1. 2012 BUDGET TO CITY COUNCIL Presented by Kim Day & Patrick Heck September 21, 2011

2. Agenda 1.Highlights 2.10-Year Financial Strategy 3.Budget Overview 4.Revenues 5.Expenses 6.FTEs 7.Capital Equipment 2

3. Executive summary 3 Highlights ●2012 O&M budget in-line with 10-year financial strategy ●Passenger and revenue growth outpaces expense growth in the 2012 budget ●Disciplined O&M process emphasizes cost effectiveness 2012 Operating Revenue v. Operating Expense Increases ($ millions) 45 5 RevenueExpense

4. 10-year financial strategy ●Positions DIA for success in a dynamic & changing environment ●Provides the foundation for DIA’s business plan and establishes performance targets including: −Cost per Enplaned Passenger (CPE) −Debt service coverage −Cash on hand 4 DIA created a 10-year financial strategy to establish a longer term financial management foundation 10-Yr Fin Strat

5. Critical assumptions CategoryAssumptions Passenger traffic Compound annual growth rate of 1.8% Revenue Non-airline revenue growth of 2.5% per enplanement annually O&M Personnel 4% per year (2012-2020) O&M Non-Personnel 2012: No additional growth 2013-2020: Inflation plus 1% per year Capital Improvement Plan $1.5 billion 2011-2020, including STRP Debt New debt structured to take advantage of existing debt profile Source: DIA 10-year financial strategy prepared by Leigh Fisher 5 DIA’s critical assumptions rely on conservative revenue projections and reasonable cost estimates 10-Yr Fin Strat

6. Key metrics Metric 2009 Actuals 2010 Actuals 2011 Budget 2012 Budget Comments Cost Per Enplanement$12.72$11.77$11.98$12.29 Increase primarily from debt service Days Cash on Hand446 days470 days510 days502 days Key risk mitigation tool Net Operating Income$185 mm$191 mm$212 mm$242 mm Revenues outpacing expenses Operating Margin32.8%31.9%34.7%37.0% Revenues outpacing expenses Debt Service Coverage 1 156%180%175%176% Well above 125% minimum Non-Airline Revenue per Enplanement $9.78$10.60$10.66$10.78 Primarily parking and aviation fuel tax Source: DIA Financials & Feasibility analysis prepared by Leigh Fisher Notes: (1) Bond ordinance requires a minimum of 125% coverage 6 2012 budget projects continued good financial health that is consistent with the 10-year financial strategy Overview

7. 2012 budget summary Category 2011 Budget 1 2012 Budget 1 VarianceVar %Comments Total Revenues$ 757$ 798$ 415% Increase of $45 mm in operating revenues Debt Service$ 311$ 321$ 103% No increase from new money Operations & Maintenance Expenses $ 340$ 345$ 51% Increased personnel costs Capital Equipment $ 3$ 7$ 4112% Vehicle replacement program 7 Notes: (1) Millions of dollars Source: DIA Budget documents Revenue growth outpacing expense growth Overview Primary Focus of Today’s Discussion

8. DIA 2012 budget overview Total Revenue Budget = $798 MillionTotal Expense Budget = $673 Million DIA Revenue Budget 2012, millions of dollars DIA Expense Budget 2012, millions of dollars 8 Source: DIA Budget documents Revenues cover three categories while expenses are focused primarily on debt service and contracts Overview

9. Operating revenues Revenue Categories 2011 Budget 1 2012 Budget 1 VarianceVar %Comments Non-Airline$ 254$ 280$ 2610% Increase in parking rates and aviation fuel tax Airline$ 356$ 375$ 195% Increase in rates primarily due to debt service Total$ 610$ 655$ 457% 9 Notes: (1) Millions of dollars Source: DIA Budget documents Non-airline revenues growing faster than airline revenues Revenues

10. Revenue share Note: Revenue share capped at $40 per current Use & Lease agreements Source: DIA Financials & Feasibility analysis prepared by Leigh Fisher Airline Revenue Share Capped at $40 million 10 Airline revenue share forecasted to stay at cap with the airport’s overall portion increasing Revenues

11. Operating expenses Categories 2011 Budget 1 2012 Budget 1 Var % [(D)/I] 2 Comments Personnel$ 94$ 973% Includes merit increase 3 and five furlough days Contracts$ 170$ 169(0%) Decrease in Letter of credit fees and insurance Supplies$ 26$ 272% Increase in fuels and repair parts Interfund$ 50$ 512% Increase in Police & Fire Total$ 340$ 3451% In-line with 10-year plan 11 Notes: (1) Millions of dollars (2) (D) = decrease; I = increase (3) Merit increase included in appropriation but held at airport level pending Mayoral decision in 2012 Source: DIA Budget documents Expense increase is primarily due to personnel related costs Expenses

12. Total of $51 million in reimbursements to the general fund – 71% covers over 300 non-aviation City employee salaries & benefits to include: – Attorneys – Auditors – CSA – Division of Small Business Opportunity – Denver Police Department – Denver Fire Department – Paramedics/Ambulance – Parks & Rec (snow season) – 29% in indirect payments General fund services 12 Source: DIA Budget documents Expenses

13. FTEs and Enplaned passengers Source: DIA Traffic Statistics & forecast from feasibility model by Leigh Fisher 13 FTEs Projecting a slight decrease in personnel despite an expected increase in passenger traffic

14. 2012 capital equipment Equipment Categories 2011 Budget 1 2012 Budget 1 Var % [(D)/I] 2 Comments Vehicles$ 2.4$ 6.2162% Vehicles in replacement program Computers$ 0.2$ 0.482% Replacement servers Other$ 0.6$ 0.1(81%) Replacements for parking equip, e.g., entry & exit terminals Total$ 3.2$ 6.7112% 14 Increase in capital equipment driven primarily by replacement vehicles Capital Equip Notes: (1) Millions of dollars (2) (D) = decrease; I = increase Source: DIA Budget documents

15. Summary ●2012 budget consistent with 10-year financial strategy ●Revenues outpacing expenses ●2009-2011 performance helps validate 2012 budget request ●2011 execution is on positive track 15

16. 2012 BUDGET TO CITY COUNCIL Presented by Kim Day & Patrick Heck September 21, 2011