2015 Annual Financial Report

ALASKA MARINE HIGHWAY FUND

Annual Financial Report For the ямБscal year ended June 30, 2015

2015

Alaska Marine Highway System Fund

ANNUAL FINANCIAL REPORT For the fiscal year ended June 30, 2015

Prepared by: Alaska Marine Highway System, Department of Transportation and Public Facilities

TABLE OF CONTENTS Alaska Marine Highway System Annual Financial Report

For the Fiscal Year Ended June 30, 2015

page

INTRODUCTORY SECTION

1

Letter of Transmittal

2

Marine Transportation Advisory Board

3

Ports of Call

4

Profile of the Fleet

5

Vessel Information

6

FY 2015 Operating Plan

7

Operating Revenue Chart

8

Operating Expenditures Chart

9

FINANCIAL SECTION

11

Statement of Revenues, Expenditures, and Changes in Fund Balance

12

Statement of Actual and Estimated Revenues from Operations

13

Notes to the Financial Statement

14

STATISTICAL SECTION

15

Operating Revenues by Vessel FY 2004 - FY 2015

16

Operating Expenditures by Vessel FY 2004 - FY 2015

17

INTRODUCTORY SECTION

I

1

LETTER OF TRANSMITTAL

2

MARINE TRANSPORTATION ADVISORY BOARD Alaska Marine Highway System Marine Transportation Advisory Board Originally created under Administrative Order 204, a temporary interim Marine Transportation Advisory Board (MTAB) was established by Governor Murkowski on January 15, 2003. Administrative Order 233 , signed by Governor Palin and dated March 28, 2007, permanently established the MTAB which was subsequently established in Alaska Statute by House Bill 294 on June 4, 2008. This bill established the Alaska Marine Transportation Advisory Board and set out its powers and duties in Alaska Statute AS 19.65.011 and AS 19.65.110-195, made conforming amendments, and provided an effective date of June 5, 2008. The board was expanded by one seat (from 11 members to 12) with the addition of a representative from the Southwest System under Senate Bill 24 effective September 1, 2013. The following are the MTAB Members as of June 30th, 2015:

CHAIRMAN Robert Venables

MEMBERS Patricia Branson

Northern Southeast (Haines, Juneau, Skagway)

South Central Alaska

DOT&PF STAFF SUPPORT Michael Neussl

Shannon Adamson

Labor Unions of the employees of the AMHS

Deputy Commissioner

Gerald Hope

Shannon Whistler

Central Southeast (Petersburg, Sitka, Wrangell)

Administrative Assistant

David Reggiani

Prince William Sound / Kenai Peninsula (Cordova, Valdez, Whittier, Yakutat, Chenega Bay, Tatitlek)

Daniel Kelly

Business owner with experience interacting with AMHS - Resident of Ketchikan Gateway Borough

Al Koch

Travel Agent / Tourism Specialist

Richard Knapp Marine Captain / Engineer Shirley Marquardt

Southwest Alaska / Aleutian Chain / Alaska Peninsula (Akutan, Chignik, Cold Bay, False Pass, Homer, King Cove, Kodiak, Port Lions, Sand Point, Seldovia, Unalaska / Dutch Harbor)

Cathie Roemmich Member At-Large

Maxine Thompson

Southeast Alaska (Angoon, Hoonah, Kake, Pelican, Tenakee)

Greg Wakefield

Member At-Large / Not directly served by AMHS

3

PORTS OF CALL Alaska Marine Highway System Ports of Call

SOUTHEAST ALASKA

SOUTHWEST ALASKA

Angoon

Akutan

Bellingham, WA

Chenega Bay

Gustavus

Chignik

Haines and Borough

Cold Bay

Hoonah

Cordova

Juneau and Borough (Auke Bay)

False Pass

Kake

Homer

Ketchikan and Borough

King Cove

Metlakatla and Annette Island

Kodiak and Borough

Pelican

Old Harbor

Petersburg (serving Kuperanof Island)

Ouzinkie

Prince Rupert, BC, Canada

Port Lions

Sitka and Borough

Sand Point

Skagway

Seldovia

Tenakee Springs

Tatitlek

Wrangell and Borough

Unalaska / Dutch Harbor

Yakutat and Borough

Valdez Whittier

4

PROFILE OF THE FLEET Alaska Marine Highway System Profile of the Fleet

M/V Matanuska 408 feet Built 1963

M/V Malaspina 408 feet Built 1963

M/V Taku 352 feet Built 1963 M/V Tustumena 296 feet Built 1964

M/V Lituya 181 feet Built 2004

M/V Columbia 418 feet Built 1974 M/V Aurora 235 feet Built 1977

M/V LeConte 235 feet Built 1974

M/V Kennicott 382 feet Built 1998

FVF Chenega 235 feet Built 2005

FVF Fairweather 235 feet Built 2004

5

74 5,569 16-11 5/8

Beam (ft) Displacement (L/T)

Loaded Draft (ft-in)

6 5 21 79 0 1 106 243 1960 98 1675 10

Vehicle Capacity (lane-ft.)

Quantity (20 foot vehicles) Vehicle Capacity: Booking Van Capacity: Booking

7,200 16.5 234 48 499 450

3,029 1,235

4 berth 3 berth 2 berth 4 berth ADA 2 berth ADA Total Staterooms Total Berths

Staterooms

hp @ Service Speed Service Speed (kts) Fuel Use (gph) Crew Capacity: COI Passenger Capacity: COI Passenger Capacity: Booking

Gross: Net:

Domestic Tonnage

Gross: Net:

9,214 3,824

408

Length (ft)

International Tonnage

Matanuska 1963

Date Built

1960 98 1675 10

45 0 26 0 1 72 234

8,000 16.5 270 59 499 450

2,928 1,253

9,121 3,667

16-10

74 5,994

408

Malaspina 1963

1500 75 1000 5

6 0 32 0 2 40 92

8,000 16.5 253 44 370 350

2,625 1,494

7,302 2,496

17

74 4,319

352

Taku 1963

852 42 680 6

6 0 17 0 1 24 60

5,100 13.3 151 38 174 160

2,174 898

4,529 1,451

14-4 1/2

59 3,067

296

Tustumena 1964

3200 160 2660 16

45 0 56 0 3 104 298

10,800 17.3 397 63 600 499

3,946 2,683

13,009 4,932

17-6 1/8

59 7,684

418

Columbia 1974

720 36 660 8

0 0 0 0 0 0 0

4,300 14.5 188 24 247 225

1,328 566

3,124 987

13-8

57 2,132

235

LeConte 1974

Alaska Marine Highway System Vessel Information Table

720 36 660 7

0 0 0 0 0 0 0

4,300 14.5 190 24 300 250

1,280 453

3,124 987

13-8

57 2,132

235

Aurora 1977

1700 85 1560 17

48 0 58 3 0 109 320

13,200 16.8 354 55 499 450

9,978 7,354

12,635 3,790

17-6

59 7,503

382

Kennicott 1998

360 18 300 2

0 0 0 0 0 0 0

2,000 11.5 55 5 149 125

97 66

758 227

12

50 647

181

Lituya 2004

720 36 620 2

0 0 0 0 0 0 0

19,310 32.0 600 10 250 210

1280 870

3,424 1,027

8-6

60 787

235

Fairweather 2004

720 36 620 3

0 0 0 0 0 0 0

19,310 32.0 600 10 250 210

1333 827

3,420 1,026

8-6

60 787

235

Chenega 2005

VESSEL INFORMATION TABLE

7

In Transit (IT)

CIP

Layup (LU)

Overhaul (OH)

On Line

CHE Jul 1 PWS

Oct 13 NP

JAN

SW: Southwest

SIT or PSG : Sitka or Petersburg Service

Note: Dates represent the ďŹ rst day of the period. Overhaul and refurbishment periods include vessel travel time.

MET: Metlakatla Service

PWS: Prince William Sound

FEB

APR

YPR-SGY: Prince Rupert to Skagway

YPR-JNU: Prince Rupert to Juneau

NLC: North Lynn Canal Dayboat

NP: Northern Panhandle Dayboat

Apr 1 OH

Mar Oct116 NPOH

March 15 OH

Mar 5 BEL - X - GULF

MAR

Mar 1 OH

Feb 12 MET

Feb 1 OH

Jan 22 OH

Jan 10 OH

Dec 15 YPR - JNU

Dec 8 Repairs

DEC

BEL - X - Gulf: Bellingham Cross Gulf Southwest

BEL: Bellingham to Skagway

Oct 13 LU

Oct 6 IT Oct 11 PWS 4X / wk

Sep 11 IT Sep 15 OH

NOV

Oct 20 SW

Oct 13 CIP

Oct 1 BEL

Sep 15 LU

FWX Jul 1 SIT 6X / wk & PSG 1X / wk Sep 8 OH

AUR Jul 1 PWS

TUS Jul 1 SW

LEC Jul 1 NP

LIT Jul 1 MET

TAK Jul 1 YPR - JNU

MAL Jul 1 NLC

MAT Jul 1 YPR - SGY

Oct 1 LU

OCT

COL Jul 1 BEL

SEP Oct 1 CIP

AUG

KEN Jul 1 BEL - X- GULF

JUL

Alaska Marine Highway System FY 2015 Operating Plan

JUN

378.3

110.4 Southwest Vessels Total Operating Weeks

104.9

163.0

21.7

Feeder Vessels

Mainline Vessels

May 14 SIT 4X / wk

Jun 25 IT May 15 Repairs 40.1

47.6

May 10 IT May 14 PWS May 11 IT

41.1

17.4

47.4

49.9

43.1

18.0

22.0

30.0

Operating Weeks

May 13 IT May 17 SW

Jun 13 NP

Jan 23 OH May 10 NP/NLC

Apr 29 OH

May 12 YPR - SGY

Apr 29 BEL

MAY

FY 2015 OPERATING PLAN

OPERATING REVENUES

Alaska Marine Highway System Fund

UNRESTRICTED OPERATING REVENUES For the fiscal year ended June 30, 2015

$53.9 MILLION

Ticket Sales

79.2%

Stateroom Sales

10.4%

Passenger Services Sales

10.1%

Other Unrestricted Revenue

8

0.3%

OPERATING EXPENDITURES

Alaska Marine Highway System Fund

OPERATING EXPENDITURES For the fiscal year ended June 30, 2015

$160.8 MILLION

Marine Vessel Operations

69.7%

Operations Management

3.1%

Marine Fuel

16.4%

Overhaul

1.0%

Shore Operations

5.2%

Marine Engineering

1.6%

Reservations and Marketing

1.5%

Support Services

1.5%

9

10

FINANCIAL SECTION

F

11

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE Alaska Marine Highway System Fund Statement of Revenues, Expenditures and Changes in Fund Balance For the Fiscal Year Ended June 30, 2015 (In Thousands) Revenues: Unrestricted Revenues: Ticket Sales Stateroom Sales Passenger Services Sales Facility Rental Concession Fees Investment Interest Other Unrestricted Revenue Total Unrestricted Revenues

Capitalization $

Restricted Revenues Indirect Cost Recovery Total Revenues

Expenditures: Current Operating: Support Services Marine Engineering Overhaul Operations Management Reservations & Marketing Shore Operations Marine Fuel Marine Vessel Operations AMHS RSA Total Expenditures Excess (Deficiency) of Revenues and Other Financing Sources Financing Uses from Operating Fund Balance, Beginning of Year Reserves and Year End Adjustments Fund Transfer - General Fund Additional Fuel Trigger Appropriation Fund Balance, End of Year; Undesignated

$

Total

- $ -

42,664 $ 5,609 5,455 4 9 144 11 53,896

42,664 5,609 5,455 4 9 144 11 53,896

-

308 588 54,792

308 588 54,792

-

2,432 2,609 1,585 4,950 2,394 8,307 26,401 111,812 308 160,798

2,432 2,609 1,585 4,950 2,394 8,307 26,401 111,812 308 160,798

2,644 -

(106,006) 7,145 112,590 7,179

(106,006) 9,789 112,590 7,179

2,644 $

The notes to the financial statement are an integral part of this statement.

12

AMHS

20,908 $

23,552

STATEMENT OF ACTUAL AND ESTIMATED REVENUES Alaska Marine Highway System Fund Statement of Actual and Estimated Revenues Budgetary Basis (In Thousands) Fiscal Year Ended June 30, 2015

Estimated Revenues Restricted Restricted Revenues Indirect Cost Recovery (ICAP) Total Restricted Unrestricted AMHS Fund Ticket Sales Stateroom Sales Passenger Service Sales Facility Rental Concession Fees Other Unrestricted Revenue Total Unrestricted Total Revenues

$

575 590

Fiscal Year Ending June 30, 2016

Actual Revenues

Actual Over (Under) Estimated

$

$

308

1,165

588 896

42,662 5,471 4,495 10 30 150 52,818 $ 53,983

(267) (2)

Total Estimated Revenues

$

Fiscal Year Ending June 30, 2017

Estimated Revenues 12/31/2015

977 598

$

435 450

Estimated Revenues

$

598 1,235

(269)

1,575

885

1,833

42,664 5,609 5,455 4 9 155 53,896

2 138 960 (6) (21) 5 1,078

41,920 5,512 5,360 10 30 50 52,882

21,107 2,775 2,699 1 3 3 26,588

40,678 5,348 5,201 10 30 50 51,317

$ 54,792

$ 809

$ 54,457

$ 27,473

$ 53,150

The notes to the financial statement are an integral part of this statement Budgetary Presentation shows all budgeted and actual revenues including budgeted intergovernmental activitiy.

13

NOTES TO THE FINANCIAL STATEMENT Alaska Marine Highway System Fund Notes to the Financial Statement For the Fiscal Year Ended June 30, 2015 NOTE 1 -

Alaska Marine Highway System Fund The Alaska Marine Highway System Fund was established July 1, 1990. All gross revenues generated from the operation of the Alaska Marine Highway System are accounted for and remitted in accordance with AS 19.65.070 which mandates that the money shall be deposited in the Alaska Marine Highway System Fund.

Marine Highway Capitalization Account The Marine Highway Capitalization account was established within the Alaska Marine Highway System Fund June 30, 2009. An estimated $9 million in general funds was reappropriated to the new Capitalization Account. Access to this new funding will be restricted and will only occur with approval by the Legislative Budget and Audit Committee.

An unexpended and unobligated balance of funds for the off-set of higher fuel costs, estimated at $1.25 million, were reallocated in Chapter 13, SLA 10, Sec 11(c) to the Marine Highway Capitalization Account.

In FY2012 and FY2013, a total of $6.55 million of unexpended and unobligated balance of funds for the off-set of higher fuel costs were reallocated to the Marine Highway Capitalization Account.

In FY2014, $11.0 million of funds were transferred to the AMHS FY15 Capital Fund for vessel overhaul projects and $3.0 million in funds were transferred to the AMHS Deferred Maintenance capital fund.

NOTE 2 -

CIP Program Component The Alaska Marine Highway System budget includes a component which authorizes positions directly related to capital projects. Beginning in FY2001, the salary cost of time charged directly to capital projects is not recorded in the Alaska Marine Highway Fund. The cost of time charged to administration or overhead is recorded in the Alaska Marine Highway Fund.

NOTE 3 -

Interest Earned on the Fund In FY13, the Alaska Marine Highway Fund began receiving the interest earned on its fund. This interest is recorded as unrestricted revenue and is reflected on the Combining Statement of Revenues, Expenditures and Changes in Fund Balance Statement.

NOTE 4 -

Operating Overhaul Overhaul expenditures that are included in the Operating Budget are limited to small maintenance items that arise while the vessels are operating and do not include capital overhaul expenditures. Large vessel overhaul and deferred maintenance items are included in the Capital Budget. In FY2015, the Vessel Overhaul and Deferred Maintenance Capital Budgets totalled $15.0 million.

NOTE 5 -

Additional Fuel Trigger Appropriation In FY15 the Office of Management and Budget (OMB) appropriated $7.2 million in excess fuel trigger funds to AMHS in order to maintain ferry service as published in the AMHS 2015 summer schedule.

14

STATISTICAL SECTION

S

15

Vessel Aurora Bartlett Chenega Columbia Fairweather Kennicott Leconte Lituya Malaspina Matanuska Taku Tustumena Contract Vessels Non Vessel Revenue TOTAL

16

FY05 2,333 7,917 3,003 5,662 1,396 593 11,975 8,762 761 3,196 64 45,662

FY06 2,327 1,128 15,530 2,257 6,209 1,638 593 7,832 7,418 3,292 2,849 76 53 51,202

FY07 2,003 1,963 12,439 2,913 5,831 916 593 7,552 8,146 2,833 3,060 127 32 48,407

FY08 1,347 3,093 6,463 2,605 3,414 1,514 721 11,659 8,841 4,480 3,376 135 47,647

FY09 2,191 3,380 9,713 1,015 5,182 1,808 639 10,980 3,094 5,156 2,992 2 46 46,200

FY10 3,115 1,392 7,924 1,945 3,125 1,757 620 11,446 6,211 4,755 3,525 54 46 45,914

FY11 2,522 3,428 8,939 1,805 7,154 794 724 10,520 6,100 2,265 3,318 39 89 47,697

FY12 1,898 2,889 13,014 1,659 8,151 2,537 822 5,765 9,003 4,001 3,755 12 180 53,684

FY13 2,679 2,221 16,635 1,537 9,195 2,006 774 3,133 9,217 3,839 1,875 2 121 53,234

FY14 2,421 2,358 6,682 1,415 8,425 2,499 769 12,051 7,154 4,789 2,106 207 50,877

FY15 4,059 1,914 11,778 1,684 8,265 854 848 11,036 3,989 5,474 3,828 167 53,896

*These figures are close approximations based on reservations and ticketing information. They may be used to show relative magnitude of different vessel operations. They are not accounting figures. Therefore, attempts to reconcile the figures with accounting documents may yield small discrepancies.

FY04 3,749 1,387 7,763 401 5,276 880 78 12,550 3,798 5,039 3,366 3 399 44,689

Alaska Marine Highway System Revenue by Vessel* Fiscal Years 2004 - 2015 (In Thousands)

OPERATING REVENUES BY VESSEL

Vessel Aurora Bartlett Chenega Columbia Fairweather Kennicott LeConte Lituya Malaspina Matanuska Taku Tustumena Vessel Leave All Vessels TOTAL

17

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 3,533 6,434 6,264 3,649 7,649 7,720 8,065 5,380 8,104 7,013 6,446 314 7,778 6,360 8,845 9,474 4,643 10,146 8,513 8,098 7,971 6,595 7,336 17,205 16,735 8,892 11,231 9,587 11,861 17,292 20,380 9,706 15,757 5,635 5,887 7,762 8,154 4,949 7,356 7,824 9,539 7,774 6,586 7,739 9,535 15,624 16,300 11,853 15,091 10,557 18,022 17,341 21,170 16,468 15,031 5,869 8,129 5,485 7,141 6,912 7,070 4,858 9,807 9,533 9,915 6,677 629 961 1,008 1,170 1,189 1,114 1,415 1,381 1,367 1,195 1,224 11,492 9,219 9,089 14,664 14,065 14,558 16,147 11,843 8,573 16,929 15,313 11,202 11,456 14,814 14,160 7,260 12,611 16,246 17,390 17,669 14,644 10,683 4,107 9,436 9,452 13,745 13,583 13,458 8,853 15,880 16,020 17,810 16,768 6,269 6,378 8,744 9,612 6,642 9,114 10,068 10,978 6,527 9,966 10,569 9,204 11,571 14,576 15,164 14,268 14,375 15,949 16,605 16,695 17,234 9,006 13,904 10,123 11,024 9,709 12,231 10,240 10,379 9,591 10,178 9,725 18,298 89,028 120,201 127,613 126,757 124,542 122,404 139,834 151,540 152,087 145,162 140,106

Service Agreements (RSA). Not included are the budget components for Marine Engineering, Operations Management, Reservations and Marketing, and Shore Operations.

*Expenditures by vessel include the following operating components: Marine Vessel Operations, Overhaul, Fuel and unbudgeted AMHS Reimbursable.

FY04 5,565 1,032 7,787 692 9,744 4,037 177 10,131 5,018 8,709 5,483 9,824 9,077 77,275

Alaska Marine Highway System Operating Expenditures by Vessel* Fiscal Years 2004 - 2015 (In Thousands)

OPERATING EXPENDITURES BY VESSEL

Alaska Marine Highway System Fund

FY 2015 ANNUAL FINANCIAL REPORT State of Alaska, Department of Transportation and Public Facilities

Compiled November 30th, 2015