FY2010 Quarterly Financial & Management Report Second Quarter Ending March 31 st, Table of Contents

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1 Table of Contents Highlights... 1 METRO Welcomes New Board Members & Chairman... 1 METRO Solutions East End Roadwork Begins... 1 New Energy Corridor Connector Launched... 2 Additional Quickline Station Unveiled... 2 South Point Park & Ride Expanded... 3 New Service To The Houston CAN Academy Hobby Campus... 3 Anti-Terrorism Unit Is Ready To Respond And Protect... 3 Marketing Programs Win Awards... 3 More Hybrid Buses Added... 4 Operations Rodeo & Family Day... 4 Another Humanitarian Project... 5 Small Business Participation Promoted Through Forum... 5 Special Events At Reliant Stadium Bolster Rail Ridership... 5 Ridership Trends... 6 Financial Performance Revenues Fares Sales Tax Revenue Grant Revenue FY2010 Operating Budget, Expenses, and Variance General Mobility Expenditures Capital Expenditures Debt Service Composite Operating & Capital Statement Balance Sheet Operating Ratio Key Performance Indicators Board Date: April 15 th, 2010

2 Highlights METRO Welcomes New Board Members & Chairman On April 7 th, 2010, a new Chairman and four Board members were sworn in to replace the outgoing members representing the City of Houston. Board Chairman Gilbert Andrew Garcia with new members Honorable Dwight E. Jefferson, Carrin F. Patman, Allen Dale Watson, and Christof Spieler replaced former Chair David S. Wolff, members Gerald B. Smith, George A. DeMontrond III, Carmen Orta, and a vacant seat. Comprised of a total of nine members, the METRO Board of Directors also has two members, Jackie L. Freeman and Trinidad Trini Mendenhall Sosa, representing Harris County in addition to two other members, C. Jim Stewart III and Burt Ballanfant, representing the 14 multi-cities in the Authority s service area. METRO Board Meetings are aired every Saturday at 6 A.M. and 6 P.M. on Comcast cable s HCCTV Channel 19. METRO Solutions East End Roadwork Begins In late March, METRO officially began construction of the roadwork phase on the East End Corridor. Work includes pavement demolition, excavation, and replacement of the new roadway in the final configuration thus setting the stage for the installation of guideway and light-rail tracks. Locally funded, the East End Corridor is a 3.3-mile, 6-station light-rail line running from downtown Houston to the Magnolia Transit Center. The line is expected to be completed by late Fall of 2013 with daily ridership projected to be at 8,500 by the year Currently, the East End Corridor has 125 of the 134 required real estate parcels in possession (93%) with utility construction underway on 4 of the 6 total segments. The current status of each of the other four light-rail corridors, also approved in the 2003 voter referendum, is as follows: North (5.3 miles) & Southeast (6.5 miles) On February 1 st, both projects were announced to be included in the Obama Administration s 2011 Budget, allocating $75 million for each - the second consecutive year the two projects were included in the President s Budget. In August 2009, both projects obtained the Federal Transit Administration s (FTA) permission for Final Design, the last prerequisite before entering into Full Funding Grant Agreements (FFGA), which commits federal funding of a transit project over a period of several years. This is the first time METRO has advanced to this phase of the federal funding process; the proposed federal funding for these two lines combined is projected to be approximately $900M. North Line has 113 of the 115 required real estate parcels in possession (98%) with utility construction underway. Southeast Line has 123 of the 132 required real estate parcels in possession (93%) with pre-utility construction activities underway. 1

3 University (11.3 miles) Uptown (4.8 miles) In early January, the Authority published the corridor s Final Environmental Impact Statement (FEIS) which was then approved by the FTA for official circulation and comment by the public. The FEIS addresses the anticipated economic, environmental, and social changes that would result from the project both during construction and after implementation. By the end of March, METRO completed the proposed responses (subject to FTA review) to the hundreds of comments received during the circulation period. METRO now awaits the FTA Record of Decision (ROD), which will allow for property acquisition to begin. Uptown Corridor Preliminary Engineering/ Design has been restarted effective March 1 st, New Energy Corridor Connector Launched Weekly ridership on METRO s new bus service, the 75 Energy Corridor Connector, has already doubled from its inaugural week. Launched on January 25 th, 2010, this connector, which runs along Eldridge between the Katy Freeway and Richmond Avenue, provides employees and residents in the area a quick, convenient ride to various local stores, restaurants, and businesses with buses running every 10 minutes from 9 A.M. to 2 P.M. and every 15 minutes between 6 A.M. to 9 A.M. and 2 P.M. to 6 P.M. The route also connects to the Addicks Park & Ride as well as other popular routes like the 53 Briar Forest, 82 Westheimer, and the 131 Memorial. The service officially kicked off with an opening ceremony at the Kendal Neighborhood Library & Community Center on January 28 th. Guests included representatives from METRO, the City of Houston, the Houston-Galveston Area Council s Metropolitan Planning, and the Energy Corridor District, an organization of area businesses. Additional Quickline Station Unveiled In late January, METRO extended signature bus service to the residents of Southside Place and West University through the unveiling of its Quickline Stella Link station, the ninth station in the nine-mile Bellaire Quickline express route. Launched in June 2009, the Bellaire Quickline is one of several signature bus services planned in METRO Solutions Phase II. Currently, the route averages about 570 boardings a day, providing more efficient travel (an average of 20 minutes faster than the 2 Bellaire local route) along the Bellaire corridor to those moving to, from, and around the Texas Medical Center. The service is unique in that it uses ultra-quiet hybrid buses with padded seating, security cameras, and custom exterior wraps colored in blue for easy identification. The Quickline bus stations are also unique in that they feature up-to-the-minute automated 2

4 announcements for the next-bus arrival and improved lighting and benches. On top of all these amenities, this premium service is priced the same as the other local service at $1.25 per trip. South Point Park & Ride Expanded Committed to giving the bus system its highest priority, METRO made a substantial reinvestment in the South Point Park & Ride lot by adding 150 new parking spaces, converting 240 temporary spaces into permanent spaces, and making drainage and lighting improvements. The lot now has 104% more capacity for a total of 766 permanent parking spaces. Not only do these improvements alleviate the overcrowded parking conditions that existed before, but they also serve Texas Medical Center employees riding the 297 South Point/Monroe Park & Ride route. New Service To The Houston CAN Academy Hobby Campus Working with school administrators and the City of Houston, METRO extended five trips on the 73 Bellfort route to the alternative high school campus located on Hansen Road near Hobby Airport. While ridership has been slow to build since the start of the service in mid January, METRO is working diligently with the school to educate its students regarding the operation of this new service and build ridership for the future success of this route extension. Anti-Terrorism Unit Is Ready To Respond And Protect In March 2010, during the first weekend of the Houston Livestock Show and Rodeo, METRO s newly formed Anti-Terrorism Unit (ATU) conducted its first major operation protecting the nearby rail platforms in the Reliant Park area and immediately adjacent areas around them from any possible terrorist threats. Created from a $3 million award received last August from the American Recovery and Reinvestment Act Transit Security Grant Program (federal money aimed to help transit agencies better equip themselves to prevent acts of terrorism), the ATU is a 10-person team of experts trained to manage, respond, and operate in the event of a terrorist attack. This operation at the rodeo allowed the ATU officers to successfully put their specialized training into action. Marketing Programs Win Awards On March 15 th, METRO won a first place award in the transportation category from the American Marketing Association of Houston for the Abuelita campaign, the Authority s Hispanic marketing effort. It was also one of the eight finalists among 40 entrants for the Marketer of the Year Award. METRO also picked up a silver ADDY award in February from the Houston American Advertising Federation in the category of interactive media for its online viral video Terra 3

5 Cotta Tourist: The Escape (promoting taking METRO to the Museum of Natural Science s Terra Cotta Warriors exhibit). In addition, the Authority received a Citation of Excellence for the window clings used in the July 2009 groundbreaking for the North and Southeast lightrail lines at Union Station. More Hybrid Buses Added In February, 20 new 45-foot MCI commuter hybrid buses arrived for use in METRO s Park & Ride fleet. This is the first batch of the 100 new hybrid-electric buses on order for FY2010 as part of METRO s long-range fleet replacement program - which replaces older, dieselpowered buses with new hybrid-electric vehicles at a steady pace over a 12-year period. Compared to diesel-powered buses, the hybrid-electric buses, using an advanced green technology, are able to reduce fuel consumption by 20% and reduce emissions of nitrous oxide by 50% and other pollutants by 90%. The hybrid buses also offer bus patrons a better riding experience. Because the bus technology has a unique gear-shifting mechanism, the actual riding experience on these buses is quieter and smoother than that of the traditional buses used in the fleet. In addition, the new hybrid buses are also designed with more passenger leg room, making the bus friendlier for both the patrons and the environment. To date, METRO has more than 260 hybrid vehicles serving both local and commuter routes in its fleet. Operations Rodeo & Family Day On April 10 th, 2010, approximately 1,850 people, comprised of METRO employees, family and friends, attended the annual METRO Operations Rodeo & Family Day. The event, which celebrates the Authority s focus on bus & rail operating expertise and safety, took place at the Fannin South Park & Ride lot and included a whole host of family activities. Festivities included a car & motorcycle show, a bicycle competition, demonstrations from METRO Police, as well as a range of competitions for children 6 to 16. In addition, employee teams competed in the annual barbeque cook-off, offering tasty selections of brisket, chili, ribs, and chicken. At the heart of the event was the annual Bus and Rail competition where METRO s staff of bus & rail operators, METROLift operators, cleaners, and mechanics all displayed their expertise and know-how through a series of challenges. From navigating obstacle courses to accurately diagnosing and repairing defective mechanical pieces, METRO staff celebrated its commitment to safety, service, and technical acumen. At its finale, an official ceremony took place recognizing METRO s 2010 Safety Award Winners, the recipients of the 2010 T.E.A.M. (The Employee Association of METRO) Scholarship Awards, as well as the competition winners from the day s events. This year, there were 83 Safety Award Winners (incentive awards in 5-year increments after 15 years 4

6 of safe service): 4 30-year veterans, year veterans, year veterans, and year veterans. In addition, there were ten $1,000 scholarships awarded to the children of METRO employees graduating from high school and planning to attend college in the fall. Of the day s competition, bus operator Frank L. Gonzales; the bus maintenance team of Van Ho, David Tat, and Khanh Nguyen; rail operator Walter Lomax; METROLift operator Ivan Willridge, bus cleaner Ernie Flatt; and rail maintenance employee Huu Kim Do all took home 1st place awards and a chance to compete at the annual national & international competitions within their respective categories. Another Humanitarian Project Building on the success of FY2010 s First Quarter Humanitarian Project, METRO has continued its efforts to help end hunger in the Houston area throughout the year on a quarterly basis. From February 16 th, 2010 through March 22 nd, 2010, METRO again teamed up with the Houston Food Bank for a food drive through its 2010 Humanitarian Project. Donations of non-perishable food items were collected from METRO employees and resulted in the presentation of 7 full boxes and 2 full bags of food (167 pounds) to the Houston Food Bank enough to feed a family of four for two weeks. Small Business Participation Promoted Through Forum On January 21 st, 2010, Parsons and Houston Rapid Transit (HRT), the joint venture heading the design and construction of the light-rail lines slated for construction activity in 2010, hosted a four-hour forum at the George R. Brown Convention Center targeting local small and disadvantaged businesses (SBE/DBE s). Garnering the attendance of nearly 300 contractors of all sizes, the forum gave updates on the public utility work currently being contracted out as well as a forecast of the roadwork construction opportunities ahead in The event also included an opportunity for SBE/DBE s to network with larger firms and Houston Rapid Transit (HRT) through a variety of breakout sessions. Special Events At Reliant Stadium Bolster Rail Ridership This quarter, METRORail experienced its highest ridership ever to the Houston Livestock Show & Rodeo with over 340,000 boardings associated with this special event held at Reliant Stadium. The boardings represent an almost 19% increase from the METRORail rodeo ridership from the previous year. This year s rodeo set new records with over 2.1 million visitors attending the event. Scheduled during the last weekend in March, the NCAA Men s South Region Basketball Finals at Reliant Stadium generated over 12,600 boardings on METRORail, a nearly 50% increase over the last time Houston hosted this event in METRO looks forward to next year when Houston will host the NCAA Men s Basketball Finals at Reliant Stadium. 5

7 Millions Millions FY2010 Quarterly Financial & Management Report System Ridership Ridership Trends At the end of the second quarter of FY2010, the year-to-date total system ridership, which includes fixed route bus, METRORail, Special Bus, and HOV Vanpools/Carpools, was 54.2 million. 60 YTD System Ridership FY2009 Actuals FY2010 Actuals YTD Monthly System Ridership Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals YTD Total System Ridership FY2009 FY2010 Change Fixed Route Bus Service 36,487,159 35,009, % METRORail Service 5,866,881 5,421, % Subtotal Fixed Route Service 42,354,040 40,431, % Special Bus Service 2,048,550 1,975, % Subtotal Bus & Rail Services 44,402,590 42,406, % HOV Carpools, Vanpools & Non-METRO Buses 11,872,775 11,790, % TOTAL RIDERSHIP 56,275,365 54,197, % Fixed route ridership data reported are the Automatic Passenger Counter (APC) registrations. 6

8 Millions Fixed Route Service FY2010 Quarterly Financial & Management Report Fixed Route Bus & Rail Service Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals YTD Fixed Route Ridership FY2009 FY2010 Change Local Bus Service 32,252,692 30,932, % Park & Ride Bus Service 4,234,467 4,076, % Subtotal Fixed Route Service 36,487,159 35,009, % METRORail Service 5,866,881 5,421, % Total Fixed Route Service 42,354,040 40,431, % Note: Fixed route ridership data reported are the Automatic Passenger Counter (APC) registrations. The major contributors for the decrease in ridership for the second quarter are the continued high unemployment rate due to the economic downturn and the continuation of a colder and wetter than normal winter. The lower ridership continued in spite of gas prices being 50 to 75 cents higher than the second quarter of last year. Park & Ride ridership did not follow the trend by staying largely flat for the quarter. The forecast of more pleasant weather conditions for the next (third) quarter could have a positive impact on ridership; however, a persistent high unemployment rate may be significant enough to continue to affect ridership negatively. 7

9 Millions Millions Millions Millions FY2010 Quarterly Financial & Management Report Fixed Route Bus Service Other factors which had an impact on ridership throughout the second quarter of FY2010: The introduction of the Pasadena Park & Ride (Apr-2009), the Renwick Crosstown (Jun-2009), the Bellaire Quickline (Jun- 2009), the TMC SwiftLine (Aug-2009), and the Energy Corridor Connector (Jan-10) as well as increased off-peak service on core routes resulted in more than 100,000 additional boardings during the second quarter of the fiscal year, compared to the same period of the previous year. METRORail s ridership decreased due to the higher unemployment at the Texas Medical Center (TMC) and the enhanced fare enforcement undertaken by METRO Police. However, METRORail did transport more passengers to both the Houston Livestock Show & Rodeo and the NCAA Men s Regional Basketball Finals than in any other year Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals METRORail Service Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals Local Bus Service Oct Nov Dec Jan Feb Mar 5.6 FY2009 Actuals FY2010 Actuals Park & Ride Bus Service Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals 8

10 Thousands Thousands Thousands FY2010 Quarterly Financial & Management Report Special Bus Services Special Bus Services have two primary components: METROLift (service ondemand) and METRO STAR Vanpool Service (vanpooling utilizing non- METRO operated vans). These services do not have fixed routes or set schedules. Total year-to-date ridership for Special Bus Services through the second quarter of FY2010 was 1.98 million. METROLift had 376,000 boardings during the second quarter of FY2010. This represents a 4.7% increase over the second quarter of FY2009. Year-to-date, METROLift experienced a 5.1% increase from FY2009. Through the second quarter of FY2010, the METRO STAR Vanpool program saw a decrease in year-to-date ridership, posting an 8.3% decline from FY2009. METRO STAR Vanpool ridership is highly influenced by the unemployment rate which is significantly above that of last year. Currently, there are just over 730 vanpools in the METRO STAR Vanpool program Special Bus Services Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals METROLift Service Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals METRO STAR Vanpool Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals 9

11 Millions Millions FY2010 Quarterly Financial & Management Report Financial Performance Revenues FY2010 YTD METRO Revenues ($ millions) Budget Actual Differences Fares % Sales Tax (Cash Basis) % Interest & Miscellaneous % Subtotal % Grants % TOTAL % Fares $36.0 $27.0 $18.0 $9.0 $0.0 FY2010 YTD Fares $34.1 $31.0 Budget Actual Compared to the budget, year-todate fares in the second quarter of FY2010 are running under by $3.11 million or 9.1%. This underrun reflects both the fare increase programmed for January, 2010 not taking place and the decline in ridership. Compared to the same period in FY2009, year-to-date actual fares are down by $2.22 million, or 6.7%. $6.0 $4.5 $3.0 $1.5 $0.0 FY2010 Monthly Fare Revenue Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals 10

12 Millions Millions FY2010 Quarterly Financial & Management Report Sales Tax Revenue $245 FY2010 YTD Sales Tax Revenue (Cash Basis) $240 $235 $230 $237.3 $239.1 Budget Actual Year-to-date sales tax revenue (cash basis) for the second quarter of FY2010 is $239.1 million, $1.8 million or 0.8% over budget; and $36.8 million or 13.3% lower than the year-to-date actual for the same period in FY2009. Although a year-to-year comparison in sales tax revenue shows a decrease, METRO projected this decline and budgeted accordingly. $75 $60 $45 $30 $15 $- FY2010 Monthly Sales Tax Revenue (Cash Basis) Oct Nov Dec Jan Feb Mar FY2009 Actuals FY2010 Actuals 11

13 Millions Millions FY2010 Quarterly Financial & Management Report Grant Revenue FY2010 YTD Grant Revenue $20.0 $15.0 $10.0 $5.0 $- $18.8 Budget $9.2 Actual Grant revenue through the second quarter of FY2010 is $9.2 million compared to $18.8 million budgeted due to the delay in the grant funded radio procurement contract. $12.0 FY2010 Monthly Grant Revenue $9.0 $6.0 $3.0 $0.0 Oct Nov Dec Jan Feb Mar Budget Actual 12

14 FY2010 Operating Budget, Expenses, and Variance March YTD March YTD FY2010 FY2010 Expense Category Budget ($) Expenses ($) $ Variance % Variance (favorable) / unfavorable Wages 49,982,928 48,820,896 (1,162,032) -2.3% Fringe Benefits Union 25,493,140 25,224,141 (268,999) -1.1% Total Union Labor 75,476,068 74,045,037 (1,431,031) -1.9% Salaries and NonUnion Wages 36,655,340 36,034,391 (620,949) -1.7% Fringe Benefits Non-Union 17,103,001 16,231,291 (871,710) -5.1% Total Non-Union Labor 53,758,341 52,265,682 (1,492,659) -2.8% Total Labor and Fringe Benefits 129,234, ,310,719 (2,923,690) -2.3% Services 8,979,157 6,362,948 (2,616,209) -29.1% Materials and Supplies 9,534,150 9,025,683 (508,467) -5.3% Fuel and Utilities 24,180,147 22,682,192 (1,497,955) -6.2% Casualty and Liability 1,272,684 1,230,227 (42,457) -3.3% Purchased Transportation 36,259,348 35,190,791 (1,068,557) -2.9% Leases, Rentals and Miscellaneous 1,481,665 1,135,895 (345,770) -23.3% Total Non-Labor 81,707,151 75,627,736 (6,079,415) -7.4% Total Labor and Non Labor 210,941, ,938,455 (9,003,105) -4.3% Cost Recovery (3,779,377) (3,365,499) 413, % Total Operating Expenses 207,162, ,572,956 (8,589,227) -4.1% Capitalized Operating Expenses (26,905,968) (26,905,968) - 0.0% Allocation to Capital & GMP (20,239,715) (19,869,470) 370, % Total Allocation to Capital (47,145,683) (46,775,438) 370, % OPERATING BUDGET 160,016, ,797,518 (8,218,982) -5.1% 13

15 Millions Millions Operating Expenses FY2010 Quarterly Financial & Management Report FY2010 YTD Operating Expenses $170 $150 $130 $110 $90 $160.0 Budget $151.8 Actual Operating expenses through the second quarter FY2010 are $151.8 million compared to $160.0 million budgeted, $8.2 million or 5.1% under budget. FY2010 YTD Operating Expense by Category $50 $40 $30 $20 $10 $- Budget Actual 14

16 Millions Millions FY2010 Quarterly Financial & Management Report $24 FY2010 Monthly Labor & Fringe Benefits $18 $12 $6 $- $16 Oct Nov Dec Jan Feb Mar FY 2010 Budget FY 2010 Actuals FY2010 Monthly Non-Labor Expenses $12 $8 $4 $- Oct Nov Dec Jan Feb Mar FY 2010 Budget FY 2010 Actuals March year-to-date, operating expenses are $8.219 million or 5.1% under budget. Wages are under budget by $1.2 million or 2%. The majority of the variance is driven by 30 cleaner and mechanic vacancies throughout bus, rail and facilities maintenance. The average vacancies for the Wages category thus far (6-months) is 27. Additionally, Sick Leave Cash Out is $69,000 below budget and Bus Operator wages are $576,000 under budget as a result of reduced overtime and less new operator training than planned - associated with lower turnover. Union Fringe Benefits are $269,000 or 1% under budget due to lower expenses in wage-related items such as F.I.C.A., savings in Workers Compensation reflecting a lower level of claims filed than anticipated, and savings in Union health benefits associated with the vacancies discussed above. Since more individuals are collecting unemployment due to the economy, state unemployment tax rates have increased, translating into budget overruns in this line item. 15

17 Salaries and Non-Union Wages are under budget by $621,000 or 2%, primarily reflecting vacancies. As of the end of March, there were approximately 40 salaried vacancies in the Authority. Non-Union Fringe Benefits are under budget by $872,000 or 5%, resulting in part from the salaried vacancies discussed above. Because some employees did not complete the Healthcare Assessment, these employees pay 30% rather than 15% of their total healthcare premiums. This produces savings to METRO. Services are under budget by $2.6 million. The start of contractual services throughout the Authority was slow at the beginning of the year with significant underruns in those months, although the spending level has picked up recently. Advertising expenses are under budget by approximately $479,000 primarily reflecting a delay in ad campaigns. IT service contracts are $394,000 under budget due to underruns in METRONet break-fix maintenance and billing delays. Facilities Maintenance expenses are also $271,000 below budget. A slowdown in the hiring of bus operators early in the fiscal year together with the hiring freeze for non-essential salaried personnel has resulted in savings of $120,000 in HR - related services. Materials and Supplies are under budget by $508,000 or 5%. Timing underruns in Facilities Maintenance and rail parts costs are partially offset by bus parts which are $291,000 over budget, primarily reflecting higher usage. Fuel and Utilities are under budget by $1.5 million or 6%. In the months of October, November, and December, fuel from off-site storage with a lesser cost than budgeted was used. This is the primary reason for the $936,000 savings in diesel fuel. Power expenses (including propulsion power) are $420,000 below budget, resulting from timing and a lower unit rate associated with the extended power contract. Casualty and Liability expenses are $42,000 or 3% below budget, reflecting favorable subrogation recovery in the current month. Purchased Transportation expense is $1.1 million or 3% under budget. Vanpool expenses are $577,000 under budget, resulting from reduced marketing and outreach activities by the contractor earlier in the fiscal year. Fixed route purchased transportation is $219,000 under budget, resulting in part from a performance bonus payment in December that was less than anticipated. METROLift paratransit purchased transportation is $272,000 under budget - reflecting higher productivity in providing paratransit service, reduced service provided on December 4, 2009 (a snow day), savings in minivan bonus payments from missing the target number of complaints, and penalties for lower fuel efficiency than contractually established for METROLift vans. Leases, Rentals & Miscellaneous expenses are $346,000 under budget. Invoices for some IT-related software products are lagging and have created a timing variance of 16

18 approximately $118,000. Tight fiscal control by management of items such as travel expenses ($133,000) and timing in membership dues/subscriptions ($70,000) make up the majority of the balance of the underrun. Cost Recoveries are $414,000 or 11% less than budget, reflecting lower vanpool costs as discussed above in Purchased Transportation. Capitalized Operating Expenses are on budget. Allocation to Capital and GMP is $370,000 or 2% less than budget, reflecting vacancies and a lower level of Capital work. 17

19 Millions General Mobility Expenditures FY2010 Quarterly Financial & Management Report FY2010 YTD General Mobility Budget $80.0 $60.0 $40.0 $20.0 $0.0 $77.3 $42.1 Budget Actual FY2010 General Mobility Program expenditures through the second quarter were $ million compared to $ million budgeted, $ million or 45.6% less than budgeted. General Mobility Budget FY2010 FY2010 YTD Budget YTD Actual Variance Variance ($ millions) ($ millions) ($ millions) (%) City of Houston (19.435) -41.0% Harris County (11.551) -75.2% Multi-Cities (3.831) -33.0% Area-Wide (0.405) -13.8% Total General Mobility Program (35.222) -45.6% City of Houston expenditures through the second quarter of FY2010 totaled $ million, 41.0% less than the $ million budgeted. This is a timing issue as invoices totaling approximately $19.5 million have been received recently and are being processed for payment in April. Harris County expenditures through the second quarter of FY2010 were $3.799 million, 75.2% less than the $ million budgeted. This was due to the County, as relevant project starts and associated invoices are behind the anticipated schedule. Multi-Cities expenditures through the second quarter of FY2010 were $7.792 million, 33.0% less than the $ million budgeted. This was due to delays in the City of Humble's Will Clayton Parkway project ($3.015 million) and the sales tax revenue rebates to Humble, Katy & Missouri City from the Congestion Mitigation Program being less than anticipated. Area-Wide expenditures through the second quarter of FY2010 were $2.521 million, 13.8% less than the $2.926 million budgeted. The primary reason for this variance is due to an initial overestimate of the direct and support labor needed for the Expanded Motorist Assistance Program. 18

20 Millions Capital Expenditures FY2010 Quarterly Financial & Management Report FY2010 YTD Capital Budget $240.0 $180.0 $120.0 $60.0 $0.0 $232.4 Budget Actual $132.6 Capital expenditures for FY2010 were $132.6 million, and are 42.9% or $99.8 million below budget. Major variances in the Capital Budget are identified and discussed below. Capital Budget FY2010 FY2010 YTD Budget YTD Actual Variance Variance ($ millions) ($ millions) ($ millions) (%) METRO Solutions (71.354) -41.5% Capital Improvement Program (28.431) -46.9% Total Capital Budget (99.785) -42.9% METRO Solutions The primary reasons for the underrun are the delays in real estate acquisitions resulting from design improvements and negotiations with Union Pacific Rail Road (UPRR) and University of Houston in addition to other property elements taking longer than anticipated. The real estate underruns per corridor are as follows: East End is $14.2M, North Corridor $9.2M, Southeast Corridor $3.4M, and Uptown Corridor $4.5M. The Facility Provider design/build contract is under budget by $17.7M as the FTA approval of the Full Funding Grant Agreement (FFGA) as well as some of the other third-party (Harris County, City of Houston, etc.) agreements are still in process. Additional underruns are due to Main Street Line vehicle procurements and the associated corridor enhancements taking longer than anticipated in the budget. The remaining variances are from other miscellaneous project elements (program development, independent engineer, etc.), totaling $10.3M. Capital Improvement Program (CIP) The CIP underrun is due to several projects being behind schedule for a variety of reasons. The largest variances are in HOT Lanes ($9M) and the Radio System Upgrade ($9M) because of protracted contract and third-party agreement negotiations. The Safe Bus project ($3.5M) is prolonged due to a longer development phase (models are being tested now anticipate installation of 50% of the fleet by September). In the case of the METROLift van acquisition project, delivery of the vans has been slower than scheduled with 22 of the 59 vans having already been delivered. 19

21 Millions FY2010 Quarterly Financial & Management Report Debt Service $36.0 FY2010 Debt Service $27.0 $18.0 $9.0 $0.0 $31.7 Budget $11.6 Actual FY2010 Debt Service expenditures were $ million compared to $ million budgeted, $ million or 63.5% less than projected. Total Debt Service Debt Service FY2010 FY2010 Budget Actual Variance Variance ($ millions) ($ millions) ($ millions) (%) % The underrun results from a revised financing plan in which METRO s outstanding commercial paper is defeased with appropriation debt scheduled for issuance in mid to late

22 Composite Operating & Capital Statement FY2010 YTD ($000's OMITTED) Budget Actual Variance Gross Income Fares 34,084 30,974 (3,110) Sales Tax Income 237, ,127 1,827 Interest Income 997 1, Other Operating Income 161 1,614 1,453 Inter Government Revenue - 1,166 1,166 Total 272, ,313 1,772 Operating Expenses Transit: Department & Support Expenditures 157, ,893 (9,658) Traffic Management: Department & Support Expenditures Expensed Small Capital Purchases 2,466-3,905-1,439 - Total 160, ,798 (8,219) Gross Income - Total Operating Expenses 112, ,516 9,991 +Federal/State Capital Grants Collected 18,772 9,224 (9,548) Current Year Cashflow Available for Capital Expenditures 131, , Capital & GMP Expenditures Made 309, ,653 (135,006) Current Year Cashflow for Future Capital Expenditures Including Replacements and Operating Expenses All data in year-of-expenditure dollars. Sales Tax reported here is on a cash basis. (178,362) (42,913) 135,449 21

23 Balance Sheet March 2009 ($) March 2010 ($) Change ($) Assets Cash 14,429,526 2,955,164 (11,474,362) Receivables 126,837, ,483,203 (23,353,885) Inventory 30,950,432 22,178,277 (8,772,155) Investments 119,470, ,346, ,876,090 Other Assets 35,570,039 33,507,255 (2,062,784) Property Net of Depreciation 1,438,419,861 1,586,913, ,494,105 Land & Improvements 433,830, ,496,010 47,665,222 Total Assets and Other 2,199,508,039 2,469,880, ,372,231 Liabilities Trade Payables 39,197,587 53,068,213 13,870,626 Accrued Payroll 23,507,413 24,390, ,716 Short-Term Debt 143,000, ,000,000 - Long-Term Liabilities 110,325, ,540, ,214,359 Other Liabilities 33,272,156 35,591,052 2,318,896 Total Liabilities 349,302, ,589, ,286,597 Net Assets - Retained (1) 1,850,205,199 1,791,290,833 (58,914,366) Total Liabilities and Net Assets 2,199,508,039 2,469,880, ,372,231 (1) On a year-to-year basis, net assets decreased by 3.2% or $ 58.9 million. 22

24 Operating Ratio 22% 21% 20% 19% 21% FY2010 Goal 20% FY2010 Actual Through the end of the second quarter of FY2010, METRO s Operating Ratio is 20%, slightly short of the FY2010 annual goal. The fare increase programmed for January 2010 did not take place. As a result of this as well as the decline in ridership, fare revenue is lower than budgeted (which negatively affects the Operating Ratio). 23

25 Miles FY2010 Quarterly Financial & Management Report Key Performance Indicators Mean Distance Between Failures (MDBF) Effective October 2006, Mean Distance Between Failures (MDBF) Mechanical roadcalls are defined as any mechanical issue encountered during operation of the vehicle in revenue service that requires a maintenance action resulting from a mechanical failure. Mechanical failures include warranty and fleet defects but exclude accidents. This indicator is for the bus system but excludes METROLift. 10,000 7,500 6,350 5,000 2,500 - Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep FY2010 Actual FY2010 Minimum Goal Through the end of the second quarter, the bus fleet performed above the FY2010 minimum performance standard of 6,350 MDBF each month. Actual performance was 25% better in January than the MDBF minimum, 45% better in February, and 36% better in March. METRO attributes the performance of the bus fleet to its continuing focus on improved preventative maintenance practices and positive results from maintenance campaign initiatives. On-Time Performance (Service Reliability) Service Reliability assesses the quality of the delivery of bus service by measuring how often the bus meets the scheduled timepoints within the set parameters. Service Reliability is measured by the Integrated Vehicle Operations Management System (IVOMS), which automatically monitors vehicle locations and compares the actual times that buses depart from all timepoints. 24

26 80% 70% FY2010 Local Bus On-Time Performance (Service Reliability) 66% 60% 50% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Local Bus OTP FY2010 Goal A Local or Express bus is considered on-time if it does not leave early and is less than 5 minutes late. In the second quarter, Local buses were reliable an average of 67% of the time, which is one percentage point above the goal of 66%. 90% FY2010 Park & Ride On-Time Performance (Service Reliability) 80% 70% 60% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 70% Park & Ride OTP FY2010 Goal A Park & Ride bus is considered on-time if it does not depart early (except in the morning when a bus can leave from a Park & Ride lot when full) and is less than 5 minutes late - measurements are for peak hours. In the second quarter, Park & Ride buses were on-time an average of 76%, which exceeded the goal of 70% by six percentage points. METRO continues to analyze routes in order to define and resolve some of the issues having a negative impact on On-Time Performance (OTP) like service restoration, system defects, layovers, and proper IVOMS training among Operators. 25

27 100% 95% FY2010 Rail On-Time Performance (Service Reliability) 96% 90% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Rail OTP FY2010 Goal Rail On-Time Performance is based on automated actual arrival and departure times at the terminal stations. A train is considered on-time if it departs a terminal station less than 5 minutes late or arrives at a terminal station less than 5 minutes past the scheduled arrival time. In the second quarter, rail was reliable an average of 97% of the time, which met the goal of 96%. 26

28 Accidents FY2010 Bus Accidents Bus Accidents by Month 46 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Goal Actual FY2009 Actuals FY2010 Actuals FY2010 Goal Bus accidents for the second quarter of FY2010 were 123, an increase of 1.7% from the same quarter last year. Year-to-date bus accidents also showed increase with a total of 250 accidents, an increase of 8.2% from the year before. To address this trend, METRO plans to expand its Safety Blitzes and Ride Observations to include Contract Services in addition to continuing to promote safety and accident reduction initiatives (like operator intersection safety awareness refresher training) at the Bus Operating Facilities. FY2010 Rail Accidents Rail Accidents by Month Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Goal Actual FY2009 Actuals FY2010 Actuals FY2010 Goal Rail accidents for the second quarter of FY2010 totaled 11 which represent a 37.5% increase from the same quarter last year. This upward trend is mostly due to road vehicles running red lights. Assistance from METRO Police is currently being provided at affected locations of high incidents to further analyze and rectify this trend. METRO Police s increased presence at the Texas Medical Center (TMC) was successful in preventing accidents. To reduce future accidents, METRO continues ongoing education of its Train Operators in order to increase awareness of hazards and changes along the alignment. 27

29 Complaints Through the second quarter of FY2010, METRO received 4,211 complaint calls from customers. This is 16.1% below the complaints goal for the second quarter. 2,500 2,000 1,500 1, Complaint Calls by Month Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 1,674 FY2009 Actuals FY2010 Actuals FY2010 Goal Year-to-date as compared to FY2009, overall complaints decreased 0.6% with complaints regarding timeliness and reliability declining 5.9%. However, complaints about operator behavior increased 8.5%, complaints about operator driving increased by 11.5%, and complaints regarding METROLift increased by 6.2%. FY2009 YTD FY2010 YTD Change % Operator Behavior 2,686 2, % Timeliness & Reliability 1,963 1, % Driving Safety 1,142 1, % METROLift % Equipment Problems % Crowded Bus or Rail Car % Other 1,373 1, % COMPLAINT TOTALS 8,428 8, % FY2009 and FY2010 complaints are measured by the number of complaint calls received. The top 25 operators at each garage that have the most complaints have been identified and counseled by garage management. Currently, each identified operator is in the process of going through a required passenger relations training course. Complaint Calls by Category 3,500 3,000 2,500 2,000 1,500 1, Operator Behavior Timeliness & Reliability Driving Safety METROLift Equipment Problems Crowded Bus or Rail Car Other FY2009 YTD FY2010 YTD 28

30 Major Security Incidents FY2010 Quarterly Financial & Management Report Major Incidents are those categories that are listed in the FBI Part I Crimes used in national crime reporting. In the second quarter of FY2010, Part I Crimes averaged 28 incidents a month and totaled 85 incidents compared to 104 incidents totaled the same quarter in FY an 18% decrease. Major Security Incidents by Month Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep FY2009 Actuals FY2010 Actuals FY2010 Goal Major Security Incidents by Category Larc/Theft Robbery Auto Theft Agg. Assault Burglary Arson Homicide Forc. Rape FY2009 FY2010 Part I Crime OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY2010 TOTAL Homicide Forc. Rape Robbery Agg. Assault Burglary Larc/Theft Auto Theft Arson TOTAL During the second quarter of FY2010, Part I Crimes for Robberies, Larceny and Thefts were down by 12.5% when compared to the second quarter of FY

31 Part I Crimes FY2010 Crime by Location - METRO Properties Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Part 1 Crime: Bus Rail P&R, Transit Ctrs FY2010 Goal 32 The second quarter s Park & Ride crime showed a 50% decrease with 19 incidents reported -compared to the 38 incidents reported in the first quarter. This reduction was a result of two key, pro-active initiatives. METRO bolstered its efforts of monitoring surveillance video received through METRONet, the Authority s 24/7 system of security cameras recording activity at all METRO Park & Ride lots. In addition to its current Transtar personnel who monitor this video, METRO assigned two officers to further assist in this responsibility. As a result of this increased surveillance, METRO was able to arrest four suspects of Park & Ride crimes from video through METRONet. METRO also implemented the effective crime prevention tactic of locking all entrance gates during midday operations at four high-incident Park & Ride locations. This tactic proved instrumental in the reduction of Park & Ride crime this quarter. There were zero crimes reported onboard light-rail vehicles in the second quarter of FY

32 Total Calls & Routed Calls (000's) Service Level (%) Average Wait Time (seconds) Goal = 60 Seconds Customer Service Center FY2010 Quarterly Financial & Management Report 450 Customer Information Center Key Indicators % 86% 88% 89% 89% 94% 91% 92% 95% 93% 92% 92% Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar Service Level (%) Calls Received and Routed to Customer Service (000's) Total Calls Average Wait Time (sec) The Customer Information Center (CIC) maintained an average answer delay of 43 seconds during the second quarter of FY2010 as compared to 65 seconds during the second quarter of FY2009. This represents a 34% decrease in the average answer delay. In addition, the number of customer calls offered into the CIC during the second quarter increased 9.74% from FY2009 to FY2010. With the merger of the Customer Information Center and the METROLift Call Centers, the Authority has been able to increase efficiency and productivity through cross-training and improved monitoring by supervisory personnel. 31