CTTY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AIRPORT
AUDIT REPORT
AT
DECEMBER 31. 1977
NORTHWESTERN U! • ■■■■'■' LIBRAE
Bansley and Kiener
Certified Public Accountants
300 WEST WASHINGTON STREET
CHICAGO, ILLINOIS 60606
AREA CODE 3ia 263-2700
July 14, 1978
To the City Council of the City of Chicago, Illinois
We have examined the balance sheet of Chicago-0 'Hare Interna- tional Airport as of December 31, 1977, and the related statements of revenue and expense, changes in reserves, changes in contributions, and changes in retained earnings for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. We also made reference to the authorizing ordinance to determine that accounting transactions reflected in the attached financial statements were within the scope of the authority.
In our opinion, the accompanying financial statements, together with our notes pertaining thereto, present fairly the financial position of Chicago-0 'Hare International Airport as of December 31, 1977 and the results of its operations for the year then ended, in conformity with generally accepted accounting principles and, except as stated in Note 1C3 , the applicable provisions of the Revenue Bond Ordinance, applied on a basis consistent with that of the preceding year.
Certified Public Accountants
■
-
CJU3L CHXCAGO-O'HARE j
BALI DECEMI
EXHIBIT A -2-
IONS AND RETAINED EARNINGS
CURRENT ASSETS: I Assets) .
Operation and Maintenance Account «.-__. _ , ^.L _ s xear
Cash - City Treasurer
Cash - Bank Trustee
U.S. Treasury Bills (Note 1A)
Accounts Receivable (Note IB)
icted Assets)
Less - Allowance for Doubtful A Due from Other Funds Due from Special Accounts Prepaid Insurance
,158.72 ,234.64 $
Total Current Assets
RESTRICTED ASSETS: Special Accounts:
Cash - City Treasurer $ 1 Cash - Bank Trustee 8,3 U.S. Treasury Bills
(Note 1A) 14,2
U.S. Treasury Notes
(Note 1A) 3 2,9
Accrued Interest
Receivable on U.S.
Treasury Notes
Construction Accounts :
Cash - City Treasurer $ Cash - Bank Trustee U.S. Treasury Bills
(Note 1A) " 4.5
289,393.36 11.879.83
Total Restricted Assets
FIXED ASSETS (Note 1C and ID) : Land Buildings and Other
Facilities $299,30
Less - Allowance for
Depreciation 127.02;
Construction in Progress
Total Fixed Assets
OTHER ASSETS (Notes 1C and ID) : Deferred Engineering Costs Less - Amortization
•line
$125,625,000.00 5.185.000.00
13,759,895.00
145,441.13
2,539,055.92
31,453,318.07 3,626,219.41 4,245,948.75 4.622.561.37
$ 22,050,818.38 41,608,055.58 29.041.618.71
Total Assets
ontributions
$ 5,185,000.00
8.977.350.28
$ 14,162,350.28
301.273.19
$ 14,463,623.47
120,440,000.00
60,392,439.65
92,700,492.67 34,756,253.80
S322.752.ftnq.5q
Note - Retained Earnings include $2] ,.„
income to reduce 1978 flight fees.
Note - Contract commitments to be fx, , ann See notes to financial statements.
'
rWTrAftn-D'HARK INTERNATIONAL AIRPORT
BALANCE SHEET DECEMBER 31, 1977
ASSETS
EXHIBIT A -2-
CURRENT ASSETS:
Operation and Maintenance Account: Cash - City Treasurer Cash - Bank Trustee U.S. Treasury Bills (Note 1A) Accounts Receivable (Note IB) Less - Allowance for Doubtful Accounts Due from Other Funds Due from Special Accounts Prepaid Insurance
Total Current Assets
RESTRICTED ASSETS: Special Accounts:
Cash - City Treasurer Cash - Bank Trustee U.S. Treasury Bills
(Note 1A) U.S. Treasury Notes
(Note 1A) Accrued Interest Receivable on U.S. Treasury Notes Construction Accounts : Cash - City Treasurer Cash - Bank Trustee U.S. Treasury Bills (Note 1A)
$ 9,313,279.80 1,250,280.83 9,079,218.49 $12,360,501.20
1.700.619.45 10,659,881.75
125,682.87
99,234.64
304,754.63
$ 30,832,333.01
$ 124,490.94 8,341,660.45
14,293,553.96
32,905,554.70
394.011.59 $56,059,271.64
20,670.60 58,812.27
4.554.958.33
Total Restricted Assets
FIXED ASSETS (Note 1C and ID) : Land Buildings and Other
Facilities $299,307,692.66
Less - Allowance for
Depreciation 127.023.622.55
Construction in progress
Total Fixed Assets
4.634.441.20
60,693,712.84
$ 50,994,641.32
172,284,070.11 7.801.930.98
231,080,642.41
OTHER ASSETS (Notes 1C and ID) : Deferred Engineering Costs Less - Amortization
Total Assets
$ 1,226,701.79 1.080.580.46
146.121.33 $322.752.809.59
LIABILITIES, RESERVES, CONTRIBUTIONS AND RETAINED EARNINGS
CURRENT LIABILITIES (Payable from Current Assets): Revenue Bonds Payable - Due within One Year Vouchers and Accounts Payable
CURRENT LIABILITIES (Payable from Restricted Assets): Special Accounts:
Vouchers and Accounts Payable $190,158.72 Due to Operation and
Maintenance Account 99,234.64 $ 289,393.36
Construction Accounts :
Vouchers and Accounts Payable
$ 5,185,000.00
8.977.350.28
$ 14,162,350.28
11.879.83
Total Current Liabilities
LONG-TERM LIABILITIES:
Revenue Bonds Payable (Note 2) Less - Portion Due within One Year
RESERVES (Exhibit C) : Debt Service Revenue Bond Retirement Reserve Maintenance Emergency Reserve
Matured Interest on Revenue Bonds Matured Revenue Bonds Construction
Total Reserves
CONTRIBUTIONS (Exhibit D) : City of Chicago State and Federal Public Utility, Concessionaire and Airline
Total Contributions
RETAINED EARNINGS (Exhibit E)
301.273.19 $ 14,463,623.47
$125,625,000.00
5.185.000.00 120,440,000.00
$ 13,759,895.00 145,441.13 2,539,055.92 31,453,318.07 3,626,219.41 4,245,948.75 4.622.561.37
60,392,439.65
$ 22,050,818.38 41,608,055.58 29.041.618.71
92,700,492.67
34,756,253.80
Total Liabilities, Reserves, Contributions and Retained Earnings
$322,752.809.59
Note - Retained Earnings include $21,854,982.73 which represent, in accordance with the Revenue Bond Ordinance, deferred income to reduce 1978 flight fees. Note - Contract commitments to be financed by the Operation and Maintenance Account totaled $11,246,301.04 at December 31, 1977. See notes to financial statements.
CTTV OF CHICAGO CHJCAOO-O'HARE INTERNATTONAT, ATRPORT
COMPARATIVE STATEMENT OF REVENUE AND EXPENSE FOR THE YEARS ENDED DECEMBER 31, 1977 AND 1976
EXHIBIT B -3-
OPERATING REVENUES (Note IE) : Flight Fees, less Ramp Rental
Credit of $5,590,140.00 Rent, Concessions, and Utilities Total Operating Revenues
OPERATING EXPENSES: Salaries and Wages Depreciation Amortization of Deferred
Engineering Costs Repairs and Maintenance - Including Expenditures from Reserve Maintenance Account Other Operating Expenses
Total Operating Expenses Net Operating Income
ADD: NON-OPERATING INCOME:
Interest Earned on Investments : Unrestricted Restricted
Total Non-Operating Income Total income
LESS: NON-OPERATING EXPENSE: Interest on Revenue Bonds Premium on Revenue Bonds Retired
Total Non-Operating Expense Net Income
ADD (DEDUCT) ADJUSTMENTS TO REFLECT ORDINANCE BASIS OF ACCOUNTING: Depreciation Amortization of Deferred
Engineering Costs Expenditures from Reserve
Maintenance Account Interest Earned on Investments -
Restricted Interest on Revenue Bonds Allocation of Revenues:
Revenue Bond Interest
Revenue Bond Retirement
Reserve Maintenance
Emergency Reserve Expenditures of Operating Revenue
for Capital Improvements (Note 1C3) Reimbursement of Capital Expenditures (Note 1C2)
INCREASE (DECREASE) IN DEFERRED INCOME TO REDUCE FUTURE FLIGHT FEES - TO RETAINED EARNINGS
Year Ended December 31,
1977
1976
$ 40,401,849.70 $ 35,118,534.57
34,600.532.59 32,827,035.77
$ 75,002,382.29 $ 67,945,570.34
$ 20,888,987.25 $ 19,499,932.66
10,678,783.30 10,495,702.61
49,068.08
49,068.08
|
9,461,814. 14.891.897. |
.59 .38 |
7,787,101 13.422,253 |
.65 .39 |
||
|
$ |
55,970,550 |
.60 |
$ |
51.254,058 |
.39 |
|
$ |
19,031.831. |
.69 |
$ |
16,691,511 |
.95 |
1,484,158.83 $ 2,270,575.25
1,479,810.41 2,259,774.47
$ 3,754,734.08 $ 3,739,584.88 $ 22,786.565.77 $ 20.431.096.83
7,506,367.19 $ 366.917.50
8,134,742.44 76.462.50
$ 7.873.284.69 $ 8,211,204.94 $ 14,913,281.08 $ 12,219,891.89
10,678,783.30
49,068.08
1,120,095.35
(2,270,575.25) 7,506,367.19
(7,506,367.19)
(11,657,925.81)
(1,160,000.00)
(1,153,268.67)
(1,584,168.44)
4,302,354.24
10,495,702.61
49,068.08
259,993.15
(2,259,774.47) 8,134,742.44
(8,134,742.44)
(11,029,550.56)
(1,160,000.00)
(1,088,363.82)
(3,958,620.37)
$ 13.237.643.88 $ 3r528r346.51
See notes to financial statements.
EXHIBIT C -4-
CITY CHICAGQ-O'HARE
ANALYSIS OF < FOR THE YEAR EN!
Revei Matured
Bon<
Revenue
£&m Bonds
Construction
Total
BALANCE - JANUARY 1, 1977
- 25.395.00 $4.392,818.48 $59.937.365.98
Add:
Allocation of Net Revenue $ 7,506 Transfer of Premiums on
Revenue Bonds Retired Interest Earned on
Investments - Restricted Transfer from Debt
Service Account Transfers from Revenue
Bond Interest and
Revenue Bond Retirement
Accounts (7'307'803.675.00
$21,477,561.67
366,917.50
216,060.60 2,270,575.25
Total Balance
199
803.675.00 $ 216.060.60 $24.115.054.42
199
'829.070.00 $4.608.879.08 $84.052.420.40
Less :
Purchase of Chicago-0 'Hare International Airport Revenue Bonds $
Expenditures by Bank Trustee during 1977 for retirement of bonds and payment of coupons
Expenditures from Reserve Maintenance Account
Expenditures for Fixed Assets Acquired with Revenue Bond Money _
199,
583,121.25
$13,243,848.44
9,309,719.25 1,120,095.35
(13.682.29)
(13.682.29)
Total 2 3^9-683.121.25 $ (13 . 682.29) $23 . 659. 980.75
BALANCE - DECEMBER 31, 1977 $ -245.948.75 j4.622.5fiT .37 S60 . 3Q9 r 43Q . 65
NOTE - Negative amount (Constructioi from adjustment to final cc
See notes to financial statements.
EXHIBIT C -4-
CTTV OF CHICAGO CHTCAGO-n'HARK TNTERNATTONAT, AIRPORT
ANALYSIS OF CHANGES IN RESERVES FOR THE YEAR ENDED DECEMBER 31. 1977
Revenue Revenue Matured Matured Bond Debt Bond Reserve Emergency Interest on Revenue Interest Service Retirement Maintenance Reserve Revenue Bonds Bonds Construction Total
BALANCE - JANUARY 1, 1977 £ = SI 5 .706. 950.00 $ 5.021,944.07 $2.371,845.76 $28.372.840.26 $ 4.045.572.41 $ 25.395.00 $4.392.818.48 $59.937.365.98
Add:
Allocation of Net Revenue $ 7,506,367.19 $ - $11,657,925.81 $1,160,000.00 $ 1,153,268.67 $ - $ $ $21,477,561.67
Transfer of Premiums on
Revenue Bonds Retired - - 366,917.50 - - 366,917.50
Interest Earned on
Investments - Restricted - 127,305.51 1,927,209.14 - - 216,060.60 2,270,575.25
Transfer from Debt
Service Account - (1,947,055.00) 1,947,055.00 - -
Transfers from Revenue
Bond Interest and
Revenue Bond Retirement
Accounts
Total
Balance
Less :
Purchase of Chicago-0 'Hare
International Airport
Revenue Bonds $ 199,122.19 $ - $13,044,726.25 $- $- $- $- $- $13,243,848.44
Expenditures by Bank
Trustee during 1977
for retirement of bonds
and payment of coupons _____ 7,726,598.00 1,583,121.25 - 9,309,719.25 Expenditures from Reserve
Maintenance Account - 1,120,095.35 - 1,120,095.35
Expenditures for Fixed
Assets Acquired with
Revenue Bond Money
Total BALANCE - DECEMBER 31, 1977 J>
NOTE - Negative amount (Construction) results
from adjustment to final contract liability.
See notes to financial statements.
|
(7.307.245.00) - (5.803.675.00) - - 7.307.245.00 |
5.803.675.00 |
|
$ 199.122.19 $(1,947,055.00)$ 8.168.223.31 $1,287,305.51 $ 3.080.477.81 $ 7.307.245.00 |
$5,803,675.00 $ 216.060.60 $24,115,054.42 |
|
$ 199.122.19 $13,759,895.00 $13,190,167.38 $3,659,151.27 $31,453,318.07 $11,352,817.41 |
$5,829,070.00 $4,608,879.08 $84,052,420.40 |
|
- - _ _ _ (13.682.29) (13.682.29! |
|
|
$ |
199,122.19 $ - $13,044,726.25 $1,120,095.35 $ - $ 7.726,598.00 $1,583,121.25 $ (13 . 682.29) $23 . 659. 980.75 |
|
$ |
$13,759,895.00 S 145.441.13 $2,539,055.92 $31,453,318.07 $ 3.626.219.41 $4,245,948.75 SA. 622 . 561 .37 S60 . 392 . 439. 65 |
CTTY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AI
ANALYSIS OF CHANGES IN CQNTRIBU
FOR THE YEAR ENDED DECEMBER 31,
BALANCE - JANUARY 1, 1977
Add:
Increase in Fixed Assets Acquired with: City Money- State and Federal Money (Note 1C2) Public Utility, Concessionaire and Airline Money
Total
Balance
Less :
Provision for Depreciation
Amortization of Deferred Engineering Costs
Total
BALANCE - DECEMBER 31, 1977
See notes to financial statements
ility, laire ine
520.25
554.24) L68.44
34.45
J 15/74
EXHIBIT D -5-
Total
$87.240.239.88
$ 6,272,263.95
1.584.168.44
.85.80) $ 7.856.432.39
$95,096,672.27
J15.74 $ 2,347,111.52 49.068.08
$ 2.396.179.60
>18.71 $92,700.492.67
C!TTY OF CHICAGO CHICAOO-O'HARE INTERNATIONAT, AIRPORT
ANALYSIS OF CHANGES IN CONTRIBUTIONS FOR THE YEAR ENDED DECEMBER 31. 1977
EXHIBIT D -5-
BALANCE - JANUARY 1, 1977
Add:
Increase in Fixed Assets Acquired with: City Money
State and Federal Money (Note 1C2) Public Utility, Concessionaire and Airline Money
Total
Balance
Less :
Provision for Depreciation
Amortization of Deferred Engineering Costs
Total
BALANCE - DECEMBER 31, 1977
City
of
Chicago
$18.257.278.66
$ 6,272,263.95 (2,218,653.16;
State
and
Federal
$36.294.340.97
Public Utility,
Concessionaire
and Airline
$32.688.620.25
Total
$87.240.239.88
6,521,007.40
(4,302,354.24)
$ 6,272,263.95
|
- |
- |
1.584.168.44 |
1.584.168.44 |
|
$ 4.053.610.79 |
$ 6.521.007.40 |
$(2,718,185.80) |
$ 7.856.432.39 |
|
$22,310,889.45 |
$42,815,348.37 |
$29,970,434.45 |
$95,096,672.27 |
|
$ 211,002. 49,068. |
.99 .08 |
$ 1,207,292. |
.79 |
$ |
928,815. |
.74 |
$ 2,347,111, 49.068, |
.52 .08 |
|
$ 260.071, |
.07 |
$ 1.207,292. |
.79 |
$ |
928.815. |
.74 |
$ 2.396.179, |
.60 |
|
$22,050,818. |
,38 |
$41,608,055. |
.58 |
$29 |
.041.618. |
.71 |
$92,700,492 |
.67 |
See notes to financial statements,
EXHIBIT E -6-
CTTY OF CHICAGO CHTCAGO-O'HARE INTERNATIONAL AIRPORT
ANALYSIS OF CHANGES IN RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1977
|
Deferred |
|
|
Income to |
|
|
Reduce Future |
City |
|
Fliqht Fees |
Ecruitv |
Total
BALANCE - JANUARY 1, 1977
Add:
Increase in Deferred
Income to Reduce Future
Flight Fees Increase in Fixed Assets
Acquired with Revenue
Bond Money Revenue Bonds Retired
during 1977
Total
Balance
Less :
Provision for Depreciation of Assets Acquired with Revenue Bond Money
$ 8,617,338.85 $ 2,703,625.14 $11,320.963.99
$13,237,643.88 $
$13,237,643.88
(13,682.29) (13,682.29) 18,543,000.00 18.543,000.00
$13.237,643.88 $18,529,317.71 $31,766.961.59 $21,854,982.73 $21,232,942.85 $43,087,925.58
8.331,671.78 8,331,671.78
BALANCE - DECEMBER 31, 1977 $21,854,982.73 $12.901.271.07 $34.756.253.80
NOTE - Negative amount (Construction) results
from adjustment to final contract liability
See notes to financial statements
SCHEDULE A-l -7-
CITY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AIRPORT
RECONCILIATION TO "NET REVENUES" AS DEFINED IN REVENUE BOND ORDINANCE FOR THE YEARS ENDED DECEMBER 31, 1977 AND 1976
Year Ended December 31,
1977
1976
NET INCOME
ADD OR (DEDUCT) ADJUSTMENTS TO REFLECT ORDINANCE BASIS OF ACCOUNTING: Amounts Included Above in
Determination of Net Income: Depreciation Amortization of Deferred
Engineering Costs Expenditures from Reserve
Maintenance Account Interest Earned on Investments
Restricted Interest on Revenue Bonds Amounts Not Included Above in Determination of Net Income: Expenditures of Operating Revenue for Capital Improvements (Note 1C3) Reimbursement of Capital Expenditures (Note 1C 2) Application of Deferred Income from Preceding Year as Reduction of Flight Fees
"NET REVENUES" AS DEFINED IN BOND ORDINANCE
ALLOCATION OF "NET REVENUES" IN ORDER OF PRIORITY (Note IF) : Revenue Bond Interest Revenue Bond Retirement -
Minimum Payment Reserve Maintenance Emergency Reserve Deferred Income to Reduce Flight
Fees in Following Year Remainder - Additional Allocation
to Revenue Bond Retirement
TOTAL ALLOCATION OF "NET REVENUES"
$14,913,281.08 $12,219,891.89
10,678,783.30
49,068.08
1, 120,095.35
10,495,702.61
49,068.08
259,993.15
(2,270,575.25) (2,259,774.47) 7,506,367.19 8,134,742.44
(1,584,168.44) (3,958,620.37) 4,302,354.24
8,617,338.85
5,088,992.34
$43,332,544.40 $30.029,995.67
$ 7,506,367.19 $ 8,134,742.44
4,922,000.00 1, 160,000.00 1,153,268.67
21,854,982.73
6,735,925.81
4,676,000.00 1,160,000.00 1,088,363.82
8,617,338.85
6,353,550.56
$43,332,544.40 $30.029.995.67
See notes to financial statements
BALANCE - JANUARY 1, 19 7 7 Add:
interest Earned on Investment. Balance
Less :
Expenditures for Fix^ a0 *.
Revenue Bond Money SSStS A°q
BALANCE - DECEMBER 31, 1977
NOTE -
Neresu^sTUnt (Fueling Sys results from adjustment t liability.
Fueling System J±xpansion
$162,911.38
-Q_
SCHEDULE A-2 -8-
JTotal $4,392,818.48
216,060.60 08
;eS n°teS to financial statement
s.
CITY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AIRPORT
ANALYSIS OF CHANGES IN RESERVE FOR CONSTRUCTION FOR THE YEAR ENDED DECEMBER 31, 1977
SCHEDULE A-2
BALANCE - JANUARY 1, 1977
General
Construction
of 1968
Elevated Garage
$3,194,920.29 $505,404.25
Pedestrian
Tunnels and
Access Roads
$292,685.62
Heating and
Refrigeration
Plant Expansion
$236,896.94
Fueling
System
Expansion
$162,911.38
Total
$4,392,818.48
Add:
Interest Earned on Investments - Restricted Balance
150,800.40
26,614.91
13,781.29
16,355.64
8, 508.36
$3,345,720.69 $532,019.16
$306,466.91
$253,252.5!
$171,419.74
216,060.60
$4,608,879.08
Less :
Expenditures for Fixed Assets Acquired with Revenue Bond Money
BALANCE - DECEMBER 31, 1977
1,845.50
2,321.67
(17,849.46)
$3,345,720.69 $532,019.16
$304,621.41
$250,930.91
$189.269.20
(13,682.29)
$4,622,561.37
NOTE - Negative amount (Fueling System Expansion) results from adjustment to final contract liability .
|See notes to financial statements.
-9-
CITY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AIRPORT
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1977
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
A. United States Treasury Bills and Treasury Notes;
Investments in these securities are carried at cost. Inter- est is accrued only on those securities having stated interest rates, i.e., Treasury Notes. Discounts and premiums are recog- nized at the time of maturity or sale. The aggregate market value of securities at December 31, 1977 was $36,771.64 in excess of cost. Components of this excess are as follows:
Cost
Market
Operation and Maintenance
Account:
Treasury Bills Special Accounts:
Treasury Bills
Treasury Notes Construction Accounts:
Treasury Bills
Total
$ 9,079,218.49 $ 9,093,470.79
14,293,553.96 32,905,554.70
4,554,958.33
14,310,343.39 32,886,952.40
4,579,290.54
$60,833,285.48 $60,870,057.12
B. Accounts Receivable:
In accordance with the Revenue Bond Ordinance, all accounts receivable uncollected for a period of thirty days after due date are considered uncollectible and are to be provided for. As of December 31, 1977 an allowance of $1,700,619.45 is recorded for these accounts. Approximately $483,000.00 of this amount was subsequently collected through April 30, 1978.
C . Fixed Assets:
All fixed assets are recorded at cost. Land includes the cost of earthwork and landscaping. The financial statements reflect fixed assets acquired with Revenue Bond Money and with money from other sources. These sources are:
City money
State and Federal money Public Utility, Concessionaire and Airline money
-10-
CTTY OF CHICAGO CHTCAGO-O'HARE INTERNATIONAL ATRPORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31. 1977
(Continued)
C. Fixed Assets (Continued) :
At December 31, 1977 the gross amount of those assets acquired with money from other sources is $120,526,403.14 less allowances for depreciation of $27,972,031.80. The net amount of these assets is reflected by source in the "Contributions" section of the Balance Sheet.
1. Fixed assets acquired with City money include capitalized interest for the use of City money. Interest is capitalized from the commencement of the land improvement or construc- tion activity through the year of completion.
2. Fixed assets acquired with State and Federal money represent grants received that are reimbursements for fixed assets acquired with City money of $2,218,653.16 and Public Utility, Concessionaire and Airline money of $4,302,3 54.24. These grants are recognized only as received. As of December 31, 1977 a maximum of $26,381,444.62 may be realized in future periods from such grants.
3. Fixed assets acquired with Public Utility, Concessionaire and Airline money are comprised of direct reimbursements and amounts expended directly and indirectly from operating revenues. The Revenue Bond Ordinance does not allow the expenditure of operating revenues for capital improvements. However, the Airline Representative has agreed to substan- tially all of these expenditures. Using operating revenues for this purpose has the effect of raising flight fees.
In accordance with the Revenue Bond Ordinance, all replace- ments of vehicles, furnishings, signs and other equipment are expensed during the year of acquisition.
D. Depreciation and Amortization;
Depreciation on Buildings and Other Facilities is provided on a straight-line basis over the estimated useful life of the individual assets. Depreciation charges are begun in the year following the year of acquisition or completion. Deferred Engineering Costs with an original balance of $1,226,701.79 are being amortized on a straight-line basis over 2 5 years.
-11-
CITY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AIRPORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1977
(Continued)
E. Revenues :
In accordance with the Revenue Bond Ordinance, all operating revenues and unrestricted interest earned on investments are accounted for through the Revenue Fund. These revenues are to be allocated first to the Operation and Maintenance Account and then allocated in the following order of priority to the follow- ing special accounts:
Revenue Bond Interest Debt Service Revenue Bond Retirement Reserve Maintenance Emergency Reserve
Further explanation of the allocations for 1977 are detailed in Note IF.
Restricted interest earned on investments is comprised of:
Special Accounts:
Reserve Maintenance $ 127,305.51
Emergency Reserve 1,927,209.14 $2,054,514.65
Construction Accounts 216, 060 . 60
Total $2,270,575.25
While the restricted interest of the special accounts is accounted for through the Revenue Fund, no restricted interest is included in the above allocation of revenues. Restricted interest of the construction accounts is accounted for in the individual construction accounts.
F. Allocation of Revenues:
The Revenue Bond Ordinance requires the allocation of reve- nues for specified purposes in the following order of priority:
1. For ordinary costs of operation and maintenance, but not in excess of the amount budgeted by the City for such purposes .
2. For amounts equal to interest on bonds outstanding. Interest of $7,506,367.19 was paid during 1977.
3. To maintain the balance of the Debt Service Reserve at an amount equal to two years' interest requirements. All Revenue Bond Issues were fully funded at December 31, 1975, through allocations made in prior years. Bonds in the principal amount of $18,543,000.00 were purchased or called during 1977 and the corresponding interest requirement of $1,947,055.00 for 1977 was transferred to the Revenue Bond Retirement Reserve.
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CITY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AIRPORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1977
(Continued)
Allocation of Revenues (Continued)
For required minimum payments to the Revenue Bond Retire- ment Reserve, which range from $4,922,000.00 in 1977 to $14,545,000.00 in 1998. Additional allocations for 1977 are $1,947,055.00 and $6,735,925.81 as explained in Notes F-3 and F-8 respectively. The total allocation to the Revenue Bond Retirement Reserve during 1977 was $13,604,980.81.
For annual payment of $1,160,000.00 to Reserve Maintenance until $4,833,334.00 is accumulated in the Reserve. This money is available for the payment of major repairs, renew- als and replacements. Expenditures of $1,120,095.35 were made from this account during 1977 for the specified purposes .
To pay to the Emergency Reserve an amount equal to the sum of the annual provisions for depreciation and amortization of fixed and other assets acquired with City money and interest on City money invested in fixed and other assets of the Airport.
The components of this amount for 1977 are:
Depreciation $ 211,002.99
Amortization 49,068.08
Interest 893, 197.60
Total $1,153,268.67
Monies held to the credit of the Emergency Reserve Account shall be treated as revenues to provide for the abatement of landing fees in the event that the Airport is closed.
To provide for deferred income to reduce future flight fees. To the extent that revenues for the year as defined in the Ordinance, including the application of deferred income from the previous year, exceed "Airport expense" as defined, the excess shall be considered deferred income and as revenues of the next succeeding year. For the year ended December 31, 1977, $21,854,982.73 has been deferred to reduce flight fees for 1978.
To provide for retirement of Revenue Bonds in addition to minimum payment referred to in Note F-4. Any remaining revenues after making the previously listed allocations shall be allocated to the Revenue Bond Retirement Reserve; $6,735,925.81 was so credited for 1977.
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CITY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AIRPORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1977
(Continued)
NOTE 2 - REVENUE BONDS AND RETIREMENT:
A. Revenues Bonds:
The Chicago-O1 Hare International Airport Revenue Bonds were issued under the authority of an ordinance adopted December 29, 1958, and subsequent supplemental ordinances. The Bonds were issued to provide monies for the extension and improvement of the Airport and its facilities. The following information is presented regarding the status of the Bonds as of December 31, 1977:
Amount authorized $238,000,000.00
Amount sold 232,000,000.00
Amount called or purchased
and retired 102,129,051.25
Amount called but not
presented to bank trustee
for retirement 4,245,948.75
Amount outstanding 125,625,000.00
The Revenue Bonds outstanding are composed of the following:
4-3/4% Series of 1959 $ 53,759,000.00
4-3/4% Series A of 1961 11,202,000.00
4-1/4% Series B of 1961 1,636,000.00
4-1/2% Series of 1967 2,478,000.00
5% Series of 1968 9,930,000.00
6.80% Series of March, 1970 39,945,000.00
6% Series of 1972 6,675,000.00
Total $125,625,000.00
The unexpended proceeds from Revenue Bond issues amounted to $4,622,561.37 at December 31, 1977. This amount is comprised of:
Construction Accounts' Assets $4,634,441.20 Less - Construction Accounts '
Liabilities 11,879.83
Reserve for Construction $4 , 622 , 561 . 37
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CITY OF CHICAGO CHICAGO-O' HARE INTERNATIONAL AIRPORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1977
(Continued)
B. Retirement:
Revenue Bonds are to be retired as rapidly as practicable through the revenues allocated to the Revenue Bond Retirement Reserve. Bonds may be redeemed by call at prices ranging down- ward from 105% to 100% of principal amount plus accrued interest to December 31, 1991, and thereafter, at par value plus accrued interest. In addition, Bonds may be redeemed by purchase in the open market or tender at prices not in excess of the next pre- determined call prices. The following information is presented regarding Bonds purchased or called for retirement through December 31, 1977.
1977 Cumulative
Par value of Bonds purchased
or called $18,543,000.00 $106,375,000.00
Cost of Bonds purchased
or called 18,481,483.75 100,074,030.75
Premiums paid on Bonds
purchased or called 366,917.50 1,024,472.50
Premiums paid on Bonds purchased or called are charged to Airport operations in the year of payment. Discounts on Bonds purchased are retained in the Bond Retirement Reserve to purchase additional Bonds.
Bonds also may be redeemed with monies that are not alloca- tions of revenues to the Retirement Reserve. Call prices for this type of redemption have been adopted which exceed the previously referred to call prices by not more than 2% of prin- cipal amount. As of December 31, 1977 the City has never opted to retire Airport Bonds by this method.
NOTE 3 - OTHER INFORMATION:
A. The Revenue Bond Ordinance provides that "Airport expense", for the purpose of computing flight fees collectible from the airlines, shall include depreciation and amortization only on fixed assets acquired with City money and interest on City money invested in land, buildings, other facilities and deferred engineering costs. See Note l-F-6.
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CITY OF CHICAGO CHICAGO-O'HARE INTERNATIONAL AIRPORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1977
(Continued)
B. The Reserve for Matured Interest on Revenue Bonds is com- prised of the following:
Payment to bank trustee for
coupons due January 1, 1978 $3,545,333.75
Prior payments to bank trustee -
coupons not presented for
redemption 80,885.66
Total $3,626.219.41
C. The Reserve for Matured Bonds represents bonds called but not presented to the bank trustee for retirement.
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