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Guam International Airport Authority Annual Report 2008
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Perspectives: 1 A message from the Governor & Lt. Governor In Perspective: A word from Management
2-3
Staying Connected
4-5
Global Focus
6-7
Business Perspective: Meeting the Demand
8-9
In Retrospect
10
Reaching Out Working Together
11
12
13
Statistics: Keeping things in Perspective
14
What we have to offer
Addendum: Financial Statement & Disclosure
Perspectives
As an unincorporated territory of the United States, and the Westernmost island in the Micronesia archipelago, Guam’s location makes it the perfect spot to connect to the rest of the world. Take a close look and you’ll see that despite being on a tiny Pacific island, our airport operations rival many spanning the globe. In 2008, the management and staff of the A. B. Won Pat Guam International Airport worked diligently to meet many of the same challenges faced by other international airports. We invite you to see in the coming pages that trade and commerce flourished, we accommodated more than a million visitors, garnered millions of dollars to improve airport facilities, and were able to encourage additional airport partner services. We commend the airport for constantly analyzing its operations to ensure we are providing nothing but excellence. This type of scrutiny gives us the underpinning of our plans and goals for the year ahead. We are proud of our airport’s accomplishments this past year and look forward to further benchmarks in the future. Join us as we look back at 2008, savoring the different views and perspectives, that together, provide our airport’s focus.
In Perspective The A.B. Won Pat Guam International Airport witnessed unprecedented growth and expansion in 2008. We implemented construction plans for the expansion of runways and further established policy to grow our airport and diversify operations. By improving efficiency and reducing waste, our efforts this past year resulted in a significant decrease in operational costs. Despite the decline of travel in select regions we returned to the drawing board, worked with our airline partners and tenants and improved our appeal as an unrivaled visitor destination. By keeping things in perspective, we weathered the uncertainty that riddled 2008. We met the needs of our ever-changing market, increased service delivery and expanded our inventory to accommodate venture projects. In fact, we garnered millions in investment dollars towards the creation and expansion of air freight and transshipment facilities, albeit in the face of a wavering global economy. Surely, 2009 will bring its fair share of trials and triumphs, but our commitment to our stakeholders and the people we serve provides the foundation for our success. As we continue to make strides in transportation, commerce, and trade, we are proud to be the premiere airport in the Western Pacific and the very lifeline that drives our multi-faceted island.
Jess Q. Torres
Carlos H. Salas
Executive Manager
Deputy Executive Manager
Hafa adai, I am happy to present to you a record of accomplishments that transpired in 2008. Guam’s unprecedented receipt of millions in federal government funds, this past year, is a tribute to our airport’s family of employees to secure options to keep Guam competitive in a global economy. Our airport continues to grow despite a difficult time for dozens of facilities around the world. I was happy to return to another year of work as a chairman of the board. It’s a responsibility I have not taken lightly but have truly enjoyed. This year was not without its challenges but along with a strong support system of employees and airport partners – we’ve prospered. My time with the airport and my second year as its chairman has definitely given me a different perspective on the world economy. We have managed to increase opportunities for growth as a transshipment point between America and Asia. In the coming years, we will see more square feet of space opening up on Guam for the delivery of goods to points all across the globe. In 2008, economies all over the world experienced a troubled period and we understood. Just as the U.S. federal government quickly considered an economic stimulus package we did our share and offered a rate reduction for our airline partners. While it was an attempt to keep business relationships strong it also made sound economic sense. Although, I would like to have more time with the airport I know the diligence that I have seen in our airport family will continue as my time as chairman comes to an end. This is another testament to the type of community we have here within these walls as well as the community that surrounds us and relies on us. I am proud of the work we have accomplished and look forward to congratulating the new chairman, Mr. Martin Gerber for his contributions at the end of 2009.
Frank Blas Chairman GIAA Board of Directors
Staying Connected The Guam International Airport is more than just a gleaming building made of steel, concrete, and glass. The airport is at the center of daily life on Guam. Not only do we provide careers for our family of employees, we also keep thousands of others on the island working. Guam’s economy relies on our visitor industry and before our visitors ever fill hotel rooms, shopping centers, and tour busses they file through our doors. Through us, the local entrepreneur is able to meet with potential foreign investors or business associates. We also support the island’s import industry because, on an island surrounded by the Pacific Ocean, it is not just a luxury it is a necessity. While we are the foundation of tourism and trade the airport also plays a vital role in keeping familial and personal relationships alive. Visiting and vacationing with family and friends across the U.S. and in other countries is now part of the local culture. We know just how special our partnership is with Guam. We have hosted numerous events as a way to let many know we want to give back to the community. We are woven into the delicate fabric of the local culture. We work hard to be a good neighbor and strive to live up to a high standard set by the people we serve.
Gl obal Focus The Guam International Airport’s location places us at the epicenter of trade and commerce. We are the gateway between East and West. As stewards of this route, in 2008, we implemented numerous economic development and investment solutions. In the past year, the Guam Economic Development and Commerce Authority worked to provide additional incentives for creating new business and attracting foreign investment. In the preceding year, the Guam Visitors Bureau implemented yet another rigorous marketing campaign to draw more tourists here. Our business environment allows for corporations to easily set up shop here. With offices and headquarters close to our airport the global executive will have the convenience of being in most major Asian cities within three to four hours from Guam. Our economic base is strong enough that Guam’s bonds rose to B+ status in the midst of angst over the passage of the U.S. Congress $700 billion bail out. We are more than just a transiting facility. More and more international airports are taking on more air cargo in order to keep up with immediate world demands for goods and commodities. We have gained an enormous lead, in this regard, as the U.S. federal government granted us the ability to increase our air cargo service. We view our airport as a hub in the wheel of a forward moving global economy.
Meeting the Demand [Business Perspective]
Our current economy is reliant on a strong tourism industry. We provide the first view of the island and we are also the last thing our visitors see. Our airport family strives to provide an environment that is pleasant and impressionable. We are expanding our facilities, offering new services, and contributing significantly to an already solid economy. Money in the form of $23.8 million in Federal Aviation Administration grants will go towards the expansion of one of the airport’s runways, the completion of a parallel runway, and increased noise insulation. Guam currently sees more than a million tourists annually and that number could significantly climb as larger aircraft will have the ability to land at our airport. Larger air cargo craft will also have the ability to land here either as a transshipment point or final destination. We are dedicated to our partners and customers. Our dedication is rivaled only by our passion to provide a top-notch facility and unparalleled service for those that rely on our operations. As we approach the 10-year mark in this millennium we foresee meeting the demands set by an ever-shrinking world.
A.B. WON PAT INTERNATIONAL AIRPORT, GUAM DEVELOPMENT OPPORTUNITIES
PROPERTY OVERVIEW
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767,553 sq. ft. of terminal building with 21 contact gates
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1,827 acres of former U.S. Navy property and facilities
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Over 937,900 sq. ft. of vacant ground area
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38,347 sq. ft. of maintenance facilities
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92,800 sq. ft. of warehouse space
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1,874 sq. ft. of storage facilities
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67,006 sq. ft. of office space
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16,120 sq. ft. of housing/barracks facilities
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207,212 sq. ft. of Aircraft Hangar Space
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93,668 sq. ft. of cargo and commuter facilities
A.B. WON PAT INTERNATIONAL AIRPORT, GUAM REAL ESTATE DEVELOPMENT OPPORTUNITIES
AVIATION AND AIRPORT RELATED
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Hangars
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Aviation & Flight Schools
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GSE Maintenance/Fuel Facility
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Reservations Call Center
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Bonded Warehouse
TOURIST AND COMMERCIAL
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Free Trade Zone
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2-Star Hotel (Business/Transit)
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Fast Food Operations
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Light Manufacturing and Assembly
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Office Blocks
In Retrospect We overcame adversity in 2008 and worked hard to realize continued growth in different sectors. We have a lot to be proud of because it is this type of tenacity and strength that has allowed the Guam International Airport to remain a steadfast participant of a global economy. While the environment in the world market continues to change we are not staying stagnant we are dynamic. This past year, our airport garnered millions in partner and federal government support. We in turn gave back to our partners by providing an economic stimulus. Our visitor arrivals stayed strong. Given these facts the A.B. Won Pat’s gates remain open to new opportunities in 2009.
Reaching Out Respect and hospitality are cornerstones of our local culture and we continue to welcome our visitors with open arms and pay tribute to many on Guam who deserve recognition. From the design of our facade, to the artwork in our terminal, to our interaction with airport customers, this is Guam. Last year, we built a museum display to honor Antonio B. Won Pat – a man who first represented Guam in the U.S. Congress. We want to continue the tradition of his exemplary service. Our soldiers are also honored on a wall to show our deepest respect for those who lost their lives protecting our freedom. During 2008, as we’ve done every year, we invited numerous government and civic organizations to utilize our facilities to promote not only our culture but our most worthy causes. We are not just an airport in this community we are a member and a friend to Guam. We extend that same warm consideration to others across the globe.
WorkingTogether Partnerships are an important part of how we conduct business. In 2008, we decreased our fees and are continuing incentives for airlines. We are encouraging our airline partners to generate new flights and air services. As an airport, our business and government relationships provide a foundation for us to realize opportunities for growth. Guam’s tax and business laws are structured after laws established by the U.S. federal government and many U.S. metropolitan cities. We understand that countries are relying heavily on the manufacturing and shipping of goods from Asia. With these factors in mind, we are rapidly growing our air cargo services by taking full advantage of liberal cargo authorizations from the U.S. Department of Transportation. Investments from partners to develop air cargo facilities within the airport’s footprint have totaled $24.5 million in 2008. Their partnership is a testament to the strength of their investment and their confidence in us. This year we are seeking more partnerships with companies and corporations. We anticipate the movement of U.S. Marine troops from Okinawa, Japan to Guam will also provide for increased opportunities for new affiliations and associations
What we have to offer Guam abounds with the beauty of a tropical paradise and splendor of any modern city across the globe. Take a trip down the main street of Tumon and you will see five star hotels, chic boutiques, fine dining establishments, and the warm invite of the Pacific Ocean. Guam is also home to a rich and enduring culture, fueled by the warmth and friendliness of our island people. Our melting pot of ethnicities forms a unique and dynamic community of artisans and craftsmen who help to preserve Guam’s heritage through the arts. Our island paradise also offers a multitude of activities for both the vacationing and corporate traveler. With temperatures range between 75 to 86 degrees Fahrenheit, visitors can explore our pristine waters, scuba diving, parasailing, windsurfing and snorkeling. You can also try your hand at Golf at any one of our majestic golf courses overlooking scenic Guam.
Keeping things in Perspective The A.B. Won Pat Guam International Airport overcame adversity in 2008 and worked hard to realize continued growth in different sectors. We forged ahead, exceeded expectations and celebrated another successful year. We look forward to new opportunities in 2009, cognizant that our unique brand of tenacity will ensure success in a dynamic, ever-changing market.
Financial Statements and Other Financial Information Antonio B. Won Pat International Airport Authority, Guam Years ended September 30, 2008 and 2007 with Report of Independent Auditors Ernst & Young
Ernst & Young LLP 231 Ypao Road Suite 201, Ernst & Young Building Tamuning, Guam 96913 Tel: +1-671-649-3700 Fax: +1-671-649-3920 www.ey.com
Report of Independent Auditors The Board of Directors Antonio B. Won Pat International Airport Authority, Guam We have audited the accompanying statements of net assets of the Antonio B. Won Pat International Airport Authority, Guam (the Authority), a component unit of the Government of Guam, as of September 30, 2008 and 2007, and the related statements of revenues, expenses and changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the Authority’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Authority’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Antonio B. Won Pat International Airport Authority, Guam as of September 30, 2008 and 2007, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information included in Schedules 1 through 9 are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information is the responsibility of the Authority’s management. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.
1 A member firm of Ernst & Young Global Limited
Antonio B. Won Pat International Airport Authority, Guam Statements of Net Assets 2008 Assets Current assets: Unrestricted assets: Cash (Note 2) Passenger facility charge cash (Note 2) Accounts receivable, trade, net of allowance for doubtful accounts of $318,142 at September 30, 2008 ($209,987 at September 30, 2007) (Note 2) Passenger facility charge receivables (Note 2) Receivables from the United States Government Current portion of notes receivable, net of allowance for for doubtful accounts of $1,797,739 at September 30, 2008 ($1,354,474 at September 30, 2007) (Note 3) Inventory and other
$
September 30,
2,383,380 92,984
$
2007
1,995,312 75,679
4,514,685 800,625 8,999,557
5,888,866 820,727 2,625,828
--46,584
515,775 55,835
16,837,815
11,978,022
10,998 1,156,631
82,935 1,500,006
1,167,629
1,582,941
Total current assets
18,005,444
13,560,963
General Revenue Bonds (Note 6) : Investments and cash with trustees, unrestricted Investments and cash with trustees, restricted
28,994,473 31,519,267
31,506,976 32,519,532
60,513,740
64,026,508
395,819,817 8,061,495 ---
375,898,559 8,958,183 3,005,592
Total unrestricted current assets Restricted assets: Customs fees, cash Customs fees, receivables (Note 11) Total restricted current assets
Capital assets, at cost less accumulated depreciation (Notes 4 and 10) Deferred bond issue costs Notes receivable, net of current portion (Note 3) Total assets
$
482,400,496
$
465,449,805
Antonio B. Won Pat International Airport Authority, Guam Statements of Net Assets, continued 2008 Liabilities and Net Assets Current liabilities: Payable from unrestricted assets: Accounts payable - trade Accounts payable - construction Other liabilities (Note 13) Security deposits and deferred income Current portion of annual leave (Note 9)
$
Total payable from unrestricted assets
September 30,
2,295,354 8,990,563 838,566 2,149,842 205,990
$
2007
3,079,077 3,165,246 848,368 1,058,261 260,705
14,480,315
8,411,657
1,476,496
1,525,038
7,335,000 4,618,034
8,030,000 4,803,484
13,429,530
14,358,522
Total current liabilities
27,909,845
22,770,179
Non-current liabilities: Payable from unrestricted assets: Accrued unfunded liability to retirement fund (Notes 7 and 9) Long-term portion of annual leave (Note 9)
5,297,378 562,538
4,708,147 562,538
182,140,551
189,612,434
Total non-current liabilities
188,000,467
194,883,119
Total liabilities
215,910,312
217,653,298
214,405,762 36,592,365 15,492,057
187,214,310 37,773,950 22,808,247
266,490,184
247,796,507
Payable from restricted assets: Customs fees payable to Treasurer of Guam (Note 11) General Revenue Bonds: Current installments (Notes 5 and 9) Accrued interest Total payable from restricted assets
Payable from restricted assets: Long-term bonds payable, less current installments: General Revenue Bonds (Notes 5 and 9)
Commitments and contingencies (Notes 5 and 10) Net assets: Invested in capital assets, net of related debt Restricted (Notes 4 and 10) Unrestricted Total net assets Total liabilities and net assets
$
482,400,496
$
465,449,805
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