant positions, and lower Pass-through Grants expenses. Operating income before depreciation was $117.8 million, $13.6 million above budget. Operating income after depreciation was $38.2 million, $14.3 million higher than budget. The Port-wide capital spending is forecasted to be $237.1 million for the year, $49.8 million below the budgeted $286.9 million. Operating Summary At the Airport, enplanements and landed weight were 4.9% higher than budget and 2.6% higher than the same period in 2010, respectively. We are forecasting the 2011 enplanements to grow by 3.5% from 2010. For the Seaport division, TEUs were 19.6% higher than budget and on the same levels as 2010 through June. We revised the forecast of TEUs volume from 1.8 million to 1.9 million for 2011. While Grain volumes were 2.1% below the 2010 levels for the same time period, it was still 9.8% higher than budget. Cruise passengers were 16.4% above budget through Q2 but down 6.8% compared to last June's levels. For the Real Estate division, occupancy levels at Commercial Properties were at 90%, slightly higher than the 89% in the first half of 2010. Shilshole Bay Marina occupancy rate was 95.3%, compared to 93.5% for the same period in 2010. Moorage occupancies at Fishermen's Terminal were 81.8%, lower than the 91.9% in 2010 but it was in line with budgeted rate. Key Business Events We held a number of Centennial Celebration events in the community, including Centennial Video Contest, Centennial Park Dedication, Centennial "Get to Know Your Port by Bike," Beach Access Opening Centennial Community Celebration, and Centennial Displays at STIA. We also held the first three Century Agenda Panels on Fostering Economic Growth, Moving Cargo, and Moving People and set a preliminary goal of increasing jobs related to Port by 100,000 over 25 years. On the business side, Condor Air began its new service at SeaTac in June. On the environmental front, we continued to implement the Northwest Ports Clean Air Strategy, there were 176 participating calls made for the At-Berth Clean Fuels Vessel Incentive Program (ABC Program) in the first half of the year. We also received the two Environmental Improvement Awards from American Association of Port Authorities and the 2011 VISION 2040 Award from Puget Sound Regional Council. Major Capital Projects We completed a number of capital projects in the second quarter of 2011. These included C1-C88 Baggage System, New Security Check Point, Terminal 91 Roadway Pavement Replacement, and Fishermen's Terminal North Dock East Fender System Replacement Projects. Additionally, Rental Car Facility construction also hit a major milestone it's ready for tenant improvement construction. Other projects under construction included Airfield Pavement/Slot Drains Replacement, FIS Booths, PC Air, Terminal 91 Waterline, Terminal 86 Tower Strengthening, Maritime Industrial Center Central Wall, Fishermen's Terminal Phase 4 South Wall, and East Marginal Way Grade Separation. 3 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 06/30/11 INCOME STATEMENT Report: Income Statement As of Date: 2011-06-30 2010 YTD 2011 YTD 2011 YTD Budget Variance Change from 2010 $ in 000's Actual Actual Budget $ % $ % Revenues: Aviation 169,422 180,537 182,663 (2,126) -1.2% 11,115 6.6% Seaport 45,050 47,017 49,312 (2,295) -4.7% 1,967 4.4% Real Estate 14,998 15,030 15,250 (220) -1.4% 32 0.2% Capital Development - 76 - 76 0.0% 76 n/a Corporate 309 620 430 190 44.1% 310 100.3% Total Revenues 229,778 243,280 247,655 (4,375) -1.8% 13,502 5.9% Operating & Maintenance: Aviation 59,172 63,614 68,357 4,743 6.9% (4,442) -7.5% Seaport 8,704 7,783 13,686 5,903 43.1% 922 10.6% Real Estate 14,472 15,581 17,004 1,424 8.4% (1,108) -7.7% Capital Development 3,402 4,334 7,222 2,888 40.0% (932) -27.4% Corporate 31,802 34,195 37,240 3,045 8.2% (2,393) -7.5% Total O&M Costs 117,553 125,507 143,509 18,002 12.5% (7,954) -6.8% Operating Income Before Depreciation 112,225 117,773 104,145 13,628 13.1% 5,548 4.9% Depreciation 79,773 79,569 80,217 648 0.8% 204 0.3% Operating Income after Depreciation 32,453 38,204 23,928 14,276 59.7% 5,752 17.7% 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. 4 I. PORTWIDE FINANCIAL & PERFORMANCE REPORT 06/30/11 KEY PERFORMANCE METRICS 2010 YTD 2011 YTD 2010 2011 2011 Forecast/Budget Actual Actual Actual Forecast Budget Var. Var. % Enplanements (in 000's) 7,322 7,678 15,773 16,325 15,845 480 3.0% Landed Weight (lbs in 000's) 9,404 9,648 19,786 20,089 20,089 - 0.0% Passenger CPE (in $) n/a n/a 11.63 12.20 12.76 (0.56) -4.4% Container Volume (TEU's in 000's) 1,008 1,007 2,140 1,900 1,800 100 5.6% Grain Volume (metric tons in 000's) 2,813 2,754 5,491 5,500 5,500 - 0.0% Cruise Passenger (in 000's) 347 324 932 807 796 11 1.4% Commercial Property Occupancy 89% 90% 88% 90% 90% - 0.0% Shilshole Bay Marina Occupancy 93.5% 95.3% 94.4% 94.3% 93.4% 0.9% 0.9% Fishermen's Terminal Occupancy 91.9% 81.8% 87.1% 82.1% 82.0% 0.1% 0.1% CAPITAL SPENDING RESULTS 2011 2011 Budget Plan of Division Forecast Budget Variance Finance ($ in millions) Aviation 185.6 223.7 38.2 231.4 Seaport 27.7 34.0 6.3 29.5 Real Estate 14.1 16.3 2.2 15.4 Corporate & CDD 9.7 12.9 3.2 12.1 Total 237.1 286.9 49.8 288.3 PORTWIDE INVESTMENT PORTFOLIO The investment portfolio for the second quarter of 2011 earned 2.56% against our benchmark (The Bank of America Merrill Lynch 3-year Treasury/Agency Index) of 0.49%. For the past twelve months the portfolio has earned 2.03% against the benchmark of 0.60%. Since the Port became its own Treasurer in 2002, the Port's portfolio life-to-date has earned 3.50% against our benchmark of 2.54%. 5 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 FINANCIAL SUMMARY 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Operating Revenues Aeronautical 182,534 198,329 214,181 217,200 (3,019) -1.4% Non-Aeronautical 137,348 135,418 144,904 144,965 (60) 0.0% Other 8,359 8,426 8,353 8,353 - 0.0% Operating Revenues 328,241 342,173 367,438 370,517 (3,079) -0.8% Operating Expenses 175,482 177,871 197,463 199,180 1,717 0.9% Environmental Remediation Liability 1,991 3,271 452 1,771 1,319 74.5% VSP, HR10 & Unemployment 1,196 - - - - n/a OPEB Reversal (4,016) - - - - n/a Total Operating Expenses 174,654 181,142 197,915 200,951 3,036 1.5% Net Operating Income 153,587 161,031 169,523 169,567 (43) 0.0% Capital Expenditures 191,479 183,578 185,560 223,746 38,186 17.1% We are forecasting aeronautical revenues to be $3 million less than budgeted due to allocated cost savings from variable rate debt service and cost savings from delayed costs for the Terminal Realignment project. A shortage of $60K in non-airline revenues is forecasted due to underperformance in Public Parking and Rental Cars slightly outweighing strong performance in Concessions and Ground Transportation fees. Operating expense is forecasted to be $3 million favorable versus budget mainly due to open positions and delays in projects which require consulting services. $185.6 million is forecasted to be spent on capital projects in 2011, 82.9% of the 2011 budget of $223.75 million. A. BUSINESS EVENTS Terminal realignment in progress. In addition to Rental Car Facility construction, building of the Bus Maintenance Facility is now underway. Condor Air began service in June. B. KEY PERFORMANCE INDICATORS 2010 2011 % 2010 2011 % Figures in 000's YTD YTD Variance Actual Forecast Variance Enplanements 7,322 7,678 4.9% 15,773 16,325 3.5% Landed Weight 9,404 9,648 2.6% 19,786 20,089 1.5% Enplanements vs. Prior Year Landed Weight vs. Prior Year 10% 5% Growth Rate 3.62% 3.91% 4% 3.11% 6.10% 2.63% 3% 3.44% 3.72% 6.54% 5% 3.91% Growth Rate 2% 5.27% 1% 1.11% 1.53% 0% 0% Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun 6 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 International enplaned passengers YTD saw greater growth (6.3% vs. YTD 2010) than domestic enplanements (4.7% vs. YTD 2010). Year-to-date cargo landed weight makes up 6.63% of total landed weight, as opposed to 7.4% of total landed weight at this point in 2010. The 2011 forecast assumes 3.5% increase in enplaned passengers and a 1.5% increase of landed weight over 2010 actuals. Key Performance Measurers 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Non-Aero NOI ($ in 000s) 81,159 78,203 82,782 81,209 1,573 1.9% Passenger Airline CPE 10.92 11.63 12.20 12.76 0.56 4.4% Total Operating Cost / Enpl 11.19 11.48 12.12 12.68 0.56 4.4% Debt Service Coverage 1.32 1.39 1.45 1.40 0.04 3.2% C. OPERATING RESULTS Year-to-date Revenue and Expense 2009 YTD 2010 YTD 2011 YTD 2011 YTD Actual/Budget $ in 000's Actual Actual Actual Budget Var $ Var % Revenues Aeronautical 99,787 100,452 107,521 108,578 (1,057) -1.0% Non-Aeronautical 68,706 64,734 68,862 69,908 (1,046) -1.5% Other 4,177 4,234 4,217 4,177 40 1.0% Revenues 172,669 169,421 180,600 182,663 (2,063) -1.1% Expenses Salaries & Benefits 39,428 37,952 38,822 40,345 1,523 3.8% Outside Services 8,688 9,062 11,185 13,786 2,601 18.9% Utilities 6,784 5,832 7,294 6,756 (538) -8.0% Supplies & Stock 2,135 1,772 2,444 2,056 (389) -18.9% Other 1,212 3,277 4,079 5,022 942 18.8% Total Airport Expenses 58,248 57,895 63,824 67,965 4,141 6.1% Corporate 14,291 15,196 15,307 16,836 1,530 9.1% Police Costs 6,445 6,811 7,885 8,221 336 4.1% Capital Development/Other Expenses 2,114 2,837 3,155 5,500 2,345 42.6% Total Operating Expenses (excl. Env Liab) 81,098 82,738 90,171 98,522 8,351 8.5% Environmental Remediation - 1,278 (210) 392 602 153.6% Total Operating Expenses 81,098 84,016 89,961 98,914 8,953 9.1% Net Operating Income 91,572 85,405 90,638 83,748 6,890 8.2% Aeronautical revenues are less than budgeted YTD by $1.1 million due to seasonality from landing fee budgets. Non-aeronautical revenues are less than budgeted due to less growth in long-term parking transactions and decreased rates in rental cars despite transactions increasing YTD. Year-to-date expenses are under budget largely due to FTE vacancies and delays to outside service projects offsetting with expense overrun in utility surface water and deicer fluid due to winter weather. 7 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 Division Summary 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Total Operating Revenues 328,241 342,173 367,438 370,517 (3,079) -0.8% Operating Expenses Salaries, Wages & Benefits 80,804 76,036 81,431 82,363 932 1.1% Outside Services 21,509 22,519 26,007 26,758 751 2.8% Utilities 13,209 11,381 12,669 12,576 (93) -0.7% VSP, HR10 & Unemployment Savings 1,196 - - - - n/a OPEB Reversal (4,016) - - - - n/a Environmental Remediation Liability 1,991 3,271 452 1,771 1,319 74.5% Other Expenses 8,183 13,275 16,561 16,107 (454) -2.8% Baseline Airport Expenses 122,877 126,481 137,119 139,575 2,455 1.8% Corporate Expenses 31,181 32,558 33,317 34,043 726 2.1% Police Expenses 14,461 14,317 16,382 16,389 7 0.0% Capital Development/Other Expenses 6,135 7,785 11,096 10,944 (152) -1.4% Total Operating Expenses 174,654 181,142 197,915 200,951 3,036 1.5% Net Operating Income 153,587 161,031 169,523 169,567 (43) 0.0% Depreciation Expense 117,731 119,538 118,418 118,418 - 0.0% Non-Operating Rev/(Exp) Grants & Donations Revenues 74,323 30,040 28,990 28,990 - 0.0% Passenger Facility Charges 59,689 59,744 61,933 61,320 613 1.0% Customer Facility Charges 21,866 23,243 23,275 22,237 1,038 4.7% Other Non-operating Rev/(Exp) (109,398) (122,549) (125,464) (125,464) - 0.0% Total Non-Operating Rev/(Exp) 46,481 (9,522) (11,267) (12,918) 1,651 -12.8% Total Revenue Over Expense 82,337 31,971 39,839 38,231 1,608 4.2% Operating revenues are forecasted to be $3.1 million unfavorable overall due to capital and operating cost savings in the aeronautical cost centers. Operating expense is forecast at $3 million favorable due to savings from open positions and savings from outside services. 8 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 Aeronautical Business Unit Summary 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Revenues requirement: Capital Costs 72,013 82,083 85,554 87,111 (1,557) -1.8% Operating Costs net Non-Aero 118,456 122,985 135,793 137,195 (1,401) -1.0% Total Costs 190,469 205,067 221,348 224,305 (2,958) -1.3% FIS Offset (5,250) (7,000) (7,000) (7,000) - 0.0% Other Offsets (16,441) (14,825) (14,882) (14,821) (61) 0.4% Net Revenue Requirement 168,778 183,243 199,466 202,485 (3,019) -1.5% Other Aero Revenues 13,757 15,087 14,715 14,715 - 0.0% Total Aero Revenues 182,534 198,329 214,181 217,200 (3,019) -1.4% Less: Non-passenger Airline Costs 12,074 14,885 15,066 15,066 - 0.0% Net Passenger Airline Costs 170,460 183,444 199,114 202,133 (3,019) -1.5% 2009 2010 2011 2011 Forecast/Budget Actual Actual Forecast Budget Var $ Var % Cost Per Enplanement: Capital Costs / Enpl 4.61 5.20 5.24 5.50 (0.26) -4.7% Operating Costs / Enpl 7.59 7.80 8.32 8.66 (0.34) -3.9% Offsets (1.39) (1.38) (1.34) (1.38) 0.04 -2.7% Other Aero Revenues 0.88 0.96 0.90 0.93 (0.03) -2.9% Non-passenger Airline Costs (0.77) (0.94) (0.92) (0.95) 0.03 -2.9% Passenger Airline CPE 10.92 11.63 12.20 12.76 (0.56) -4.4% We are forecasting an overall savings of $1.6 million to capital costs due to lower than budgeted variable rate debt service. Operating costs are forecasted $1.4 million lower than budget due to cost savings from open positions and outside services cost savings from the Terminal Realignment project. 9 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 Non-Aero Business Unit Summary 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Revenues: Public Parking 49,689 49,416 51,542 52,847 (1,305) -2.5% Rental Cars 33,320 30,309 32,178 33,833 (1,655) -4.9% Concessions 33,473 33,765 34,366 32,640 1,726 5.3% Other 20,865 21,929 26,818 25,644 1,174 4.6% Total Revenues 137,348 135,418 144,904 144,965 (60) 0.0% Operating Expense 55,916 54,743 63,025 64,397 1,372 2.1% Share of terminal O&M 17,011 16,935 17,467 17,729 262 1.5% Less utility internal billing (16,738) (14,464) (18,370) (18,370) - 0.0% Net Operating & Maint 56,189 57,215 62,122 63,756 1,634 2.6% Net Operating Income 81,159 78,203 82,782 81,209 1,573 1.9% 2009 2010 2011 2011 Forecast/Budget Actual Actual Forecast Budget Var $ Var % Revenues Per Enplanement Parking 3.18 3.13 3.16 3.34 (0.18) -5.3% Rental Car 2.13 1.92 1.97 2.14 (0.16) -7.7% Concessions 2.14 2.14 2.11 2.06 0.05 2.2% Other 1.34 1.39 1.64 1.62 0.02 1.5% Total Revenues 8.80 8.59 8.88 9.15 (0.27) -3.0% Primary Concessions Sales / Enpl 9.66 9.99 10.24 10.12 0.12 1.2% Growth in enplanements shows revenues increased of 7.0% comparing 2011 to 2010. Comparisons of Forecast to Budget for revenues include the following: Public Parking revenues are forecasted to be $1.3 million lower than budget due to transactions falling short of budgeted expectations. Rental Car revenues are forecasted to be $1.7 million under budget due to flat industry revenues despite an increase in transactions. Concession revenues are forecasted $1.7 million favorable to budget due to strong primary concessions sales performance, an increase in janitorial monthly rates and advertising revenue from Google partnership. Forecasting an increase of $1.2 million in Other revenues due to increased Ground Transportation trips, Utilities sales and anticipated grant reimbursement for Sound Transit work. The concessions primary Sales per Enplaned passenger (SPE) is forecasted to be $10.24, up from a budgeted SPE of $10.12. 10 II. AVIATION DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 Net Cash Flow: NOI after Debt Service and Interest Income 2009 2010 2011 2011 Forecast/Budget $ in 000's Actual Actual Forecast Budget Var $ Var % Aeronautical Net Operating Income (NOI) 65,915 74,402 77,105 78,661 (1,557) -2.0% Debt Service 68,767 73,080 75,143 76,700 1,557 2.0% NOI After Debt Service (2,851) 1,323 1,961 1,961 (0) 0.0% Non-Aeronautical Net Operating Income (NOI) 81,159 78,203 82,782 81,209 1,573 1.9% Debt Service 39,241 41,752 41,808 42,469 661 1.6% NOI After Debt Service 41,917 36,451 40,974 38,739 2,235 5.8% Fuel Hydrant Revenue 8,359 8,426 8,353 8,353 - 0.0% Total Aviation NOI 155,433 161,031 168,240 168,223 17 0.0% Debt Service 108,008 114,831 116,951 119,169 2,218 1.9% NOI After Debt Service 47,425 46,200 51,288 49,054 2,235 4.6% Add ADF Interest Income 8,853 6,297 5,916 4,167 1,749 42.0% Less Non-Cash Fuel Hydrant Revenue (7,845) (7,912) (7,839) (7,839) - 0.0% Net Cash Flow after D/S & Interest Inc. 48,433 44,585 49,366 45,382 3,983 8.8% D. CAPITAL SPENDING RESULTS 2011 2011 2011 Forecast/Budget Plan of $ in 000's YTD Actual Forecast Budget Var ($) Var (%) Finance Rental Car Facility Construction 46,336 78,092 97,488 19,396 19.9% 98,616 Central Plant Preconditioned Air 5,078 15,078 20,000 4,922 24.6% 8,000 Airfield Pavement Replacement 236 4,611 10,500 5,889 56.1% 10,500 Parking System Replacement 311 7,573 9,137 1,564 17.1% 8,994 Terminal Escalators Modernization 419 7,419 8,955 1,536 17.2% 10,000 South Satellite Delta Sky Club Expansion 408 8,739 5,250 (3,489) -66.5% 5,038 Aircraft RON Parking USPS Site 117 467 5,050 4,583 90.8% 5,661 All Other 11,164 63,581 67,366 3,785 5.6% 84,599 Total 64,069 185,560 223,746 38,186 17.1% 231,408 Off-site Road Improvements and Bus Maintenance Facility contractors have gotten off to a very slow start. Soft costs are also running below forecast for Rental Car Facility. Site work for PC Air was expected to begin in 4th quarter 2010 but didn't commence until 1st quarter 2011. Project completion date is not expected to be impacted. Amount originally budgeted for Airfield Pavement Replacement project was not needed for the scope of the 2011 pavement replacement. 11 III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 FINANCIAL SUMMARY 2010 2011 2011 Budget $ in 000's Actual Forecast Budget Var $ Var % Operating Revenue 96,060 95,772 94,972 800 1% Security Grants 1,791 423 3,415 (2,992) -88% Total Revenues 97,850 96,195 98,387 (2,192) -2% Total Operating Expenses 39,321 43,998 47,108 3,110 7% Net Operating Income 58,530 52,198 51,280 918 2% Capital Expenditures 11,172 27,651 33,953 6,302 19% Total Seaport revenues were ($2,049K) unfavorable through the 2nd quarter due to unfavorable Security Grant revenue ($3,364K) partially offset by Operating Revenue exceeding budget by $1,315K. Operating Revenues were favorable to budget due to higher crane rent and grain revenue both resulting from higher volumes. Seaport is forecasting full year Operating Revenue to exceed budget while Security Grant Revenue will be below budget. Total Operating Expenses were $7,101K favorable due to postponed or cancelled Security Grant projects $3,390K being administered for outside parties, lower corporate expenses, and lower Outside Services largely due to timing. Seaport is forecasting full year expenses to be $3,110K favorable to budget primarily due to postponed or cancelled Security Grant projects. Forecasted Net Operating Income for 2011 is estimated to $918K favorable to Budget and ($6,332K) less than 2010 full year Actual Net Operating Income. The year-to-year change is driven by higher Operating Expense in 2011 Budget and Forecast. As of the end of the 2nd Quarter, total capital spending for 2011 is projected to be $27.7M or 81% of the Approved Annual Budget. A. BUSINESS EVENTS TEU volumes for Seattle Harbor are down .04% as of June 30, 2011 YTD compared to the same period in 2010. Total YTD 2011 volume is 1,007K TEU's. Consolidated West Coast Port results for the first half of 2011 show an overall increase in TEU volume of 3.9% compared to volumes in 2010. TEU Volume (in 000's) 2011 2010 % change Long Beach 2,968 2,795 6.2% Los Angeles 3,767 3,664 2.8% Oakland 1,142 1,086 5.2% Portland 97 85 14.5% Prince Rupert 152 158 -3.7% Seattle 1,007 1,008 -0.04% Tacoma 720 704 2.3% Vancouver 1,225 1,164 5.2% West Coast - Total: 11,077 10,661 3.9% 12 III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 Grain vessels shipped 2,754K metric tons of grain through Terminal 86 in the first half of 2011. Amount is (2%) below 2010 grain volumes of 2,813K metric tons. 2011 actual volume is 10% higher than 2011 budget volume. Cruise passengers for the year-to-date are 16% favorable to budget due to ships sailing at in excess of 100% occupancy. Implementation of the Northwest Ports Clean Air Strategy continued: At-Berth Clean Fuels Vessel Incentive Program (ABC Program), 176 participating calls were made in the first half of the year. Environmental Awards Received: o American Association of Port Authorities 2011 Environmental Improvement Awards: (1) Stakeholder Awareness, Education and Involvement Award for Terminal 117 and (2) Comprehensive Environmental Management Award for the Northwest Ports Clean Air Strategy Implementation o Puget Sound Regional Council 2011 VISION 2040 Award o Finalist for the 2011 Sustainable Shipping Award in the clean air category 13 III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 B. KEY INDICATORS Container Volume TEU's in 000's Grain Volume Metric Tons in 000's Cruise Passengers in 000's Net Operating Income Before Depreciation By Business $ in 000's 2010 2011 2011 2011 Bud Var Change from 2010 Actual Actual Budget $ % $ % Containers 21,648 23,302 20,575 2,727 13% 1,655 8% Grain 2,548 2,498 2,010 488 24% (50) -2% Seaport Industrial Props 3,150 2,743 2,122 621 29% (407) -13% Cruise 1,703 1,353 736 617 84% (350) -21% Docks (600) (494) (594) 99 17% 106 18% Security (626) (373) (606) 232 38% 252 40% Env Grants/Remed Liab/Oth (855) 17 (250) 267 107% 872 102% Total Seaport 26,967 29,045 23,993 5,053 21% 2,078 8% 14 III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 C. OPERATING RESULTS 2010 YTD 2011 Year-to-Date 2011 Bud Var Year-End Projections $ in 000's Actual Actual Budget $ % Budget Forecast Variance Operating Revenue 44,508 47,330 46,014 1,315 3% 94,972 95,772 800 Security Grants 682 51 3,415 (3,364) -99% 3,415 423 (2,992) Total Revenue 45,190 47,380 49,429 (2,049) -4% 98,387 96,195 (2,192) Direct Expenses 9,250 10,593 12,513 1,920 15% 24,081 25,293 (1,212) Security Grant Expense 710 61 3,451 3,390 98% 3,451 459 2,992 Environmental Remed Lia Exp 855 (18) 250 268 107% 500 500 0 Divisional Allocations 1,210 673 1,246 573 46% 2,511 1,461 1,050 Corporate Allocations 6,198 7,025 7,976 951 12% 16,565 16,285 280 Total Expense 18,223 18,335 25,436 7,101 28% 47,108 43,998 3,110 NOI Before Depreciation 26,967 29,045 23,993 5,053 21% 51,280 52,198 918 Depreciation 15,493 15,687 15,884 198 1% 31,898 31,698 200 NOI After Depreciation 11,474 13,359 8,109 5,250 65% 19,381 20,499 1,118 Seaport revenues were ($2,049K) unfavorable to budget. Key variances are as follows: Seaport Leasing & Asset Management - favorable $951K Containers $973K favorable. Crane Rent Revenue $714K favorable due to higher volumes and related crane usage at Terminal 5 and Terminal 18. Intermodal Revenue $88K favorable due to higher Terminal 5 intermodal volumes. Miscellaneous Revenue $188K favorable due to more maintenance reimbursable work performed than budgeted. Grain $244K favorable due to actual grain volume exceeding budget by 10%. Seaport Industrial Properties ($266K) unfavorable due to lower rent and concession revenues at T91 as well as lower utility sales revenue and related expense on that site, and due to continued vacancy within Building 2 at Terminal 106. Cruise and Maritime Operations - unfavorable ($3,000K) Cruise $203K favorable primarily due to higher than anticipated passenger volumes. Docks $161K favorable primarily due to higher than anticipated security fee revenue ($117K favorable) from Terminal 91 customers and moorage ($40K favorable). Security Grants ($3,364K) unfavorable due to YTD Round 7 pass-through grant activity being less than budgeted. Examples of 3rd party projects planned for YTD were for the Port of Everett and the Seattle Fire Department. See offsetting expense variance below. Seaport expenses were $7,101K favorable to budget. Key variances: Security Grant Expenses favorable $3,390K due to Round 7 pass-through grant activity being delayed. Outside Services (excluding Corporate, Maintenance and Security Grants) were favorable $1,259K due to projects and programs with later actual timing or payments than budgeted including Environmental Services stormwater and air programs $118K, T-5 Dredging $352K (balance of work performed internally), Seaport Asset Condition Assessments $370K, grain facility external appraisal and asset condition assessment $150K, Planning T91 Option and Transportation studies $76K, and Seaport Division Admin CTQI Certifications $75K. Thus far, asset condition assessment work is being done by internal Port staff. Corporate costs, direct and allocated were favorable $875K due to lower than anticipated direct charges and allocations from virtually all orgs/departments including Accounting and Financial Reporting $110K, Office of Social Responsibility $107K, Human Resources $102K, Public Affairs $83K, Contingency $82K, and Police $77K. Overhead Allocations for Environmental Services favorable $521K due to less direct charging of time to Business Groups and projects than assumed in developing the overhead rate. 15 III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 CDD costs were favorable $290K due to overall less spending by CDD groups on non-direct charge, non- overhead rate eligible expense items partially offset by work performed internally on asset condition assessments. Environmental Remediation Liability Expense favorable $268K due to lower estimated future clean-up costs than assumed in Budget. Travel & Other Employee Expenses, Promotional Hosting, and Trade Business and Community favorable $221K primarily due to timing. Miscellaneous Expense was favorable $202K primarily due to an unused Seaport Division Contingency and budgeted relocation expenses for former Asia Representative. All other variances netted to favorable $75K or less than 1% of Total Expenses Budgeted. NOI Before Depreciation was $5,053K favorable to budget. Depreciation was $198K, or approximately 1%, favorable to the 2011 Budget. NOI After Depreciation was $5,250K favorable to budget. Forecast As of the end of the 2nd Quarter 2011, Seaport anticipates ending the year $918K favorable to budget for NOI Before Depreciation. Security Grant Revenue and offsetting Security Grant Expense are forecasted to be $2,992K lower than budgeted due to delay or cancellation of third party grant projects. Operating Revenue is forecasted to be $800K favorable to budget primarily due to higher crane rent. Operating Expenses, excluding Security Grant Expenses, are forecasted to be $118K favorable to Budget. The forecast also reflects a reclassification in expenses from Divisional Allocations to Direct Expenses. At the beginning of 2011, a change was made in the way Marine Maintenance charges overhead to expense projects and programs. As a result, approximately $1,050K of Maintenance related overhead expenses are forecasted to be direct charged to Seaport and therefore reflected in Direct Expenses rather than in Divisional Allocations. Because this change in methodology was not in place during the development of the 2011 Budget, these offsetting expense impacts are reflected in the Forecast. Change from 2010 Actual NOI Before Depreciation for YTD 2011 increased by $2,078K from 2010. Revenue is up $2,191K from the prior year due to an increase in Container revenue of $3,083K resulting from higher crane rent, increase in container lease rate effective July 2010 and application of straight-line rent adjustment to all container terminals. Amounts are partially offset by lower Security Grant related revenue. Expenses increased $112K due to Terminal 5 Maintenance Dredge Project, earlier payment for Tribal mitigation, earlier payment for city street vacation permits, and higher direct charges and allocations from CDD for asset condition assessment work and SR99 Tunnel property related work. Amounts were largely offset by lower security grant project driven expenses and lower Environmental Remediation Liability Expense. 16 III. SEAPORT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 D. CAPITAL SPENDING RESULTS 2011 2011 Variance Estimated Approved EstActs to EstActs as a % 2011 Plan $ in 000's Actual Budget Budget of Budget of Finance Terminal 10 5,420 5,326 (94) 102% 5,585 Terminal 18 4,043 4,616 573 88% 5,040 Cruise 4,205 4,617 412 91% 2,737 Security 2,177 3,583 1,406 61% 1,799 Terminal 91 - Industrial Properties 3,767 3,568 (199) 106% 4,073 Cranes 1,353 3,465 2,112 39% 2,800 All Other 6,686 8,778 2,092 76% 7,456 Total Seaport 27,651 33,953 6,302 81% 29,490 Comments on Key Projects: Through the second quarter, Seaport spent 27% of the Approved Capital Budget. Full year spending is estimated to be 81% of the Approved Capital Budget. Projects with significant changes in spending were: Terminal 5 Crane Cable Reels Bids came in below estimate. Security Projects Spending moved to 2012. All Other Primary difference is due to savings on projects as the result of lower costs or change in scope and due to postponing projects. Changes between the 2011 Plan of Finance and the 2011 Approved Budget represent modifications in 2011 spending estimates made after determination of 2010 actual spending. 17 IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 FINANCIAL SUMMARY 2010 2011 2011 Budget $ in 000's Actual Forecast Budget Var $ Var % Operating Revenue 29,820 30,795 30,707 88 0% Total Revenues 29,820 30,795 30,707 88 0% Total Operating Expenses 31,499 35,940 36,079 139 0% Net Operating Income (1,678) (5,145) (5,372) 227 4% Capital Expenditures 3,965 14,127 16,339 2,212 14% Total Real Estate Division Revenues are $467K unfavorable to budget year-to-date due to lower activity at Bell Harbor International Conference Center and World Trade Center Club than assumed in the budget partially offset by favorable revenue variances from Recreational Boating, Commercial Properties and Real Estate Planning & Development. For the full year, Real Estate is forecasting revenue to exceed Budget due to increasing activity at Bell Harbor International Conference Center. Total Operating Expenses are $2,033K, or 11%, favorable to budget primarily due slower start on Maintenance projects than anticipated and less spending at Bell Harbor International Conference Center due to lower activity. For the full year, Real Estate is forecasting Operating Expenses to be favorable to Budget due to more Maintenance work being charged to capital than assumed in the Budget. Forecasted Net Operating Income for 2011 is estimated to be favorable to Budget for the year and $3,467K below 2010 Actual. Higher maintenance, corporate and CDD expenses are driving the year over year change. At the end of the second quarter, capital spending for 2011 is currently estimated to be $14.1 million or 86% of the Approved Annual Budget amount of $16.3 million. A. BUSINESS EVENTS Occupancy levels at Commercial Properties were at 90% at the end of the second quarter, which is at the 90% target for the 2011 Budget, but above comparable statistics for the local market 84%. Through the 2nd quarter, moorage occupancies at Fishermen's Terminal and Maritime Industrial Center averaged 81% which was below the target 83%. Recreational marinas averaged 94% occupancy for the second half which was above the target of 92%. Fishermen's Terminal NW dock fender replacement and Maritime Industrial Center sheet pile replacement projects are substantially complete. The Fishermen's Terminal south wall replacement project was delayed due to construction complications, but is expected to be completed in the 3rd quarter. Fishermen's Terminal net shed pilot program continues with 19 lofts removed through the second quarter and 37 customers on waiting list to get racking installed when it is approved. Eastside Rail Corridor Continuing to develop streamlined procedures and standards to handle the volume of incoming access requests. Marine Maintenance Continuing Deferred Maintenance Reduction Program. 18 IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 B. KEY INDICATORS Shilshole Bay Marina Occupancy 120.0% 100.0% 2010 Actual Footage 80.0% 2011 Budget Percent Linear 60.0% 2011 Actual 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% 2010 Actual Footage Occupied 80.0% 2011 Budget 60.0% Percent Linear 2011 Actual 40.0% 20.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Commercial Building 100% 90% 88% 90% 89% 90% 90% 90% 90% 89% 87% 88% 2010 Actual 80% Percent Occupied 2011 Target 70% 2011 Actual 60% Qtr 1 Qtr 2 Qtr 3 Qtr 4 Net Operating Income Before Depreciation By Business 2010 2011 2011 2011 Bud Var Change from 2010 $ in 000's Actual Actual Budget $ % $ % Recreational Boating 1,033 914 344 570 166% (119) -12% Fishing & Commercial (978) (1,037) (1,288) 251 19% (59) -6% Commercial & Third Party 455 (147) (1,261) 1,114 88% (602) -132% Eastside Rail (111) (944) (325) (619) -191% (833) -748% RE Development & Plan (248) (330) (589) 260 44% (81) -33% Envir Grants/Remed Liab 0 (9) 0 (9) NA (10) NA Total Real Estate 151 (1,553) (3,119) 1,566 50% (1,704) -1129% 19 IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 C. OPERATING RESULTS 2010 YTD 2011 Year-to-Date 2011 Bud Var Year-End Projections $ in 000's Actual Actual Budget $ % Budget Forecast Variance Operating Revenue 14,857 14,667 15,133 (467) -3% 30,707 30,795 88 Total Revenue 14,857 14,667 15,133 (467) -3% 30,707 30,795 88 Direct Expenses 13,861 14,477 16,803 2,326 14% 33,221 31,765 1,456 Envir Remediation Liability (0) 0 0 0 NA 0 0 0 Divisional Allocations (1,733) (1,225) (1,865) (641) -34% (3,787) (2,375) (1,412) Corporate Allocations 2,579 2,968 3,315 347 10% 6,645 6,550 95 Total Expense 14,706 16,220 18,253 2,033 11% 36,079 35,940 139 NOI Before Depreciation 151 (1,553) (3,119) 1,566 50% (5,372) (5,145) 227 Depreciation 4,981 5,037 5,007 (29) -1% 10,166 10,166 0 NOI After Depreciation (4,830) (6,590) (8,127) 1,537 19% (15,538) (15,311) 227 Total Real Estate revenues were ($467K) unfavorable to budget. Key variances are as follows: Harbor Services: Unfavorable $22K Recreational Boating favorable $61K due to 2% or 236 more boat-months at SBM than planned. Fishing and Commercial unfavorable ($83K) primarily due to fewer medium and large fishing boats due to work on the Northwest Dock fender pile replacement project and higher catch quotas than expected which kept vessels out fishing longer and thus out of the harbor. Portfolio Management: Unfavorable ($549K) Commercial Properties favorable $67K primarily due to higher occupancy at Terminal 102 Marina Corporate Center and higher occupancy and utility revenue at Fishermen's Terminal Office & Retail than assumed in budget. Third Party Managed Properties unfavorable ($616K) due to lower activity than anticipated at the Bell Harbor International Conference Center, lower sponsorship revenue and activity at World Trade Center Club, and lower occupancy at WTC West than assumed in Budget. Eastside Rail Corridor: Unfavorable ($9K) Eastside Rail Corridor unfavorable ($9K) due to considerable unknowns at time of Budget. Budgeted revenue was based on continuing review of over 844 agreements assigned to the Port from BNSF. As research and billing progressed it was found that only 240 agreements require payment and they are spread among annual, 5-year, and 10-year periodic payments. RE Development and Planning: Favorable $79K Terminal 91 General Industrial favorable $62K due to higher revenue from Pacific Maritime Association as a result of the tenant taking more yard space. Facilities Management: Favorable $1K Pier 69 Facilities Management favorable $1K due to reimbursed tenant work that was not budgeted for 2011. Maintenance: Favorable $35K Maintenance favorable $35K due to recycling revenue. 20 IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 Total Real Estate expenses were $2,033K favorable to budget. Key variances: Third Party Management Expense and Management Fees related to the World Trade Center Club, World Trade Center West and Bell Harbor International Conference Center (BHICC) were favorable $456K due to expense controls by third party managers and $154K favorable due to timing of acquisition of furniture and equipment at BHICC and World Trade Center Club. Outside Services (excluding Maintenance, CDD and Corporate) were favorable $297K primarily due to lower than expected spending on Eastside Rail Corridor ($224K), slower start on Environmental Services projects ($97K). Maintenance expenses were favorable $1,309K primarily due to later start of the Bell Street Garage sprinkler project, later start of P69 concrete beam project, fewer tenant improvement project, slower work on net shed pilot program and lower than anticipated overhead charges to the Real Estate Businesses. Corporate costs, direct and allocated, were favorable $369K primarily due Human Resources $66K, Accounting & Financial Reporting $55K, Internal Audit $46K, Legal $41K, Public Affairs $29K, Police $28K, and IT $23K. CDD costs, direct and allocated were favorable $176K primarily due to $157K in lower allocations than planned. Room/Space/Land Rental favorable $73K due to correction of prior accruals related to DNR submerged land rent for Pier 69 and Pier 66. Litigated Injuries & Damages unfavorable ($778K) due to reserve for legal expense set up for lawsuit filed. All other variances netted to an unfavorable ($23K) or about 0.1% of Total Expenses budgeted NOI Before Depreciation was $1,566K favorable to budget. Depreciation was ($29K) unfavorable to budget primarily due to unanticipated depreciation at Bell Harbor. The variance amounted to less than 1% of budget. NOI After Depreciation was $1,537K favorable to budget. Forecast Real Estate anticipates ending the year favorable to Budget by $227K for NOI Before Depreciation. Revenue is forecasted to exceed Budget by $88K due to increased activity at Bell Harbor International Conference Center. Expenses are forecasted to be favorable to Budget by $139K primarily due to more Maintenance work being charged to capital then budgeted and lower than budgeted Corporate allocations. The forecast also reflects a reclassification in expenses from Divisional Allocations to Direct Expenses. At the beginning of 2011, a change was implemented in the way Marine Maintenance charges overhead to expense projects and programs. As a result, approximately $1,050K of Maintenance related overhead expenses will be direct charged to the Seaport Divison rather than ascribed to Seaport through Divisional Allocations. Because this change in methodology was not in place during the development of the 2011 Budget, the impact on these offsetting expense impacts are reflected in the Real Estate Division Forecast. Change from 2010 Actual Net Operating Income Before Depreciation decreased by ($1,704K) between 2011 and 2010 as a result of lower revenue ($191K) and higher expenses ($1,513K). Operating Revenue decreased by $191K due to lower revenue at the Bell Harbor International Conference Center. Expenses increased by $1,513K in 2011 due to litigated damages associated with a lawsuit filing, tenant improvement costs, higher utilities and higher corporate costs. This was partially offset by lower third party management expenses associated with BHICC. 21 IV. REAL ESTATE DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 D. CAPITAL SPENDING RESULTS 2011 2011 Variance Estimated Approved EstActs to EstActs as a % 2011 Plan $ in 000's Actual Budget Budget of Budget of Finance FT NW Dock Fender System 2,305 3,440 1,135 67% 3,350 FT East Portion South Wall 3,478 3,232 (246) 108% 4,668 Small Projects 1,957 2,026 69 97% 992 RE Maintenance Shop Solution 2,282 1,925 (357) 119% 186 MIC Seawall Replacement 1,728 1,707 (21) 101% 2,123 All Other 2,377 4,009 1,632 59% 4,038 Total Real Estate 14,127 16,339 2,212 86% 15,357 Comments on Key Projects: Through second quarter, the Real Estate Division spent 42% of the Approved Capital Budget. Full year spending is estimated to be 86% of the Approved Capital Budget. Projects with significant changes in spending were: FT NW Dock Fender System Actual contractor bids lower than estimate. Work completed. Changes between the 2011 Plan of Finance and the 2011 Approved Budget represent modifications in 2011 spending estimates made after determination of 2010 actual spending. 22 V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 A. BUSINESS EVENTS AVPMG Construction has started on the following projects airfield pavement/slot drains replacement near south satellite, FIS booths, PC air. Parking revenue control system - selected Scheidt & Bachmann Rental car facility construction hit a major milestone ready for tenant improvements construction. Construction complete & facility in use C1-C88 baggage system, new security checkpoint CPO On March 31, 2011, the expanded P-Card program was implemented. We hired a P-Card Administrator, who is conducting compliance reviews (audits) and identifying/addressing non-compliance with CPO-7. Many CPO team members are completing ESI classes and will attain their ESI & George Washington University School of Business Masters in Government Contracting Certificate. We hosted 3 classes in furtherance of this certification. CPO hosted 4 training sessions (with 59 attendees) related to procurement and administration of consulting contracts (service agreements). Attendance is down and a number of classes were cancelled. CPO is evaluating the appropriate number of sessions we should host on a yearly basis. CPO Service Agreement Section kicked off compliance reviews and is in process of reviewing 8 contracts. ENG Assistant Directors participated in FEMA Training with Aviation division in Maryland. Engineering started work on Seaport under-dock inspection project in collaboration with Seaport PMG and Maintenance. This work was not included in the Engineering Operating Budget. Second quarter adjustments made for new CDD Overhead Allocation Methodology. Overhead rate review and adjustments to be implemented for quarters 3 & 4. PCS Several key projects for the 2nd quarter of 2011 include the installation of the FIS Primary Inspection Booths at the south satellite, T-91 Waterline & Paving, Noise Remedy Mitigation, and Gate B3 Loading Bridge We continued the RFQ process for Asbestos Design and Monitoring and will complete this process during the 3rd quarter. SPM Completed the construction phase of Terminal 91 Roadway Pavement Replacement and Fishermen's Terminal Northwest Dock East Fender System Replacement Projects. Projects in construction: Terminal 91 Waterline, Terminal 86 Tower Strengthening, Maritime Industrial Center central seawall, Fishermen's Terminal Phase 4 South Wall, East Marginal Way Grade Separation. Continued underdock inspections at Terminal 18 and 46 and began Terminal18 Pile Caps Pilot Project design. Awarded Terminal10 Development construction contract. Construction is scheduled to begin in July. CDD Admin SharePoint site development continues. 23 V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 B. KEY PERFORMANCE METRICS (CDD Dashboard updated) Key Performance 2011 YTD Notes Metrics Construction Soft ($ in 000's) Limit construction soft costs Costs Total Costs $ 909,790 (100%) (design, construction management, 36 month rolling project management, environmental Total Construction: $ 733,259 ( 81%) average from documentation) to no more than Total Soft: $ 176,531 ( 19%) 25% of total capital improvement Q3 2008 thru Q2 2011 costs. Cost Growth During Total Completed Projects YTD: 5 Limit average mandatory change Construction Discretionary Change: 0.0% cost growth to 5% of construction contract award. Mandatory Change: 0.1% 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: 74.5% construction advertisement to no Cumulative Value YTD: $99,040 more than 10% of originally allotted duration. Construction Schedule ($ 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: -2.2% originally allotted duration Cumulative Value YTD: $99,040 Performance Q2 2011 98% PREPs completed within 30 Evaluation Timeliness Total PREPs due: 47 94 days of anniversary date. Total PREPs on time: 0-30 days (CDD) 36 69 (76.6%) (73.4%) 0-60 days (HRD) 6 14 (89%) (88%) 2011 Procurement Good & Services 69 days Average number of days, improving Schedule: Major Public Works 84 days from period to period. Total Time Specs - Small Works 50 days Execution Service Agreements 214 days 24 V. CAPITAL DEVELOPMENT DIVISION FINANCIAL & PERFORMANCE REPORT 06/30/11 C. OPERATING RESULTS 2010 YTD 2011 YTD 2011 Bud Var. Year-End Projections $ in 000's Notes Actual Actual Budget $ % Budget Forecast Variance Engineering - 63 - 63 0.0% - - - Port Construction Services - 14 - 14 0.0% - - - Aviation Project Management - - - - 0.0% - - - Total Revenues - 76 - 76 0.0% - - - EXPENSES BEFORE CHARGES TO CAPITAL PROJECTS Capital Development Administration 197 171 181 10 5.4% 359 359 - Engineering 4,716 5,479 7,694 2,215 28.8% 15,225 13,103 2,122 Port Construction Services 3,448 2,947 3,778 831 22.0% 7,554 7,236 318 Central Procurement Office 1,572 1,598 2,189 591 27.0% 4,394 4,403 (9) Aviation Project Management 2,338 2,561 4,324 1,763 40.8% 8,637 8,637 - Seaport Project Management 1,219 983 1,258 275 21.9% 2,493 2,371 122 Total Before Charges to Capital Projects 13,490 13,739 19,424 5,685 29.3% 38,662 36,108 2,554 CHARGES TO CAPITAL PROJECTS Capital Development Administration - - - - 0.0% - - - Engineering (4,239) (3,935) (5,456) (1,521) 27.9% (10,892) (8,892) (2,000) Port Construction Services (2,113) (2,200) (2,169) 32 -1.5% (4,338) (4,338) - Central Procurement Office (735) (523) (607) (84) 13.8% (1,214) (1,214) - Aviation Project Management (2,003) (2,157) (3,169) (1,012) 31.9% (6,338) (6,338) - Seaport Project Management (999) (589) (801) (212) 26.4% (1,602) (1,602) - Total Charges to Capital Projects (10,088) (9,405) (12,202) (2,797) 22.9% (24,384) (22,384) (2,000) OPERATING & MAINTENANCE EXPENSE Capital Development Administration 197 171 181 10 5.4% 359 359 - Engineering 477 1,544 2,238 694 31.0% 4,333 4,211 122 Port Construction Services 1,335 746 1,609 862 53.6% 3,216 2,898 318 Central Procurement Office 838 1,075 1,582 507 32.1% 3,180 3,189 (9) Aviation Project Management 335 404 1,155 751 65.0% 2,299 2,299 - Seaport Project Management 220 393 457 64 14.0% 891 769 122 Total Expenses 3,402 4,334 7,222 2,888 40.0% 14,278 13,725 554 Notes: Variance Summary Vacancies: 24.5 = $1,646K savings from unfilled positions, plus PCS layoffs (Under)/over Absorption OH Clearing ($1,009K) represents costs expended but not yet allocated as overhead. Actual capital, expensed and net operating costs will increase to account for the under absorption value. AVPMG $712K on-site consulting charged to capital projects, offset by honorarium payments for escalators contract (MC-0316531) AVPMG $49K refund upon closing of RST Enterprises claim ($50K reserve expensed Oct 2010) CPO $9K for unbudgeted moving expenses and prior year consulting fees paid in current year ENG $780K reduced consultant use, offset by ($80K) unbudgeted expense work; $72K reduced travel expense PCS $428K due to accruals of Outside Services and $12K in reduced Equipment Rental SPM ($212K) reduced charges to capital 25 VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 06/30/11 A. BUSINESS EVENTS Centennial Celebration events: o Centennial Video Contest for Schools launched, awards recognition at Commission Meeting o Centennial Park Dedication o Centennial "Get to Know Your Port by Bike" o Beach Access Opening Centennial Community Celebration and Ribbon Cutting Ceremony o Centennial displays installed at STIA Held Century Agenda Panels on Fostering Economic Growth, Moving Cargo, and Moving People. Set preliminary goals and objectives of increasing jobs related to Port by 100,000 over 25 years, Moving Cargo, and Moving People. Ship Canal Cleanup, in conjunction with Seattle Marine Business Coalition. Participated in community outreach programs such as: o Duwamish Alive! Community Restoration, Kayak Launch Opening and Park Bench Ribbon Cutting at Terminal 117 o Duwamish Alive! Earth Day Festival o South Park Bridge Ground Breaking, Community Celebration and Business Casual Reception o Seattle Maritime Festival o Northwest Paddling Festival at Jack Block Park o Emissions Inventory Update outreach meetings AFR completed a department-wide Risk Assessment & Mitigation "refresh" project, covering all operating sections and business processes of the AFR department to update business process improvement opportunities, identify potential control gaps and establish action plans to mitigate risks and potential exposures. Completed the liability insurance broker selection process and signed a Category III Contract in May for five years. The contract includes a small business component of 10%. Completed Tier 1 of the 2011 Wellness Rewards Tiered Program on April 30th. To date, 935 employees have completed the health assessment. Implemented telephonic and online coaching program as part of the Wellness Reward program. To date, 258 are engaged in telephonic coaching. Installed TeamMate software audit management system. Ethics Survey was offered to all Port employees. Intake and response system continues to be developed and implemented. Training program continues to be developed. HR&D identified as lead on Request for Proposal (RFP) to select a consultant for design of Portwide process improvement effort. Finalized Scope of Work and expect to advertise RFP in Q2. ICT has finished building the Port's new website and is working with Public Affairs on Content migration for a third quarter deployment. Received the Distinguished Budget Presentation Award for 2011 from Government Finance Officers Association in June. Completed the Investment Banking Services procurement process. Six firms were selected to provide financing support for the next 3-5 years. Of the six selected firms, two are small business firms. Office of Social Responsibility participated in business events such as the Supplier Diversity Best Practices Summit, Women of Color Empowered Luncheon, Hire America's Heroes Symposium, Women Veterans Summit, Northwest Minority Supplier Council Business Conference and the City of Seattle Reverse Vendor Trade Show. 26 VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 06/30/11 B. KEY PERFORMANCE METRICS Key Performance Metrics 2011 YTD 2010 YTD/Notes A. High Performance Workplace: 1. Occupational Injury Rate 5.68 5.45, increased by 0.23 2. Total Lost Work Days 313 253, increased by 60 3. Contract Administration Issues 59 28, increased by 31 4. Employee Training a) New Employee Orientation 23 21, increased by 2 b) REALeadership Program 30 29, increased by 1 c) MIS Training 6 Classes and 10 users 6 classes and 67 users d) Required Safety Training 68% 63%, increased by 8% 5. Job Openings Created 132 97, increased by 35 6. Job Applications Received 6,210 4,143, increased by 2,067 7. Tuition Reimbursement 30 employees participated n/a B. Transparency: 1. Rate of Public Meetings 6 2, increased by 4 2. Public Disclosure Requests 144 149, decreased by 5 3. Web site usage 2,036,201 total page views; 2,428,967 total page views, decreased 1,430,113 unique page views by 16%; 1,742,791 unique page views, decreased by 18% 4. Track Constant Contact 19,853 active contacts 16,142 contacts at year-end 5. Increase internal Site is averaging 6,922 visits 5,500 visits per day, and 1,200 unique communications via Compass per day, average 807 unique users. visitors. C. Accountability: 1. Internal Audits Completed 10 7, increased by 3 2. % of Audit Plan Completed 32% 24%, increased by 8% 3. Preventable Vehicle Incidents 31 38, decreased by 7 4. Incurred Auto Liability Costs $50K $5K, increased by $45K D. Other Services and Support: 1. Projects on Budget/Schedule 100%/38% 100%/33% increased by 15% 2. Police Service Calls 27,246 29,534, decreased by 8% 3. Police Arrests 245 with no warrant 306, decreased by 61; 195 with warrant 192 with warrant, increased by 3 4. Attorney Services 30 litigation and claims 28 Litigations and claims, increased by 2 5. Labor Contracts Negotiated 2 4, decreased by 2 6. Account Receivables Collection 93.3% 90.8% (0 30 days) 7. Small Business Roster 1,215 1,122, increased by 93 27 VI. CORPORATE FINANCIAL & PERFORMANCE REPORT 06/30/11 C. OPERATING RESULTS 2010 YTD 2011 YTD 2011 Bud Var. Year-End Projections $ in 000's Notes Actual Actual Budget $ % Budget Forecast Variance Total Revenues 309 620 430 190 44.1% 1,025 1,202 177 Executive 697 694 793 99 12.4% 1,500 1,460 40 Commission 404 336 465 129 27.8% 931 862 70 Legal 1,603 1,529 1,667 138 8.3% 2,906 3,055 (149) Risk Services 1,259 1,249 1,383 134 9.7% 2,789 2,722 67 Health & Safety Services 499 542 574 32 5.6% 1,129 1,124 5 External Affairs 2,644 2,990 3,395 404 11.9% 7,012 6,795 217 Human Resources & Development 1,741 2,271 2,709 439 16.2% 5,285 5,063 222 Labor Relations 294 515 462 (53) -11.6% 922 922 - Information & Communications Technology 8,696 8,951 9,170 219 2.4% 19,511 19,511 - Finance & Budget 729 707 762 54 7.1% 1,493 1,483 11 Accounting & Financial Reporting Services 2,946 2,789 3,293 504 15.3% 6,596 6,415 181 Internal Audit 494 507 621 114 18.3% 1,215 1,204 11 Office of Social Responsibility 576 531 835 305 36.5% 1,567 1,560 6 Police 9,204 10,535 10,760 225 2.1% 21,452 21,443 9 Contingency 17 48 350 302 86.3% 700 350 350 Total Expenses 31,802 34,195 37,240 3,045 8.2% 75,008 73,969 1,039 Corporate revenues were $190 thousand favorable compared to budget due to higher operating grants. Corporate expenses for the first six months of 2011 were $34.2 million, $3.0 million or 8.2% favorable compared to the approved budget and $2.4 million or 7.5% higher than the same period a year ago. The $3.0 million favorable variance is due primarily to timing differences between when the items are paid and when budgeted and not necessarily cost savings. A ll corporate departments have a favorable variance except for Labor Relations, which has an unfavorable variance of $53thousand due to charging less to capital projects than originally anticipated. Year-end spending is projected to be $1.0 million under budget due primarily to: External Affairs incurring lower costs than anticipated and vacant positions Human Resources and Development vacant positions and credit from state for participating in the Commute Trip Reduction Program Accounting and Financial Reporting Services vacant positions and rebate from bank for travel program Not anticipating to use all funds in Contingency D. CAPITAL SPENDING RESULTS ($ Millions) Annual Results: 2011 Plan of Finance $12.07 2011 Approved Budget $12.90 2011 Estimated/Actuals $9.74 Variance (Budget vs Actuals) $3.16 28
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