FY 2013 Financial Plan February 28, 2013

Transcription

1 FY 2013 Financial Plan February 28, 2013 DFW Finance Department P. O. Box DFW Airport, Texas

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3 FY 2013 Financial Plan Introduction TABLE OF CONTENTS Introduction o Investor Disclosure and DFW Background. 1 o Airline Use Agreement Rate Model.. 2 o Related Reports.. 4 o Public Facility Improvement Corporation. 4 Executive Summary o Major Assumptions. 5 o Ten Year Financial Plan. 8 Operating Fund.. 8 Joint Capital Account and Related Bond Proceeds... 9 Terminal Renewal and Improvement Program (TRIP) 10 DFW Capital Account and Related Bond Proceeds o Key Performance Indicators (KPIs). 12 Core Business KPI: Passengers Financial KPI: Airline Cost Financial KPI: Airline Cost per Enplanement 14 Financial KPI: Net Revenues from DFW Cost Center. 15 Financial KPI: Revenue Management Revenue per Enplanement.. 16 Debt Service/Debt Outstanding Debt KPI: Coverage Ratios and Debt per Enplanement Cash KPI: Restricted and Unrestricted Cash 18 Cash KPI: Days Cash on Hand.. 18 Pension Plans and OPEB. 18 Operating Fund o Airfield and Terminal Cost Centers. 19 o DFW Cost Center.. 22 Parking Business Unit.. 24 Concessions Business Unit. 25 Rental Car (RAC) Business Unit Commercial Development Business Unit. 27 o Expenses and Passengers 28 Capital Projects o Joint Capital Account TRIP. 30 o Joint Capital Account Non-TRIP 32 o DFW Capital Account 35 Debt and Cash Reserves o Existing Debt o New Money Bonds (TRIP and Other Capital Projects) o Total Debt Outstanding o Debt Paid By Other Sources o Debt Service Coverage Calculations.. 42 o Cash and Cash Reserves. 43 o Debt Reserves and Sureties Public Facility Improvement Corporation o Grand Hyatt Hotel o Rental Car Facility.. 46 o Hyatt Place Hotel 47 o PFIC Cash Flow Projection á= DFW International Airport February 28, 2013

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5 FY 2013 Financial Plan Introduction INVESTOR DISCLOSURE This Financial Plan contains assumptions and forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such assumptions and statements may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance and achievements to be different from future results, performance and achievements expressed or implied by such assumptions or forward-looking statements. Investors are cautioned that such assumptions and forward-looking statements could differ materially from those set forth in the assumptions and forward-looking statements included in this Financial Plan. Report of the Airport Consultant It should be noted that DFW has contracted with LeighFisher, Inc. to develop a feasibility study to accompany the sale of bonds currently scheduled for pricing in April The assumptions and forward-looking statements in this Financial Plan may differ from those in the Report of the Airport Consultant. DFW Background INTRODUCTION The Dallas/Fort Worth International Airport (the Airport or DFW ) was created by a Contract and Agreement between the Cities of Dallas, Texas, and Fort Worth, Texas ( the Cities ) on April 15, 1968 for the purpose of developing and operating an airport as a joint venture between the Cities. Although owned by Dallas and Fort Worth, DFW is located within the boundaries of the Cities of Grapevine, Coppell, Irving, Fort Worth, and Euless, and within Dallas and Tarrant Counties. DFW is located within a four-hour flight time of 95% of the U.S. population and currently ranks fourth among the world s busiest airports in terms of operations and eighth in terms of passengers. Its central location is the focal point of one of the nation s largest intermodal hubs, connecting air, rail, and interstate highway systems. DFW currently operates daily passenger flights to 198 destinations worldwide, including 148 nonstop domestic destinations and 50 nonstop international destinations. The Airport is recognized as a premier inland cargo hub, served by major international cargo carriers. According to the Texas Department of Transportation, DFW is the primary economic engine for North Texas, driving $15.7 billion of economic impact, supporting 268,000 jobs, and generating $7.4 billion in payroll annually. Purpose of Financial Plan This document represents DFW s third Financial Plan (the FY 2013 Plan or the Plan ). The primary purpose of the Plan is to serve as a management tool that allows DFW to monitor its future projected performance against established long term strategic goals and objectives. The Plan includes projected future revenues, expenses, capital expenditures, debt financing requirements, cash reserves, and DFW s Key Performance Indicators (KPIs). Management 1 DFW International Airport February 28, 2013

6 FY 2013 Financial Plan Introduction intends to update the Financial Plan annually. The Financial Plan is reviewed but not approved by the DFW Board of Directors. The original FY 2011 Plan coincided with the approval of the ten-year Airline Use and Lease Agreement ( Use Agreement ) which became effective October 1, The FY 2011 Plan is the baseline Plan for future comparisons since it was the baseline financial model for negotiating the Use Agreement. This Plan and all future Financial Plans will include schedules that show the changes from the prior year and comparisons to the original FY 2011 Plan with a special focus on achieving the established FY 2020 performance targets. Normally, the first year of the Plan will be the same as DFW s Annual Budget which is typically approved by the DFW Board in August of each year. Airline Use Agreement Rate Model The Use Agreement is a hybrid model whereby the Signatory Airlines pay landing fees and terminal rentals based on the net cost to provide those services, and DFW retains a portion of the net revenues from non-airline business units (e.g., parking) in the DFW Cost Center. The following chart is a summary of the current Airline Use Agreement rate model. DFW Cost Centers Airfield Terminal DFW Expenses Expenses DFW Revenues (Business Units) Direct Costs Direct Costs Parking, Concessions, RAC, DPS and Overhead Allocations DPS and Overhead Allocations Commercial Development, Debt Service (net of PFCs) Debt Service (net of PFCs) Employee Transp., Taxis, Utilities, and Interest Income Less: Misc Airfield Revenues Less: Misc. Terminal Rentals Less: Expenses General Aviation Federal Inspection Fees Direct Costs Fueling Facility Lease Turn Fees; TSA Rentals DPS and Overhead Allocations Concessions Reimbursements Debt Service (net of PFCs) +/- Transfers/Adjustments +/- Transfers/Adjustments - Transfers/Other - Lower Threshold Adjustment + DFW Terminal Contribution - Skylink Costs + Upper Threshold Adjustment + Annual Capital Transfer - DFW Terminal Contribution +/- True-Up Adjustment +/- True-Up Adjustment Net Cost = Landing Fees (KPI) Net Cost = Terminal Rentals (KPI) +/- Threshold Adjustments +/- True-Up Adjustment Joint Capital Account Coverage Account DFW Capital Account + Natural Gas Royalties + Sale of Land Proceeds - Annual Capital Transfer to the Terminal Cost Center Operating Revenue and Expense Fund (the 102 Fund) Airline Cost Centers Airline Cost & Airline Cost per Enplanement (KPI) Capital Accounts (Capital Improvement Fund) Funded from existing coverage, plus coverage from New Debt Service from all three cost centers as debt service increases KPI = DFW Cost Center Net Revenues Net Revenues to the DFW Capital Account (KPI) Funded annually from DFW CC. Contributions must be higher than "Lower Threshold" and cannot exceed the "Upper Threshold." Airline Cost Centers The Airline Cost Centers are residual (i.e., cost recovery) in nature, such that the amount charged to the airlines equals the cost to provide services, after certain adjustments. Landing fees and terminal rental rates are based on the net cost to operate and = 2 DFW International Airport February 28, 2013

7 FY 2013 Financial Plan Introduction maintain the airfield and terminals, respectively. DFW charges the direct operating and maintenance costs for the airfield and terminals, plus allocated Department of Public Safety (DPS) and overhead costs, plus debt service, net of Passenger Facility Charges (PFCs), to each cost center; then, subtracts ancillary revenues generated in these cost centers; and credits or charges certain transfers and/or adjustments (see True-Up Adjustments below). The budgeted landing fee rate is determined by dividing the net cost of the airfield by estimated landed weights. The budgeted average terminal rental rate is determined by dividing the net cost of the terminal cost center divided by leasable square footage. The Use Agreement requires the Airport to charge an equalized terminal rental rate for all five terminals. The amount paid by the airlines for landing fees and terminal rents/fees less airline incentive payments equals airline cost, which is an airport industry Key Performance Indicator (KPI). Another common industry KPI is passenger airline cost per enplaned passenger or CPE. This KPI for passenger airlines is calculated by dividing the amount paid by passenger airlines for landing fees and terminal rents fees less airline incentive payments (i.e., airline cost) by the number of enplanements. DFW Cost Center All non-airline business units, plus interest income, are included in the DFW Cost Center. The DFW Cost Center is also responsible for all costs associated with the Skylink people mover system per the terms of the Use Agreement. The net revenues from this cost center are transferred to the DFW Capital Account providing the net revenues are not higher than the Upper Threshold. If this occurs, then a Threshold or True-Up Adjustment is required. One of DFW s most important KPIs is Net Revenues from the DFW Cost Center. This KPI measures the net revenues generated by DFW s non-airline business units (after adjusting for the cost of Skylink and the DFW Terminal Contribution) and drives the amount of cash flow that can be transferred to the DFW Capital Account each year. Joint Capital Account - Funds in the Joint Capital Account (JCA) require DFW and airline approval before money can be spent. The JCA is funded from the proceeds from natural gas royalties and the sale of land, plus interest income on the account. Supplemental funding for projects paid from the JCA comes from grants and the issuance of debt. Per the terms of the Use Agreement, an Annual Capital Transfer (described below) is made from the JCA to the terminal cost center to lower airline cost through FY Coverage Account The Airport established the Coverage Account as part of the new Use Agreements in order to implement rolling coverage. It was initially funded from coverage collected in FY 2010 (the last year of the old Use Agreement). Each year, the Coverage Account is rolled into the 102 Fund as a source of revenue, and then transferred back into the Coverage Account as excess revenue at the end of the year. The Coverage Account must equal 25% of aggregate debt service each year. If new debt is issued, each cost center must generate the incremental coverage required to fund 25% of the new debt service. These incremental coverage amounts are collected in the 102 Fund through rates and charges during the fiscal year. DFW Capital Account This is DFW s discretionary account and is funded primarily from the Net Revenues of the DFW Cost Center, plus interest income. Supplemental funding for projects paid from the DFW Capital Account comes from grants and the issuance of debt. Funds in this account may be used for any legal purpose without prior airline approval. Threshold Adjustments The Use Agreement established a Lower Threshold and an Upper Threshold for Net Revenues from the DFW Cost Center to limit the amount transferred annually to the DFW Capital Account. If DFW Cost Center Net Revenues are budgeted to be less than 3 DFW International Airport February 28, 2013

8 FY 2013 Financial Plan Introduction the Lower Threshold ($42.2 million in FY 2013), then an incremental charge (i.e., a Lower Threshold Adjustment) is collected through landing fees in an amount sufficient to achieve the Lower Threshold amount. Conversely, if DFW Cost Center Net Revenues are budgeted to be greater than the Upper Threshold ($63.2 million in FY 2013), then 75% of the excess is credited to the Airfield Cost Center as an Upper Threshold Adjustment. This reduces budgeted landing fees. The remaining 25% may be retained in the DFW Cost Center and transferred to the DFW Capital Account at the end of the Fiscal Year. The benefit of the Lower Threshold Adjustment is that it guarantees that DFW will have a minimum level of cash to transfer to the DFW Capital Account so that DFW can replace assets on a timely basis. Conversely, the Upper Threshold limits the Airport s ability to generate significantly more net revenues and serves to reduce Airlines costs as non-airline revenues increase. It also places a limit on DFW s ability to significantly increase its coverage ratios. The Threshold Amounts are adjusted annually for inflation. True-Up Adjustments At the end of each Fiscal Year, DFW performs a reconciliation or trueup, such that revenues collected equal the actual net cost to operate and maintain the airfield and the terminal. Any difference becomes a True-Up Adjustment and is either charged or credited to that cost center in the next fiscal year. The True-Up Adjustments for the airline cost centers are applied back to that cost center the following year beginning in January. DFW Cost Center True-Up Adjustments are applied against landing fees beginning in the following January. Annual Capital Transfer Per the terms of the Use Agreement, an annual transfer is made from the Joint Capital Account to the Terminal Cost Center to reduce the cost of the terminal to the airlines for a period of years. This transfer was $28 million in FY 2011 (first year of new Use Agreement) and $20 million in FY The transfer will be reduced by $4 million each year through FY 2017 when it will be eliminated. DFW Terminal Contribution Per the terms of the Use Agreement, an annual transfer is made from the DFW Cost Center to the Terminal Cost Center to pay for DFW s share of common use and leasable, but unleased space, in Terminals D and E. This amount is $8.7 million in FY Related Reports and Information For a more comprehensive understanding of DFW s financial, operational and capital programs, readers will find additional information on the DFW website at including the Comprehensive Annual Financial Report, Annual Budget, the Schedule of Charges, the DFW Strategic Plan, Terminal Renewal and Improvement Program status reports, Passenger Statistics, required Bond disclosures, and recent Official Statements. Public Facility Improvement Corporation (PFIC) DFW has a PFIC which manages the rental car facility, rental car bus transportation, and the Grand Hyatt Hotel. The PFIC is a separate legal entity. Net revenues generated from the PFIC are retained in the PFIC. The majority of the PFIC cash is classified as unrestricted and available for any purpose. See further discussion beginning on page DFW International Airport February 28, 2013

9 FY 2013 Financial Plan Executive Summary DFW AIRPORT FY 2013 FINANCIAL PLAN Major Assumptions The major assumptions used to develop this Financial Plan are highlighted below. changes from the FY 2012 Plan are highlighted. Major General Assumptions AMR Bankruptcy. On November 29, 2011, AMR Corporation, the parent company of American Airlines ( AA ), American Eagle, and other affiliates, filed voluntary petitions for Chapter 11 reorganization. AMR represents 84% of DFW passengers, 75% of landed weights, and 33% of total 102 fund revenues. DFW is AMR s largest hub representing approximately 40% of AMR s total traffic. On July 18, 2012, the bankruptcy judge approved AMR s motions seeking to assume all unexpired leases for nonresidential property at the Airport, including the Use Agreement, to cure any defaults under such leases by paying any amounts due and owing under such leases, and approval for modification to certain lease terms under certain leases. AMR did reject the facility agreements associated with its unsecured debt issued by DFW s Facility Improvement Corporation (FIC). Although AMR officials have publicly stated that they plan to grow their business at DFW and their other cornerstone hubs (up to 20%), it is premature to increase service levels significantly in the Plan. Therefore, the passenger growth and operational traffic assumptions in the FY 2013 Plan are similar to the levels projected in the FY 2012 Plan. Management has evaluated the potential impacts of a merger with US Airways and has concluded that it will not have a negative effect on DFW; and could have a positive impact. Use Agreement. The current Use Agreement expires September 30, The Financial Plan extends through FY Although a new future Use Agreement may have terms that are significantly different from the current Use Agreement, it is assumed that rates and charges for FY 2021 and beyond are calculated the same as the current Use Agreement. Passenger, Revenue, and Expense Assumptions Passengers are projected to grow at an average of 2.2% per year through 2022 with the exception of 2015 which is first year of the end of the Wright Amendment restrictions at Love Field (0.6% growth). This is slightly higher than the FY 2012 Plan assumptions. Inflation/CPI is assumed to increase 3.0% per year. Total personnel costs (salaries, wages and benefits) are projected to increase approximately 4.2% in 2014 and 3.5% per year beginning in FY Parking revenues are correlated with originating passengers and average parking rates. Consistent with last year, the Plan assumes a $1 parking rate increase in FY 2014 and FY 2017 for all parking products. Additionally the plan assumes an increase in average R= DFW International Airport February 28, 2013

10 FY 2013 Financial Plan Executive Summary revenue for originating passenger of $0.46 in FY 2015 to cover incremental costs of Terminal E parking garage. The Plan assumes productivity improvements (i.e., increase revenue per originating passenger) through FY 2022 resulting from expanded terminal and express parking facilities, parking guidance systems, a new parking control system, and enhanced marketing. Concessions revenues are correlated with enplaned passengers (EPAX), yield, and average gross receipts per EPAX. Revenues are 70% EPAX based and 30% nonpassenger based (e.g., advertising). Food, beverage, and retail gross receipts are increased by 2.2% annually, consistent with passenger growth assumptions. In addition, it is assumed that average percent rent rates will increase 5-11% as new concession agreements are executed in association with the TRIP. Non passenger based revenues are projected to increase 2% per year except in FY 2016 and FY 2017 when major contracts expire. Rental car revenues are correlated with destination passengers and average car rental rates. Average rates are projected to grow 1% in 2014 and 2015, and 2% thereafter. This is consistent with FY Commercial development revenues are correlated with developed acres and average rate per acre. The FY 2013 Plan assumes the development of 1,131 additional acres by FY 2022 and that average rate per acre will increase with inflation. This represents an increase of 130 developed acres over the FY 2012 Plan due to additional tax sharing agreements with host cities and the maturity of formal development plans for the various tracks of land on the airport. Capital Account Assumptions Terminal Renewal and Improvement Program (TRIP) will continue to be constructed in phases from FY 2012 through FY 2017 at an estimated cost of $2.05 billion (in escalated dollars). The TRIP budget was increased $113 million in the past year. See a detailed list of changes on page 31. Joint Capital Account (JCA) The FY 2013 Plan reflects the addition of $251 million of new capital projects (excluding TRIP) primarily for a new Terminal E parking structure, expansion of North Express Covered Parking, and a renovation of DPS Station #1. A detailed list is included on page 33. DFW Capital Account is programmed annually for renewal, replacement, road expansion, commercial development, and other discretionary projects. The FY 2013 Plan includes $167 million of new projects including a new consolidated headquarters, a renovated training facility for American Airlines on DFW property, and other commercial development projects primarily in the second half of the Plan. A detailed list is on page 36. PFCs/Grants. The FY 2013 Plan assumes that PFC s remain at $4.50 through FY Entitlement grants are assumed to remain at the current annual level of $9 million through Discretionary grants are programmed for runway refurbishments. Natural gas royalties. Given current natural gas prices, the Plan assumes no new drilling with slowly declining production over time. Prices are based on NYMEX Henry S= DFW International Airport February 28, 2013

11 FY 2013 Financial Plan Executive Summary Hub gas futures contract rates. Natural gas royalties are lower in the FY 2013 Plan primarily due to lower existing and projected natural gas rates. However, DFW has significant natural gas reserves that could be tapped if prices begin to rise. Debt Service and Cash Reserve Assumptions Existing debt. DFW and the Airlines agreed as part of the Use Agreement negotiations that DFW would restructure its existing debt structure (i.e., debt that existed on September 30, 2010) such that debt service, net of available PFC s, would be forecast to increase approximately $6.5 million per year including coverage through FY However, due to favorable interest rates, that has been shortened to FY New debt. DFW has already issued $1.0 billion of new debt. The Plan assumes DFW will issue an additional $2.5 billion of new fixed rate bonds through FY This represents an increase of approximately $240 million primarily due to new projects approved by the airlines in the past year, plus the impact of higher capitalized interest (discussed below), plus incremental borrowing for new commercial development projects. In addition, DFW plans to accelerate the issuance of bonds originally scheduled in calendar 2014 and 2015 into calendar 2013 to take advantage of the low interest rate environment. Interest rates on new-money bonds are based on future Treasury spreads. AMT rates are assumed at 4.8 to 5.5% in FY 2013 and 7.1% in FY Non AMT rates are assumed at 3.9 to 5.0% for FY 2013 and 6.1% for both FY 2014 and FY In most cases assumed interest rates have been reduced from the FY 2012 plan due to lower projected Treasury rates given the current economic environment and a Federal Reserve commitment to lower rates. Capitalized Interest. The Plan assumes that DFW will issue fixed rate bonds as necessary to fund projects on a cash flow basis and that interest will be capitalized through the date of beneficial occupancy for each project. Some projects may be funded with cash then reimbursed with bond proceeds. Total capitalized interest was increased $157 million in the FY 2013 Plan to $283 million due to the acceleration of planned debt issuances. Debt reserves. Future debt reserves are assumed to be funded with cash and that outstanding sureties will be replaced with cash reserves as the bonds are refunded if required by that specific surety policy. Interest Income. Plan assumes interest income of 0.25% in FY 2014, 0.5% in FY 2015, 1% in FY 2016, and 2% in FY 2017, 3% in FY 2018, and 3.5% thereafter. These rates are lower in the first 5 years than the FY 2012 Plan and consistent with the lower interest expense rates mentioned above. T= DFW International Airport February 28, 2013

12 FY 2013 Financial Plan Executive Summary Ten Year Summary Operating Revenue and Expense Fund Following is a ten year sources and uses of cash for DFW s Operating Revenue and Expense Fund (the Operating Fund ). The Operating Fund is projected to generate $1.2 billion of net revenues over ten years, of which $841 million is projected to be transferred to the DFW Capital Account and $347 million to reduce future landing fees. 102 Operating Fund Millions FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Total Revenues Airfield Cost Center $ 131 $ 138 $ 143 $ 152 $ 160 $ 166 $ 169 $ 171 $ 174 $ 177 $ 180 $ 1,631 Terminal Cost Center ,703 DFW Cost Center ,943 PFCs for Debt Service ,229 Total Revenues ,016 1,042 1,074 1,102 1,116 9,506 Expenses Operating Expenses ,108 Debt Service Existing Debt Service ,484 PFIC Debt Service New Debt Service ,550 Total Debt Service ,210 Total Expenses ,318 Net Revenues Generated ,188 Landing Fee Reductions (11) (8) (3) (4) (11) (28) (45) (50) (59) (66) (72) (347) Revs to DFW Capital Acct $ 65 $ 66 $ 66 $ 69 $ 73 $ 81 $ 88 $ 92 $ 98 $ 102 $ 107 $ 841 The following table compares the FY 2012 and FY 2013 Plans for the period FY 2012 through FY Operating Fund FY2013 Plan Increase (Decrease) Compared to FY2012 Plan Millions FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Total Revenues Airfield Cost Center $ (1) - $ (1) - $ (1) $ (2) $ (6) $ (11) $ (14) $ (18) $ (55) Terminal Cost Center - (11) (25) (24) (21) (14) (11) (12) (12) (26) (154) DFW Cost Center 13 1 (4) (3) 3 (3) PFCs for Debt Service 1 (1) (1) (1) Total Revenues 13 (11) (31) (27) (19) (19) (5) (14) (12) (28) (153) Expenses Operating Expenses (7) (8) (7) (7) (7) (8) (8) (8) (9) (9) (79) Debt Service Existing Debt Service - (1) (1) (5) (11) (16) (21) (56) PFIC Debt Service 1 (2) (5) New Debt Service 1 (12) (21) (8) (6) (5) Total Debt Service 2 (15) (22) (8) (1) (5) (28) (66) Total Expenses (5) (23) (29) (15) (8) - (4) (10) (14) (37) (145) Net Revenues Generated (2) (12) (12) (19) (1) (4) 2 9 (8) Landing Fee Reductions 11 8 (1) (9) (9) (14) (1) (3) 1 7 (9) Revs to DFW Capital Acct $ 7 $ 4 - $ (3) $ (3) $ (5) - $ (1) - $ 2 $ 2 Terminal revenues decreased primarily due to the reduction of debt service requirements resulting from better interest rates on bond sales. DFW cost center revenues decreased initially due to changes in parking revenue from prior years plan. Operating expenses are lower due primarily to a reduced base year in FY = U= DFW International Airport February 28, 2013

13 FY 2013 Financial Plan Executive Summary The following charts summarize projected sources and uses of cash for the Operating Fund over the ten year period. Sources of Cash (FY13-FY22) $9.5 Billion Uses of Cash (FY13-FY22) $9.5 Billion PFCs, $1.2B DFW, $4.0B Airfield, $1.6B Terminal $2.7B Cash Flow $1.2B Debt Services, $4.2B Ops Expense, $4.1B Ten Year Summary Joint Capital Account and Related Bond Proceeds The following table summarizes the primary sources and uses of cash for the joint capital account (JCA) including the sale of bonds and use of related bond proceeds for the period FY 2012 through FY The JCA is funded from beginning cash, the proceeds from natural gas royalties and land sales, grants, and interest income; and supplemented with bond proceeds as needed. The major uses of cash over the next ten years include the TRIP, other capital projects, capitalized interest, debt reserves, and annual joint capital account transfers to reduce terminal rentals. The table highlights the significant amounts of cash retained in the JCA in FY 2013 from the accelerated bond sales. Joint Capital Account and Related Bond Funds Millions FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Total Beginning Cash $ 401 $ 818 $ 1956 $ 1680 $ 892 $ 591 $ 308 $ 225 $ 217 $ 217 $ 220 $ 401 Sources of Cash Natural Gas Debt Financing 739 1, ,225 Misc Sources Grants Interest Income Total Sources of Cash 804 1, ,506 Uses of Cash TRIP ,926 Other Capital Projects ,144 Capitalized Interest Debt Reserves Transfer to Operations Cash Flow Adjustment - (165) (68) (31) Total Uses of Cash ,679 Net Change in Cash 417 1,138 (276) (788) (302) (283) (82) (8) (172) Ending Cash $ 818 $ 1,956 $ 1,680 $ 892 $ 591 $ 308 $ 225 $ 217 $ 217 $ 220 $ 229 $ 229 Bond Funds 590 1,740 1, $ 10 $ 3 - Unrestricted Funds $ 228 $ 217 $ 207 $ 202 $ 204 $ 174 $ 185 $ 196 $ 207 $ 217 $ 228 To obtain the most accurate cash flow estimates, projected outflows of cash for construction projects have been deferred from the construction schedule by three to six months over time to account for delays in billing and payments (see Cash Flow Adjustment line). More detail on the V= DFW International Airport February 28, 2013 =

14 FY 2013 Financial Plan Executive Summary sources and use for the joint capital account is included in the Capital Accounts section. The following table compares the FY 2012 and FY 2013 Plans for the period FY 2012 through FY = Joint Capital Account and Related Bond Funds Increase (Decrease) FY 2013 Plan Compared to FY 2012 Plan Millions FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Total Beginning Cash $ 7 $ 143 $ 1,308 $ 930 $ 324 $ 86 $ (7) $ (56) $ (52) $ (100) $ 7 Sources of Cash Natural Gas (7) (7) (6) (5) (4) (4) (3) (3) (3) (3) (46) Debt Financing 85 1,180 (274) (424) (127) (41) Misc Sources Grants (2) (1) (1) 7 (31) (5) (44) (78) Interest Income - 1 (5) (7) (5) (3) (2) (2) (2) (4) (28) Total Sources of Cash 122 1,182 (287) (429) (167) (53) (50) (5) (5) (6) 302 Uses of Cash TRIP (72) 72 (29) 78 (8) Other Capital Projects (14) (27) (45) 16 (55) Capitalized Interest (2) Debt Reserves 3 70 (27) (39) (1) (7) (1) Cash Flow Adjustment 71 (117) (16) (43) 89 (45) 46 (24) 38 - (2) Total Uses of Cash (15) (9) Net Change in Cash 136 1,165 (378) (607) (238) (93) (49) 4 (48) (10) (117) Ending Cash $ 143 $ 1,308 $ 930 $ 324 $ 86 $ (7) $ (56) $ (52) $ (100) $ (110) $ (110) The reduction in natural gas revenues is due to lower natural gas prices. The increase in debt financing requirements is due to the net increase in capital projects and capitalized interest requirements. The decrease in grants is primarily due the removal of runway projects from the capital plan that would have received discretionary grants. The net effect of these factors contributes to the decrease in ending cash in the out years. Other capital projects increased $483M over the ten years. See a full list of new programs in the Capital Accounts section. Capitalized interest has been increased due to the acceleration of bond sales to take advantage of lower interest. Terminal Renewal and Improvement Program (TRIP) DFW s most significant capital project over the next decade is the Terminal Renewal and Improvement Program (TRIP) which will renovate and update DFW s four older terminals (A, B, C and E) between FY 2011 and FY The total TRIP budget is $2.05 billion. The Airlines, as part of the Use Agreement, preapproved the TRIP budget for each terminal and a total TRIP budget of $1.92 billion. Subsequently, an additional $130 million of scope has been added for projects such as Terminal B baggage handling system, terminal window replacement, terminal vault replacement, and various other projects. The following chart highlights the schedule and costs by terminal. A more detailed schedule is included in the Capital Section on page 31. = NM= DFW International Airport February 28, 2013

15 FY 2013 Financial Plan Executive Summary Millions FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Total Term inal A $509 Term inal E $562 Term inal B $457 Term inal C $525 Total $14 $114 $239 $448 $359 $426 $277 $178 $2,052 = Ten Year Summary DFW Capital Account and Related Bond Proceeds The following table summarizes the primary sources and uses of cash for the DFW capital account including the sale and use of related bond proceeds. The primary sources of cash for the DFW capital account are beginning cash and net revenues from the DFW cost center. Although the DFW capital account is a discretionary account, the primary purpose is to fund non-trip renewals and replacements. More detail on the projects is included in the Capital Accounts section. DFW Capital Account - Sources and Uses Millions FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Total Beginning Cash $ 88 $ 111 $ 261 $ 276 $ 142 $ 62 $ 53 $ 56 $ 73 $ 100 $ 123 $ 88 Sources of Cash Revenues from DFW CC Debt Financing Proceeds Misc Sources Grants Interest Income Total Sources of Cash ,227 Uses of Cash Capital Projects ,176 Capitalized Interest Debt Reserves Transfer to JCA/Operations Cash Flow Adjustment - (70) (110) (6) 1 19 (32) Total Uses of Cash ,183 Net Change in Cash (134) (80) (9) Ending Cash $ 111 $ 261 $ 276 $ 142 $ 62 $ 53 $ 56 $ 73 $ 100 $ 123 $ 132 $ 132 Bond Funds Unrestricted Cash $ 111 $ 142 $ 146 $ 102 $ 62 $ 53 $ 56 $ 73 $ 100 $ 123 $ 132 = NN= DFW International Airport February 28, 2013

16 FY 2013 Financial Plan Executive Summary The following table compares the FY 2012 and FY 2013 Plans for the period FY 2012 through FY DFW Capital Account and Related Bond Proceeds Increase (Decrease) FY 2013 Plan Compared to FY 2012 Plan Millions FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Total Beginning Cash - $ 47 $ 194 $ 201 $ 99 $ 34 $ 6 $ (15) $ (24) $ (26) - Sources of Cash DFW Cost Center (3) (3) (5) - (1) - - Debt Financing (2) (2) (12) (13) (5) (4) (5) (19) 86 Misc Sources (5) Grants (6) (4) (1) 15 Interest Income (1) - 1 Total Sources of Cash (13) (10) (11) (8) (4) (10) (20) 103 Uses of Cash Capital Projects (67) (3) (6) (19) 148 Capitalized Interest Debt Reserves Transfer to JCA/Operations Cash Flow Adjustment 7 (33) (83) (5) (3) (51) Total Uses of Cash (60) (17) (8) (18) 132 Net Change in Cash (102) (64) (29) (20) (10) (2) (2) (29) Ending Cash $ 47 $ 194 $ 201 $ 99 $ 34 $ 6 $ (15) $ (24) $ (26) $ (28) $ (28) The changes in capital projects reflect a deferral in the timing of projects, the elimination of some projects, and a shift in commercial development projects over time. These changes caused the adjustments in grants and debt financing proceeds. Key Performance Indicators (KPIs) The following table shows DFW s highest level core business, financial, debt and cash KPIs. Key Performance Indicator (KPI) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Core Business Total Passengers (Ms) Financial Total Airline Cost (Ms)* $ 244 $ 289 $ 330 $ 374 $ 399 $ 398 $ 399 $ 399 $ 400 $ 403 Cost Per Enplanement** $ 7.91 $ 9.23 $ $ $ $ $ $ $ $ Net Revs - DFW CC (Ms) $ 74 $ 69 $ 72 $ 84 $ 108 $ 134 $ 143 $ 157 $ Revenue Mgmt Revs/EPAX $ 7.87 $ 8.38 $ 9.14 $ 9.76 $ $ $ $ $ $ Debt Coverage Ratio : Gross Revenue Current Gross Revenue All Sources Debt Service/EPAX $ 9.74 $ $ $ $ $ $ $ $ $ Net Debt Service/EPAX $ 5.29 $ 6.70 $ 8.28 $ 9.90 $ $ $ $ $ $ 9.51 Debt Outstanding/EPAX $ 219 $ 215 $ 210 $ 212 $ 204 $ 196 $ 187 $ 179 $ 171 $ 163 Cash Days Cash on Hand *Post True Up, Threshold Adjustment, and ASIP **Post True Up, Threshold Adjustment, and ASIP (excludes Cargo) = = NO= DFW International Airport February 28, 2013

17 FY 2013 Financial Plan Executive Summary Passengers DFW s passenger forecast assumes a steady growth through FY 2022, averaging about 2.2% annually. Total passengers in FY 2020 are 0.14% above the FY FY2012 Plan. DFW is not expecting a decrease in passengers in FY 2015 when Southwest can fly to any destination from Love Field as connecting passengers will offset any loss of originating passengers. Airline Cost Airline cost is defined as the revenues Airline Cost (Millions) $500 paid to an airport by the Airlines for $446 $425 landing fees, terminal rents, and other $373 $385 $399 $400 $374 miscellaneous airfield and terminal $148 $115 $100 $124 charges. The chart compares projected $300 $144 $133 $260 $261 $244 airline cost at DFW for the periods FY $200 $133 $116 $ , FY 2016, and FY 2020 (the last $298 $310 $261 $299 year of the Use Agreement). Airline cost $229 $241 $100 $127 $145 $136 is reduced due to reduced debt service, $- lower operating expenses, and higher FY13 FY16 FY20 Terminal 2011 Plan Airfield 2011 Plan Terminal 2012 Plan Airfield 2012 Plan Terminal 2013 Plan Airfield 2013 Plan share of DFW cost center net revenues, thus overcoming the elimination of the original plan assumption that the PFC would increase from $4.50 to $6.00. The major components/changes in the airline cost from the base year of FY 2011 are shown in the second chart. The changes accumulate to $209 million from the FY 2011 base airline costs of $190 million. The majority of the increase is related to the new money debt service on TRIP and other capital programs (green). The structural changes in the Use Agreement (red) are primarily related to the gradual phase out of capital transfers that subsidize the terminal cost center $200 $150 $100 $50 $- $(50) Passenger Projections (Millions) Total Pax Enpl. Total O&D Conn Pax Components to Airline Cost (Millions) Cumulative impact to FY2020 is $209 million from the FY 2011 Base $142.7 from the joint capital account and the elimination of a $5.5 million terminal credit in FY The increase in CPI and Other Changes (dark blue) is mostly offset by the increase (shown as a reduction in costs in the chart) in threshold adjustment from the DFW cost center to the airfield cost center. $22.8 $33.5 $59.7 $(49.7) $(100) TRIP Existing Debt Service Use Agreement CPI & Expense Changes Threshold/Trueup/ASIP NP= DFW International Airport February 28, 2013

18 FY 2013 Financial Plan Executive Summary Airline Cost per Enplanement (CPE) CPE is defined as total passenger airline cost (i.e., revenue paid to DFW) divided by $15 Airline Cost Per Enplanement $12.47 the number of enplaned passengers. The $12 $11.27 following chart compares projected CPE between the FY 2011 Plan, the FY 2012 Plan, and the FY 2013 Plan for selected fiscal years. CPE in the FY 2013 Plan is lower due to decrease in new debt service expenses in the Terminal cost center, lower operating expenses, and higher $9 $6 $3 $- $8.31 $8.48 $7.91 DFW net revenues which are shared to 2011 Plan 2012 Plan 2013 Plan reduce landing fees. This more than offsets the loss of $1.50 PFC in the original plan. $12.12 $12.33 $11.71 $11.58 FY13 FY16 FY20 Although this is a standard industry metric, it is flawed because it does not compare the total cost of an airline to operate at an airport. It does not include the costs that airlines incur and pay directly for terminal maintenance or to finance capital improvements in the terminals. Some airports pay for all of these costs for the airlines; other pay for some or none of these costs. For example at DFW, American Airlines pays for maintenance costs of Terminals A and C. These costs should be included to get an apples to apples comparison. In addition, traditional CPE comparisons do not include delay costs, which are substantial (see following chart). Airports that have invested in runway capacity typically have lower delay costs. To correct for these deficiencies, DFW developed the following chart that shows fully loaded CPE for DFW s competitive set of 13 large U.S. hub airports. Fully loaded cost includes what the airlines pay directly to the airports (shown in light blue), what airlines pay directly for terminal maintenance and terminal debt service (shown in dark blue), and an estimate of what they pay for delay costs (in red developed by Ricondo and Associates using FAA data). American Airline s other hubs are designated in red letters. DFW ATL SEA MSP DEN SFO DTW IAH BOS LAX MIA ORD EWR Fully Loaded Cost per Enplaned Passenger $18.96 $19.04 $ $21.94 $ $25.33 $25.45 $26.16 $27.42 $ $29.51 $29.56 DFW 2020 $ JFK $90.44 K $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $50.56 Cost on Airport Books Cost on Airlines' Books* Delay and Taxiing Cost** Red text indicates AA Hub/Major Airports Source: 2011 CPEs from ACI Survey. Delay and Taxiing Cost from Ricondo 2012 study. Other estimates from DFW Finance. * Estimated Maintenance and Debt Service cost paid directly by Airlines. Additional direct airline CPE represents an estimate for airline-specific direct costs divided by airline enplanements. ** Excludes gate delays, which are primarily due to airline actions. NQ= DFW International Airport February 28, 2013

19 FY 2013 Financial Plan Executive Summary The chart shows that DFW is the lowest cost large hub airport today. Also, highlighted is the fact that if DFW s FY 2020 CPE would only be an estimated $ This would place DFW ahead of two thirds of the airports from a cost standpoint, using the other airports FY 2011 CPE figures. Since most of these airports have major capital programs underway also, it is logical to assume that their costs and CPEs will rise too. The conclusion: DFW will be very competitive from a cost standpoint even after the TRIP is completed. Net Revenues from DFW Cost Center The increase in DFW net revenues as compared to the FY 2011 Plan and the FY $180 $ Plan is the result of a higher FY 2013 $140 base year, higher parking productivity due $120 to the new parking garage, higher $96 $100 $81 concessions revenue based on current $80 $74 $61 experiences with TRIP, and higher $60 $56 $40 commercial development revenues in the $20 second half of the Plan due to more $0 developed acres. In comparing the FY 2012 Plan and FY 2013 Plan for FY2016, the decrease is primarily lower interest income due to lower interest rates. DFW Net Revenues (Millions) $84 $120 $155 FY13 FY16 FY Plan 2012 Plan 2013 Plan $157 Net revenues from the DFW cost center $200 are transferred to the DFW Capital Account within agreed upon thresholds. $180 The upper threshold (green line) and $160 lower threshold (orange line) were established to ensure DFW has sufficient $140 (but not excessive) discretionary capital to $120 fund projected non-trip renovations $100 through FY The chart shows the projected cash flow generated from the $80 DFW cost center (blue line) and the $60 amount transferred to the DFW capital account (solid red line) through FY $40 When net revenues exceed the upper Lower Threshold threshold, 75% of the surplus is credited to the airfield cost center to lower landing fees; and the other 25% is transferred to the DFW cost center. Net Revenues from DFW Cost Center (Millions) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 DFW Capital Acct Contribution Upper Threshold 75% reduces landing fees DFW Cost Center Net Revenues This provides a double incentive for DFW to grow net revenues (i.e., lower airline cost and higher revenues to the DFW capital account). If budgeted net revenues fall below the lower threshold, the airlines have agreed to pay an incremental landing fee to ensure that DFW achieves at least $40 million per year. This provides downside protection to ensure sufficient funds for capital replacement. NR= DFW International Airport February 28, 2013

20 FY 2013 Financial Plan Executive Summary Revenue Management Revenue per Enplanement= This KPI is similar to the non-airline revenue Revenue Management Revenues per EPAX per enplanement metric used by the airport $12 $11.11 $10.69 industry. This KPI includes revenues from $10 $9.76 $9.76 $9.30 business units that operate to make a profit $8.56 $7.64 $7.87 $8 $7.46 (i.e., parking, concessions, rental car, commercial development), but excludes $6 revenues from other business units that are priced to break even such as employee transportation, ground transportation and $4 $2 non-terminal utilities. This KPI excludes $- FY13 FY16 FY20 natural gas royalties which are deposited into 2011 Plan 2012 Plan 2013 Plan the joint capital account, Grand Hyatt revenues, and customer facility charges (CFCs) and customer transportation charges (CTC) for the RAC which are retained in the PFIC. The increases from the FY 2012 Plan result from a higher base year in FY 2013, higher parking revenues due to new facilities, higher concessions revenues after TRIP completion, and an increase in developed commercial development acres. Debt Service/Debt Outstanding The Plan includes the assumption that DFW Debt Outstanding (Billions) $7.0 Maximum Principal Balance $6.5 billion will refund an additional $1.1 billion of existing $6.0 debt (in blue) for savings and minor $5.0 restructuring purposes in FY $4.0 Refundings since FY 2010 have realized net $3.0 present value savings (NPV) of $287 million $2.0 and future value (FV) savings of $349 million. $1.0 These savings along with the projected $0.0 savings from the 2013 refundings will result in NPV savings in excess of $370 million and FV savings in excess of $500 million. The Plan assumes the issuance of approximately $3.6 billion of fixed rate bonds to fund the TRIP, other capital projects, escrow for 2003A bonds, required debt service reserves, and capitalized interest, offset by anticipated premiums. Most of the principal from these issuances will be spread between FY 2036 and FY 2045; however some will be spread in the 2020s. In addition DFW will extend maturities for one $25 million term bond into FY 2046 through FY 2050 which will lower required debt service reserves by approximately $40 million which will allow DFW to cancel two surety policies in Total debt outstanding is projected to reach $6.5 billion in FY 2013 through FY 2016 then begin to decline in FY Debt service in the FY 2013 Plan is lower in the early and later years compared to the FY 2011 Plan despite $1 billion in new capital due to lower rates. $600 $500 $400 $ Existing New Money Debt Paid By Other Sources Projected Debt Service Profile Comparison to 2011 Financial Plan (Millions) Financial Plan $200 $100 $ Existing New Money Debt Paid By Other Sources 2011 Financial Plan NS= DFW International Airport February 28, 2013

21 FY 2013 Financial Plan Executive Summary Debt Service Coverage Ratios DFW s Bond Ordinance requires two debt service coverage ratios: gross revenues and current 1.80 Debt Service Coverage Ratios 1.70 gross revenue. The gross revenue ratio requires 1.70 DFW to establish rates and charges sufficient to generate revenues that are 1.25x debt service after operating expenses. The current gross revenues requires DFW to set rates and charges such that it achieves a minimum of 1.0x excluding transfers from capital accounts (i.e., rolling coverage and the annual capital transfer from the 1.10 joint capital account to the terminal cost center). With respect to the gross revenue ratio, rolling coverage makes-up the first 0.25 of the ratio with FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 the remainder coming from the net revenues Gross Revenues Current Gross Revenues All Sources generated from the DFW cost center. The all sources ratio shown on the chart includes other recurring revenue streams that are not defined as gross revenues in the bond ordinance (i.e., PFIC net revenues and natural gas). Note that this rate excludes available unrestricted cash which exceeds $550 million in each year of the Plan which would take coverage in excess of 2.5x in each fiscal year. Debt Service/Debt Outstanding per Enplanement Debt service per enplanement is a standard industry measure. This KPI increases through FY 2018 due to the addition of debt to finance DFW s capital programs. The red line reflects debt service per enplanement, net of PFC revenues. The FY 2013 Plan includes the assumption that PFCs will remain at the $4.50 level through FY The latest FAA reauthorization signed into law in 2012 retains PFCs at $4.50 through FY DFW committed (in the Use Agreement) to use PFCs up to $7.50 (if approved by Congress) for debt service. Debt outstanding per enplanement peaks with DFW s maximum debt in FY 2013 then begins to decline as debt outstanding is reduced and enplanements increase. Although this ratio is somewhat higher than the industry average, the impact is offset by DFW s strong liquidity and low cost per enplanement. The increase over the FY 2012 Plan is due to the higher projected debt levels. The increase in FY 2013 is due to the acceleration of debt from FY 2014 and FY 2015 into FY 2013 to take advantage of low interest rates. $16 $14 $12 $10 $8 $6 $4 $2 $- $250 $200 $150 $100 $50 $- Debt and Net Debt Service per EPAX FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Debt Service/EPAX Net Debt Service/EPAX Debt Outstanding per Enplaned Passenger $219 $212 $199 $180 $177 $181 $173 $179 $153 FY13 FY16 FY Plan 2012 Plan 2013 Plan NT= DFW International Airport February 28, 2013

22 FY 2013 Financial Plan Executive Summary Restricted and Unrestricted Cash The table includes the projections for DFW s restricted and unrestricted cash accounts for FY 2016 and FY Unrestricted cash includes available operating funds, the 90 day operating reserve, rolling coverage, and cash available in the joint capital account and DFW capital account, and the PFIC. Restricted cash accounts include bond funds, interest and sinking fund reserves, and debt service reserves. DFW s goal is to keep a minimum of approximately $500 million of unrestricted cash available at all times. Days Cash On Hand Based on comments from rating agencies and investors, DFW elected to increase its liquidity in FY 2012 Plan versus the FY 2011 Plan. DFW s goal is to maintain a minimum of 450 days cash on hand for financial planning purposes. The increase over the FY 2011 Plan was achieved primarily by increasing cash retained in the joint capital account. Also, the FY 2013 Plan includes PFIC cash which is available for other purposes. $3.0 $2.5 $2.0 $1.5 $1.0 $ Cash Balances (Billions) $2.8 $2.2 $1.5 $1.3 $0.9 $0.6 $0.6 $0.6 $0.7 FY13 FY16 FY20 Unrestricted Restricted Days Cash on Hand FY13 FY16 FY Plan 2012 Plan 2013 Plan 564 Pension Plans and OPEB DFW has a defined contribution plan for all general employees hired after January 1, The Airport continues to provide a defined benefit plan for its Department of Public Safety employees. DFW closed its defined benefit plan for general employees on December 31, The General employee and DPS plans are 71.8% and 67% funded as of January 1, DFW s investment rate assumption is 7.25% (reduced from 8.0% beginning January 1, 2012). The total unfunded actuarial accrued liability (UAAL) was $171.9 million at January 1, DFW is using a fixed amount amortization period with 23 years remaining as of January 1, DFW contributed more than the actuarial required contribution (ARC) in the past and has a pension asset of $54.1 million as of September 30, The ARC for FY 2012 was $27.6 million, 4.2% of the budget. DFW has an Other Post-Employment Benefits (OPEB) plan that provides an insurance premium subsidy not to exceed $400 per month for eligible employees from the date of retirement until they reach age 65. The unfunded UAAL was $24.3 million at January 1, The ARC is $2.8 million. DFW has significant pension and OPEB disclosures in its CAFR and Official Statement. Readers are encouraged to find more details there. NU= DFW International Airport February 28, 2013

23 FY 2013 Financial Plan Operating Fund OPERATING REVENUE AND EXPENSE FUND The Operating Revenue Expense Fund (the Operating Fund ) is divided into three direct cost centers (airfield, terminal, and DFW) and three indirect cost centers (department of public safety (DPS), indirect, and net debt service). Direct expenses are charged to each cost center. Indirect is allocated based on direct costs, while DPS costs are allocated on usage (net of ancillary DPS revenues). Existing debt service (i.e., debt issued prior to new Use Agreement), net of PFCs, is charged to cost centers based on percentages agreed upon in the Use Agreement. Future debt service (i.e., new-money bonds), net of all future incremental PFCs if any, is allocated to the projects for which the debt service is incurred based on a formula in the Use Agreement. All non-airline revenues are retained in the DFW cost center. A flow chart of DFW s Use Agreement model is included in the Introduction. The following table highlights revenues and expenses for the Operating Fund for the period FY 2013 through FY 2017 and FY Changes to the FY 2012 Plan are discussed in the Executive Summary. DFW Airport Financial Plan - Operating Fund Millions FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Revenues Airfield Cost Center $ 138 $ 143 $ 152 $ 160 $ 166 $ 169 $ 171 $ 174 $ 177 $ 180 Terminal Cost Center DFW Cost Center PFCs for Debt Service Total Revenues ,016 1,042 1,074 1,102 1,116 Expenses Operating Expenses Debt Service Existing Debt Service PFIC Debt Service New Debt Service Total Debt Service Total Expenses Net Revenues Generated Landing Fee Reductions (8) (3) (4) (11) (28) (45) (50) (59) (66) (72) Revs to DFW Capital Acct $ 66 $ 66 $ 69 $ 73 $ 81 $ 88 $ 92 $ 98 $ 102 $ 107 Airfield and Terminal Cost Centers As discussed in the Executive Summary, total Airline Cost is projected to increase significantly over the next ten years primarily due to incremental debt service for the TRIP, the impact of the Use Agreement, and inflation. The following table highlights the primary revenues and expenses of the Airfield and Terminal Cost Centers for the period FY 2013 through FY Note that landing fees are projected to be lower beginning in FY 2018 than in FY = = 19 DFW International Airport February 28, 2013

24 FY 2013 Financial Plan Operating Fund Calculation of Landing Fees and Terminal Rentals Millions FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Airfield Expenses Operating Expenses $ 70 $ 74 $ 77 $ 80 $ 82 $ 85 $ 88 $ 91 $ 93 $ 97 Debt Service Total Expenses Less: Misc. Airfield Revenues (8) (8) (8) (8) (9) (9) (9) (9) (10) (10) Upper Threshold Adjustment (8) (3) (4) (11) (28) (45) (50) (59) (66) (72) Landing Fees $ 122 $ 133 $ 140 $ 140 $ 130 $ 115 $ 112 $ 106 $ 101 $ 99 Terminal Expenses Operating Expenses $ 180 $ 187 $ 193 $ 193 $ 200 $ 206 $ 213 $ 220 $ 227 $ 235 Debt Service Total Expenses Less: Misc. Terminal Revenues (40) (41) (44) (47) (50) (52) (53) (54) (56) (57) Annual Capital Transfer (20) (16) (12) (8) (4) DFW Terminal Contribution (8) (12) (13) (15) (16) (17) (17) (17) (18) (18) Terminal Rentals $ 144 $ 176 $ 209 $ 248 $ 281 $ 296 $ 299 $ 305 $ 310 $ 316 = The following table compares the FY 2012 and FY 2013 Plans for the period FY 2013 through FY The most significant change is the decrease in net debt service associated with the terminal cost center which is resulting from better interest rates assumptions on bond sales. Calculation of Landing Fees and Terminal Rentals Increase (Decrease) FY 2013 Plan Compared to FY 2012 Plan Millions FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Airfield Expenses Operating Expenses $ (1) $ (1) $ (1) $ (1) $ (1) $ (1) $ (1) $ (1) $ (1) Debt Service, net of PFCs (1) (5) (10) (13) (17) Total Expenses - (1) (1) (1) (2) (6) (11) (14) (18) Less: Misc. Airfield Revenues Upper Threshold Adjustment (8) (1) (7) Landing Fees (8) (5) (8) (15) (24) Terminal Expenses Operating Expenses $ (3) $ (3) $ (3) $ (3) $ (3) $ (3) $ (3) $ (3) $ (4) Debt Service, net of PFCs (10) (23) (21) (18) (11) (7) (8) (8) (22) Total Expenses (13) (26) (24) (21) (14) (10) (11) (11) (26) Less: Misc. Terminal Revenues DFW Terminal Contribution (1) (1) (1) - Terminal Rentals $ (11) $ (21) $ (20) $ (18) $ (11) $ (8) $ (9) $ (8) $ (21) 20 DFW International Airport February 28, 2013

25 FY 2013 Financial Plan Operating Fund The following charts highlight projected landing fees and average terminal rentals for the period FY 2013, FY 2016, and FY 2020 and the differences between the FY 2011, FY 2012, and FY 2013 Plans. Landing Fee Rate Terminal Rent Rate per Square Foot $4.00 $350 $3.60 $3.20 $2.80 $2.40 $3.47 $3.45 $3.13 $3.54 $3.29 $3.53 $3.37 $2.77 $2.44 $300 $250 $200 $150 $100 $127 $137 $127 $216 $236 $220 $272 $278 $271 $2.00 FY13 FY16 FY20 $50 FY13 FY16 FY Plan 2012 Plan 2013 Plan 2011 Plan 2012 Plan 2013 Plan Landed weights are projected to grow at 2% per year on average. The increase in landing fees in FY 2016 per the FY 2013 Plan compared to FY 2012 Plan is due a reduced threshold adjustment from DFW Cost Center resulting primarily from lower interest income. Landing fee rates are significantly lower in FY 2022 due to increased DFW Cost Center net revenues and lower debt service. Terminal rentals increase over time due to debt service for the TRIP, increases in existing debt service, and the reduction in the annual capital transfer. The decrease in terminal rentals compared to the FY 2012 Plan is due to a lower base year and reduced debt service requirements due to better interest rates on bond sales. The Plan assumes that leased space remains constant. American Airlines has preferential leases for Terminals A and C and about two-thirds of Terminal D. The remainder of Terminal D is managed by DFW as common use for international flights. American Eagle has preferential leases for Terminal B. The other domestic passenger carriers lease space in Terminal E on a preferential and common use basis. DFW charges an equalized terminal rental at each of the five terminals and provides the airlines certain credits/transfers to the terminal cost center as described below: Annual Capital Transfer The current Use Agreement provides for a capital transfer from the joint capital account to the terminal cost center each year through The transfer is $20 million in FY 2013 and will be reduced by $4 million each year until it is phased out. DFW Terminal Contribution - DFW pays for the allocable cost of common use gates and unused and leasable space in Terminals D and E. This transfer is approximately $8.5 million in FY 2013 and is funded from the DFW cost center. American Airlines (AA) Maintenance Credit DFW provides AA a credit to reimburse it for maintenance that AA provides in Terminals A and C. This credit (negotiated at $38 21 DFW International Airport February 28, 2013

26 FY 2013 Financial Plan Operating Fund million for FY 2013) is added to the terminal cost for the purpose of calculating equalized terminal rental rates then subtracted from AA s rent. The credit increases with CPI each year. Note If AMR would decide not to perform the maintenance in Terminals A and C in the future, DFW could assume those responsibilities and costs and this credit would no longer be provided. DFW Cost Center The Use Agreement allows DFW to retain the net revenues (i.e., profit) from non-airline sources up to specified limits. Net revenues from the DFW cost center are transferred to the DFW Capital Account. The DFW cost center consists of four business units (parking, concessions, rental car, and commercial development) that are operated to generate positive cash flow; and other services such as employee transportation and ground transportation that are operated at break-even. The following table highlights the computation of net revenues for the DFW cost center for FY 2013 through FY 2017 and FY The DFW cost center also pays for the cost of Skylink and people mover ($21.2 million in FY 2013). DFW Cost Center Revenues Millions FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Revenues Parking $ 116 $ 129 $ 141 $ 152 $ 165 $ 173 $ 178 $ 182 $ 187 $ 192 Concessions Rental Car Center Commercial Development Total Rev. Mgmt Revenues Other Services Transfers from PFIC Interest Income Total Revenues Expenses Operating Expenses Debt Service, Net of PFCs DFW Terminal Contribution Total Expenses Net Revenues Transfer to Airfield Cost Center (8) (3) (4) (11) (28) (45) (50) (59) (66) (72) Net Revenues to DFW Capital $ 66 $ 66 $ 69 $ 73 $ 81 $ 88 $ 92 $ 98 $ 102 $ 107 = 22 DFW International Airport February 28, 2013

27 FY 2013 Financial Plan Operating Fund The following table compares the FY 2012 and FY 2013 Plans for the period FY 2013 through FY DFW Cost Center Revenues Increase (Decrease) FY13 Plan compared to FY12 Plan Millions FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Revenues Parking $ - $ (4) $ 5 $ 8 $ 1 $ 4 $ 4 $ 3 $ 2 Concessions Rental Car Center Commercial Development - (1) (4) Total Rev. Mgmt Revenues Other Services Transfers from PFIC (2) Interest Income (4) (7) (10) (11) (8) (6) (2) (2) (2) Total Revenues 1 (4) (3) 3 (2) Expenses Operating Expenses (4) (3) (3) (4) (4) (4) (4) (4) (4) Debt Service, net of PFCs (5) DFW Terminal Contribution (2) (1) (1) Total Expenses (11) (3) Net Revenues 12 (1) (12) (12) (18) (1) (3) 2 10 Transfer to Landing Fees (8) (1) (7) Net Revenues to DFW Capital $ 4 $ - $ (3) $ (3) $ (4) $ - $ - $ 1 $ 3 = Parking is generally higher due to incremental parking spaces, higher productivity, and potentially higher projected rates. Concessions revenues are higher through FY 2013 due to stronger performance during TRIP than expected. However, in the FY 2012 Plan concessions revenues reflected Terminal C fully operational in FY In fact, Terminal C - Section C will not be fully operational until early FY 2018 resulting in lower revenue expectations for FY Commercial development is lower in FY 2014 and FY 2015 due to timing differences of development projects, but increases in the out-years due to additional developed acres. Debt Service is higher due to additional capital projects such as the Terminal E parking garage, consolidated headquarters, AA Training Center, and commercial development projects. Interest income is lower due to lower interest rate assumptions. The following chart compares total revenue management revenues for the four business units by.== $450 Revenue Management Revenues (Millions) $400 $350 $300 $250 $200 $150 $100 $ $0 FY13 FY16 FY20 Parking 2011 Plan Concessions 2011 Plan Rental Car Center 2011 Plan Commercial Development 2011 Plan Parking 2012 Plan Concessions 2012 Plan Rental Car Center 2012 Plan Commercial Development 2012 Plan Parking 2013 Plan Concessions 2013 Plan Rental Car Center 2013 Plan Commercial Development 2013 Plan = 23 DFW International Airport February 28, 2013

28 FY 2013 Financial Plan Operating Fund Parking The Parking Business Unit is DFW s most significant source of non-airline revenue. DFW manages its own parking operations. The primary drivers of parking revenues are originating passengers, parking prices, and average length of stay. DFW s goal is to maximize revenue per originating passenger. The Airport has a total of over 40,000 public parking spaces and four different parking options: terminal ($18-20 per day), uncovered and covered express lots ($11-13 per day); uncovered remote lots ($8 per day), and DFW valet through a contractor ($25 per day plus tax). The Airport is unique from an airport parking perspective because the Airport has parking plazas on the north and south ends of International Parkway (i.e., the entrances to the Airport), so that all customers and visitors must go through the plazas to access the Airport. Patrons who pass through both plazas pay $1-$2 per trip. The Airport also charges for drop-offs and has incremental rates up to six hours. DFW plans to make several major capital improvements for its parking business unit over the next five years including a refresh of all parking garages as part of the TRIP, a new 7,900 space parking garage in Terminal A, a new 7,000 space parking garage in Terminal E, a new parking control system and entry plazas, and the expansion of the Express North covered parking lot to (5,763 spaces). In total, DFW plans to add 7,123 spaces over the next four years. The Plan assumes a $1 rate increase for all products in FY 2014 and FY 2017; an increase in revenue per originating passenger (OPAX) of $0.46 in Parking Revenue per OPAX FY 2015 and productivity increases through $14 FY 2018 due the new parking control system $12 that will provide management more flexibility $10 to implement yield management techniques, and marketing initiatives. DFW has done $8 limited advertising on its parking products in $6 the past. The increase in the FY 2013 Plan $4 over the FY 2012 Plan is due to a higher base $2 year in FY 2012 and incremental productivity $- changes, and the new parking garages. If FY13 FY16 FY20 productivity expectations are not met, 2011 Plan 2012 Plan 2013 Plan management can consider increasing parking rates to achieve the revenue per originating passenger targets. Alternatively, if higher productivity can be achieved, management may not increase rates as much as planned. There is a large off-airport parking market at DFW that can be tapped. Eight off-airport parking providers (five self-park and three dedicated valets) pay a 10% privilege fee to the Airport for access to the Airport. Off-airport self-parking competes against the Airport s remote and express parking products. Off-airport parking represents approximately 36% of the surface facilities market that requires customer busing. Total off-airport sales volume, including valet providers, was approximately $27.6 million in FY Drop-offs and meeters/greeters (i.e., less than six hours) represent 54% and 21% of total parking transactions. 24 DFW International Airport February 28, 2013

29 FY 2013 Financial Plan Operating Fund Concessions = Terminal concessions primarily consist of food and beverage (F&B), retail, duty free, advertising, and customer services/ amenities. Concessions goal is to achieve higher customer satisfaction and increase net revenues per enplanement by right-sizing locations and optimizing retail, F&B and services options. In addition, Concessions will continue to grow new non-passenger driven revenue streams such as sponsorships, communications and advertising. Revenues are 70% enplaned passenger (EPAX) based and 30% non-passenger based (i.e., advertising). Concessions agreements generally are for a term of 3 to 10 years and include a minimum annual guarantee and percentage rent. The Airport previously combined multiple concessions locations into one concessions package, however, the airport is moving to individual leases per location. As of January 17, 2013, the Airport had 210 total locations and 124 packages. Approximately 82% of packages are currently paying percentage rent. Concessions strategy is to implement a customer desired mix of food, beverage, retail, and advertising options as part of TRIP; initiate DFW-to-customer marketing strategies; and enhance passenger wayfinding options, resulting in higher customer satisfaction and an increase of net revenues per enplanement (EPAX). During TRIP, DFW will rebid nearly all of its concessions contracts, and then group the majority of concessions in highly trafficked areas near the Skylink stations and entrances to the secure side. Renovations of the four original terminals over the next six years will allow DFW to implement a new concessions program that will provide customers new options for dining, shopping, and other amenities. Concessions is also initiating DFW-to-consumer marketing strategies to identify and communicate directly with its customers. This includes leveraging technology to help passengers find the concessions they re seeking and, in the future, an order from the gate area. The chart shows the impact of the above mention strategies on projected concessions revenue (i.e., income to DFW) per enplanement for the FY 2013, FY 2016, and FY 2020 periods. Concessions revenues are correlated with EPAX, yield, and average gross receipts per EPAX. Non passenger based revenues are projected to increase 2% per year. $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $ Concessions Revenue per EPAX FY13 FY16 FY Plan 2012 Plan 2013 Plan DFW International Airport February 28, 2013

30 FY 2013 Financial Plan Operating Fund Rental Car Center (RAC) The Airport opened its Consolidated Rent-a- Car Facility ("RAC") in The RAC covers 155 acres and includes a common rental building with individual counters and back office space for each rental car company, a parking garage for ready and return car spaces, a bus maintenance facility, maintenance bays and fueling systems. The Airport collects ground lease, 10% percentage rent, and O&M expenses from the rental car companies, all of which have historically exceeded the operating costs of the RAC. There are ten rental car companies with eleven brands operating from the RAC, with a total available inventory of approximately 25,000 cars. The largest three rental car companies and their market share are Hertz (27%), Avis (21%), and Vanguard (19%). There are no major off-airport rental car companies competing with the Airport. RAC Revenue per DPAX DFW management has little control over $3.00 $2.62 $2.60 rental car company activities. It assists the $2.48 $2.46 $2.50 $2.43 $2.48 $2.37 $ $ RAC companies where possible and $2.00 maintains the RAC facility to high standards. The drivers of RAC revenue include daily $1.50 rental rates, length of stay, and the percent $ of destination passengers renting cars (i.e., $0.50 passengers who originate from another location with their destination at DFW). Most $0.00 FY13 FY16 FY20 RAC patrons are business travelers. The Percent Rent 2011 Plan Ground Rent 2011 Plan Percent Rent 2012 Plan Ground Rent 2012 Plan Percent Rent 2013 Plan Ground Rent 2013 Plan chart shows the projected changes in RAC revenues (to DFW) per destination passenger. Rental car transactions are projected to grow at the same rate as destination passengers; while average rates are projected to grow 1.5% in FY 2014 and FY 2015 and 2% thereafter reflecting the strong competition and price pressures in the rental car industry. Ground rents increase 3% per year as stated in the contract. RAC revenue per originating passenger is lower in the FY 2013 Plan because of a lower base ground rent than the FY 2012 Plan due to a budget error.= = The 102 Operating Fund does not include customer facility charges (CFC) or customer transportation charges (CTC) that are levied per transaction day and are collected by the PFIC. = 26 DFW International Airport February 28, 2013

31 FY 2013 Financial Plan Operating Fund Commercial Development = The Airport has a total landmass of 17,207 acres. As of June 30, 2012, 7,273 acres have been developed and are being used for runways, taxiways, terminals, roads, and commercially developed property. DFW has revenue producing ground leases with 69 tenants on 1,070 acres of land. Management estimates that approximately 6,500 acres of additional land is available for future development. A land use plan has been completed and approved by the Board. The Airport focuses primarily on developing land that has airport synergy such as logistics, warehousing, and cargo facilities. Commercial Development revenues include ground leases, foreign trade zone tariffs and facility rents generated from non-terminal Airport facilities, and property and surface use fees resulting from natural gas drilling. Multiyear lease agreements are negotiated with tenants on a square foot or acre basis. Approximately 40% of this land is leased under negotiated terms with the remainder being leased at the airport services rate which increases with inflation through FY 2020 per the terms of the Use Agreement. Some ground leases, such as the Hyatt Regency Hotel, include percentage rents based on revenues. The largest three Airport tenants from a revenue perspective are American Airlines (32%), GTE Realty Corporation (8%), and UPS (7%). The Plan includes the assumption that the Airport will invest in eleven different commercial development projects over the next ten years totaling approximately $192 million. See Capital Accounts section for a detailed list. It is assumed that the majority of these projects will be developer financed; however, DFW may finance initial road, infrastructure and utility work as necessary. DFW has received airline preapproval to issue bonds to finance commercial development projects up to a specified limit. 27 DFW International Airport February 28, 2013

32 FY 2013 Financial Plan Operating Fund Expense Budget The Plan assumes that operating expenses will increase with CPI plus or minus the incremental operating cost or benefit of new capital projects when they become operational. Personnel costs are projected to increase by approximately 3.5-4% per year. The following table highlights the increase in the total Operating Revenue and Expense Fund for FY 2013, FY 2016, and FY 2020 between the FY 2011 Plan, FY 2012 Plan, and FY 2013 Plan. FY 2013 Plan is less than FY 2012 Plan primarily due to a lower expense base in FY The FY2012 and FY2013 Plans include PFIC Debt Service. Existing debt service is scheduled to increase steadily through FY 2020 as negotiated as part of the Use Agreement. Net debt service results from debt issued to finance the TRIP and additional capital projects. 102 Fund Budget (Millions) $1,000 $948 $930 $917 $800 $600 $677 $678 $654 $46 $38 $26 $257 $276 $273 $813 $816 $809 $152 $161 $242 $260 $162 $259 $187 $276 $187 $292 $199 $276 $400 $200 $374 $485 $451 $419 $364 $355 $395 $388 $442 $0 O&M Expenses 2011 Plan Existing Debt Service 2011 Plan New Debt Service 2011 Plan O&M Expenses 2013 Plan Existing Debt Service 2013 Plan New Debt Service 2013 Plan O&M Expenses 2012 Plan Existing Debt Service 2012 Plan New Debt Service 2012 Plan = Passenger Forecast Table Following is a table of DFW s forecasted passenger information through FY Year Total Pax Enpl. Total O&D Conn Pax Orig Pax DFW Passenger Forecast (Millions) Dest Pax Local Orig% Local Dest% 28 DFW International Airport February 28, 2013 Local % Conn % Dom Intl Dom% of Total Intl % of Total % 19.7% 40.9% 59.1% % 9.1% % 19.8% 40.9% 59.1% % 9.5% % 20.2% 42.2% 57.8% % 9.6% % 20.1% 42.0% 58.0% % 10.1% % 20.3% 42.4% 57.6% % 10.0% % 20.8% 43.4% 56.6% % 10.6% % 20.8% 43.4% 56.6% % 10.9% % 21.0% 43.8% 56.2% % 11.1% % 21.1% 44.0% 56.0% % 11.2% % 21.2% 44.2% 55.8% % 11.4% % 21.3% 44.4% 55.6% % 11.5% % 21.4% 44.6% 55.4% % 11.7% % 21.5% 44.8% 55.2% % 11.8% % 21.6% 45.0% 55.0% % 12.0%

33 FY 2013 Financial Plan Capital Projects CAPITAL PROJECTS The Use Agreement includes three capital funds: the Joint Capital Account (JCA), the DFW Capital Account (DFWCA), and the Rolling Coverage Account (in addition to funds required to be established by DFW s bond ordinances). Capital Project Overview Sources and Uses of Cash DFW plans to spend approximately $4.2 billion on capital projects for the period FY 2013 though FY The following chart highlights the Sources and Uses of Cash for DFW s capital programs for that ten years period in millions. The charts show that approximately 55% of total uses are financed. The rest is paid from cash or other sources. Capital Sources of Cash FY 2012 to FY 2022 Capital Uses of Cash FY 2012 to FY 2022 Other Sources, $360 Cap-I & Debt Reserve, $559 Ending Cash, $430 FY 13 Beginning Cash, $929 Debt, $2,531 Cash, $800 DFW Capital, $898 TRIP, $1,687 Joint Capital, $1,046 Over the past year, $483 million of new capital projects have been added to the Plan including $113 million in new TRIP projects, and $251 million of other JCA projects, and $167 million of DFWCA projects. A total of $290 million (92%) of the JCA projects require airline approval. These are discussed in more detail in this section. 29 DFW International Airport February 28, 2013

34 FY 2013 Financial Plan Capital Projects Joint Capital Account TRIP TRIP The Terminal Renewal and Improvement Program (TRIP) consists of renovation and renewal of DFW s four older terminals (Terminals A, B, C and E) that were constructed between 35 and 40 years ago. These terminals have been expanded and renovated over their life, but primarily consist of their original structural and building systems. Approximately two-thirds of the TRIP budget will be used for the replacement of aging systems such as electrical, plumbing, heating and cooling, security, fire safety, conveyances, telecommunications, lighting, and information technology systems. The majority of the remaining budget will be used to upgrade ticket halls, TSA security areas, certain baggage systems, and concessions villages. The TRIP also includes modest improvements to the terminal exteriors, entrances, and parking structures. The TRIP is budgeted to cost $2.05 billion between FY 2010 and FY The TRIP program budget was increased by $113 million since the FY 2012 Plan to include new terminal enhancements such as $40 million for replacement of all concourse-level windows, $23 million for terminal interior finish enhancements, $13 million for the addition of natural gas lines and terminal electric vault replacement, $9 million for Concessions Loading Docks, and $27 million for various other concessions-related and TRIP transition costs. Approximately 60% of these TRIP budget increases have already been approved by the airlines. Construction of each terminal is scheduled to be completed in multiple phases with each phase lasting approximately one year (see construction schedule below). Initial construction began in Terminal A in late February 2011 and the first section of Terminal E began in the fall of Construction in Terminal B began in the fourth quarter of calendar DFW currently has sufficient terminal capacity to construct up to one section of three different terminals at one time without impacting flight operations activity at the Airport. However, only one section of Terminals A and C may be closed at one time to accommodate American Airlines projected flight activity. The TRIP schedule, including the DART rail station follows. 30 DFW International Airport February 28, 2013

35 FY 2013 Financial Plan Capital Projects In connection with the construction of the TRIP, DFW Executive Management and the Board of Directors receive regular TRIP status reports from the Airport s Vice President Airport Engineering and Development, who oversees the project and receives regular reports from each of the managers for the various TRIP components. These reports detail the current status of each component of the TRIP and include such information as cost to date and percentage to completion. Summary status reports are available on DFW s web site. The following table highlights a summary of the TRIP program from the base scope through the FY 2013 Plan. Project Name Total Original TRIP approved in Use Agreement $1,922.0 TRIP: Terminal B BHS Increased Scope 17.5 FY12 Financial Plan TRIP Budget $1,939.5 TRIP: Terminal A, B, C, & E Window Replacement 40.0 TRIP: Natural Gas Lines (Term B, C, & E) * 3.8 Terminal Electric Vault Replacement 9.2 Interior Finishes Revisions (1) 23.2 Concession Loading Docks (1) 9.3 TGIF Buyout (Terminals A, B, C, & E) (1) 8.8 Terminal Information Centers (1) 4.4 TRIP Transition 14.0 Additions to TRIP in FY13 Financial Plan $112.7 Total TRIP Additions To Base $130.2 FY13 Financial Plan TRIP Budget $2,052.2 * Excludes Terminal A natural gas which is funded in DFW Capital Acct (1) Contingent on MII approval TRIP Base Scope + Additional Projects (Millions) 31 DFW International Airport February 28, 2013

36 FY 2013 Financial Plan Capital Projects Joint Capital Account Non - TRIP As part of the Use Agreement, DFW and the airlines negotiated $220 million of capitalized projects to be funded with debt. These projects were bundled into categories. DFW cannot exceed category totals without approval of the airlines. In addition to the $220 million, DFW has added $786 million of new projects to the Plan. Joint Capital Account - Preapproved Projects from Use Agreement Category (in Millions) Prior Yrs FY13 FY14 FY15 FY16 FY17 FY18-22 Total Budget Preapproved Projects Airfield $0 $13 $34 $15 $1 $2 - $65 Roads Bridges, Rail Utilities Parking Other Preapproved Projects Total Preapproved Less: Preapproved Grants (14) (13) (18) (7) (52) Net Amount Preapproved $28 $64 $68 $30 $7 $6 $16 $220 Other JCA Projects Airfield Terminals Parking Other JCA Projects-Gross Less: Other JCA-Grants - (0) (2) (12) (9) - - (24) Other JCA Projects-Net Total Projects, Net $73 $200 $287 $310 $91 $15 $31 $1,006 The following table shows the new JCA projects added in the last year. Major Project Description (in Millions) Non-TRIP (JCA) Joint Capital Account Terminal E Parking Garage Reconstruction (1) $ 174 North Express Covered Parking Expansion (1) 35 DPS Station #1 Reconstruction (1) 21 Terminal D Parking Guidance System (1) 7 Taxiway "Y" for A-380 Aircraft (1) ** 6 Projects <$5M 8 Total Incremental Project Costs $ 251 (1) Subject to Majority in Interest Approval ** Net of grants Due to the length of time it takes to plan, design, construct and open new facilities and projects, DFW is constantly evaluating potential expansion and replacement projects for addition to the Plan. It is likely that new projects will be added to the Financial Plan especially in the later years. 32 DFW International Airport February 28, 2013

37 FY 2013 Financial Plan Capital Projects Detailed Capital Project Listing The following pages include the major capital project listing for the joint capital account, excluding the TRIP.= Airfield Joint Capital Account Projects - Excluding TRIP Prior Project Description (Millions) Yrs FY13 FY14 FY15 FY16 FY17 FY18-22 Total Total Budget T/W "Lima" Reconstruct Airfield Taxiway [AIP 75% ] ($ T/W "Lima" Less: AIP Grant Reimbursement (75%) ($22 (0.1) (8.7) (18.2) (6.7) (33.7) Reconfigure Southeast Holding Pad Deicing Infrastructur Rehabilitate Spent Aircraft Deicing Fluid System NE/NW Cargo VCP Remediation Total Airfield, Net of Grants Total Airfield, Gross Roads, Bridges, Rail Rehabilitate Landside Roads & Bridges (Ph. 2-5) W Airfield Dr & Mid-Cities Rd (road construction only) DART Rail Term A* (excludes "T" platform Te Utilities Total Roads, Bridges, Rail Elevated Water Tower (2.5 MG) $220M) Rehab Open Storm Channels Rehabilitate and Reconfigure Water Pump Stations ($ Replace E. Airfield Dr Sanitary Sewer Lift Station ($220M Rehabilitate Energy Plaza - Utility Vault ($220M) Install Electrical Distribution System Duct Bank (concret Rehabilitate AOA Storm Sewers ($220M pre-approved) Rehabilitate ESP Thermal System (Install Two 300 Ton Ch Total Utilities Parking Parking Control System (PCS)* North/South Toll Plaza & Parking Admin Bldg ($220M pre Other FY 2013 Financial Plan Total Parking Fire Training Center Rehab ($220M pre-approved) Fire Training Center Rehab : Less: AIP Grant ($220M pre (13.4) (4.6) (18.0) ITS Radio System Expansion ($220M Pre-Approved) Rehab Stations 2, 3, Total Other, Net of Grants Total Other, Gross Total Pre-approved Projects Less: Grants (13.5) (13.3) (18.2) (6.7) (51.7) Total Pre-approved Projects Net *Total current PCS budget is $24.4M and DART Rail is offset by I-2/I-3 easement funding 33 DFW International Airport February 28, 2013

38 FY 2013 Financial Plan Capital Projects Project Description (Millions) Prior Yrs FY13 FY14 FY15 FY16 FY17 FY18-22 Total Total Budget Other Programmed Expenditures E Parking Garage A Garage Reconstruction Term D South: Stinger & Apron re-grading (Phase 4) $R Term D South: New Bus Station to replace hardstand op Term D South: Remote Bus Gates (4) to replace hardsta Term D South: Ramp Expansion for hardstand ops/deici Term D South: Ramp Expansion Less: AIP Reimb (AIP D - - (1.4) (6.7) (7.1) - - (15.3) ADG VI Term D South Gating: Expand Deicing Infrastr(ad Term D South: Renovate/Delink D12 Bus Station (Ph 2) Term B North Stinger (net 9 add'l American Eagle gates) ADE Overhead (moved from DFW Capital Acct to JCA) Term D North Ext (B/D Connector) DPS Station #1 Reconstruction (placeholder, $'s/timing/f ADG VI T/W "Y" Bridges: to carry ADG VI ( & A ADG VI T/W "Y" Less: AIP Reimb - (0.1) (0.8) (5.6) (2.1) - - (8.6) N. Express (1W)Expansion FY2014 (1,325 c N. Express (1W)Expansion FY2013 (1,225 N N. Express (1W)Expansion FY2012 (1,156 s Oil and Gas Lease Reimbursables Airfield Snow and Ice Removal Equipment/Facility Parking Guidance System (PGS) - Term D (7,933 space Projects <$5M Other Programmed Expenditures Other Programmed Expenditures-Grants - (0.1) (2.2) (12.4) (9.2) - - (23.9) Total Other Programmed Expenditures-Net DFW International Airport February 28, 2013

39 FY 2013 Financial Plan Capital Projects DFW Capital Account The capital projects included in the first five years of the Plan consist mostly of identified individual projects rather than the planning level reserves that are included later in the Plan based on projected asset lifecycles. Projects already underway are generally in design or construction and at a high level of budget accuracy. The amounts for new projects, which have not gone through design yet, represent planning level estimates. DFW actively manages these projects to identify savings and free-up cash for other projects as needed and to remove projects when assumptions change. DFW Capital Account - Summary by Project Category Category (in Millions) Prior Yrs FY13 FY14 FY15 FY16 FY17 FY18-22 Total DFW Capital Projects Airfield Terminal Roads, Bridges, Rail, Skylink Utilities Parking Information Technology Safety & Security Commercial Development ASIP Other Projects Total DFW Capital Account, Gross Less DFW Capital Grants (9) (19) (24) (21) (13) (16) (29) (131) Total DFW Capital Account, Net The following table highlights the new projects added in the last year. = DFW Capital Major Project Description (in Millions) Account Commercial Development & Other (DFW) Southgate: Consolidated Headquarters $ 50 Southgate: Infrastructure 15 AA Training/Conference Center Renovation 50 AA Hanger Renovation 13 North Entertainment District (FY19-FY22) 14 Bear Creek District (FY22) 10 Projects <$10M 16 Total Incremental Project Costs $ 167 (1) Subject to Majority in Interest Approval 35 DFW International Airport February 28, 2013

40 FY 2013 Financial Plan Capital Projects Detailed Capital Project Listing = The following pages include the major capital project listing the DFW capital account. = Airfield Project Description (Millions) Prior Yrs FY13 FY14 FY15 FY16 FY17 FY18-22 Total Total Budget Rehab Airfield Lighting Systems FY Add: AIP Grant Airfield Lighting FY12 (0.3) (2.8) (1.8) (4.9) Rehab Airfield Pavements FY Add: AIP Grant Airfield Pavements FY12 (0.3) (3.0) (5.0) (8.3) Rehabilitate Airfield Lighting Systems FY Less: AIP Reimb Rehab Airfield Lighting FY13 (0.1) (2.2) (1.5) (3.9) Rehabilitate Airfield Lighting Systems FY16 - FY Less: AIP Reimb Rehab Airfield Lighting FY (1.4) (6.0) (3.0) (10.4) Rehabilitate Airfield Pavements FY13 (construction Less: AIP Reimb Rehab Airfield Pavements FY13 (0.3) (1.4) (6.2) (1.4) (9.3) (construction Rehabilitate Airfield only) Pavements FY14 (construction Less: AIP Reimb Rehab Airfield Pavements (0.0) - (3.4) (7.1) (10.5) Rehabilitate Airfield Pavements FY Less: AIP Reimb Rehab Airfield Pavements FY (0.5) (6.2) (1.8) - - (8.5) Rehabilitate Airfield Pavements FY16 - FY20 [AIP % Less: gross AIP Reimb $'s shown] Rehab Airfield Pavements FY (0.7) (5.9) (5.9) (24.2) (36.7) Rehabilitate Airfield Pavements FY Add: AIP Grant Airfield Pavements FY11 (3.5) (4.7) (8.1) Rehabilitate Spent Aircraft Deicing Fluid System Other Airfield Projects < $5M Other Airfield Projects < $5M Grants (4.9) (4.4) (2.7) (2.1) (0.4) (1.1) (1.3) (17.0) Total Airfield, Net of Grants Total Airfield, Gross Terminals Terminal "D" Annual Capital Renewal (0.65% RAV) TSA Checked Baggage Resolution Area/Inspection Sy Less: TSA LOI Reimbursement (0.3) (0.5) (3.2) (3.2) (3.5) (2.6) - (13.3) Other Terminal Projects < $5M Total Terminal Roads, Bridges, Rail, Skylink Renewal/replacement Skylink Systems, Facilities, & Rehabilitate Landside Roads & Bridges Roads, Bridges, Rail, Skylink < $5M Utilities Total Roads, Bridges, Rail and Skylink Other Utilities < $5M Total Utilities Parking FY 2013 Financial Plan DFW Capital Account - Projects Replace Remote Buses Replace Employee Buses (32 total fleet) Replace Express Vans (45 total fleet) Replace Terminal Link Vans (29 total fleet) Other Parking Projects < $5M Total Parking DFW International Airport February 28, 2013

41 FY 2013 Financial Plan Capital Projects Project Description (Millions) Commercial Development Prior Yrs FY13 FY14 FY15 FY16 FY17 FY18-22 Total Total Budget AA Training & Conf Center, Flight Training Academy (F Southgate: Consolidated HQ ($'s ROM) North Entertainment DD# Southgate: Infrastructure - all phases DD# Facility Renewal (facility reversion rehab) AA Hanger #2 + #5 [JRB funded, no AA reimb] West Grapevine (Ph I) DD #11 [Tax Sharing Req'd] NW Logistics DD# Coppell Industial DD# Bear Creek - DFW (Ph I) DD# Passport Park - DFW (Ph I) DD# Coppell Freeway Commercial DD# Walnut Hill (Ph I) DD# Other Commercial Development Projects < $5M Total Commercial Development Environmental Other Environmental Projects < $5M Total Environmental Information Technology IT Terminal Sys: EVIDS Replacements IT Terminal Sys: EVIDS Head-End Replacement IT Terminal Sys: CCTV head-end replacement (@ CUP IT Sys Ops: Upgrade to Data & Phone Network Core/D Other Information Technology Projects < $5M Total Information Technology Safety/Security ARFF Truck Replacement (8x8) 8 total ARFF trucks Structural Fire Truck Replacement Other Safety/Security Projects < $5M Total Safety/Security ASIP/Other Air Service Incentive Plan (ASIP) & Marketing Replace General Purpose Vehicles Replace Heavy Equipment Roof Replacement/Repair Roofing/Waterproofing for Occupied Board Bldgs Other ASIP/Other Projects < $5M Total ASIP/Other Total DFW Projects, Net DFW International Airport February 28, 2013

42 FY 2013 Financial Plan Capital Accounts (THIS PAGE INTENTIONALLY LEFT BLANK) 38 DFW International Airport February 28, 2013

43 FY 2013 Financial Plan Debt and Cash DEBT AND CASH RESERVES Existing Debt As of September 30, 2012, DFW has $4.5 billion of fixed rate bonds outstanding. DFW currently has no SWAPs or variable rate debt. Approximately $3.5 billion of this debt existed before the TRIP (i.e., existing debt ) and $1 billion of new money bonds have been issued for the TRIP and other capital projects (i.e., new debt ). During the financial crisis of FY 2008 and FY 2009 when AMR was having significant financial difficulties, DFW created a debt restructuring plan to reduce debt service to provide financial relief to the airlines. Overall, the program was scheduled to defer approximately $166 million of principal over a ten year period into 2036 and 2037, with most of the savings front-loaded. Due to favorable interest rates however, DFW has achieved sufficient savings so that it has not had to extend maturities past the original date of In fact, the realized saving has been so significant that the restructuring plan has only added approximately two months to the average maturity of the bonds that were refunded. The agreed-upon restructuring plan gradually increases debt service by $6.5 million per year, with the amount paid through rates, fees, and charges (RFCs) increasing by approximately $5.2 million per year (excluding coverage) through FY However, due to interest savings on refundings, debt service only increases through FY Passenger facility charges (PFCs) are used to pay the remaining debt service. The following chart shows existing debt service after the restructuring plan is complete in FY 2013, and the original RFC Target from the FY 2011 Plan. $300 Current Plan - Existing Debt Service Profile (Millions) $200 $100 $ Rates Fees & Charges Passenger Facility Charges RFC Target PV= DFW International Airport February 28, 2013

44 FY 2013 Financial Plan Debt and Cash Passenger Facility Charges DFW collects a $4.50 PFC from eligible revenue passengers. DFW has agreed with the airlines to use these collections for the payment of eligible debt service on existing debt. DFW estimates that it will collect approximately $110 million in FY As of December 31, 2012, DFW had $33 million of PFC s in a reserve fund. DFW expects this reserve to be depleted in early FY 2014; at which point, debt service paid by PFC s will be from current PFC collections. DFW and the airlines have agreed to use any increase in PFCs up to an additional $3.00, if approved by congress, to pay debt service on debt issued for the TRIP. PFC eligibility for existing debt service expires in FY 2035 when existing debt service ends. DFW could reapply for continuation of the $4.50 PFC to pay for debt service on new money bonds beyond Bond Issuances (TRIP and Other Capital Projects) DFW plans to issue approximately $3.6 billion of fixed rate bonds during FY 2013 to FY The following table provides the construction funding for each planned debt issuance, along with the required funding of the debt service reserve fund, capitalized interest fund, and estimated cost of issuance. The escrow in the 2013E, 2013F, and 2013G series is to refund the 2003A bonds. The assumed interest rates for the debt service fund and the capitalized interest reserve funds are based on the forward Treasury curve as of December 6, The plan assumes that DFW will issue fixed rate bonds. Planned Bond Issues (Amounts in Millions) Refunding New Money Joint Capital DFW Capital Delivery Joint DFW Debt Cap Issue Issue Debt Debt Series Date AMT? AIC Capital Capital Res Interest Escrow Expenses Prem Size Size Proceeds Proceeds 2012H Dec-12 Yes 0.00% $ 453 $ - $ 30 $ 40 $ - $ 4 $ 47 $ - $ 480 $ 524 $ A Apr-13 Yes 5.36% B May-13 No 5.00% C Jun-13 Yes 5.47% D Jul-13 Taxable 5.41% E* Aug-13 No 3.90% F* Sep-13 Yes 4.76% G* Sep-13 No 4.36% FY 2013 Total $ 1,496 $ 128 $ 121 $ 189 $ 1,163 $ 31 $ 268 $ 1,048 $ 1,813 $ 1,794 $ H Oct-13 Yes 5.51% A May-14 No 6.10% FY 2014 Total $ 320 $ 52 $ 35 $ 68 $ - $ 5 $ 29 $ - $ 450 $ 418 $ A Jan-16 No 6.09% B Jan-16 Yes 7.09% FY 2016 Total $ 220 $ - $ 28 $ 26 $ - $ 10 $ - $ - $ 285 $ 275 $ - Grand Total $ 2,036 $ 179 $ 184 $ 283 $ 1,163 $ 46 $ 297 $ 1,048 $ 2,547 $ 2,486 $ 197 *To refund 2003A bonds The following chart shows DFS s projected debt service through FY 2045 including existing debt service (blue), new money debt service (red), and debt service paid from other sources; PFIC and American Airlines (green). The chart also highlights the original debt service profile from the original Plan (black line). Due to favorable interest rates DFW has been able to reduce debt service in the early and late years of the Plan. QM= DFW International Airport February 28, 2013

45 FY 2013 Financial Plan Debt and Cash $600 Projected Debt Service Profile Comparison to 2011 Financial Plan (Millions) $500 $ Financial Plan $300 $200 $100 $ Existing New Money Debt Paid By Other Sources 2011 Financial Plan Total Debt Outstanding With the issuance of $3.6 billion of debt, DFW projects that total debt outstanding will peak at $6.5 billion in FY 2013 as shown in the following chart. $7.0 Maximum Principal Balance $6.5 billion Debt Outstanding (Billions) $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $ Existing New Money Debt Paid By Other Sources QN= DFW International Airport February 28, 2013

46 FY 2013 Financial Plan Debt and Cash Debt Paid By Other Sources The debt service highlighted in green is paid from sources other than the rate base. Specifically it is paid from the PFIC (for the Grand Hyatt Hotel and the Rental Car Center) and from American Airlines (for improvements to its training center located on DFW property). See the PFIC section for a more detailed discussion of the PFIC debt. With respect to the training center, DFW expects to issue $50 million of taxable bonds during FY 2013 for the training center. AA has agreed to repay this debt beginning in 2017 through the end of the lease term (2039). This was negotiated to as part of American s acceptance of the leases on the airport including the Use Agreement. Debt Service Coverage Calculations DFW utilizes three coverage calculations (the first two are required by bond covenants) as shown in the following table. Coverage Calculations In Millions FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Gross Revenue Calculation Total 102 Fund Revenues $ $ $ $ $ $ 1,019.4 $ 1,044.0 $ 1,072.9 $ 1,098.9 $ 1,109.6 Add: Rolling coverage Less: Operating expenses (355.2) (368.4) (380.8) (387.9) (401.8) (414.4) (428.4) (442.4) (456.7) (471.5) Gross Revenues available for debt service Debt Service Coverage ratio - Gross Revenues Current Gross Revenues Calculation Gross Revenues available for debt service $ $ $ $ $ $ $ $ $ $ Less: Rolling coverage (72.1) (75.9) (87.9) (101.8) (111.7) (116.0) (117.4) (118.4) (119.1) (116.2) Less: Other transfers from capital accounts (20.0) (16.0) (12.0) (8.0) (4.0) Current Gross Revenues avail for debt service Debt Service Coverage ratio - Current Gross Revenues Gross Revenues Plus Other Sources Calculation Gross Revenues available for debt service $ $ $ $ $ $ $ $ $ $ Add: Other Sources of Cash Natural Gas Incremental PFIC net revenues Total Gross Revenues avail. for debt service Debt Service Coverage ratio - Gross Plus Other Sources The Gross Revenue calculation from DFW s bond ordinance requires the Airport to maintain a 1.25x debt service coverage ratio including all gross revenues as defined in the bond ordinance. The bond ordinance also requires a Current Gross Revenue calculation, whereby DFW must establish rates and charges sufficient to achieve a minimum of 1.0x debt service excluding rolling coverage and other transfers from capital accounts. The Gross Revenue Plus Other Sources calculation is an internal metric. It adds other recurring revenue sources that are available for debt service should the unforeseen need arise, including incremental PFIC revenues and natural gas. = QO= DFW International Airport February 28, 2013

47 FY 2013 Financial Plan Debt and Cash Cash and Cash Reserves The following table highlights restricted and unrestricted cash by account type. Restricted cash accounts are restricted by Bond Ordinance or Federal law (e.g., PFCs) and may only be used for its stated purposes. Unrestricted cash includes available cash in the Operating Fund, Rolling Coverage, the Joint Capital Account, DFW Capital Account, and PFIC. These funds may be used for any lawful purpose including payment of debt service or ongoing operating expenses if necessary. Rolling Coverage is considered unrestricted because it is defined as part of Gross Revenues and available during the year for operating expenses. Restricted and Unrestricted Cash Summary Cash Accounts (Millions) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Restricted Debt Service Reserves $ 288 $ 319 $ 319 $ 347 $ 347 $ 347 $ 347 $ 347 $ 347 $ 347 Interest & Sinking Funds JCA Bond Funds 1,740 1, DFWCA Bond Funds Passenger Facility Charges PFIC Other Total Restricted $ 2,308 $ 2,087 $ 1,239 $ 952 $ 718 $ 634 $ 617 $ 609 $ 603 $ 594 Unrestricted Operating Fund Rolling Coverage Joint Capital Account DFW Capital Account PFIC Total Unrestricted $ 627 $ 627 $ 600 $ 575 $ 550 $ 591 $ 644 $ 683 $ 734 $ 783 Total Cash $ 2,935 $ 2,714 $ 1,839 $ 1,527 $ 1,269 $ 1,225 $ 1,261 $ 1,292 $ 1,337 $ 1,377 The following chart shows the projected days of operating expenditures that can be covered with unrestricted cash for the life of the Financial Plan. = 800 Days Cash On Hand FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 QP= DFW International Airport February 28, 2013

48 FY 2013 Financial Plan Debt and Cash Debt Reserves and Sureties = DFW s bond ordinances require DFW to maintain debt reserves equal to the average annual debt service. DFW currently has $225.5 million of cash and investments in its debt reserves and $54.6 million in sureties, for a total of $280.1 million. Total debt reserve requirements are $280.1 million as of the December 1, DFW will continue to fund debt reserves with future bond issuances as necessary. The following sureties are outstanding at December 1, Surety Policy Provider Millions FGIC (National Public Finance) (1) $34.0 MBIA(National Public Finance) (1) 6.0 Assured Guaranty Municipal Corp(FSA) 14.6 $54.6 (1) MBIA and FGIC have both been merged into National Public Finance Guarantee Corporation. The Airport expects to reduce the FGIC and MBIA sureties to zero during FY As part of the 2013B bonds, DFW will issue approximately $25 million of term bonds payable in FY By extending the maturity DFW will lower its required reserves by approximately $40 million, allowing the Airport to cancel these policies. DFW will take out the assured surety in FY 2014 if it refunds the 2004A bonds. QQ= DFW International Airport February 28, 2013

49 FY 2013 Financial Plan Public Facility Improvement Corporation Public Facility Improvement Corporation The Public Facility Improvement Corporation ( PFIC ) was created in 2001 for the purpose of financing, planning, constructing, equipping, owning, renovating, repairing, improving, maintaining and/or operating one or more facilities within the boundaries of the Airport. The revenues and costs of PFIC projects are separate from the DFW Cost Center and the Airport s 102 Fund. Except as described below, the revenues of the PFIC are not Gross Revenues of the Airport. There are currently three approved PFIC projects: the Grand Hyatt Hotel, the Rental Car Facility, and a new Hyatt Place Hotel. Management expects that the Airport will request the Cities to approve additional projects for the PFIC in the future. The following table highlights the computation of net revenues for the PFIC for FY 2012 through FY PFIC Summary FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Total Revenues $ 60 $ 60 $ 62 $ 68 $ 70 $ 72 $ 73 $ 75 $ 77 $ 79 $ 80 $ 775 Expenses Operating Expenses Debt Service Reserves Total expenses Net Revenue Generated $ 21 $ 8 $ 11 $ 12 $ 13 $ 14 $ 14 $ 15 $ 15 $ 16 $ 31 $ 169 Grand Hyatt Hotel The Grand Hyatt Hotel is a 298-room hotel located in Terminal D that opened in FY The hotel is owned by the Airport and leased to the PFIC which is responsible for hotel management. The PFIC has signed an agreement with the Hyatt International Corporation to provide the day-to-day management of hotel operations. The PFIC issued approximately $75 million Public Facility Improvement Corporation Airport Hotel Revenue Bonds, Series 2001 to construct the Grand Hyatt Hotel. Since the opening of the hotel, Grand Hyatt net revenues have been used to pay debt service on these bonds and for capital improvements to the Hotel. In 2012, the Series 2001 Bonds were refunded by the Dallas/Fort Worth International Airport Joint Revenue Improvement and Improvement Bonds, Series 2012C. In consideration for the Board issuing the Series 2012C Bonds, the PFIC entered into a Facility Agreement whereby the PFIC will deposit, to the extent available, an amount sufficient to pay that portion of the debt service and Coverage attributable to the refunding of the Series 2001 Bonds. Although the net revenues of the Grand Hyatt are not Gross Revenues of the Airport and are not available for, or pledged, to the payment of debt service on the Bonds, the PFIC s deposits to pay for debt service and coverage, once received by the Board, are considered Gross Revenues of the Airport. 45 DFW International Airport February 28, 2013

50 FY 2013 Financial Plan Public Facility Improvement Corporation The following table highlights the net revenues for the Grand Hyatt for FY 2012 through FY Fund Grand Hyatt FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Total Revenues $ 29 $ 29 $ 30 $ 30 $ 31 $ 32 $ 32 $ 33 $ 33 $ 34 $ 35 $ 348 Expenses Operating Expenses Debt Service Reserves Total expenses Net Revenue Generated $ 6 $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 $ 46 Rental Car Facility (RAC) In 1998 and 1999, DFW s Facility Improvement Corporation (FIC) issued approximately $160 million of taxable bonds (the FIC Bonds ) to construct a consolidated rental car facility, referred to as the RAC. The FIC Bonds were secured by the collection of a Customer Facility Charges (CFC) by the rental car companies. The FIC Bonds were refunded with the proceeds of the Dallas/Fort Worth International Airport Joint Revenue Improvement Bonds, Series 2011A. In consideration for the Board issuing the Series 2011A Bonds, the FIC entered into a Facility Agreement whereby the FIC will deposit, to the extent available, an amount sufficient to pay that portion of the debt service and Coverage attributable to the 2011A Bonds. The CFC rate is currently $4.00 per transaction day and may be changed at any time as necessary to ensure the payment of debt service. The CFC is also used to make capital facility improvements to the RAC and to purchase buses. Although under consideration, there is currently not a required reserve structure for the RAC facilities. The rental car companies also collect a Customer Transportation Charge ( CTC ) from rental car customers. The CTC was initiated in FY 2008 and is used to pay a third party contractor that operates and maintains the buses for the RAC. The CTC is currently $2.20 per transaction day and may be changed at any time based on the projected transaction days and expenses required to operate and maintain the buses. During FY 2012, the Cities authorized the assignment of the FIC s assets, obligations and responsibilities, with respect to the RAC to the PFIC. Although the net revenues from the CFC and the CTC are not Gross Revenues of the Airport and are not available for, or pledged to the payment of debt service on the Bonds, the PFIC s deposits to pay for debt service and coverage on the 2011A Bonds, once received by the Board, are considered Gross Revenues of the Airport. The debt on the RAC will be retired in FY DFW International Airport February 28, 2013

51 FY 2013 Financial Plan Public Facility Improvement Corporation The following table highlights the net revenues for the RAC for FY 2012 through FY Rental Car Facility (CFC's and CTC's only) FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Total Revenues CFC 20 $ 19 $ 20 $ 20 $ 21 $ 22 $ 22 $ 23 $ 23 $ 24 $ 25 $ 240 CTC 11 $ 11 $ 11 $ 11 $ 12 $ 12 $ 12 $ 13 $ 13 $ 13 $ 14 $ 132 Total Revenues $ 31 $ 30 $ 32 $ 32 $ 33 $ 33 $ 34 $ 35 $ 36 $ 37 $ 38 $ 372 Expenses Operating Expenses Debt Service Reserves Total expenses Net Revenue Generated $ 16 $ 4 $ 6 $ 6 $ 7 $ 7 $ 8 $ 8 $ 9 $ 9 $ 24 $ 103 Hyatt Place Hotel During 2012 the Cities authorized the Hyatt Place Hotel as an approved PFIC project. The new hotel will have 137 rooms and be located in the Southgate development near the RAC at the south entrance to the airport. The current estimated cost for construction of the Hyatt Place Hotel is approximately $23 million, which management anticipates funding from available and unrestricted cash in the PFIC. The Hyatt Place Hotel is expected to be completed in late The projected revenues and expenses have been derived from a feasibility study prepared for the hotel. The following table highlights the anticipated net revenues for the Hyatt Place Hotel for FY 2015 through FY HYATT PLACE FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Total Revenues - - $ 5 $ 5 $ 5 $ 5 $ 6 $ 6 $ 6 $ 6 $ 44 Expenses Operating Expenses Debt Service Reserves Total expenses Net Revenue Generated - - $ 1 $ 1 $ 2 $ 2 $ 2 $ 2 $ 2 $ 2 $ 13 PFIC Cash Flow Projection As of September 30, 2012 the PFIC had unrestricted available cash and investments of approximately $61 million. The following table summarizes the primary sources and uses of cash for the PFIC for the period FY 2012 through FY DFW International Airport February 28, 2013