Quarterly Financial & Management Report - Ride, METRO · 2015. 3. 10. · Management Discussion and Analysis Ridership Trends 6 Financial Performance Revenues 10 Operating Expenses

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METRO

FY2007 Quarterly Financial & Management Report

Second Quarter Ending March 31, 2007

INDEX

PageHighlights

▪ METRORail Ridership Climbs to New Heights 1▪ U.S. 290 Receives METRO Park & Ride - Yields Record Ridership 1▪ METRO and Public Private Partnerships - New Developments 1▪ Environmental Impact Study for University Corridor 2▪ Important Step in the HOT Lane Project 2▪ Small Business Outreach Activity in Full Swing 2▪ Surplus Real Estate Nets $4.8 million 3▪ Breathe Easier - New Hybrid Electric Buses Offer Lower Emissions 3▪ Emergency Preparedness Workshop Attracts Regional Attendance 3▪ METRO Board Welcomes New Member 4▪ Bus and Rail Rodeo - Best of the Best Compete 4▪ METRO Launches Transit Blog 5

Management Discussion and Analysis▪ Ridership Trends 6▪ Financial Performance

Revenues 10Operating Expenses 12General Mobility Expenditures 15Capital Expenditures 16

▪ Key Performance Indicators 19▪ Composite Operating and Capital Statement 26▪ Balance Sheet 27

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FY2007 Quarterly Financial & Management ReportSecond Quarter Ending March 31, 2007

HighlightsMETRORail Ridership Climbs to New HeightsOn Thursday, March 15, 2007, METRORail set a new weekday ridership record of 64,448passenger boardings. The ridership on this date surpassed the previous single-day record of 61,005 boardings on Sunday, February 1, 2004 when Houston hosted Super Bowl XXXVIII. METRORail also set a weekly ridership record with 322,571 boardings between Monday, March 5 and Sunday, March 11, 2007. A third record was set as Rail ridership for the Month of March, 2007 achieved the highest monthly ridership in METRORail history. The 1,267,375 passenger boardings were 12.4%higher than March 2006, the previous record-breaking month. In addition, another record was set during the 2007 Houston Livestock Show & Rodeo.Rodeo-related Rail ridership from February 22 – March 18, 2007 was 334,124 passenger boardings, a 30.8% increase from the previous record for the Rodeo last year. In fact, thelarge number of passengers attending the Houston Livestock Show and Rodeo contributed tothe achievement of daily, weekly and monthly ridership records as well. U.S. 290 Receives METRO Park & Ride – Yields Record Ridership METRO recently added a new Park & Ride (Cypress P&R) with 623 parking spaces on theNorthwest Freeway corridor near Skinner Road. This temporary facility is located in the Hewlett Packard parking lot on the westbound feeder of U.S. 290. On the first day of operation, January 22, 2007, more than 200 customers used the service, representing the highest first-day ridership on a Park & Ride route in 15 years. The second day saw a 17 percent increase in ridership, and currently, more than 300 customers use the service on a daily basis (600+ customer boardings). Since the inaugural week, METRO has more buses than planned to accommodate the increased demand and now offers service at 15 minute intervals during the AM peak. A permanent facility is under construction nearby, andcompletion is anticipated in June 2007. METRO and Public Private Partnerships – New Developments METRO has submitted an application to the Federal Transit Administration (FTA) proposing the METRO Solutions Program as a candidate for its new Public Private Partnership Pilot Program. METRO Solutions, to our knowledge, is the first federal transit design-build-finance-operate-maintain program in the United States. It is ideally suited to demonstrate the new entrepreneurial government approach of FTA and the specific goals of the Private PublicPartnership Pilot Program, while protecting the federal interest. The METRO Solutions program is specifically designed to exploit key advantages of public-private partnerships such as fast-track design and construction and private sector performance guarantees In addition,this comprehensive approach to a public private partnership presents many benefits including expedited project delivery, transfer of risk to the private sector, reduced costs/reduced claims,and shared liability. Under this scenario, the public sector can deliver more improvementsfaster, without giving up quality, control or public protections.

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Highlights

Also, in mid February, METRO President & CEO Frank Wilson was invited to speak before theCongressional Subcommittee on Highways and Transit on “Public Private Partnerships: Innovative Financing and Protecting the Public Interest”, and he emphasized the benefits of such programs to transit. Environmental Impact Study for University Corridor METRO completed a detailed Environmental Analysis on a short list of alternative routings thatthe Board previously approved. The Environmental Analysis will become a part of the Draft Environmental Impact Study (DEIS) scheduled to be submitted to FTA in April. Community Outreach continued with four Open Houses and Planning Workshops held in late March. Important Step in the HOT Lane Project At the February meeting, the Board of Directors took an important step in advancing the conversion of the High Occupancy Vehicle (HOV) Lanes to High Occupancy Toll (HOT) Lanes by approving Carter and Burgess, an engineering company, to serve as Program Manager. The firm will support METRO’s Planning, Engineering & Construction Department by providingstrategic planning and development expertise, assistance in interagency coordination, andconstruction and operations acceptance oversight. A Request for Qualifications for a Toll System Provider was circulated in January and four responses are currently being evaluated.Presently, the first HOT lane is scheduled to be operational during FY2008 in the US290 corridor with each of the remaining to come on stream over three months thereafter until the program completes five HOT lanes. The concept of HOT Lanes is based on efficiency. METRO wants to move more people andvehicles in the managed lanes in order to maximize their use. Although some HOV Lanes are currently congested at the peak of rush hour, the lanes are underutilized the rest of the day. A HOT Lane is a designated lane for high occupancy vehicles as well as for toll-paying vehicles that do not meet the required high occupancy requirements. At peak hours, the toll would be based on the level of congestion. At the height of the peak hour, this “dynamic toll” wouldgradually discourage paying vehicles from entering the lane and encourage commuters totravel by bus or higher occupancy vehicles, ensuring the HOT lane keeps flowing even whenmain lanes are congested. Small Business Outreach Activity in Full Swing METRO hosted an Open House for Small Business Outreach at 1900 Main as part of an ongoing effort to educate small and disadvantaged businesses and encourage increasedparticipation. METRO’s Board Room and second floor lobby were filled to capacity with about 400 eager small business owners wanting to learn how to do business with METRO, the Cityof Houston, and the Port of Houston Authority. Hosted by METRO and co-sponsored by Mayor Pro Tem Michael Berry and Council Member Peter Brown, the meeting agenda includeda panel discussion by small and disadvantaged businesses that had been successful with one

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Highlightsor more of these agencies. Representatives from METRO, the City and the Port detailedupcoming procurements and contracts at each agency. The information session also includedinstructions on how to do business with each agency, the benefits of certification, and variousnetworking and training opportunities. In addition, an “Optimum Opportunity Match-up” for FY2007 was also held in early March. The purpose of the Optimum Opportunity Match-up was to provide an opportunity for contract administrators/buyers and project managers to meet face-to-face with METRO certified small business owners. Forty small businesses attended the event. Each small business was individually interviewed by METRO buyers, contract administrators and project managers in 30 minute sessions. Surplus Real Estate Nets $4.8 million Approximately 47 acres of surplus land on South Main near Hiram Clark was sold, realizing $4.8 million to be used for other projects. The property was declared surplus in 1988, but remained in inventory until real estate market conditions improved. In 2006, when it was determined that this parcel of land would not be useful toward any future transit purpose, theproperty was put up for public sale. Breathe Easier - New Hybrid Electric Buses Offer Lower Emissions The first 16 of an order for 40 new 40-foot transit low-floor hybrid-electric drive (HEV) buses METRO has contracted to buy were received during the second quarter of FY2007. Manufactured by New Flyer Industries, Inc., the buses have a diesel fuel engine combined with an electric motor powered by batteries. This combination results in buses which are 20 to 30percent more fuel efficient, and which have significantly lower exhaust emissions (nitrogen oxide and carbon dioxide) than buses with standard propulsion systems. Buses with an HEV drive are also more reliable to operate than buses with standard propulsion systems. In addition to the benefits to the environment, the buses which replace older buses already retired have been redesigned to give them a sleek, modern look, both inside and out. The redesigned exterior is similar to European-style buses. The interior features stainless steelseats and new flooring material. The HEV buses are also quieter and will run more smoothlythan buses with standard propulsion systems. Of the 40 buses ordered, the last 10 to bedelivered will be specifically designed for METRO’s Signature Bus Service. In other new bus news, METRO has placed 25 new MCI 45-foot buses into Park & Ride service during the 2nd

quarter to accommodate new service (see Cypress Park & Ride Highlight). Emergency Preparedness Workshop Attracts Regional Attendance METRO hosted a two-day public transportation emergency preparedness workshop on March26-27, 2007, at the Fallbrook facility. The program, which was free to all attendees, was sponsored by the National Transit Institute, in collaboration with the Federal TransportationAuthority and the Office of Grants and Training of the US Department of Homeland Security.The ultimate goal of the workshop was to improve coordination and response among allagencies and resources during an incident. Participants worked in small groups to tackle the

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Highlightschallenges posed by fictional, yet very real emergency scenarios that were presented during the session by workshop facilitators. More than 40 people participated, representing not only a cross-section of METRO, but also such regional organizations as TranStar, FBI, the Galveston Fire Marshal’s Office, GreyhoundLines, Houston Galveston Area Council, Burlington Northern Santa Fe Railroad Police, US Department of Transportation, Harris County Office of Homeland Security and EmergencyManagement, Houston Fire Department, and the Fort Bend County Public TransportationAuthority. METRO Board Welcomes New Member Mr. Burt Ballanfant, former West University mayor, became the latest addition to METRO’s Board to replace Ms. Louise Richman who left the Board to become the Authority’s CFO. Ballanfant, who will represent the 14 Multi-cities in METRO’s service area, is an attorney for Shell Oil Company. He served six years on the West University City Council, the last four asMayor, and also served during that time as President of the Harris County Mayors andCouncils Association. He has also served on the Metro Citizen Advisory Board and has been a 30-year mass transit user in Houston. Bus and Rail Rodeo – Best of the Best Compete On Saturday, March 24, 2007 approximately 1,500 METRO employees, their family and friends gathered to watch the best of the best compete in METRO’s annual Bus and Rail Rodeo competition. Bus operators, METROLift operators and cleaners navigated an obstacle course, mechanics diagnosed and repaired defective (purposely rigged) buses, and rail operators and mechanics competed in various events. To make the day more of a familyoccasion, the event had a variety of activities including a rock wall, mechanical bull, a giantslide, a basketball competition and bingo. Teams competed in Barbeque Brisket and ChiliCook-offs and a miniature train ran throughout the grounds. In addition to the adultcompetitions, Small Fry and Electric Cart competitions were available to children from 6 to 16years of age. Bus operator Darrel Willis and the bus maintenance team of David Tat, Van Ho and Khanh Nguyen won their competitions and will go on to represent METRO at the International BusRoadeo in Nashville, Tennessee in May. Additionally, contract bus operators representingFirst Transit will compete in the Nashville competition. Light Rail train operator Ron Williams and a rail maintenance team made up of Carlos Santa Cruz, Kim Do and Michael Collins arethe winners to go to the APTA International Rail Rodeo that will be held in Toronto in June.

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HighlightsMETRO Launches Transit Blog METRO has put in place a new communication tool, a “Transit Blog”, to give a daily snapshotof what’s going on at the Authority and in the transportation industry. From inception inJanuary through March 2007, 266 users have registered and there were 38,267 views and 730comments on the blog. The goal was to open a dialogue with the public, put a human voice to the agency and be more accessible and transparent to riders. From the comments that have been received, it’s evident that METRO has started lively discussions from both critics and supporters. Blog topics have ranged from the serious to the humorous, including the Q Card, new Cypress Park & Ride lot, HOV lanes, hybrid buses, cell phone use on buses, and rubber sidewalks. The top three postings that generated the most comments were: Using Cameras to Keep Park & Ride Lots Secure; From Where They Sit: Bus Drivers Sound Off; and Countdown to the Q Card Launch Date.

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Ridership Trends

Ridership

Total system ridership year-to-date including fixed route bus and METRORail, METROLift,Special Events, METROVan, and HOV Vanpools/Carpools is 63.0 million boardings, up 0.4%from last year on a calendar adjusted basis. Factors that contribute to the increase arediscussed in the next three pages.

62.7 63.0

40

50

60

70

80

FY06 FY07

YTD Total System RidershipRidership in Millions

49.2 48.4

40

45

50

55

FY06 FY07

YTD Total Fixed Route RidershipRidership in Millions

FY2006 FY2007 ChangeFixed Route Bus Service 43,606,014 42,691,953 -2.1%METRORail Service 5,607,536 5,757,749 2.7%

Subtotal Fixed Route Service 49,213,550 48,449,702 -1.6%

Special Bus Service 2,395,534 2,310,075 -3.6%Subtotal Bus & Rail Services 51,609,084 50,759,777 -1.6%

HOV Carpools, Vanpools & Non-METRO Buses 11,120,338 12,233,509 10.0%

TOTAL RIDERSHIP 62,729,422 62,993,286 0.4%

Total System Ridership

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7

8

9

10

OCT NOV DEC JAN FEB MAR

Fixed Route Bus and Rail ServiceRidership in Millions

FY06 FY07

Fixed Route Service

Fixed-route ridership through the second quarter, comprised of METRORail, Local and Express Bus, and Park & Ride services, is 48.4 million, down 1.6% from FY2006 ridership of 49.2 million.METRORail ridership year-to-date is up 2.7% to 5.8 million.Local and Express Bus service is 38.5 million, down from 39.4 million in FY2006, a decrease of 2.1%.Park & Ride service ridership is down 1.6%, to 4.2 million.

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

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6

7

8

9


Fixed Route Bus ServiceRidership in Millions

FY06 FY07

5

6

7

8


Local & Express Bus ServiceRidership in Millions

FY06 FY07

0.5

0.6

0.7

0.8


Park & Ride ServiceRidership in Millions

FY06 FY07

0.7

0.9

1.1

1.3


METRORail ServiceRidership in Millions

FY06 FY07

• 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.

• Very bad weather conditions in January 2007 contributed to a sizeable reduction of close to 750,000 boardings in local fixed route 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 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 in January, the local and express fixed route ridership would have decreased by only 0.2%.

• The majority of the Park & Ride decrease can be attributed to the merging of all former Park & Ride trips serving the North Shepherd Park & Ride lot with the 108 Veterans Memorial Express route. Over 83,000 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 0.5% from the first half of FY2006.

• Also, some of the Hurricane Katrina affected people who were in Houston last fiscal year have left. This contributed to a loss in ridership.

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

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110

120

130

140

Oct Nov Dec Jan Feb Mar

METROLift ServiceRidership in Thousands

FY06 FY07

200

400

600

800

1,000


Special Bus ServicesRidership in Thousands

FY06 FY07

120

150

180

210


METROVan ServiceRidership in Thousands

FY06 FY07

Special Event Bus Service including chartersforms only a very small percentage ofMETRO's total boardings (less than 0.1%) andfluctuates depending on the occurance ofspecial events like the Houston LivestockShow & Rodeo, Shell Houston Open, andWings Over Houston Airshow.

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 ServicesSpecial 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 for theSecond Quarter is 2.310 million, a decrease of3.6% from last year.

METROLift (0.697 million boardings year-to-date in FY2007) demand has decreased, down 4.7% from last year, the result of more efficientscheduling and the effects of the Houston CityCouncil increase of taxi rates in September2006. METROVan services (1.133 millionboardings in FY2007) experienced increaseddemand, up 30.9% from the same period inFY2006. This increase was due to the addition of the miniPOOL program.

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Financial PerformanceMETRO Revenues FY2007 YTD

($millions)

Fares 26.179 23.927 -2.252 -8.6%

Sales Tax (Cash Basis) 201.502 237.645 36.143 17.9%

Interest & Miscellaneous 6.060 7.163 1.103 18.2%

Subtotal 233.741 268.735 34.994 15.0%

Grants 32.810 25.032 -7.778 -23.7%

TOTAL 266.551 293.767 27.216 10.2%

Budget Actual Differences

$3

$4

$5

$6


FY2007 Fare Revenue by Month($millions)

Budget Actual

$26.2

$23.9$22

$24

$26

$28

FY2007 Budget FY2007 Actual

FY2007 YTD Fares ($millions)

Fares

Compared to the YTD budget, actual fares are $2.3 million or 8.6% 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 is in fact approximately $700,000 or 3% above budget YTD.

Compared to the same period in FY2006, fares are down $1.3 million or 5.1%. 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 7 and 30 day passes as well as Stored Value Cards. This has temporarily skewed the stream of revenue. (365 day passes are of a higher denomination and deeper discount than 7 and 30 day passes; so when fewer of the higher denomination passes are sold, less revenue is recognized in a given month.)

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$20

$30

$40

$50

$60

Oct Nov Dec Jan Feb M ar

Actual Sales Tax Revenueby Month - Cash Basis

($millions)

FY06 FY07

$232.6$237.6

$200

$220

$240

YTD Actual Sales Tax RevenueCash Basis

($millions)

FY06 FY07

$0

$3

$6

$9

$12

Oct Nov Dec Jan Feb M ar

FY2007 Grant Revenue by Month($millions)

Budget Actual

Sales Tax Revenue

Sales tax revenue (cash basis) for FY2007 is$237.6 million: $36.1 million or 17.9% abovebudget. The increase is being driven byemployment and population growth. With sales tax growth running higher than inflation,METRO is experiencing real growth.

$32.8

$25.0

$20

$23

$26

$29

$32

$35

FY2007 YTD Grant Revenue($millions)

Budget Actual

Interest and Miscellaneous

Revenues in this category were $7.2 million, or 18.2% over projection mainly due to increases resulting from a larger investment portfolio size.

Grant Revenue

Grant revenue through the second quarter is$25.0 million, $7.8 million or 23.7% belowprojection. Under FTA policy, METRO onlyreceives grant funds after paying for thefunded projects. Year to date, includingMETRO Solutions, Capital spending is 28.6%below budget. This is consistent with theGrants shortfall.

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Operating Budget

FY2007 OPERATING BUDGET, EXPENSES, AND VARIANCE

Expense CategoryYear-to-Date

Budget Year-to-Date

Expenses $

Variance %

VarianceWages 44,960,810 45,042,466 81,656 0.18%Fringe Benefits Union 21,713,809 21,293,511 (420,298) -1.94%Total Union Labor 66,674,619 66,335,977 (338,642) -0.51%

Hourly Wages NonUnion 542,303 660,887 118,584 21.87%Salaries 33,256,703 31,837,843 (1,418,860) -4.27%Fringe Benefits Non-Union 14,692,622 14,502,120 (190,502) -1.30%Total Non-Union Labor 48,491,628 47,000,850 (1,490,778) -3.07%

Total Labor and Fringe Benefits 115,166,247 113,336,827 (1,829,420) -1.59%

Services 7,459,556 4,531,514 (2,928,042) -39.25%Materials and Supplies 8,685,161 8,532,870 (152,291) -1.75%Utilities & Fuel 21,407,014 19,991,363 (1,415,651) -6.61%Casualty and Liability 1,749,328 1,701,958 (47,370) -2.71%Purchased Transportation 35,050,924 33,579,740 (1,471,184) -4.20%Leases, Rentals and Miscellaneous 613,187 1,025,979 412,792 67.32%Total Non-Labor 74,965,170 69,363,424 (5,601,746) -7.47%

Total Labor and Non Labor 190,131,417 182,700,251 (7,431,166) -3.91%

Cost Recovery (3,501,443) (3,185,531) 315,912 -9.02%

Total Operating Expenses 186,629,974 179,514,720 (7,115,254) -3.81%

Capitalized Operating Expenses (24,905,970) (24,904,350) 1,620 -0.01%Allocation to Capital & GMP (18,374,864) (17,617,289) 757,575 -4.12%Total Allocation to Capital (43,280,834) (42,521,639) 759,195 -1.75%

OPERATING BUDGET 143,349,140 136,993,081 (6,356,059) -4.43%

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Operating Expenses

Operating expenses through the end of the second quarter are $136.993 million compared to $143.349 million budgeted, $6.356 million or 4.4% below budget. This underrun in the operating budget is due to the following:

$143.3$137.0

$100

$120

$140

$160

Budget Actual

FY2007 YTD Operating Expenses($millions)

Wages are over budget by $82,000 or 0.2%. Bus operator wages are over budget due to the use of more overtime than planned due to a shortage of operators (accelerated recruitment is underway). However, the bus operator wage overrun is largely 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 Benefits are $420,000 or 1.9% under budget mainly 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 $1.3 million or 3.8% due to vacancies throughout the Authority. As of the end of March, 57 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 $191,000 or 1.3% due to lower benefit costs primarily resulting from the vacancies discussed above.

FY2007 Labor and Fringe Benefits by Month($millions)

$16

$18

$20

$22


Budget Actual

FY2007 YTD Operating Expenses by Category($millions)

$0

$10

$20

$30

$40

$50

Wages

Salarie

s

Fring

e Ben

efits

Purcha

sed T

rans.

Service

s

Materia

ls & Sup

plies

Utilities

& Fuel

Casua

lty & Li

ab.

Misc.

Budget Actual

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Services expenses are under budget by $2.928 million or 39.3%. The slow start of contractual service activity accounts for the large timing variance. Significant components of the underrun include:

• $1.2 million in Communications & Marketing (a slow start delayed spending in advertising and promotion expenses)

• $763,000 in Operations (primarily the delayed start in facility maintenance work)

• $244,000 in Human Resources & Diversity (slower start of DOT physicals and employee communication initiative as well as lower than planned usage of recruitment advertising and training/consulting services)

• $142,000 in Finance (underruns in banking related services due to lower transaction fees than anticipated)

• $150,000 in Legal (primarily delayed billing from outside counsel contract work)

• $124,000 in IT (underspending in router, radio system and storage system maintenance due to invoice delays and deferral of some work).

Materials & Supplies are under budget by $152,000 or 1.8%. In Operations, Bus Parts cost is $919,000 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, delays in receiving invoices for traffic control and accident investigation equipment and overall reduced expenses in most other areas in the Authority.

Fuel & Utilities are under budget by $1.416 million or 6.6%. Diesel fuel Is under budget by $504,000 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 and propulsion power, due to a mismatch between budget and actual expenses; and telephone expenses, the result of delays in the receipt of invoices.

Casualty & Liability expenses are $47,000 or 2.7% under budget and result from higher than anticipated subrogation recoveries.

Purchased Transportation expenses are $1.471 million or 4.2% under budget. Of this, METROLiftrepresents $294,000 and is the result of more efficient scheduling and lower demand. Delayed billing and lower contract costs in the vanpool program represent $257,000. The balance is in Special Events and primarily reflects a more cost effective plan for scheduling and providing service for the Houston Livestock Show & Rodeo.

Leases, Rentals & Miscellaneous expenses are $413,000 or 67.3% over budget, but 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.)

Cost Recovery is $316,000 or 9.0% less than budget. This is primarily due to delayed billing and reduced cost recovery of vanpool expense, partially offset by unplanned recovery of some special event costs from the prior year.

Capitalized Operating Expenses are on budget.

Allocation to Capital and GMP is $758,000 or 4.1% lower than projected and is mostly driven by capital-related vacancies in the Planning Engineering & Construction, Real Estate and Government Affairs departments.

FY2007 Materials & Services by Month($millions)

$10

$12

$14

$16


Budget Actual

15


$51.6 $49.9

$30

$40

$50

$60

Budget Actual

FY2007 YTD GMP Expenditures($millions)

City of Houston 32.257 36.083 3.826Harris County 6.568 0.000 -6.568Multi-Cities 10.011 11.263 1.252Area-wide 2.783 2.602 -0.181Total General Mobility Program 51.619 49.948 -1.671

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

FY2007 YTD Budget

FY2007 YTD Actuals

Variance

Expenditures for City of Houston projects are $3.826 million more than budgeted through the second quarter of FY2007 due to expenditures on pre-FY2007 projects/programs and represent 111.9% of planned expenses.

Year to date expenditures for Harris County projects are $6.568 million less than budget due to slow progress on Future Designated Projects handled by the County.

Expenditures for Multi-Cities projects are $1.252 million more than budgeted through the second quarter of FY2007 due to the acceleration of funding for the Future Designated Projects Program. Expenditures represent 112.5% of projected expenses.

Area-Wide Programs are $0.181 million less than budgeted due to less than anticipated issuance of commercial paper to fund Harris County Future Designated Projects (interest on commercial paper is included in this category).

FY2007 Second Quarter General MobilityProgram expenditures are $49.9 millioncompared to $51.6 million budgeted, $1.7million or 3.2% lower than projected.

General Mobility Expenditures

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Capital Expenditures

FY2007 year-to-date capital expenditures are $98.1 million compared to $137.3 million budgeted; $39.25 million, or 28.6% lower than projected. Major variances in the Capital Budget are identified below.

$137.3

$98.1

$80

$100

$120

$140

Budget Actual

FY2007 YTD Capital Expenditures($millions)

FY2007YTD Budget

FY2007 YTD Actuals Variance

($millions) ($millions) ($millions)METRO Solutions 65.254 26.807 -38.447

Capital Improvement Program 72.056 71.252 -0.804

Total Capital Budget 137.310 98.059 -39.251

METRO SOLUTIONS - Variance Due to Schedule Slippage: -$38.4 millionProperty Acquisitions that were scheduled to begin as early as December2006 have been delayed due to the following reasons: delay in receipt ofthe Final Environmental Impact Statement (FEIS) and the "Record ofDecision" for the North and Southeast corridors, and a delay in receipt of theFinding of No Significant Impact (FONSI) decision for the IntermodalTerminal. In addition, protracted negotiations and delayed award of fullcontract authority to the selected Facility Provider has affected theperformance of continued engineering. The complexity of the IntermodalFacility design has also delayed commencement of the next stage of designand property acquisition.

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CAPITAL IMPROVEMENT PROGRAM

Variance Due to Schedule Slippage:

Implement Bus Smart Card Technology -$13.0 millionThe implementation date and schedule for the Q Card has been modified toallow time for "stress testing" the new hardware and software and for phasedimplementation.

Information Technology -$6.7 millionThe underrun is primarily due to a delay in the Police Mobile Data TerminalSystem Enhancement, METRONet and ARCS System Radio Replacementprojects. The Police Mobile Data Terminal project was delayed to allowbidding by Small Business, instead of using the State of Texas Departmentof Information Resources (DIR) for the procurement. It is now underway. TheCMAQ (Congestion Mitigation Air Quality) addition to the METRONet projectgot delayed waiting for City approval of design plans and equipmentspecifications. Installation of the CMAQ equipment is underway and will becompleted in the third quarter. The ARCS System Radio Replacementproject has been delayed while the pilot is being tested. The majorexpenditures for this project will not occur until the 3rd quarter.

Major Facility Rehabilitation Initiative -$2.9 millionThe MFRI program has an annual budget of $7 million for FY2007 out ofwhich approximately $1 million has been spent through the 2nd QTR (notincluding the invoices being processed). However, there are also $2 millionof work authorizations that have been issued and an additional $1 millionunder review for a total committed of $4 million. It is anticipated that the MFRIprogram will be completed by the end of the fiscal year with minimalunderruns.

Transitway & Related Facilities -$1.2 millionExecution of Fixed Guideway Modernization (FGM) Projects which includes:Sign Standardization , Transtar Integration and HOV Utilization DataCollection projects have been slower than planned due to the need tocoordinate with the HOT Lane program. Design work for SignStandarization will be completed under the FGM program, while constructionwill be done under the HOT Lane project. The T-Ramp Control Signal projectis complete and under budget.

Total Schedule Slippage – Other Projects -$23.8 million

18


Variance Due to Other Issues:

Bus and Support Equipment $25.9 millionThe approved budget allowed for a capital lease of 25 MCI buses and 40New Flyer Hybrid buses. All the MCI buses and 12 (to date) of the New Flyerbuses have been purchased on full cash outlay basis. The master leaseprogram has not been submitted to the Board for approval as yet pendingnegotiations for the Facility Provider contract.

Purchase Diesel Storage Tanks -$2.5 millionCapital lease of the storage tanks is on hold due to concern about theContractor's viability. METRO will continue on month to month rental until aviable option has been identified.

Homeland Security -$1.0 millionProgram was delayed for additional review that took longer than anticipated.All projects are now approved and currently being executed.

Other Miscellaneous Variances $0.5 million

Total Schedule Variance Due to Other Issues $22.9 million

GRAND TOTAL CAPITAL BUDGET & METRO SOLUTIONS -$39.3 million

19


Key Performance Indicators

19.0%

17.1%

16%

17%

18%

19%

20%

FY07 Goal YTD Actual

FY2007 Operating Ratio

Operating Ratio

The Operating Ratio through the second quarter of FY2007 year to date is 17.1%, 10.0%below the FY2007 annual goal of 19.0%. Increased revenue after the implementation of farerestructuring will be a key element in achieving the 19.0% target.

20



Mean Distance Between Failures by Month(miles)

5,000

0

3,000

6,000

9,000


FY07 Actual FY07 Goal

Mean Distance Between Failures (MDBF)The bus fleet continued to perform well in the second quarter. Actual performance was 47% betterin January than the FY2007 MDBF minimum of 5,000 miles, 50% better in February and 46% betterin March.

In other actions, Operations and Information Technology are partnering to develop reports thatprovide up-to-the minute information on the mechanical status of buses.

Operations continues implementing new policies and procedures which are improving the reliabilityof the bus fleet. For example, a classification process is being established for all buses to ensurethat the condition of each bus is appropriately maintained. The 40 new hybrid-electric buses, whichare in the process of being delivered, will be classified as Level 1 quality buses. This classificationmeans that these buses will receive priority treatment to ensure that they stay in new condition.A second tier of buses is being identified. These are buses which have a reasonable amount ofwear and tear due to their age and usage. Each Bus Operating Facility will select a group of buseswhich, while in good and safe operating condition, could benefit from preventive action now. Thiswill help to avoid more extensive, as well as costly, repairs in the future. Additional classificationtiers will be developed.

Operations will also assign the new hybrid-electric buses to specific operators and trips every day.This will help to build relationships between the operators and the mechanics, will allow operatorsto become familiar with their bus and will allow mechanics to take pride in their job performance.

Operations is also working to identity buses which may be susceptible to transmission failure dueto water migrating into the transmission or its electrical harness. Personnel in the Bus OperatingFacilities and in technical support are working together to find a solution.

Bus Maintenance and Control Center personnel are working together to triage information on buseswhich develop a mechanical issue when in service. This is leading to better diagnostics ofmechanical problems.

21



480

236200

300

400

500

FY07 YTD Goal FY07 YTD Actual

FY2007 Bus Accidents

24

16

10

14

18

22

26

FY07 YTD Goal FY07 YTD Actual

FY2007 Rail Accidents

Accidents

Bus Accidents by Month

80

0

25

50

75

100


FY06 FY07 FY07 Goal

Rail Accidents by Month

4

0

2

4

6

8


FY06 FY07 FY07 Goal

In the second quarter, accidents for the bus system are 236, or 50.8% better than the YTDgoal of 480. Rail system accidents are 16, or 33.3% better than the YTD goal of 24.

The reduction in the accident rate continues to be attributable to the overall goodperformance of our Bus and Train Operators. The accident goal was somewhat loweredthis year to accommodate over 250 new part time bus operators. But the results show thatwe are doing far better than we projected as the new operators are experiencing feweraccidents than anticipated. Efforts towards accident reduction included safety blitzes at thefacilities, observation rides, radar checks, hazard analysis of bus routes, safety contactsbeing made in the field and safety awareness being promoted at the Bus OperatingFacilities. The System Safety Division conducted over four hundred ride checks and over36 hazard analysis of bus routes which help produce a positive safety attitude among theoperators.

22

FY2006 FY2007 Change %Operator Behavior 4,206 4,795 14.0%Timeliness & Reliability 2,181 2,804 28.6%Driving Safety 1,416 1,984 40.1%METROLift 1,005 821 -18.3%Equipment Problems 333 433 30.0%Crowded Bus 274 247 -9.9%Other 1,446 1,855 28.3%

Complaints by Category

0

1,000

2,000

3,000

4,000

5,000

OperatorBehavior

Timeliness &Reliability

Driving Safety METROLift EquipmentProblems

Crow ded Bus Other

FY2006 FY2007

Complaints through the second quarter are 66.3%better than the year-to-date goal.

COMPLAINTS

METROLift complaints have decreased 18.3%compared to the same period in FY2006. This isdue to a decrease in the number of complaintsregarding late trips.

The Operations Department is continuing toimplement initiatives to reduce the number ofcomplaints. For example, it has started to focus onwhere and when complaints regarding pass upsare generated. (A pass up is categorized as anOperator Behavior complaint.) The Department isanalyzing trends on where and when these eventshappen and using the results of the analysis inorder to avoid future occurrences. It is alsocontinuing the new incentive program and thecustomer service refresher training for operators.Through the end of the 2nd Quarter, 55 percent ofthe eligible operators had received the refreshertraining.

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



Complaints by Month

6,400

01,0002,0003,0004,0005,0006,0007,000


FY06 FY07 Monthly Maximum

23



Major Security Incidents by Month

55

0

10

20

30

40

50

60


FY06 FY07 FY07 Goal

Part I Crime OCT NOV DEC JAN FEB MARYTD

TOTALLarc/Theft 31 22 13 15 22 25 128Robbery 13 13 13 15 15 17 86Auto Theft 3 0 5 1 3 3 15Agg. Assault 0 1 2 4 1 3 11Burglary 2 0 0 0 0 0 2Arson 0 0 0 0 0 0 0Forc. Rape 0 0 0 1 0 1 2Homicide 0 0 1 0 0 1 2TOTAL 49 36 34 36 41 50 246

Major Security Incidents by Category

0

20

40

60

80

100

120

140

Larc/Theft Robbery Auto Theft Agg.Assault

Burglary Arson Forc. Rape Homicide

.

Major Security Incidents are those categories that are listed in the FBI Part 1 Crimes used innational crime reporting requirements. Year-to-date numbers represent a 41 incident a monthaverage and a grand total 246 Part I crimes, 25.5% better than the annual goal. The mostsignificant crime that occurred during the quarter was a homicide on March 28, 2007. Thehomicide occurred on a bus as an argument escalated between two patrons. The suspect wasarrested at the scene and has been charged with murder. There has been a significant reduction in Class I crimes occurring at bus stops and TransitCenters. Crime at Transit Centers dropped by 50% from the previous quarter. There was alsosignificant decline in crimes at bus stops which reported 30% fewer incidents than the first quarterof FY2007. Although difficult to quantify, we believe we can attribute this reduction in part to thehigh visibility enforcement initiative implemented this year. METRO Police also continued to promote the Adopt a Stop / Adopt a Shelter program at civicclubs and neighborhood association meetings. The program has proven to be effective ascitizens adopting shelters are reporting crime. During this quarter, one adoptor providedinformation to police which resulted in several subjects being arrested in possession of crack /cocaine. The suspects were distributing the narcotics directly out of the shelter. Fifty-five sheltershave now been adopted.

Major Security Incidents

24



METRO Police Attacking Crime Trends (MPACT) focused initiatives and pro-active policing efforts will continue to attack crime trends affecting the system and changing conditions that impact community and system reported crime.

25



Customer Service Center

The combination of METRO's Interactive Voice Response system (IVR) and enhanced productivity in the Customer Information Center continues to yield good results.

The automated system handles many routine customer inquiries for bus and rail schedule times automatically, allowing representatives to focus on more detailed inquiries. New systems and practices for trip planning, workforce management, real time communications and quality assurance have improved the productivity of our representatives in handling the calls that are routed to them.

The IVR provided automated bus and rail times to 51% more callers in the second quarter of FY2007 than were provided in the second quarter of FY2006. Telephone representatives answered 50% more calls in the second quarter of FY2007 than were answered in the second quarter of FY2006. The average answer delay for this quarter was 0:54 as compared to 1:08 in the same quarter of last year, with 51% more customer calls received.

Customer Information Center Key Indicators

91% 91% 85% 77% 79% 85% 85% 88% 88%80% 79%87%

0.60 0.58

1.00 0.970.83 0.88

1.82

2.27

1.75

1.13

0.97

1.58

101115 123 124

141123 131 129 126

148136

153

214

242256

266285

304

272

314

241

299286 289

0

50

100

150

200

250

300

350

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

Cal

ls R

ecei

ved

(000

's)

Serv

ice

Leve

l (%

)

0.00

0.50

1.00

1.50

2.00

2.50

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

26


FY2007 YTDBudget Actual Variance

Gross IncomeFares 26,179 23,927 (2,252)Sales tax income 201,284 239,810 38,526Interest Income 6,000 6,794 794Other operating income 60 370 310

Total 233,523 270,900 37,377Operating Expenses

139,974 131,882 (8,092)3,375 5,027 1,652

0 84 84Total 143,349 136,993 (6,356)

Gross Income Less Total Operating Expenses 90,174 133,907 43,73332,810 25,032 (7,778)

122,984 158,939 35,955188,929 148,008 (40,921)

(65,945) 10,931 76,876

All data in year-of-expenditure dollars.Sales Tax is reported on an accrual basis.

- 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

27


March 2006 March 2007 Change ($)

Assets

Cash 2,360,458 2,415,412 54,954 Receivables 102,837,484 115,691,432 12,853,948 Inventory 25,705,335 29,723,418 4,018,083 Investments 173,670,140 285,893,268 112,223,128 Other Current Assets 16,396,540 24,800,520 8,403,980 Property Net of Depreciation 1,178,868,134 1,253,227,401 74,359,267 Land & Improvements 303,481,869 292,344,173 (11,137,696)

Rounding 1 (1) -2Total Assets and Other 1,803,319,961 2,004,095,623 200,775,662

Liabilities

Trade Payables 37,021,722 61,333,832 24,312,110 Accrued Payroll 18,752,669 17,919,438 (833,231) Short-term Debt 64,000,000 143,000,000 79,000,000 Other Current Liabilities 21,816,192 25,066,945 3,250,753

Rounding 0 0 - Total Liabilities 141,590,583 247,320,215 105,729,632

Net Assets - Retained (1) 1,661,729,378 1,756,775,408 95,046,030

Total Liabilities and Net Assets 1,803,319,961 2,004,095,623 200,775,662

(1) On a year to year basis, net assets increased by 5.7% or $95 million.

BALANCE SHEETMarch 2007

Documents

Quarterly Financial & Management Report - Ride, METRO · 2015. 3. 10. · Management Discussion and Analysis Ridership Trends 6 Financial Performance Revenues 10 Operating Expenses