Quarterly Financial & Management Report - ride METRO · 2015-03-10 · 1 FY2007 Quarterly Financial & Management Report Third Quarter Ending June 30, 2007 Highlights New Federal Grant

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METRO

FY2007 Quarterly Financial & Management Report

Third Quarter Ending June 30, 2007

INDEX

PageHighlights

▪ New Federal Grant will Boost Security Training 1▪ Two METRO Solutions Corridors Selected for FTA Pilot Program 1▪ First Phase of METRO Solutions Work Contract Approved 1▪ Real Estate Acquisitions for METRO Solutions Gain Momentum 2▪ New Buses will Augment Fleet 2▪ Service Enhancements Go Into Effect 2▪ Green is In - Bikes, Buses and Other Programs 2▪ Passenger Safety High on METRO Agenda 3▪ A New Emergency Preparedness Website 3

Management Discussion and Analysis▪ Ridership Trends 4▪ Financial Performance

Revenues 8Operating Expenses 10General Mobility Expenditures 13Capital Expenditures 14

▪ Key Performance Indicators 16▪ Composite Operating and Capital Statement 23▪ Balance Sheet 24

25-Jul-07

1

FY2007 Quarterly Financial & Management ReportThird Quarter Ending June 30, 2007

Highlights New Federal Grant will Boost Security Training Over 2,000 of METRO’s front-line employees and mid-level managers will soon receive training in preventing terrorist attacks and responding to major disasters thanks to a $1.5million grant from the Transportation Security Administration. This training will cover securityawareness, behavior recognition, immediate emergency response and local emergency procedures. For the past several years METRO has worked closely with our representatives in Washington and the Transit Security Administration to get the funding needed to protect Houston’s transit system from home-grown and foreign threats. METRO has been a keypartner in developing our nation’s transit security posture and was instrumental in the development of this national training program. Two METRO Solutions Corridors Selected for FTA Pilot Program Following an innovative proposal METRO submitted to the Federal Transit Administration (FTA), the North and Southeast Corridors of METRO Solutions are among the only threeprojects to be selected for the Public Private Partnership Pilot Program known as Penta-P. This new federal pilot program will allow METRO to advance the projects and complete themfaster and at a lower cost by accelerating final design approval, streamlining the project development processes and expediting the approval of a Full Funding Grant Agreement. Such an agreement heralds a long-term commitment of federal support for the program. First Phase of METRO Solutions Work Contract Approved In May 2007, the METRO Board approved a $77.3 million contract with the Washington Group Transit Management Company (WGTMC) to become the Facility Provider, or main contractor,for the project development phase of work on the North, East End, Southeast and Uptown Corridors as well as the Intermodal Terminal. WGTMC was selected because of their exceptional staff and a proven track record of successfully designing, building and operatingmajor transportation projects throughout the nation. This first phase will last eight months and will include completing engineering on early construction items, early construction activities, implementing a Small/Disadvantaged BusinessEnterprise (SBE/DBE) utilization plan, scoping, engineering, pricing, scheduling andconstruction packaging for Phase 2, community outreach activities and project financestrategies. Many local companies will benefit during this period receiving $54 million, or 70 percent of the total value of the contract. Of the 167 local firms, 137 are small and disadvantaged business enterprises (SBE/DBE’s) and will receive $26.8 million through their participation.

2


Highlights

Real Estate Acquisitions for METRO Solutions Gain MomentumAcquisitions of real estate properties for METRO Solutions gained momentum in the third quarter with 27 offers being extended and about a third of these offers being subsequently accepted. Closed deals include three properties in the Southeast Corridor, three in the North Corridor and one in the East End Corridor. In addition, one property has been acquired for the Intermodal Terminal. New Buses will Augment Fleet Continuing METRO’s focus on improving service, the Board recently approved the purchase of 100 hybrid-electric buses. These buses – 52 Park & Ride and 48 transit buses – will be powered by hybrid-diesel engines that would advance METRO’s commitment to reduceemissions and fuel costs. The new buses will augment METRO’s existing fleet of 40 hybrid buses, which arrived this spring. Within the next decade, METRO plans to convert its entire fleet of 1,200 buses to hybrid-diesels. These new buses are part of an overall replacementprogram that allows METRO to retire older buses, reducing the average age of the fleet and providing a nicer and more reliable ride for our customers. The local buses will begin arriving in March 2008 and the Park & Ride buses in June 2008. Service Enhancements Go Into Effect METRO implemented a number of route and schedule modifications as of May 27, 2007, to provide more efficient service for our customers. The 8 South Main/Yale, previously an extremely long route, is now split into two shorter routes- 8 South Main and 66 Yale – a section of which is also integrated with the much more frequent METRORail service. Running time was added to the 33 Post Oak, 65 Bissonnet and 163 Fondren Express to improve route performance, and an additional early morning trip was added to the 88 Hobby. The 2 Bellaire was extended to Highway 6 on weekends to beconsistent with the weekday service and peak hour trips were added to the heavily traveled 82 Westheimer. Two north and southbound trips were added to the 1 Hospital between the VA Hospital and downtown. Two additional trips – one inbound and one outbound – were added to the 217 Cypress Park & Ride, and adjustments were made to the morning trip times.METRO will open the permanent Cypress Park & Ride this summer. Green is In - Bikes, Buses, and Other Programs In tune with the ever growing global focus on a cleaner and safer environment, METRO is pitching in its share in several areas. As part of this effort METRO’s Bikes-on-Bus Program kicked off with installation of 21 racks on its recently acquired hybrid, diesel-electric buses. By

3


Highlights

the end of December 2007, METRO’s fleet of local buses will have 800 bike racks. Riders are also allowed to store bikes in designated luggage bays of METRO’s Park & Ride buses.Further, METRO’s bus replacement plan is geared towards replacement of old diesel engine buses with hybrid electric buses. These buses are expected to post fuel savings of 30 percent or more and greatly lower emissions of hydrocarbon and carbon monoxide. In addition to the above visible efforts, METRO strives to adopt other environmentally conscious programs like recycling the water it uses to wash its fleet thus reducing the number of gallons used per bus by 14%. METRO also recycles scrap metal, tires, batteries, woodpalettes and oil, and uses green-tipped fluorescent lamps which contain lower levels ofmercury. Passenger Safety High on METRO Agenda The Authority is taking several steps to ensure passenger safety across METRO’s system. Earlier in the year METRO Police Department launched a new task force to provide greaterinteraction between police officers and passengers. Each day uniformed officers assigned to various transit centers throughout the city perform security checks at the transit center and subsequently board the buses and METRORail. The officers are available to answerpassenger’s questions, promote safety and prevent criminal activity. Officer visibility in the transit centers is having a large impact on reducing crime. Other programs that the METRO Police operate to promote safety on the system include a Special Operations Response Team, a canine unit and plain-clothed officers. In addition, the police monitor both local and national security situations and respond to heightened security alerts issued by the Federal authorities by increasing visibility in the transit system, especiallyalong the rail line. A New Emergency Preparedness Website METRO has now established a remote website www.metroresponds.org for area-wide emergency information. By visiting the website (also available at www.ridemetro.org) METRO’s employees, its customers and the general public can obtain useful disaster specificinformation. Information provided include guidelines for disaster preparation and planning,evacuation procedures and routes, emergency numbers, METRO services and a host of related helpful links.

4

Ridership

Total system ridership year-to-date including fixed route bus and METRORail, METROLift,Special Events, METROVan, and HOV Vanpools/Carpools is 94.9 million boardings, up 0.8%from last year on a calendar adjusted basis. Factors that contribute to the increase arediscussed in the next three pages.

94.2 94.9

60

70

80

90

100

FY06 FY07

YTD Total System RidershipRidership in Millions

73.972.8

60

65

70

75

FY06 FY07

YTD Total Fixed Route RidershipRidership in Millions

FY2006 FY2007 ChangeFixed Route Bus Service 65,549,368 64,144,618 -2.1%METRORail Service 8,361,015 8,661,254 3.6%

Subtotal Fixed Route Service 73,910,383 72,805,872 -1.5%

Special Bus Service 3,357,015 3,527,771 5.1%Subtotal Bus & Rail Services 77,267,398 76,333,643 -1.2%

HOV Carpools, Vanpools & Non-METRO Buses 16,895,476 18,594,885 10.1%

TOTAL RIDERSHIP 94,162,874 94,928,528 0.8%

Total System Ridership


Ridership Trends

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Fixed Route Service

Fixed-route ridership through the third quarter, comprised of METRORail, Local and Express Bus, and Park & Ride services, is 72.8 million, down 1.5% from FY2006 ridership of 73.9 million.METRORail ridership year-to-date is up 3.6% to 8.7 million.Local and Express Bus service is 57.8 million, down from 59.2 million in FY2006, a decrease of 2.4%.Park & Ride service ridership is down 0.2%, to 6.4 million.

Factors contributing to the fixed route ridership changes are discussed on the following page.

7.0

8.0

9.0

10.0

OCT NOV DEC JAN FEB MAR APR MAY JUN

Fixed Route Bus and Rail ServiceRidership in Millions

FY06 FY07


6


• The majority of the METRORail ridership increase can be attributed to the Houston Livestock Show & Rodeo. Rodeo ridershipincreased by nearly 140,000 in FY2007 as compared to FY2006. In addition, METRORail had an additional increase of over 74,000 boardings, attributable in part to an increase in boardings from the Houston Grand Prix, the Off-Shore Technology Conference and the Soccer Gold Cup events at Reliant Park.

• Bad weather conditions in January and April 2007 contributed to a sizeable reduction of close to 850,000 boardings in local fixed route bus service. In general, local service has longer scheduled wait times between buses, and has a lower percentage of passenger shelters than commuter services. Several days in January 2007 were significantly colder and rainier than in January 2006. This may have contributed toward a decrease in customers’ willingness to be exposed to inclement weather if there was another option for their trip, and translated into a decrease in local ridership. Adjusting for the weather related impact on ridership, the local and express fixed route ridership would have decreased by only 0.9%.

• The majority of the Park & Ride decrease can be attributed to the merging of the 201 North Shepherd Park & Ride and the 108 Veterans Memorial Express routes in May 2006. In addition, Houston Center trips on the 212 Seton Lake Park & Ride were renamed to the 108 Veterans Memorial Express in January 2007. Over 121,000 boardings for the period were shifted from the Park & Ride to the Express category of ridership. Adjusting for this, Park & Ride ridership would have increased by 1.7% YTD from the same period in FY2006.

Fixed Route Service (continued)Many factors contributed to the ridershipchanges:

0.7

0.9

1.1

1.3


METRORail ServiceRidership in Millions

FY06 FY07

6.0

7.0

8.0

9.0


Fixed Route Bus ServiceRidership in Millions

FY06 FY07

5.0

6.0

7.0

8.0


Local & Express Bus ServiceRidership in Millions

FY06 FY07

0.5

0.6

0.7

0.8


Park & Ride ServiceRidership in Millions

FY06 FY07

7


200

400

600

800

1,000

Oct Nov Dec Jan Feb Mar Apr May Jun

Special Bus ServicesRidership in Thousands

FY06 FY07

110

120

130

140


METROLift ServiceRidership in Thousands

FY06 FY07

120

150

180

210


METROVan ServiceRidership in Thousands

FY06 FY07

Special Bus Services

Special Event Bus Service, including charters,although down 16.4%, forms only a very smallpercentage of METRO's total boardings (lessthan 1%) and fluctuates depending on theoccurances of special events such as theHouston Livestock Show & Rodeo, ShellHouston Open and Wings Over HoustonAirshow.

In May 2006, METRO took over operation ofminiPOOL from the Houston-Galveston AreaCouncil. The demonstration project is gearedto support vanpools with five to eight personstravelling through major construction corridors.

Special Bus Services have three components:METROLift (service on-demand), METROVan(special bus service utilizing non-METROoperated vans), and Special Events bus serviceincluding Charter service. These services do nothave fixed routes or a set schedule.

The total ridership for Special Bus Services forThird Quarter YTD is 3.528 million, an increase of5.1% from last year.

METROLift ridership (1.057 million boardingsyear-to-date in FY2007) has decreased, down4.9% from last year, the result of lowerdemand. METROVan services (1.758 millionboardings in FY2007) experienced increaseddemand, up 26.2% from the same period inFY2006. This increase was due to the addition of the miniPOOL program.

8


Financial Performance

Fares

Compared to the YTD budget, actual fares are $4.5 million or 10.9% below budget. However, the FY2007 Budget included approximately $1.0 million per month of increased fare revenue, beginning in January, from fare restructuring which has not yet occurred. When adjusted for this, fare revenue would be in fact approximately $1.5 million or 3.8% above budget YTD.

Compared to the same period in FY2006, fares are down $1.5 million or 3.9%. This decrease in actual fare revenue against last year is due to a combination of factors. The decline in Fixed Route ridership yields a proportional fare revenue decrease for the cash portion of fares. There is also a disproportionate decrease in fares as a result of a shift in different types of fare media used by customers. With the pending implementation of Q Card and fare restructuring, METRO stopped selling full fare 365 day passes in November 2006. As a result, we have seen increased use of other passes as well as Stored Value Cards. This has skewed the stream of revenue. (365 day passes were of a higher denomination and deeper discount than other time based passes; so when fewer of the higher denomination passes are sold, less revenue is recognized in a given month.)

METRO Revenues FY2007 YTD($millions)

Fares 40.869 36.411 -4.458 -10.9%

Sales Tax (Cash Basis) 299.436 355.126 55.689 18.6%

Interest & Miscellaneous 8.522 10.709 2.187 25.7%

Subtotal 348.828 402.245 53.418 15.3%

Grants 54.376 33.598 -20.778 -38.2%

TOTAL 403.204 435.844 32.640 8.1%

Budget Actual Differences

$3.5

$4.0

$4.5

$5.0

$5.5


FY2007 Fare Revenue by Month($millions)

Budget Actual

$40.9

$36.4$34.0

$36.0

$38.0

$40.0

$42.0

FY2007 Budget FY2007 Actual

FY2007 YTD Fares ($millions)

9

$341.2

$355.1

$320

$340

$360

YTD Actual Sales Tax RevenueCash Basis

($millions)

FY06 FY07


$20

$30

$40

$50

$60

Oct Nov Dec Jan Feb M ar Apr M ay Jun

Actual Sales Tax Revenueby Month - Cash Basis

($millions)

FY06 FY07

$0.0

$3.0

$6.0

$9.0

$12.0

Oct Nov Dec Jan Feb M ar Apr M ay Jun

FY2007 Grant Revenue by Month($millions)

Budget Actual

$54.4

$33.6

$30.0

$40.0

$50.0

$60.0

FY2007 YTD Grant Revenue($millions)

Budget Actual

Interest and Miscellaneous

Revenues in this category were $2.2 million, or 25.7% over projection mainly dueto a larger portfolio size.

Sales Tax Revenue

Sales tax revenue (cash basis) for FY2007is $355.1 million: $55.7 million or 18.6%above budget. The Houston economy hasbeen fueled by the strength in the upstreamenergy sector creating employment andpopulation growth. As a result, METRO hasexperienced real growth in Sales TaxRevenue.

Grant Revenue

Grant revenue through the third quarter is$33.6 million, $20.8 million or 38.2% belowprojection. Under FTA policy, METRO onlyreceives grant funds after paying for thefunded projects. Year to date, includingMETRO Solutions, Capital spending is30.6% below budget. This is consistent withthe Grants shortfall.

10


Operating Budget

FY2007 OPERATING BUDGET, EXPENSES, AND VARIANCE

Expense CategoryYear-to-Date

Budget Year-to-Date

Expenses $ Variance % VarianceWages 67,030,941 67,262,527 231,586 0.35%Fringe Benefits Union 32,466,039 31,861,743 (604,296) -1.86%Total Union Labor 99,496,980 99,124,270 (372,710) -0.37%

Hourly Wages NonUnion 813,455 1,009,197 195,742 24.06%Salaries 49,553,232 47,664,901 (1,888,331) -3.81%Fringe Benefits Non-Union 22,008,466 21,682,553 (325,913) -1.48%Total Non-Union Labor 72,375,153 70,356,651 (2,018,502) -2.79%

Total Labor and Fringe Benefits 171,872,133 169,480,921 (2,391,212) -1.39%

Services 11,402,546 7,421,439 (3,981,107) -34.91%Materials and Supplies 12,853,805 13,656,262 802,457 6.24%Fuel & Utilities 32,010,588 30,280,428 (1,730,160) -5.40%Casualty and Liability 2,664,932 2,548,536 (116,396) -4.37%Purchased Transportation 51,887,648 50,366,465 (1,521,183) -2.93%Leases, Rentals and Miscellaneous 1,412,043 1,579,010 166,967 11.82%Total Non-Labor 112,231,562 105,852,140 (6,379,422) -5.68%

Total Labor and Non Labor 284,103,695 275,333,061 (8,770,634) -3.09%

Cost Recovery (8,314,804) (7,190,361) 1,124,443 -13.52%

Total Operating Expenses 275,788,891 268,142,700 (7,646,191) -2.77%

Capitalized Operating Expenses (37,358,958) (37,356,527) 2,431 -0.01%Allocation to Capital & GMP (27,589,399) (26,578,448) 1,010,951 -3.66%Total Allocation to Capital (64,948,357) (63,934,975) 1,013,382 -1.56%

OPERATING BUDGET 210,840,534 204,207,725 (6,632,809) -3.15%

11


Operating Expenses

Operating expenses through the end of the third quarter are $204.208 million compared to $210.841 million budgeted, $6.633 million or 3.2% below budget. This underrun in the operating budget is due to the following:

Wages are over budget by $232,000 or 0.4%. Bus operator wages continue to be over budget due primarily to the use of more overtime than planned. The bus operator wage overrun is partially offset by underruns in Bus Maintenance and Facilities Maintenance due to an average of more than 50 vacant mechanic and cleaner positions over the period. Union Fringe Benefitsare $604,000 or 1.9% under budget primarily due to reduced union healthcare expenses and other fringe benefit underruns resulting from the vacancies in mechanics and cleaners.

Non-Union Wages and Salaries are under budget by $1.7 million or 3.4% due to vacancies throughout the Authority. At the end of June, 55 salaried positions were vacant after adjusting for salaried employees on short term disability (METRO does not hire against those positions). Non-Union fringe benefit expenses are under budget by $326,000 or 1.5% due to lower benefit costs primarily resulting from the vacancies discussed above.

$210.8

$204.2$200.0

$205.0

$210.0

$215.0

Budget Actual

FY2007 YTD Operating Expenses($millions)

FY2007 YTD Operating Expenses by Category($millions)

$0.0

$20.0

$40.0

$60.0

$80.0

Wages

Salarie

s

Fring

e Ben

efits

Purcha

sed T

rans.

Service

s

Materia

ls & Sup

plies

Utilities

& Fuel

Casua

lty & Li

ab.

Leas

es, R

ental

s & M

isc.

Budget Actual

FY2007 Labor and Fringe Benefits by Month($millions)

$16.0

$18.0

$20.0

$22.0


Budget Actual

12

Services expenses are under budget by $3.981 million or 34.9%. Significant components of the underruninclude:

• $1.7 million in Communications & Marketing (a slow start delayed spending in advertising and promotion expenses)

• $784,000 in Operations (primarily the delayed start in facility maintenance work)

• $338,000 in Human Resources & Diversity (a lower use of daily print media job advertising than budgeted, later rollout of wellness programs and a communication initiative, and lower than planned use of general Human Resources consulting and computer training)

• $262,000 in IT (underspending primarily in router, radio system and storage system maintenance due to invoice delays and deferral of some work)

• $224,000 in Legal (primarily delayed billing from outside counsel and a lower level of Legislative Coordination)

• $206,000 in Finance (underruns in banking related services due to lower transaction fees than anticipated, lower temporary help expenses in Treasury due to a lower level of absenteeism than anticipated, and timing in Education & Training fees)

• $153,000 in Public Safety (delayed vendor invoicing for contract security).

Materials & Supplies are over budget by $802,000 or 6.2%. In Operations, bus parts cost is $1.6 million over budget, partially offset by underruns in Rail and Facilities Maintenance. The bus parts overrun is the result of higher parts usage than budgeted. Rail savings result primarily from reduced failure rates, as well as unplanned warranty recovery and reduced accident costs. In other areas of the Authority, there are some timing underruns due to fewer magnetic fare media being purchased in anticipation of Q Card, and overall reduced expenses in most other areas in the Authority.

Fuel & Utilities are under budget by $1.730 million or 5.4%. Diesel fuel is under budget by $719,000 primarily due to savings from better fuel economy than budgeted (First Transit – NW Bus Operating Facility). Natural gas cost is under budget, a combination of a lower unit price than budgeted, partially offset by increased usage. Gasoline savings result primarily from lower prices than budgeted. The balance is primarily in two areas: electric power, due to lower usage and a misalignment of budget and actual expenses and telephone expenses, the result of delays in the receipt of invoices.

Casualty & Liability expenses are $116,000 or 4.4% under budget and result from higher than anticipated subrogation recoveries.

Purchased Transportation expenses are $1.521 million or 2.9% under budget. Lower Special Events Purchased Transportation cost reflects a more cost effective plan for scheduling and providing service for the Houston Livestock Show & Rodeo. Vanpool program expenses are below budget and reflect a temporary reduction in lower overall contract costs. With the implementation of a new contract for the provision of vanpool services, the underrun is expected to diminish. METROLift expenses are under budget and are primarily the result of lower paratransitridership.

Leases, Rentals & Miscellaneous expenses are $167,000 or 11.8% over budget, primarily reflecting the lower level of METRO operated service for the Rodeo. This is totally offset (resulting in a net zero balance) by a corresponding reduction in labor and materials expenses. (These accounts are used together for booking METRO-operated special events service provided for the Houston Livestock Show & Rodeo. When a lower level of service is provided, as happened this year, the accounts reflect the difference.) In addition, there have been savings in discretionary items such as travel.

Cost Recovery is $1.124 million or 13.5% less than budget. This is primarily due to delayed billing and reduced cost recovery of vanpool expense.

Capitalized Operating Expenses are on budget.

Allocation to Capital and GMP is $1.011 million or 3.7% lower than projected and is mostly driven by underspending in the Planning Engineering & Construction department.

FY2007 Materials & Services by Month($millions)

$10.0

$12.0

$14.0

$16.0


Budget Actual


13


Expenditures for City of Houston projects are $9.576 million more than budgeted through the third quarter of FY2007 due to expenditures on pre-FY2007 projects/programs and represent 119.8% of planned expenses.

Year to date, there are no expenditures for Harris County projects, resulting in $9.852 million less than budget. This is due to slow progress on Future Designated Projects handled by the County.

Expenditures for Multi-Cities projects are $7.232 million more than budgeted through the third quarter of FY2007 due to the acceleration of funding for the Future Designated Projects. Actual expenditures represent 153.3% of planned expenses. Area-Wide Programs are only slightly more than budget.

FY2007 Third Quarter General MobilityProgram expenditures are $83.08 millioncompared to $76.04 million budgeted, $7.04million or 9.3% lower than projected.

General Mobility Expenditures

$76.0

$83.1

$60.0

$70.0

$80.0

$90.0

Budget Actual

FY2007 YTD GMP Expenditures($millions)

City of Houston 48.465 58.041 9.576Harris County 9.852 0.000 -9.852Multi-Cities 13.581 20.813 7.232Area-wide 4.138 4.223 0.085Total General Mobility Program 76.036 83.077 7.041

($millions) ($millions) ($millions)

FY2007 YTD Budget

FY2007 YTD Actuals

Variance

14


Capital Expenditures

FY2007 year-to-date capital expenditures are $162.0 million compared to $233.5 million budgeted; $71.5 million, or 30.6% lower than projected. Major variances in the Capital Budget are identified below.

$233.5

$162.0

$50.0

$100.0

$150.0

$200.0

$250.0

Budget Actual

FY2007 YTD Capital Expenditures($millions)

FY2007YTD Budget

FY2007 YTD Actuals Variance

($millions) ($millions) ($millions)METRO Solutions 125.628 60.589 -65.039

Capital Improvement Program 107.824 101.373 -6.451

Total Capital Budget 233.452 161.962 -71.490

METRO SOLUTIONS - Variance Due to Schedule Slippage: -$65.0 millionProperty Acquisitions for the GRT corridors (-$30 million) werescheduled to begin in late December 2006 have been delayed. Thecomplexity of the Intermodal Facility design and the interrelatedagreement with Union Pacific Railroad also delayed commencementof the advanced conceptual engineering and property acquisition(-$27 million) at the Intermodal Terminal site. Finally, protractednegotiations and delayed award of full contract authority to the selectedFacility Provider has affected the performance of continuedengineering (-$8 million). Actions have been taken to accelerate theproperty acquisition process to meet the established schedule. TheFacility Provider has been selected, the contract has been awardedand the Phase 1 Development/Design is in progress.

15


CAPITAL IMPROVEMENT PROGRAM

Variance Due to Schedule Slippage:

Implement Bus Smart Card Technology -$14.2 millionThe implementation date and schedule for the Q Card has beenmodified to allow time for "stress testing" the new hardware andsoftware and for phased implementation.

Information Technology -$7.6 millionThe underrun is primarily due to a delay in the Police Mobile DataTerminal System Enhancement to allow bidding by Small Businessinstead of using the State of Texas Department of InformationResources (DIR) for the procurement. This project is well underwayand will be completed in the 4th quarter. There was also a delay in theARCS System Radio Replacement project until a pilot is completed.The decision was made to postpone extending METRONet to theTransit Centers until METRONet has been operational for a year in thePark & Rides and Hillcroft Transit Center.

Transitway & Related Facilities -$1.8 millionExecution of the Fixed Guideway Modernization (FGM) projects havebeen slower than planned due to the need to coordinate with the HOTLane program. Design work for Sign Standardization will becompleted under the FGM program, while construction will be doneunder the HOT Lane project. The T-Ramp Control Signal project iscomplete and under budget.

Total Schedule Slippage – Other Projects -$23.6 million

Variance Due to Other Issues:

Bus and Support Equipment $20.1 millionThe approved budget allowed for a capital lease of 25 MCI buses and40 New Flyer Hybrid buses. All the MCI buses and the New Flyer buses have been purchased on full cash outlay basis. The master leaseprogram is currently under evaluation.

Purchase Diesel Storage Tanks -$2.5 millionMETRO will continue on month to month rental for diesel storage until aviable option has been identified.

Other Miscellaneous Variances -$0.5 million

Total Schedule Variance Due to Other Issues $17.1 million

GRAND TOTAL CAPITAL BUDGET & METRO SOLUTIONS -$71.5 million

16

19.0%18.3%

16%

17%

18%

19%

20%

FY07 Goal YTD Actual

FY2007 Operating Ratio


Key Performance Indicators

Operating Ratio

The Operating Ratio through the third quarter of FY2007 year-to-date is 18.3%, 3.7% belowthe FY2007 annual goal of 19.0%. Increased revenue after the implementation of farerestructuring will be a key element in achieving the 19.0% target.

17

Mean Distance Between Failures by Month(miles)

5,000

0

3,000

6,000

9,000


FY07 Actual FY07 Goal



In other activities, the Board of Directors took the first step to guarantee the long-termreliability of the bus fleet when it approved the purchase of 100 new buses at its June2007 meeting. The purchase plan approved the purchase of 48 40-foot local buses,which will be delivered in March 2008, and 52 45-foot Park & Ride buses, which arescheduled for delivery in June 2008.

The purchases are the start of a five-year bus replacement program. The programallows for steady and predictable replacement of the bus fleet and will improve reliabilityby reducing the average age of the fleet. In addition, the bus replacement program willallow for bus maintenance activities to be more predictable, and therefore, moreefficient in future years.

Mean Distance Between Failures (MDBF)

The bus fleet performed comparatively better in the third quarter. Actual performancewas 41 percent better in April than the FY2007 MDBF minimum of 5,000 miles, 33percent better in May and 17 percent better in June.METRO continues implementing new procedures to improve the reliability of the busfleet. For example, staff is targeting HVAC maintenance procedures, and believes thatimproving training and workmanship and changing the preventive maintenance programwill be beneficial.

Staff will first change the preventive maintenance program to include detailed pre-summer inspections and to make better diagnoses and system repair. The next step willbe to train technical support staff. That staff in turn will train mechanics, check repairsand provide technical support. Training is expected to continue into FY2008.

18

Bus Accidents by Month

80

0

25

50

75

100


FY06 FY07 FY07 Goal

720

378

200

400

600

800

FY07 YTD Goal FY07 YTD Actual

FY2007 Bus Accidents

Rail Accidents by Month

4

0

2

4

6

8

OCTNOV

DECJA

NFEB

MARAPR

MAYJU

N

FY06 FY07 FY07 Goal

3625

0

10

20

30

40

FY07 YTD Goal FY07 YTD Actual

FY2007 Rail Accidents

Accidents



AccidentsThe accident rate was held better than goal through safety blitzes at the facilities and on thebus routes and the rail alignment by performing 400 observation rides of Bus and TrainOperators, 29 Hazard Analysis and quarterly safety meetings. The continuous effort toreduce accidents with safety contacts being made in the field and promoting safetyawareness at the Bus and Rail Operating Facilities is bringing a total safety culture changeto METRO.

19

FY2006 complaints have been restated to reflect the current methodology which counts all complaints in a call individually.

Complaints by Month

6,400

1,000

3,000

5,000

7,000


FY07 Monthly Maximum

Complaints by Category

0

2,000

4,000

6,000

8,000

OperatorBehavior

Timeliness &Reliability

Driving Safety METROLift EquipmentProblems

Crow ded Bus orRail Car

Other

FY2007

COMPLAINTS

Through the third quarter of FY2007, METROreceived 19,594 complaints from customers. Thisis 66.0% better than goal.

Taking action to reduce the number of complaints,METRO is focusing on specific areas of operator-related complaints. Staff analyzed what types ofoperator behavior and driving safety complaintsreceived the most comments, and developedcorrective actions to address each type of thesecomplaints. Staff also analyzed the routes onwhich these complaints were received and thecorrective actions will focus on those routes wheremost of these complaints occur.

In other actions, METRO is continuing the newincentive program and customer service refresherfor operators. Through the end of the third quarter,92 percent of the operators slated for training hadreceived the refresher course.

FY2006 FY2007 Change %Operator Behavior 6,461 7,383 14.3%Timeliness & Reliability 3,482 4,404 26.5%Driving Safety 2,082 2,839 36.4%METROLift 1,337 1,226 -8.3%Equipment Problems 573 695 21.3%Crowded Bus or Rail Car 421 378 -10.2%Other 2,145 2,669 24.4%COMPLAINT TOTALS 16,501 19,594 18.7%



20

.

Major Security Incidents

Major Security Incidents by Category

0

75

150

225

300

Larc/Theft Robbery Auto Theft Agg.Assault

Burglary Arson Forc.Rape

Homicide

FY06 FY07

Major Security Incidents by Month

55

0

20

40

60

80


FY06 FY07 FY07 Goal

Part I Crime OCT NOV DEC JAN FEB MAR APR MAY JUNYTD

TOTALLarc/Theft 31 22 13 15 22 25 20 15 24 187Robbery 13 13 13 15 15 17 9 18 20 133Auto Theft 3 0 5 1 3 3 6 2 3 26Agg. Assault 0 1 2 4 1 3 4 8 2 25Burglary 2 0 0 0 0 0 0 0 0 2Arson 0 0 0 0 0 0 0 0 0 0Forc. Rape 0 0 0 1 0 1 1 0 0 3Homicide 0 0 1 0 0 1 0 0 0 2TOTAL 49 36 34 36 41 50 40 43 49 378

Major Incidents are those categories that are listed in the FBI Part I Crimes used in national crimereporting. Third quarter 2007 YTD represents a 44 incident a month average and a grand total132 Part I crimes. This is down an average of 2 incidents a month from the previous quarter YTD.METRO showed only a 4% increase in Part I Crimes this quarter, compared to the secondquarter's 7% increase from the previous quarter. There was a slight increase in Park & Ride crimeduring this reporting period, up 3 from 31 incidents. However, it should be noted that METRONetvideo provided leads that led to the clearance and arrest of individuals responsible for at least 16reported cases in this quarter. Coordination and follow up with the Houston Auto Theft Task forceis continuing and clearance of many more cases of Burglary and Auto Thefts in the Houston areawill result from the arrest of the individuals involved in this case.

The year to date On Board Bus crimes have decreased by 25% from the previous year. Bus AndRail Coordination (BARC) Officers focused on troublesome routes. Although difficult to quantify,METRO believes this reduction can be attributed in part to the high visibility enforcement initiativeimplemented this year. BARC officers will primarily ride METRO buses, checking the welfare ofbus operators, and patrons to enhance positive two-way communication to assist with anyproblems along the routes. In addition to the high visibility enforcement on the rail line this reportingperiod, there were no reported Class I crimes on light rail vehicles.



21

Crime by Location

0

25

50

75


Bus Rail Parking Lot

A close examination of Class I reported crimes this month indicate that 43% of current Class Icrimes are cases that are not directly reported to the METRO Police Department. Many crimesthat occur at METRO bus stops and bus shelters are reported directly to the Houston PoliceDepartment. Follow up is difficult on these cases as METRO may not receive notification of thereport for several days. In the future, two separate categories of those Class I crimes will bereported: cases reported to the Houston Police Department and cases reported to METROPolice. MPACT (METRO Police Attacking Crime Trends) focused initiatives and proactivepolicing efforts will continue to attack crime trends affecting the system and changing conditionsthat impact community and system reported crime.



22



Customer Information Center Key Indicators

85% 77% 79% 79% 88% 88% 89% 88% 88%85% 85%80%

1.020.93

0.88

1.00

1.58

0.97

1.751.82

0.83

2.27

1.13

0.88

266

293

325

170

157141

136

124141

123 131 129 126

148

153

314299

344

286

241

285289304

272

0

50

100

150

200

250

300

350

400

Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07

Cal

ls R

ecei

ved

(000

's)

Serv

ice

Leve

l (%

)

0

0.5

1

1.5

2

2.5

Ave

rage

Wai

t Tim

e (m

in)

Service Level (%) Average Wait Time (min) Calls Received and Routed to Customer Service (000's) Total Calls

Customer Service Center

The productivity manifests itself in three areas. Agent productivity has increased as newlytrained agents gain proficiency in the job. As agents are hired and trained, the CustomerInformation Center has had more agents available to schedule and has achieved moreeffectiveness in staffing. As a result of more efficient use of part-time agents, schedulingefficiency has also been increased. As agent staffing is analyzed in 15 minute increments,the effective use of part-time staff has allowed the CIC to schedule agents to be availableduring periods of projected heavy call volume.

The Customer Information Center (CIC) continued to meet the wait time objective in Juneeven as calls continued the long-term growth trend with a new high of 344,332 total calls. Agents set a new record with 150,612 calls answered and the IVR produced a record173 ,984 bus and rail schedule responses. The average customer wait time before answerwas 53 seconds for the month of June and 57 seconds for the third quarter as a whole. Thebetter than expected results were due in part to increasing productivity and scheduleefficiency attributable to the part-time temporary staff brought in to assist with Q Card rollout.

23


FY2007 YTDBudget Actual Variance

Gross IncomeFares 40,869 36,411 (4,458)Sales tax income 300,946 364,579 63,633Interest Income 8,432 10,220 1,788Other operating income 90 489 399

Total 350,337 411,699 61,361Operating Expenses

205,805 196,394 (9,411)5,036 7,708 2,672

0 106 106Total 210,841 204,208 (6,633)

Gross Income Less Total Operating Expenses 139,497 207,491 67,99454,376 33,598 (20,778)

193,873 241,089 47,216309,488 245,039 (64,449)

(115,615) (3,950) 111,665

- Capital expenditures made

COMPOSITE OPERATING AND CAPITAL STATEMENT($000 OMITTED)

Current Year Cashflow for Future Capital Expenditures Including Replacements and Operating Expenses

Transit: department & support expendituresTraffic Management: department & support expendituresExpensed Small Capital Purchases

+ Federal/State Capital Grants CollectedCurrent Year Cashflow Available for Capital Expenditures

24


June 2006 June 2007 Change ($)

Assets

Cash 2,532,669 2,184,243 (348,426) Receivables 89,022,097 130,937,915 41,915,818 Inventory 27,468,036 28,996,819 1,528,783 Investments 221,061,015 241,183,799 20,122,784 Other Current Assets 16,118,694 25,534,047 9,415,353 Property Net of Depreciation 1,185,870,479 1,292,052,488 106,182,009 Land & Improvements 298,753,303 292,262,302 (6,491,001)

RoundingTotal Assets and Other 1,840,826,293 2,013,151,613 172,325,320

Liabilities

Trade Payables 44,454,617 47,504,959 3,050,342 Accrued Payroll 18,372,786 18,527,500 154,714 Short-term Debt 78,000,000 143,000,000 65,000,000 Other Current Liabilities 21,914,911 25,627,108 3,712,197

Rounding 0 0 - Total Liabilities 162,742,314 234,659,567 71,917,253

Net Assets - Retained (1) 1,678,083,979 1,778,492,046 100,408,067

Total Liabilities and Net Assets 1,840,826,293 2,013,151,613 172,325,320

(1) On a year to year basis, net assets increased by 6.0% or $100.4 million.

BALANCE SHEETJune 2007

Documents

Quarterly Financial & Management Report - ride METRO · 2015-03-10 · 1 FY2007 Quarterly Financial & Management Report Third Quarter Ending June 30, 2007 Highlights New Federal Grant