FY2008 Quarterly Financial & Management Report

Transcription

1 FY2008 Quarterly Financial & Management Report INDEX Page Highlights Strategic Response to Increased Ridership 2 Vanpool Routes Added to Address Growth in Customer Demand 2 Concent Agreement Finalized / East End Construction Underway 3 Bus Program Receives $7 Million FTA Award 3 METRO Police Department Hosts Public Safety Award Ceremony 4 Bike Boardings On The Rise 4 METRO Solutions Phase II - New Partner Selected 4 New Safety Devices Installed on METRO Buses 5 Management Discussion and Analysis Ridership Trends 6 Financial Performance Revenues 10 Operating Expenses 12 General Mobility Expenditures 16 Capital Expenditures 17 Key Performance Indicators 19 Composite Operating and Capital Statement 27 Balance Sheet Aug-08 1

2 FY2008 Quarterly Financial & Management Report Highlights Strategic Response to Increased Ridership As gasoline prices continue to skyrocket, a significant number of Houston residents have begun making adjustments to their commute schedules to curtail increased transportation costs. More and more commuters are now seriously looking at other ways to manage the ever increasing transportation costs and METRO is a solution. In April, METRO had over a 15% increase from April 2007 in Park & Ride ridership. With this trend in rising gasoline costs continuing, the Agency is working on several plans to meet increased demand. On Monday June 16, 2008, additional early morning service was added to 14 of the busiest Park & Ride routes including 204 Spring, 214 Northwest Station, 228 Addicks, 246 Bay Area, 257 Townsen, 265 West Bellfort, 283 Kuykendahl/Greenway and the 298 Kingsland/Addicks/TMC. In addition, 52 new hybrid commuter buses are scheduled for delivery later this year. These will be put into service immediately to ease overcrowding in bus services currently experienced during peak times on several routes. Matching increasing ridership demands was the focus of the June 2008 service change which went into effect on Sunday June 1, Service was added to relieve overcrowding on many routes, and bus schedules were adjusted on both local and park & ride routes in order to improve schedule adherence. Vanpool Routes added to Address Growth in Customer Demand In recent months, METRO has seen an increasing number of customer inquiries into its Vanpool programs. In the 3 rd quarter, METRO added approximately 50 new vanpools to provide service to 721 new riders. In addition, by the end of June, the total number of vanpools reached 704. Vanpooling has many benefits including reducing stress levels, lowering gas and maintenance expenses on personal vehicles, lowering personal auto insurance rates, saving time with the use of High Occupancy Vehicle (HOV) Lanes, providing a reliable source of transportation to and from work, reducing congestion by lowering the number of vehicles on roadways and reducing harmful emissions. Vanpool services are available not just for commuters traveling to the downtown Houston area but also to those traveling to other cities such as Sugar Land, The Woodlands and Galveston. Many companies offer vanpool benefits to their employees and their influence has contributed significantly to vanpool growth in the recent months. Each qualified vanpool rider receives a $35 monthly incentive to be applied towards the van lease fee (if a rider rides at least 12 days in the month) and some employers offer additional transportation benefits or even pick up the entire tab; thus helping employees reduce their commuting costs. 2

3 FY2008 Quarterly Financial & Management Report Highlights Consent Agreement Finalized / East End Construction Underway The Consent agreement which outlines how work will proceed on the City of Houston right-ofway has now been finalized. Approval of the agreement signals the creation of a partnership among Houston s elected officials, the community and METRO. The Agency expects to continue seeking input from the government leaders and the community, and is arranging future meetings with the City Council to discuss issues such as the alignment of the University Corridor and Main Street. METRO supports the Community Advisory Boards for each alignment and maintains a dedicated website for the project. Approval of the Consent agreement was an important accomplishment in paving the way to begin construction on the METRO Solutions light rail corridors. On June 26, 2008, a groundbreaking ceremony was held for the light rail construction in the East End. The East End line will provide area residents and businesses with connections to the rest of the city with a faster, more reliable mode of transit. There will be a four mile ride from the Magnolia Transit Center to Downtown Houston, with the last portion of the track shared with the Southeast line. Riders will be able to transfer to Southeast line and go all the way to the University of Houston Main campus and Palm Center. East End Line rides will also have a transfer point to METRORail s existing Red Line on Main Street. On June 30, 2008, to signal the beginning of construction, barriers were placed on the intersection of Harrisburg and Milby to prevent motorists from accessing the construction zone. The East End Corridor construction phase will culminate with 30 additional miles of light rail that will serve the Houston area. Bus Program Receives $7 Million FTA Award On June 2, 2008 the Federal Transit Administration (FTA) allocated $7 Million to METRO s Bus and Bus Facilities Program for FY2008. This award is one of the largest amounts allocated to bus and bus facility purchases. METRO will apply the money toward the purchase of replacement buses. In addition to fleet upgrades, additional eligible programs include facilities, Park & Ride stations, Intermodal Terminals, passenger shelters, and bus stop signs. 3

4 FY2008 Quarterly Financial & Management Report Highlights METRO Police Department Hosts Public Safety Award Ceremony Safety and security on the transit system, transit related projects and the High Occupancy Vehicle (HOV) Lane system are high priorities for METRO. Every year the Agency holds a Public Safety Award ceremony to recognize achievements through outstanding service and dedication of employees in promoting this mission. The following awards were presented on May 13, 2008: Officer of the Year - Officer Rodney James Bacon Meritorious Service Award - Officers Steven Garber, Bryan Skero, and Andrew Lynn Life Saving Award - Officer Roger Salazar Public Service Award - Christopher Islas, Kelly West, Kelvin Trotter Other awards presented included Supervisor of the Year, Manager of the Year, Support Employee of the Year, Unit Citation Corporate Award and Chief of Police Commendation. Bike Boardings On The Rise The Bikes-on-Buses program posted a record 2,567 bike boardings in May 2008, 70 percent increase over the prior month. This program, launched in April 2007, equipped local buses with bike racks and commuter buses with luggage compartment storage to transport bicycles. The bike racks hold two bicycles securely, are easy to use, and fit most types and sizes of bikes. The program is receiving more and more attention as commuters look for alternative transportation options in an effort to save on travel costs. This year May 16 th, 2008 was designated as the National Bike to Work Day a concept which is part of a nationwide effort to promote a clean commute and reduce pollution from ozone emissions. The City of Houston supported this concept and in Houston the Energy Corridor District encouraged employees to bike to work on May 15, 2008 in recognition of this day. METRO Solutions Phase II New Partner Selected In order to maintain the current schedule of METRO Solutions Phase II, METRO decided to proceed with a new development partner - Parsons Transportation Group. Parsons was one of the three initial pre-qualified bidders for the first phase of the METRO Solutions development work and has a resume of transportation work that includes light rail projects across the country. The Authority is negotiating with Parsons Transportation Group to design, build, operate and maintain its next four light rail lines: East End, North, Southeast and Uptown. 4

5 FY2008 Quarterly Financial & Management Report Highlights New Safety Devices Installed on METRO Buses As part of bus safety improvement program, the Authority is always looking for new ways to improve safety. In January 2008, METRO began testing a new device on 150 of its buses. The devices are known as Wheel-Checks. The bright-green plastic rings are designed to alert mechanics and drivers of loose nuts or an overheating wheel. Since the Wheel-Check is also heat sensitive, it can identify a hot wheel condition that could be caused by a tight brake or a wheel bearing problem. Bus operators and mechanics have been educated on the new device and inspecting the Wheel-Checks are now a required component of bus operator pre-trip inspections. 5

6 Ridership Trends Total system ridership in the third quarter of FY2008 including foxed route bus, METRORail, METROLift, Special Events, Star vanpool and HOV Vanpools/Carpools is shown below. Ridership changes are more fully discussed in the next three pages. Total System Ridership Ridership in Millions Apr 07 Apr 08 May 07 May 08 Jun 07 Jun 08 YTD Total System Ridership Ridership in Millions FY2007 FY2008 Beginning in the 3 rd quarter FY08 report, fixed route bus and rail ridership reporting is based on Automatic Passenger Counter (APC) information. In FY2007, APC was not fully calibrated and therefore undercounted ridership. 6

7 Adjusted Boardings June FY2008 YTD Change from June 2007 YTD Fixed Route Ridership Service Type Local & Express Park & Ride Rail Unadjusted APC Boardings June FY2008 YTD Change from June 2007 YTD 57,977,647 1,283,613 39,274,251 5,272,561 6,915, ,137 5,749,458 1,330,437 9,093, ,772 9,127, ,243 73,986,381 2,567,522 Total Fixed Route 54,150,967 7,099, FY2008 Fixed Route Bus and Rail Service Ridership in Millions OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP Fixed Route ridership is reported based on unadjusted Automatic Passenger Counter (APC) information. 7

8 Fixed Route Service (continued) Major factors contributed to ridership increases throughout FY2008: FY2008 METRORail Service Ridership in Millions Higher gasoline prices have resulted in additional boardings, particularly on Park & Ride service. Investments such as additional time added to bus schedules and improved connectivity to METRORail to improve service reliability have increased boardings. Ridership on both bus and rail service serving or within the Texas Medical Center has increased. METRO has experienced higher levels of holiday ridership than last year. Growth has been observed in bus ridership on routes on which InfoPanels have been installed. Adding additional Sunday service on Westheimer bus routes has resulted in additional boardings. The introduction of new service such as the Grand Parkway and Baytown Park & Ride routes have resulted in additional boardings OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY2008 Fixed Route Bus Service Ridership in Millions OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY2008 Local & Express Bus Service Ridership in Millions OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY2008 Park & Ride Service Ridership in Millions OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP 8

9 400 Special Bus Services Ridership in Thousands Special Bus Services Special Bus Services have three components: METROLift (service on-demand), Star vanpool service (special bus service utilizing non-metro operated vans), and Special Events/Charter service. These services do not have fixed routes or a set schedule. Total ridership for Special Bus Services for FY2008 year-to-date is million. METROLift ridership is million boardings through the third quarter FY2008 and has increased due to higher demand Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep FY08 METROLift Service Ridership in Thousands In April 2008, METRO introduced Star vanpool service; a new name for the former METROVan service. In the 3rd quarter of FY2008, Star has experienced growth of 50 new vanpools, bringing the total to just over 700 vanpools. Special Event and Charter Bus Service decreased YTD from the same period last year. In the months of February and March, Special Events ridership reflected reduced service for the Rodeo and no service for the Shell Houston Open Golf Tournament. Recent Federal regulations have curtailed this type of service Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep FY08 METROVan Service Ridership in Thousands Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep FY08 9

10 Financial Performance METRO Revenues FY2008 YTD ($millions) Budget Actual Differences Fares % Sales Tax (Cash Basis) % Interest & Miscellaneous % Subtotal % Grants % TOTAL % Fares FY2008 year-to-date actual fares compared to the budget are up $1.7 million or 4.5%, primarily the result of increased ridership and the effects of the fare restructuring. FY2008 year-to-date actual fares compared to year-to-date actual fares in FY2007 are up $3.1 million or 8.4%. FY2008 Fare Revenue by Month ($millions) FY2008 YTD Fares ($millions) $5.0 $40.0 $37.8 $39.5 $4.0 $30.0 $3.0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep $20.0 FY2008 Budget FY2008 Actual Budget Actual 10

11 Sales Tax Revenue Sales tax revenue (cash basis) for the third quarter FY2008 year-to-date is $383.5 million - $47.2 million or 14.1% above budget. Compared to the actuals through the third quarter FY2007 year-to-date, sales tax revenue is $28.4 million or 8.0% higher in FY2008 as an impressive Houston economy continued. METRO's consultant, Dr. Barton Smith, had the following conclusions about Houston's economy in his June 2008 report. "Even with a declining employment growth rate, Houston's economic health continues to be impressive, far outpacing the nation as a whole. Despite a drop in the growth rate... Houston's growth rate is still greater than any other major metropolitan area. This top ranking is likely to continue at least through calendar year 2008." $60 Actual Sales Tax Revenue by Month - Cash Basis ($millions) YTD Actual Sales Tax Revenue Cash Basis ($millions) $50 $400 $40 $30 $350 $300 $355.1 $383.5 $20 Oct Nov Dec Jan Feb M ar Apr M ay Jun Jul Aug Sep $250 FY07 FY08 FY07 YTD FY08YTD Grant Revenue Grant revenue through the second quarter FY2008 is $21.0 million compared to $36.5 million budgeted, 42.5% below projection. Under FTA policy, METRO receives grant funds only once the expenditures are incurred. As a result, when the project expenditures are running under budget, due to rescheduling, etc., grant revenue is also under budget. FY2008 YTD Grant Revenue ($millions) FY2008 Grant Revenue by Month ($millions) $40.0 $30.0 $36.5 $8.0 $6.0 $20.0 $21.0 $4.0 $10.0 $2.0 $0.0 FY2008 Budget FY2008 Actual $0.0 Oct Nov Dec Jan Feb M ar Apr M ay Jun Jul Aug Sep FY08 Budget FY2008 Actual Interest and Miscellaneous Revenues in this category were $1.1 million, or 15.6% under projection mainly due to a smaller portfolio size resulting from Capital and General Mobility expenditures made from general funds rather than Commercial Paper proceeds as originally planned. 11

12 Operating Budget FY2008 OPERATING BUDGET, EXPENSES, AND VARIANCE Year-to-Date Year-to-Date $ Variance % Variance Expense Category Budget Expenses (favorable)/unfavorable Wages 70,508,062 70,633, , % Fringe Benefits Union 33,476,139 32,452,414 (1,023,725) -3.06% Total Union Labor 103,984, ,086,321 (897,880) -0.86% Salaries and NonUnion Wages 53,792,014 52,681,017 (1,110,997) -2.07% Fringe Benefits Non-Union 23,064,519 22,112,304 (952,215) -4.13% Total Non-Union Labor 76,856,533 74,793,321 (2,063,212) -2.68% Total Labor and Fringe Benefits 180,840, ,879,642 (2,961,092) -1.64% Services 11,321,410 7,269,700 (4,051,710) % Materials and Supplies 14,165,571 13,557,058 (608,513) -4.30% Fuel & Utilities 29,730,912 28,226,022 (1,504,890) -5.06% Casualty and Liability 2,953,024 2,387,960 (565,064) % Purchased Transportation 52,013,947 49,302,894 (2,711,053) -5.21% Leases, Rentals and Miscellaneous 2,102,172 1,723,894 (378,278) % Total Non-Labor 112,287, ,467,528 (9,819,508) -8.75% Total Labor and Non Labor 293,127, ,347,170 (12,780,600) -4.36% Cost Recovery (6,358,949) (4,627,915) 1,731, % Total Operating Expenses 286,768, ,719,255 (11,049,566) -3.85% Capitalized Operating Expenses (40,775,582) (40,775,582) % Allocation to Capital & GMP (29,785,111) (30,046,364) (261,253) 0.88% Total Allocation to Capital (70,560,693) (70,821,946) (261,253) 0.37% OPERATING BUDGET 216,208, ,897,309 (11,310,819) -5.23% 12

13 Operating Expenses Operating expenses for the third quarter FY2008 are $ million compared to $ million budgeted, $2.658 million or 3.7% below budget. Year-to-date, operating expenses are $216.2 million, 5.2% below the budget of $204.9 million. Year-to-date operating budget variances are explained below: Wages are $126,000 or 0.2% over budget primarily due to higher than budgeted bus operator wages, partially offset by savings in maintenance wages. Bus operator wages are $647,000 over budget due to higher than budgeted sick leave requiring unplanned overtime to meet service requirements. Operator training expenses were also higher than planned. Approximately $180,000 in increased training expense represent terrorist training, the cost of which is offset by grant funding. Offsetting the bus operator wage overruns are savings in Bus Maintenance, Rail Operations and Facility Maintenance wages attributable mainly to vacancies in mechanic and cleaner positions. $230.0 $210.0 $190.0 $170.0 $80.0 $60.0 $40.0 $20.0 FY2008 YTD Operating Expenses ($millions) Budget Actual FY2008 YTD Operating Expenses by Category ($millions) Union fringe benefits are $1.0 million or 3.1% under budget. Over two thirds of the underrun is in Union healthcare expense, reflecting lower enrollment than budgeted resulting from vacancies and lower than expected participation. F.I.C.A. is under budget as a result of vacancies. Underruns in Uniform & Tool are timing related. Salaries and non-union wages are under budget by $1.1 million or 2.1% mainly due to vacancies throughout the Authority through the end of June. $0.0 $22.0 $20.0 Wages Salaries Fringe Benefits Purchased Transportation Budget Services Materials & Supplies Actual Fuel & Utilities Casualty & Liab. Leases, Rentals & Misc. FY2008 Labor and Fringe Benefits by Month ($millions) Non-Union fringe benefit expenses are under budget by $952,000 or 4.1% largely resulting from an underrun in healthcare costs attributable to vacancies and lower than anticipated year to date claims experience. In addition, other non-union fringe benefits are under budget due to vacancies. $18.0 $16.0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Budget Actual 13

14 $15.0 FY2008 Non-Labor Expenses by Month ($millions) $10.0 $5.0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Budget Actual Services expenses are under budget by $4.1 million or 35.8%. A large timing variance continues, resulting from the slower utilization of and delays in contractual services throughout the authority such as advertising and maintenance contracts, and the delay in receipt of invoices. The underrun is expected to diminish somewhat. Materials and supplies are under budget by $609,000 or 4.3%. Bus Parts are approximately $124,000 under budget as a result of efforts to contain usage levels while maintaining safe and reliable service. Rail parts are approximately $324,000 under budget mostly resulting from increased warranty recovery, in-house repair of some components rather than replacement, and savings resulting from capital investments. Fuel & utilities are under budget by $1.5 million or 5.1%. Diesel fuel is under budget by $1.2 million primarily due to savings from improved fuel efficiency of the bus fleet and from the utilization of fuel from bulk storage (bought at a price lower than budgeted). The balance reflects delayed receipt of telecommunications invoices, and timing in the receipt of invoices for electric power. Casualty and liability expenses are $565,000 or 19.1% below budget and are driven by aggressive subrogation recovery. In addition to normal subrogation activity, two large recoveries were received earlier in the fiscal year resulting from a bus destroyed in a fire and a Worker s Compensation case. Additionally, in the month of April, METRO recovered over $100,000 resulting from several large workers compensation claims. Expenses and recoveries in this category can be unpredictable and variances should be treated as timing variances until the end of the fiscal year. Purchased transportation expense is $2.7 million or 5.2% under budget. This is primarily due to a continued underrun in vanpool expenses caused by program delays in converting to a fare collection based system. The conversion timeline assumed additional contractor labor costs for financial and individualized marketing activities and additional non-labor costs such as banking fees. As a result, year-to-date expenses are approximately $2.1 million 14

15 below budget (and correspondingly, the cost recovery that covers these expenses has not occurred). Purchased transportation cost for the Northwest bus operating facility is $503,000 below budget, the result of a lower than planned bonus payment to First Transit combined with savings achieved from a lower than budgeted hourly rate paid to the contractor. Special Events purchased transportation is under budget by $236,000. This year, METRO provided a lower level of service to the Houston Livestock Show & Rodeo and did not provide service to the Shell Houston Open Golf Tournament. Correspondingly, Cost Recovery for Special Events service is less than budget. Leases, rentals & miscellaneous expenses are $378,000 or 18.0% under budget. The majority of this variance is from out of town travel not yet utilized and invoice delays in software license fees. Cost recoveries are $1.7 million or 27.2% less than budget. Vanpool program cost recovery is below budget resulting from the corresponding underrun in vanpool purchased transportation expenses discussed above and represents $1.4 million of the variance. Approximately $366,000 results from reduced cost recovery based on the lower level of service provided for Rodeo and other Special Events. Capitalized operating expenses are on budget. The Allocation to Capital and GMP is $261,000 or 0.9% greater than budget resulting from higher than planned allocation of expenses to Capital and General Mobility programs. 15

16 FY2008 YTD GMP Expenditures ($millions) General Mobility Expenditures $150.0 Through the third quarter of FY2008, General Mobility Program expenditures are $131.5 million compared to $137.2 million budgeted, $5.7 million or 4.2% lower than projected. $130.0 $110.0 $137.2 $131.5 $90.0 Budget Actual FY2008 YTD FY2008 YTD Budget Actuals Variance ($millions) ($millions) ($millions) City of Houston Harris County Multi-Cities Area-wide Total General Mobility Program Expenditures through the third quarter of FY2008 for Harris County projects were $ million. This is 4.1% under budget resulting from County invoicing being less than anticipated. Expenditures through the third quarter of FY2008 for Multi-Cities projects were $ million. This is 54.9% more than budgeted due to acceleration of funding for all remaining Multi-Cities Future Designated Projects obligations. Expenditures through the third quarter of FY2008 for Area-Wide projects were $4.308 million. This is within 2% of the budgeted amount. 16

17 FY2008 YTD Capital Expenditures ($millions) Capital Expenditures - update $220.0 $200.0 Capital expenditures for the third quarter FY2008 are $79.2 million compared to $94.2 million budgeted, $15.0 million, or 15.9% lower than projected. Year-to-date, expenditures are $158.1 million, $51.9 million or 24.7% below budget. Major variances in the Capital Budget are identified below. $180.0 $160.0 $140.0 $210.0 Budget $158.1 Actual FY2008 YTD Budget FY2008 YTD Actuals Variance ($millions) ($millions) ($millions) METRO Solutions Capital Improvement Program Total Capital Budget METRO SOLUTIONS For the third quarter of FY2008 METRO Solutions saw construction work begin in the East End Corridor. Preliminary engineering has continued on the North, Southeast and Uptown Corridors. Progress has been delayed in the University Corridor LPA (Locally Preferred Alignment) approval resulting from additional study. The variance is due primarily to the delay in ROW/Land acquisitions for all corridors with the exception of the East End Corridor. -$11.1 million 17

18 CAPITAL IMPROVEMENT PROGRAM Bus Acquisitions and Improvements The primary reason for the underrun in Bus Acquisitions is continued development of the Capital Lease program. The axle rebuild program has been slow to develop and will be continued into next fiscal year. Engines replacement scope have been scaled back due to parts availability. Additionally, support vehicle replacement is also lagging and will be under budget for the year. Operating Facilities & Upgrades The MFRI (Major Facility Rehabilitation Initiative) program is $1.4 million under budget; however, project execution has been accelerated and is forecast to be on budget by the end of the fiscal year. The remaining variance is due to postponement of security upgrades at 1900 Main, delay in securing a diesel storage facility and further evaluation of Emergency Preparedness needs. Information Technology The primary underrun of $7.9 million is caused by a change in the implementation plan of the Safe Bus/Replace ARCS radio system. The Core Applications system upgrades, SAP Upgrade and Fortify Network Communication projects have also been delayed to evaluate the ERP (Enterprise Resource Planning) system viability which accounts for the remaining underrun. -$11.2 million -$2.3 million -$12.6 million Development Projects - Real Estate The underrun is primarily due to additional study and analysis of the Fannin South Transit Oriented Development and Transit Oriented Development Marketing Analysis projects. Work is progressing with two developers for the Fannin South TOD. The Intermodal Terminal contract is pending and should be executed shortly. These slow developing projects will continue into fiscal year Other Miscellaneous Variances Transitways, Homeland Security, Shop Tools & Equipment and P&R Lots, are also slightly under budget due to schedule slippage and scope reductions. Subtotal Capital Improvement Program GRAND TOTAL CAPITAL BUDGET & METRO SOLUTIONS -$6.8 million -$7.9 million -$40.8 million -$51.9 million 18

19 Key Performance Indicators Operating Ratio FY2008 Operating Ratio - June YTD 20% 18% 19.0% 18.4% 16% FY2008 Goal FY2008 Actual Through the third quarter, the year to date Operating Ratio is 18.4%, 3.2% below the FY2008 annual goal of 19.0%. It is important to note that a key assumption for setting the annual goal at 19% was increased fare revenue to be collected after the implementation of fare restructuring. A three month transition to the new fare structure began January With the full Q Card implementation that took effect in April, we have now started to see the positive effect of the fare restructuring, as the operating ratio for the month of June was 19.9%. 19

20 Key Performance Indicators Mean Distance Between Failures (MDBF) Mean Distance Between Failures by Month (miles) 9,000 6,000 5,250 3,000 0 OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEPT FY08 Actual FY08 Minimum Goal In the third quarter, the bus fleet performed above the FY2008 minimum performance standard of 5,250 MDBF. Actual performance was 44 percent better in April than the MDBF minimum, 25 percent better in May and 24 percent better in June. The Operations Department is focusing on improving the practices of managers and the productivity of mechanics to improve performance of the bus fleet. Managers are performing more random inspections of buses. Facility Superintendents and General Foremen spot-check buses to asses the condition of the buses and the quality of work performed. They then coach first-line foremen and mechanics on what they discovered during the spot-checks. The Department is also assessing mechanics' ability to find areas where knowledge can be improved. Following the assessment, courses will be developed and offered to mechanics to improve their abilities and knowledge, which will improve their productivity. The Department also hopes that this process will allow most of its mechanics to be certified by the National Institute for Automotive Service Excellence (ASE), an independent, non-profit organization which tests and certifies mechanics. 20

21 Key Performance Indicators Service Reliability (On Time Performance) FY2008 Local Bus Service Reliability (OTP) FY2008 Park & Ride Service Reliability (OTP) 80% 80% 70% 60% 61% 60% 40% OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP 40% OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP Local Bus Serv. Reliability (OTP) Goal Park & Ride Serv. Reliability (OTP) Goal Service Reliability assesses the quality of the delivery of bus service by measuring how often the bus meets the scheduled time points within the set parameters. There are different goals and measures for Local and Park & Ride services. A Local bus is considered on time if it does not depart early or departs up to 5 minutes late. Data is taken from all timepoints for all days and hours of service. In the third quarter, Local buses were reliable 56% of the time, which is 5 percentage points below the goal of 61%. However, this is an improvement of 8% in service reliability from the beginning of the fiscal year. An inbound Park & Ride bus during the morning peak is considered on time if it departs from the Park & Ride lot as scheduled, no more than 5 minutes before the scheduled time if full, or up to 5 minutes late if not full. An outbound Park and Ride bus during the afternoon peak is considered on time if it does not leave scheduled timepoints early or up to 5 minutes late. In the third quarter, Park & Ride buses were on time an average of 71%, which is 1 percentage point above the goal of 70%. 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. The data reported is adjusted only for delays of 20 minutes or more which are considered anomalous and therefore excluded. The Operations Department has formed a working group, including Bus Operators, to focus on the routes which have been classified as the worst performers (reliability below 50%). The group has been assessing actual performance of trips, increasing the management of routes by the Control Center, performing ride checks, and informing Operators of the proper use of IVOMS to manage their schedule. The number of dispatchers have increased to help manage the performance of each route on a consistent basis. In June 2008, the Operations Department implemented a special Route 82 Management Project under the professional assistance of a contractor from INIT, to provide hands on training on techniques of managing routes and restoring service. The project has netted an improvement of 7 percentage points in the performance of the route for the 30-day period. 21

22 Accidents FY2008 Quarterly Financial & Management Report Key Performance Indicators Bus Accidents by Month FY2008 Bus Accidents OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY07 FY08 FY08 Goal FY08 Goal 392 FY08 Actual Rail Accidents by Month FY2008 Rail Accidents OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP 0 FY08 Goal FY08 Actual FY07 FY08 FY08 Goal Bus accidents for the third quarter (121) were 25.0% better than goal through conducting over 3,000 observation rides on buses and trains, completing over 100 route hazard analyses, and the performance of 13 safety blitzes at operating facilities. Rail accidents in the third quarter totaled 18. The increase in rail accidents is attributed to an increase in illegal left turns along with vehicles running red lights along the rail line System Safety will work closely with the Operations Department to reduce accidents by increasing safety compliance checks in the field, increasing safety blitzes, and increasing ride checks by mystery riders. System Safety will also work closely with the Planning, Engineering, and Construction Department in instituting an "all red" for trains in the Central Business District. 22

23 COMPLAINTS Through the third quarter of FY2008, METRO received 18,049 complaint calls from customers. This is 37.3 percent below the maximum number of complaints set through the first three quarters. Key Performance Indicators 4,000 3,000 Complaint Calls by Month 3,200 It is important to note that, through the third quarter, complaints regarding Operator behavior and driving safety have declined as compared to FY2007. The Operations Department is recognizing almost 400 Bus Operators with superior customer service skills. These Operators are being recognized because they did not have any verified customer complaints in the past year. These Operators have received pins featuring a representation of a METRO Bus and identify the Operator as a "Top Customer Service Ambassadors". Short chains link a small "1 Year" plaque to the bottom of the pin. In future years, additional plaques can be added to recognize Operators for further years of service without verified customer complaints. 2,000 1,000 OCT NOV DEC JAN FEB MAR FY08 FY2007 YTD APR MAY Monthly Maximum JUN JUL AUG SEP FY2008 YTD Change % Operator Behavior 6,326 6, % Timeliness & Reliability 4,192 4, % Driving Safety 2,359 2, % METROLift 1,226 1, % Equipment Problems % Crowded Bus or Rail Car % Other 2,256 2, % COMPLAINT TOTALS 17,174 18, % FY2007 and FY2008 complaints are measured by the number of complaint calls received. These Bus Operators will also be saluted with individualized bus cards. Each Operator s picture, their name and home Bus Operating Facility will be displayed on the bus cards. 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Operator Behavior Timeliness & Reliability Complaint Calls by Category Driving Safety METROLift Equipment Problems Crow ded Bus or Rail Car Other FY2008 YTD 23

24 Key Performance Indicators Major Security Incidents Major Security Incidents by Month Major Security Incidents by Category Larc/Theft Robbery Auto Theft Agg. Assault FY07 Burglary Arson Homicide FY08 0 OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY07 FY08 FY08 Goal Major Incidents are those categories that are listed in the FBI Part I Crimes used in national crime reporting. The third quarter FY 2008 Part I Crimes averaged 34 incidents a month for a total of 104 compared to 133 the same quarter FY 2007 which represents a 22% decrease. This quarter Part I Crimes on board bus, rail car, rail platforms,. at transit centers and at park and rides averaged 17 incidents per month. At these locations we are 47% below our monthly goal of 32 incidents per month. Part I Crime OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP FY08 TOTAL Homicide Forc. Rape Robbery Agg. Assault Burglary Larc/Theft Auto Theft Arson TOTAL

25 Key Performance Indicators 20 FY2008 Crime by Location - METRO Properties OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP Bus Rail Park & Rides Thereweremanypro-activepoliceeffortsthatwebelieveareimpactingorcontributingtoouroverall reduction in Part I Crimes. The Bus Marshall Program with plain clothes officers targeting the high crime bus routes, the 77 and the 2 bus lines, during this reporting period. Overtime officers were responsible for 188 misdemeanor arrest, 20 felony arrest and 651 citations. As part of the Bus Marshall Program, three lease trucks were assigned to support security efforts on targeted bus routes. The METRO Police Attacking Crime Trends (MPACT) program focused initiatives and proactive policing efforts will continue to attack crime trends affecting the system and changing conditions that impact community and system reported crime. 25

26 Key Performance Indicators Customer Service Center The Customer Information Center (CIC) maintained an average answer delay of 55 seconds during the third quarter of FY2008 (59 seconds in April, 50 seconds in May and 55 seconds in June). 544,152 calls to agents represented a 16% increase over the same period in FY2007 and an increase of 7% over the 2nd quarter of this year. The number of calls answered in third quarter of FY2008 was 478,340 vs. 414,416 answered in the FY2007 period, an increase of 15%. The increased call handling capacity was accomplished through increased overtime and temporary labor hours. During the third quarter of FY2008, the CIC continued the Help Desk for Q Card, utilizing a combination of experienced call center staff and temporary staff. Customers seeking assistance with Q Card transactions, including registering cards, creating an online Q Card account, and inquiring about Q Card transactions and balances, added 43,665 calls during the third quarter. The average answer delay for Q Card Help Desk was 1:09 in the third quarter of FY2008. Customer Information Center Key Indicators Total Calls / Routed Calls (000's) Service Level (%) % 86% 90% 89% 86% 87% 87% 91% 91% 87% 87% 89% Average Wait Time (seconds) 0 0 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Service Level (%) Average Wait Time (sec) Calls Received and Routed to Customer Service (000's) Total Calls 26

27 COMPOSITE OPERATING AND CAPITAL STATEMENT ($000 OMITTED) FY2008 YTD Budget Actual Variance Gross Income Fares 37,772 39,478 1,706 Sales tax income 336, ,847 55,585 Interest Income 6,684 5,425 (1,259) Other operating income Total 381, ,345 56,179 Operating Expenses Transit: department & support expenditures 211, ,015 (14,645) Traffic Management: department & support expenditures 4,548 7,761 3,213 Expensed Small Capital Purchases Total 216, ,897 (11,311) Gross Income Less Total Operating Expenses 164, ,448 67,490 + Federal/State Capital Grants Collected 36,534 21,000 (15,534) Current Year Cashflow Available for Capital Expenditures 201, ,448 51,956 - Capital expenditures made 347, ,577 (57,643) Current Year Cashflow for Future Capital Expenditures Including Replacements and Operating Expenses (145,728) (36,129) 109,599 All data in year-of-expenditure dollars. Sales Tax is reported on an accrual basis. 27

28 BALANCE SHEET As of June 2008 June 2007 June 2008 Change ($) Assets Cash (2,449,999) 8,528,182 10,978,181 Receivables 130,937, ,726,337 7,788,422 Inventory 28,996,819 22,048,681 (6,948,138) Investments 241,183, ,209,217 (90,974,582) Other Current Assets 25,534,047 35,332,834 9,798,787 Property Net of Depreciation 1,292,052,488 1,336,215,632 44,163,144 Land & Improvements 292,262, ,592,638 70,330,336 Total Assets and Other 2,008,517,371 2,053,653,521 45,136,150 Liabilities Trade Payables 42,870,717 48,664,729 5,794,012 Accrued Payroll 18,527,500 23,472,598 4,945,098 Short-term Debt 143,000, ,000,000 - Other Current Liabilities 25,627,108 28,915,924 3,288,816 Total Liabilities 230,025, ,053,251 14,027,926 Net Assets - Retained (1) 1,778,492,046 1,809,600,270 31,108,224 Total Liabilities and Net Assets 2,008,517,371 2,053,653,521 45,136,150 (1) On a year to year basis, net assets increased by1.7% or $ 31.1 million. 28