2005 Performance Report

2005

Performance Report

February 28, 2006

ITEM NO. 6b Supp-1

DATE OF MEETING 2/28/06

Port of Seattle Year End Results 2005 2

Port Wide Financial Results

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

1998 1999 2000 2001 2002 2003 2004 2005

$ in

000

's Revenues

Expenses

NOI Before Depreciation


Port Wide Income Results($ in Millions) 2004

Actual2005

Budget2005

Actual

05 Actual - Budget Var. %

05 Actual - 04 Actual

Var. %

Operating Revenues $376.6 $402.5 $406.0 0.9% 7.8%

Operating & Maint. Expenses 223.3 213.8 213.1 0.3% -4.6%

Net Operating Income 153.3 188.7 192.9 2.2% 25.8%

Depreciation Expense 110.2 102.5 133.7 -30.4% 21.3%

NOI after Depreciation 43.1 86.2 59.2 -31.3% 37.4%Net Non-operating Income (Expense) 68.3 100.0 77.0 (23.0) -23.0%


Port Wide2005 Capital Spending

Division Q1 Q2 Q3 Q4

Year-to-Date

Actual BudgetPlan of Finance

Aviation 95.8 106.8 127.4 83.3 $413.3 $484.0 $594.2Seaport 13.0 19.4 24.9 30.2 $87.5 72.0 74.8Econ Dev 1.1 6.4 0.9 0.3 $8.7 1.8 1.5Corporate 0.8 0.8 1.3 1.7 $4.6 13.4 11.0

Total $110.7 $133.4 $154.5 $115.5 $514.1 $571.2 $681.5

2005Performance Report

Aviation Division


Aviation Business Highlights• Passenger level hit 29.3 million, +1.7% over 2004

– Landed weight down 3.6%; equals 88% of 2000– Operations down 4.9%; equals 77% of 2000– Load factor at 79.1% vs. 75% in 2004

• Non-aeronautical NOI +$18.3M vs. 2004• Reduced Airline costs

– Cost per enplanement (CPE) $11.10 vs. $11.45 in budget– Revenue sharing: $23.6 million, up $5.9 million over 2004– Reduced forecasted 2009 CPE to $14.15

• Reached agreement on new 7-year airline agreement• Major project milestones:

– Opened CTE– Third Runway Project on schedule and budget


Goals & Strategic Issues Progress

• Develop and Maintain Community Support– Completed ILA negotiations with city of SeaTac– Modified 55-acre development agreement with city

of SeaTac– Established ILA with City of Des Moines– Regular meetings of Highline Forum

• Extraordinary NW Customer Experience– Opened Central Terminal– Enhanced international arrivals assistance– Relocated hourly parking in garage– Installed new airport directories



• High Density Development– Phase I Program on schedule; 79% completion– Refined Comprehensive Development Program

and completed environmental process– Completed funding strategy for SR518 3rd lane– Established effective design and construction

collaboration with Sound Transit– Restarted rental car facility project– Delays in completion of baggage systems

• C-60 is 85% complete (goal was 100%)• C-1 is 49% complete (goal was 60%)



• High Performance Workplace– Implemented employee development initiative

focused on enhanced job proficiency and succession preparation

• Special assignment pilot completed• Development planning education completed

– Diversity awareness milestones completed– Eliminated backlog of labor contract negotiations– Continued labor relations education series:

• 9 labor relations sessions attended by 227 employees• 9 collective bargaining sessions attended by 127

– Workplace Safety: achieved lowest incident rate and lost work days since measurements began



• Maximize Financial Performance– Airline CPE - 3.1% under budget– Non-airline revenues per enplanement – exceeded

budget by 6%– Opened new concessions in Central Terminal– Implemented new financing strategy:

• New intermediate lien:– Lower debt service coverage – Structure facilitates PFC offset

• Increased liquidity level


Enplanements 2000-2005

14,174

13,506

13,362 13,356

14,364

14,632

12,600

12,800

13,000

13,200

13,400

13,600

13,800

14,000

14,200

14,400

14,600

14,800

2000 2001 2002 2003 2004 2005

Enplanements (000's)

2005 is 1.9% above 20042005 is 3.2% above 2000


Aviation Q4 Operating Results$ in '000 2004 2005 2005

Actual Actual Budget Var $ Var %

Revenues Total Airline Revenues 150,640 165,927 173,059 (7,131) -4.1%

Public Parking 42,037 45,782 43,446 2,336 5.4%Rental Cars 25,818 32,353 30,859 1,494 4.8%Concessions 21,022 26,232 26,399 (167) -0.6%Other 26,175 29,733 26,976 2,756 10.2% Total Non-airline Revenues 115,052 134,099 127,680 6,419 5.0%

Security Grants & Fuel Hydrant 2,107 4,894 5,244 (351) -6.7%

Total Revenues 267,798 304,920 305,983 (1,063) -0.3%

ExpensesAirport Expenses 102,020 108,825 108,290 (536) -0.5%Corporate Expenses 26,012 26,020 24,844 (1,176) -4.7%Police Costs 13,784 13,987 14,085 97 0.7% Total Operating Expenses 141,817 148,833 147,218 (1,615) -1.1%

Net Operating Income 125,982 156,087 158,765 (2,678) -1.7%

Actual/Budget


Aviation Key Indicators2004 2005 2005

Actual Actual Budget Var $ Var %

Non-Aero Financial PerformanceRevenues 115,052 134,099 127,680 6,419 5.0%Operating Expenses 39,440 40,172 42,565 2,392 5.6%NOI 75,612 93,927 85,116 8,908 10.5%

Airport Vitality Measures Operating Cost / Enpl 9.87 10.17 9.96 (0.21) -2.1% Non-Airline Revenues / Enpl 8.01 9.16 8.64 0.53 6.1% Passenger Airline CPE 10.26 11.10 11.45 0.35 3.1%

Other Key MeasuresLanding Fee Rate 2.17 2.33 2.50 0.16 6.5%

Non-Airline Revenue / Total Rev 43.0% 44.0% 41.7% 2.3% 5.4% Parking Revenue / Enpl 2.93 3.19 3.02 0.16 5.4% Concessions Revenue / Enpl 1.46 1.79 1.79 0.01 0.4% Primary Concession Sales / Enpl 6.92 7.75 7.45 0.30 4.0%

Traffic Enplanements 14,364 14,632 14,781 (149) -1.0%Landed Weight (BALA for '03) 20,944 20,186 21,537 (1,351) -6.3%

Airline Surplus/DeficitLanding Fees (1,245) 1,815 0 1,815 n/aTerminal Rents (20,316) (4,907) 0 (4,907) n/aRevenue Sharing 17,716 23,558 18,161 5,398 30%Net Surplus/Deficit (3,845) 20,467 18,161 2,306 12.7%

Actual/Budget


Aviation Expense Variance Drivers

Description ($ in '000s) Amount

Total operating expense variance ($1,615)

Major VariancesEarthquake Receivable Write-off (2,096) Capital Project Write-offs (1,459) Environmental Reserve (269) Janitorial Costs (1,119) ICT Charges (1,200) Total (6,143)

Other Net Savings $4,528


Capital Spending 1999-2005$ in millions

$229$272

$359$364 $421 $417 $413

$484

$0

$100

$200

$300

$400

$500

$600

1999 2000 2001 2002 2003 2004 2005 Act 2005 Bud


Aviation Capital Budget

Sponsor ($ in '000s)

2005 Plan of Finance

2005 Annual Approved

Budget2005

Actuals

Variance Actuals to

Budget

Airfield 50,356 25,058 23,545 1,513

Division Wide 13,295 14,220 9,824 4,396

Business Development 9,533 7,774 10,141 (2,367)

Infrastructure 43,478 42,064 35,031 7,033

Landside 25,283 15,590 8,318 7,272

Noise Program 44,189 48,538 20,757 27,781

Security 111,746 66,961 61,581 5,380

Stormwater 26,800 12,150 10,599 1,551

Terminal & Tenants 63,986 98,800 71,123 27,677

Third Runway 205,544 152,581 162,342 (9,761)

Totals 594,210 483,736 413,261 70,475

Percentage of Budget 85%

2005

Performance Report

Seaport Division

Seaport Division

Overview

2002 - 2005


Seaport in 2002

• NOI in 2002 was $13.2M• Container volume flat at 1.439M TEU’s (3 year

avg annual growth rate negative (1.2)%)• Nearly 200 vacant acres

– Consolidation in containers – SE harbor vacant– Car Shipper (DAS) and Hasbro departure– Rainier Cold Storage earthquake damage

• Cruise 1 berth, 3 homeport ships and 245,000 passengers

• Impacts of 9/11 and Nisqually earthquake• Set a goal of reaching $34M NOI by 2005


Lease of Vacant Acres2003-2005

• T46 – Completed TTI/Hanjin Expansion 18 acres • T30 – 2 berth cruise facility 25 acres• T25/28 – Redevelop into container facility for SSAT

32 Acres• T25 – SCS Refrigerated Services, LLC 15 Acres• T106 – Container storage yard for SSAT 15 Acres• T5 – Use of option area by Eagle Marine 19 Acres

(month to month)• T91 – Carnitech facility 2 Acres• T115 – 30 Year Lease with Northland (property was

occupied by other tenants prior to this transaction)


Seaport 2002-2005

• 2005 container volume at 2.088M TEU’s (3 year avg annual growth rate of 13.2%)

• Leased 126 Acres to maritime and industrial tenants

• Cruise 3 berths, 8 homeport ships and 687,000 passengers


Seaport 2002-2005

• Carried out key transportation and environmental initiatives

• Reduced expenses

• Staff reduced from 217 to 169 not including warehouse

• NOI in 2005 is $40.4M: 18.8% above goal and 3 times 2002 NOI

2005

Performance Report


Seaport Business Goals

Provide Compelling Value and Asset Utilization

• TEU’s: Up 17.6% over 2004 to 2.088 million. Full inbound up 19.2% and full outbound up 22.1%.

• Grain: Up 30% over 2004 to 5.0 million metric tons.

• Cruise:169 calls and 687,000 passengers.


Seaport Business Goals

Provide Compelling Value and Asset Utilization• Vacant Property: 14 additional acres leased. • Occupancy Rates: commercial property at 91%

occupancy, below target of 96% but above market average of 81%. Industrial buildings and warehouses occupancy 91%, market 96%.

• Marina Occupancy: two of five marinas exceeded occupancy targets: SBM 93% vs. goal 90%; FT 89% vs. goal 85%; HIM 98% vs. goal 99%; BHM 80% vs. goal 90%; MIC 73% vs. goal 80%.


Seaport Community Goals

• Relationships: 36 speaking engagements. No regulatory violations. Air emissions inventory 12/06.

• Regional Transportation: Viaduct south end design better accommodating T-46 access. 519 discussions restarted. East Marginal Way work on track: design progressing, offers made to property owners, detailed MOA with City in progress.

• Security: 98% of the tasks identified in 2004 have been completed. Projects on track.

• High Performance: 48% of performance reviews completed one week prior to anniversary date, 61% completed by anniversary date. Safety index at 98.6% as of Q3.

Seaport Division Operating Results

($ in Millions)2004

Actual2005

Budget2005

Actual

2005 $ Budget

Var.Operating Revenue $85.3 $88.0 $95.2 $7.2Security Revenue 23.2 8.3 5.4 (2.9)Total Operating Revenues 108.5 96.3 100.7 4.4Seaport Operating Expense 39.8 39.4 36.8 2.6Security Expense 23.7 9.0 6.5 2.5Environmental Reserve 2.2 1.1 3.7 (2.6)Corporate Allocations 12.0 12.7 13.3 (0.6)Total Expenses 77.7 62.2 60.3 1.9Net Operating Income 30.8 34.1 40.4 6.3

Seaport Division Key VariancesRevenue Detail ($’s in Millions)

Business Unit - Revenue

Variance to Budget B(W)

Containers $3.7

Docks $3.0

Cruise $.7

Harbor Services $.4

Real Estate $(.6)

Security $(2.8)

Total $4.4

Seaport Division Key VariancesExpense Detail ($’s in Millions)

Expense Variance to Budget B(W)

Security – offset by revenues $2.2

Unemployment Reserves $1.2

Environmental Reserve $(2.6)

Maintenance $(.7)

Utilities $.5

All Other $1.3

Total Expense $1.9


Seaport Business GroupsNOI Before Depreciation ($’s in Millions)

Actual NOI

Variance to Budget B(W)

Cargo and Cruise $37.4 $8.4

Harbor Services $1.8 $.7

Real Estate $2.5 $(2.2)

Security $(1.3) $(.6)

Total Seaport $40.4 $6.3


Seaport Capital 2005$’s in Millions

Plan of Finance

Approved Budget

Actual Variance to

Budget

Act. as % of App. Budget

$74.8 $72.0 $87.6 $(15.6) 122%


Seaport Capital Projects 2005

Spending was 122% of the approved budget for the year.

Projects not in Plan of Finance were authorized by Commission:– Terminal 25 development for Matson $15 million.– Terminal 91 Berth C&D and utility upgrade planning $8 million.

Shilshole Bay Marina spending was $13 million in excess of Approved Budget. Approved Budget was not adjusted to reflect shorter project time frame. Actual spending in line with Plan of Finance.

Projects less than Approved Budget due to delays:– Terminal 5 Admin Building delayed due to weather $2.6 million.– Terminal 115 Dock Reconstruction was delayed due to permitting issues $5

million.– Security due to delays on Round II projects for Tacoma and Everett, $4.3 million

below budget.


Seaport Recent Results

• NOI $40.4M exceeding $34M NOI target and triple 2002 NOI.

• 17.6% Container growth in 2005.• 22% growth in Cruise passengers in 2005.• Grain volumes up 30% over 2004.• Aggressive capital project milestones met. • Commercial building occupancy at 92%.• Received Envirostar awards at 3 Marinas and

Maintenance.

Seaport Division OverviewExcluding Security Grants ($’s in Millions)

100

88

8385

95

7775

61

55 55

23

13

23

31

40

0

20

40

60

80

100

120

2001 2002 2003 2004 2005

Seaport Revenue Total Expense Seaport NOI Before Depreciation

2005

Performance Report

2005 Fourth QuarterPerformance Report

Economic Development Division


Economic Development DivisionToday’s Presentation

Introduction

Business Goals, Progress & Highlights for:– Real Estate Development– Regional Transportation– Economic, Business and Trade Development

2005 Operating Results

2005 Capital Program & Results


Real Estate Development2005 Business Goals

1) Advance the planning and development of certain assets the Port currently owns (e.g. North Bay)

2) Identify and respond to new opportunities and projects

3) Seek to establish a center of expertise within the Port for real estate planning and development

Create regional economic vitality through three real estate-related initiatives:


Real Estate DevelopmentProgress & Business Highlights

– North Bay Project• Selected preferred development alternative• Published final Environmental Impact Statement• Integrated planning with Pier 91 improvements • Continued outreach to community• Acquired Tsubota Steel site


Real Estate DevelopmentProgress & Business Highlights

Central Waterfront Concept Plan• Participated in Waterfront Partners Group

Colman Dock Expansion• Monitored planning efforts by WSDOT and City of

Seattle• Appraising Pier 48

Waterfront Streetcar Extension• Completed joint feasibility study


Regional Transportation2005 Business Goals

Be a Catalyst for Regional Transportation Solutions

1) Ensure access to existing and future Port facilities

2) Enhance freight mobility

3) Promote regional economic competitiveness


Regional TransportationProgress & Business Highlights

– Project Planning & Activities:• Viaduct/Seawall Replacement• SR518• East Marginal Way, South Downtown Rail

Corridor/SR519• Magnolia Bridge, Mercer Corridor

– Defeat of I-912 maintained state funding– Developed federal and state 2006

legislative strategies


Economic, Business & Trade DevelopmentBusiness Goals

Create regional economic vitality by proactively seeking international and regional trade related opportunities

1) Regional Economic Development

2) International Trade & Business Development

3) New Business Opportunities


Economic, Business & Trade Development

Progress & Business Highlights

Regional Economic Development• Formulation and implementation of Prosperity

Partnership’s “Regional Economic Development Strategies for Central Puget Sound”

• Action Strategy Groups

International Trade and Business Development• Port Asia Offices (Japan, South Korea, Shanghai, Hong

Kong and Singapore)• Strategy for identifying trade leads and Foreign Direct

Investment leads, and• Transportation and Logistics intelligence gathering and

interpretation• China Initiative


Economic, Business & Trade Development

Progress & Business Highlights

Developing New Business Opportunities• Inland Northwest Project

• Cruise business MOU with Shanghai Int’l Ports Group

• Foreign Manufacturing Company site selection


Economic Development DivisionOperating Results

2004 2005 2005 Bud Var

Actual Actual Budget $ %

Expenses:

Direct Op & Maint Exp $ 2,872 2,408 3,012 604 20.1%

Divisional Allocations 0 21 0 (21)

Corporate Allocations 541 511 488 (23) 4.7%

Total Expenses 3,413 2,940 3,500 560 16.0%

NOI Before Depreciation (3,413) (2,940) (3,500) 303 -16.0%

Depreciation 93 108 72 (36) -49.0%

NOI After Depreciation (3,506) (3,048) (3,572) 524 -14.7%


Capital Program 2005SR 518

("Gov't Expense" Project)

North Bay Tsubota Total R.E. Reg. Trans.

2005 Plan of Finance 1.5 0.0 1.5

2005 Approved Budget 1.8 0.0 1.82005 Actuals 2.5 6.1 8.6Variance (0.7) (6.1) (6.8)

Authorization 7.3 6.1 13.4 5.0

2005 Spending 2.5 6.1 8.6 1.7Previous Spending 4.0 0.0 4.0 0.0Total Spending 6.5 6.1 12.6 1.7

Remaining Budget 0.8 0.0 0.8 3.3

2005

Performance ReportCorporate Professional &

Technical Services


Corporate Highlights• Corporate performance for the year 2005 was

$3.7 million or 6.3% unfavorable compared to the approved budget.– $1.9 million for ICT restructuring & Systems

Remediation– $1.9 million in environmental reserves

• Commission meetings accessible via web-site• Environmental Services reached agreement on

air emissions inventory• ICT completed restructuring


Corporate Indicators• Workers Compensation costs decreased 19%• 1019 employees participated in learning calendar

classes• Processed 7,256 employment applications

compared to 5,155 for 2004, up 40%• Electrical consumption decreased by 11%• Saved $6,684,763 PV (9.97%) on bond

Refunding


Corporate Professional and Technical Services Operating Results

2004 YTD 2005 YTD 2005 Bud Var.In $ Thousands Actual Actual Budget $ %

Revenues 1,624 1,647 1,694 (47) -2.8%

Executive 1,550 1,643 1,648 5 0.3%Commission 473 462 495 34 6.8%Legal 11,314 12,084 10,180 (1,904) -18.7%Public Affairs 3,231 3,940 3,807 (134) -3.5%Government Relations 808 859 876 17 2.0%Engineering 814 726 1,127 400 35.5%Port Construction Services 1,843 1,840 1,304 (535) -41.0%Human Resources & Dev. 2,836 3,006 3,203 196 6.1%Labor Relations 533 581 647 66 10.2%Information & Communications Technology 10,559 10,957 9,089 (1,868) -20.5%Finance & Budget 1,314 1,181 1,249 68 5.4%Accounting & Procurement Svcs. 4,223 4,939 4,959 20 0.4%Facilities Management 1,995 1,775 1,739 (36) -2.1%Police 16,829 17,407 17,388 (19) -0.1%Contingency 504 486 500 14 2.9% Total 58,827 61,886 58,212 (3,674) -6.3%


Small Business Initiative Highlights

• May 2003 Port Commission adopted the Small Business Initiative

• Small Business Roster (SBR) developed for easy access to register with the Port as qualified small business

• Port set a 10% target for purchases of Goods and services from qualified small business

• Regional Contracting Forum: The Port was one of the lead agencies in planning and organizing of this forum

• Northwest Minority Showcase: The port hosted a booth in which major corporations, minority business, and public agencies from across the country came to develop business relationships and attend workshops


Small Business Initiative

Year 2003 Year 2004 Year 2005Total Total Total Total Total Total

Organization Eligible Dollars % Eligible Dollars % Eligible Dollars % Aviation 99,654 5,484 5.50% 92,579 5,291 5.71% 86,619 4,799 5.54%

Seaport 34,464 2,082 6.04% 11,355 1,152 10.15% 14,572 2,298 15.77%

Corporate 49,620 4,845 9.76% 35,468 4,365 12.31% 45,311 3,607 7.96%

Econ & Trade 1,261 138 10.97% 3,066 383 12.51% 2,457 637 25.91%

POS Total 184,999 12,550 6.78% 142,468 11,191 7.86% 148,959 11,340 7.61%

2005

Performance Report

Documents

2005 Performance Report