City of Chicago, Chicago-O'Hare International Airport audit report

3 5556 029 780178

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

AUDIT REPORT

AT
DECEMBER 31, 197 6

fRANSPC

LIB-

f4E

19 76

Bansley and Kieneh

Certified Public Accountants

300 WEST WASHINGTON STREET
CHICAGO, ILLINOIS 60606

AREA CODE 312 263-2700

June 17, 1977

To the City Council of the
City of Chicago, Illinois

We have examined the balance sheet of Chicago-O'Hare Interna-
tional Airport as of December 31, 1976, 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-O'Hare International Airport as of December 31, 1976 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

CITY (

CHICAGO-O'HARE II

EXHIBIT A
-2-

BALAB
DECEMB1

A S RUT TONS AND RETAINED EARNINGS

CURRENT ASSETS:

Operation and Maintenance Account
Cash - City Treasurer
U.S. Treasury Bills (Note 1A)
Accounts Receivable (Note IB)
Less - Allowance for Doubtful Ace
Due from Other Funds
Prepaid Insurance

ent Assets)

ne Year

ricted Assets) :

$ 222,367.88
241,424.86

$ 46,849.36

4,922,000.00

10,038,743.98

4,805,174.73

$ 19,812,768.07

Total Current Assets

RESTRICTED ASSETS:
Special Accounts:

Cash - City Treasurer I
Cash - Bank Trustee
U.S. Treasury Bills (Note 1A)
U.S. Treasury Notes (Note 1A)
Accrued Interest Receivable

on U.S. Treasury Notes
Due from Operation and
Maintenance Account
Construction Accounts:

Cash - City Treasurer i

Cash - Bank Trustee

U.S. Treasury Bills (Note 1A)

Total Restricted Assets

FIXED ASSETS (Notes 1C and ID) :
Land

Buildings and Other Facilities $291
Less - Allowance for

Depreciation 116

Construction in Progress

Total Fixed Assets

OTHER ASSETS (Notes 1C and ID) :
Deferred Engineering Costs
Less - Amortization

irline

. 463,792.74
$ 20,276,560.81

$144,168,000.00

4,922,000.00 139,246,000.00

$ 15,706,950.00
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

$ 18,257,278.66
36,294,340.97
32,688,620.25

87,240,239.88

11,320,963.99

Contributions

$318,021. 130.66

Total Assets

Note - Retained Earnings include $8,6ncome to reduce 1977 flight fees.
Note - Contract commitments to be fin 1976.
See notes to financial statements.

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

BALANCE SHEET
DECEMBER 31, 1976

ASSETS

CURRENT ASSETS:

Operation and Maintenance Account:
Cash - City Treasurer
U.S. Treasury Bills (Note LA)
Accounts Receivable (Note IB)
Less - Allowance for Doubtful Accounts
Due from Other Funds
Prepaid Insurance

$ 10,124,191.66
1,316,082.13

40,976.43

4,229,117.62

13,222,409.29

33,016,835.95

452,401.36

4,805,174.73 $ 55,766,915.38

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
Due from Operation and
Maintenance Account
Construction Accounts:
Cash - City Treasurer
Cash - Bank Trustee
U.S. Treasury Bills (Note 1A)

Total Restricted Assets

FIXED ASSETS (Notes 1C and ID) :

Land $ 50,966,929.32

Buildings and Other Facilities $291,417,319.89
Less - Allowance for

Depreciation 116,344,839.25 17 5,072,480.64

Construction in Progress 7,877 , 265. 65

Total Fixed Assets

6,523,142.20
7,006,572.17

8,808,109.53
790,087.96
380, 195.06

$ 23,508,106.92

26,022.97

11,632.98

4,596,587.39

4,634,243.34

60,401,158.72

OTHER ASSETS (Notes 1C and ID)
Deferred Engineering Costs
Less - Amortization

$ 1,226,701.79
1,031,512.38

233,916,675.61

195,189.41

EXHIBIT A
-2-

LIABILITIES, RESERVES. CONTRIBUTIONS AND RETAINED EARNINGS

CURRENT LIABILITIES (Payable from Current Assets):
Overdraft - Bank Trustee

Revenue Bonds Payable - Due within One Year
Vouchers and Accounts Payable
Due to Special Accounts

CURRENT LIABILITIES (Payable from Restricted Assets) :
Special Accounts:

Vouchers and Accounts Payable $ 222,367.

Construction Accounts:

Vouchers and Accounts Payable 241,424,

88

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)

$144,168,000.
4,922,000.

$ 46,849.36

4,922,000.00

10,038,743.98

4,805,174.73

$ 19,812,768.07

■ 463,792.74
$ 20,276,560.81

00

00 139,246,000.00

$ 15,706,950.
5,021,944.
2,371,845.
28,372,840.
4,045,572.
25,395.
4,392,818.

00
07
76
26
41
00
48

59,937,365.98

$ 18,257,278.
36,294,340.
32,688,620,

66
97
25

87,240,239.88
11,320,963.99

Total Liabilities, Reserves, Contributions
and Retained Earnings

Total Assets $318.021.130.66

Note - Retained Earnings include $8,617,338.85 which represent, in accordance with the Revenue Bond Ordinance, deferred income to reduce 1977
Note - Contract commitments to be financed by the Operation and Maintenance Account totaled $8,264,866.53 at December 31, 1976.
See notes to financial statements.

$318,021. 130.66
flight fees.

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

COMPARATIVE STATEMENT OF REVENUE AND EXPENSE
FOR THE YEARS ENDED DECEMBER 31, 1976 AND 197 5

EXHIBIT B
-3-

Year Ended December 31,

1976

197 5

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

Debt Service

Revenue Bond Retirement

Reserve Maintenance

Emergency Reserve
Expenditures of Operating Revenue

for Capital Improvements (Note 1C3)

INCREASE (DECREASE) IN DEFERRED INCOME
TO REDUCE FUTURE FLIGHT FEES - TO
RETAINED EARNINGS

$ 35,118,534.57 $ 27,313,875.56

32,827,035.77 30,994,488.89

$ 67,945,570.34 $ 58,308,364.45

$ 19,499,932.66
10,495,702.61

49,068.08

18,254,796.85
9,898,559.07

49,068.08

7,787,101.
13,422,253.

65
.39

10,871,008.
12,768,456.

,68
.89

$

51,254,058.

39

§

51,841,889.

57

$

16,691,511.

95

$

6,466,474.

88

1,479,810.41 $
2,259,774.47

1,676,036.67
2,261,851.03

$ 3,739,584.88 $ 3,937,887.70
$ 20,431,096.83 $ 10,404,362.58

8,134,742.44 $
76,462.50

8,701,980.28
60,477.50

$ 8,211,204.94 $
$ 12,219,891.89 $

8,762,457.78
1,641,904.80

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)

9,898,559.07

49,068.08

3,692,363.05

(2,261,851.03)
8,701,980.28

(8,701,980.28)

(9,576.00)

(10,452,736.72)

(1,160,000.00)

(877,220.82)

(3,958,620.37) (9,161,656.30)

$ 3.528.346.51 $ (8.641.145.87)

See notes to financial statements

CITY

CHICAGO- O'HARE I

ANALYSIS OF C

FOR THE YEAR END

EXHIBIT C
-4-

Matured

Revenue

Bonds

Construction

Total

BALANCE - JANUARY 1, 1976

Add:

Allocation of Net Revenue
Interest Earned on

Investments - Restricted
Transfer from Debt

Service Account
Transfer from Revenue

Bond Interest Account

Total

Balance

Less :

Purchase of Chicago-O' Hare

International Airport

Revenue Bonds
Expenditures by Bank

Trustee during 1976

for Retirement of

Bonds and Payment

of Coupons
Expenditures from Reserve

Maintenance Account
Expenditures for Fixed

Assets Acquired with

Revenue Bond Money

Total

$ $36,010.00 $4,348,448.85 $55,154,381.29

$ 8,

Hi

$ - $21,412,656.82

251,773.65 2,259,774.47

L

$ 251,773.65 $23,672,431.29

j ;$36,010.00 $4,600,222.50 $78,826,812.58

$ 9,850,850.59

10,615.00

207,404.02

8,571,198.84
259,993.15

207,404.02

j| ;$10,615.00 $ 207,404.02 $18,889,446.60

BALANCE - DECEMBER 31, 1976 $ $25.395.00 $4.392.818.48 $59.937.365.98

See notes to financial statements

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

ANALYSIS OF CHANGES IN RESERVES
FOR THE YEAR ENDED DECEMBER 31, 1976

EXHIBIT C
-4-

BALANCE - JANUARY 1, 197 6

Add:

Allocation of Net Revenue
Interest Earned on

Investments - Restricted
Transfer from Debt

Service Account
Transfer from Revenue

Bond Interest Account

Total

Balance

Less :

Purchase of Chicago-O1 Hare

International Airport

Revenue Bonds
Expenditures by Bank

Trustee during 1976

for Retirement of

Bonds and Payment

of Coupons
Expenditures from Reserve

Maintenance Account
Expenditures for Fixed

Assets Acquired with

Revenue Bond Money

Total
BALANCE - DECEMBER 31, 1976

Revenue

Revenue

Matured

Bond

Debt

Bond

Reserve

Emergency

Interest on

Interest

Service

Retirement

Maintenance

Reserve

Revenue Bonds

Matured
Revenue
Bonds Construction

Total

$16,742,000.00 $ 2,631,170.41 $1,356,153.97 $25,392,160.56 $ 4,648,437.50 $36,010.00 $4,348,448.85 $55,154,381.29

$ 8,134,742.44 $

$11,029,550.56 $1,160,000.00 $ 1,088,363.82 $
115,684.94 1,892,315.88
(1,035,050.00) 1,035,050.00

$ - $21,412,656.82
251,773.65 2,259,774.47

1

(7

,957,

,718.

.75)

-

-

-

-

7,

,957,

,718.

.75

-

_

-

?

177,

,023,

.69

?(1,

,035,

.050.

,00)$12,

,064,

,600,

.56

$1,

275,

,684.

.94

$'

2,

,980,

,679.

,70

$

7,

,957,

,718.

.75

$

$

251,

,773.

.65

$23,

,672,

,431.

,29

?

177,

,023,

.69

$15,

,706,

,950,

,00

$14,

,695,

,770,

,97

$2,

,631,

,838.

.91

?:

28,

,372,

,840.

,26

$

12,

,606,

,156,

.25

$36,

,010,

,00

$4,

,600,

,222.

.50

$78,

,826

,812.

.58

177,023.69 $

$ 9,673,826.90 $

8,560,583.84 10,615.00

259,993.15

$ 9,850,850.59

8,571,198.84
259,993.15

- - - - 207,404.02 207,404.02

$

177,023.69 $ - $ 9,673,826.90 $ 259,993.15 $ - $ 8,560,583.84 $10,615.00 $ 207.404.02 $18,889,446.60

$

$15,706,950.00 $ 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

See notes to financial statements.

CITY OF CHTCAGO
CHICAGO-0 ' HARE INTERNATIONAL AI

ANALYSIS OF CHANGES IN CONTRIBU
FOR THE YEAR ENDED DECEMBER 31 ,

EXHIBIT D
-5-

BALANCE - JANUARY 1, 197 6

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, 1976

See notes to financial statements.

:ility,

jnaire

rline

780.85

Total

$84,415,346.77

$ 1,085,779.14

520.37

3,958,620.37

520.37

$ 5,044,399.51

101.22

$89,459,746.28

780.97

$ 2,170,438.32
49,068.08

780.97

$ 2,219,506.40

520.25

$87,240,239.88

CTTY OF CHICAGO
CHICAGO-O ' HARE INTERNATIONAL AIRPORT

ANALYSIS OF CHANGES IN CONTRIBUTIONS
FOR THE YEAR ENDED DECEMBER 31, 197 6

EXHIBIT D

BALANCE - JANUARY 1, 197 6

City

State

Public Utility,

of

and

Concessionaire

Chicago

Federal

and Airline

Total

$21,910,590.09 $32,883,975.83 $29,620,780.85 $84,415,346.77

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, 1976

$ 1,085,779.14 $ - $

(4,510,532.85) 4,510,532.85

$ 1,085,779.14

-

-

3,

.958,620.37

3,958,620.37

?(3,

,424,753.71)

$ 4,510,532.

,85

$ 3,

,958,620.37

$ 5,044,399.51

$18,

,485,836.38

$37,394,508.

.68

$33,

,579,401.22

$89,459,746.28

$

179,489.64
49,068.08

$ 1,100,167.

.71

$

890,780.97

$ 2,170,438.32
49,068.08

$

228,557.72

$ 1,100,167,

.71

$

890,780.97

$ 2,219,506.40

$18

.257,278.66

$36,294,340.

.97

$32

.688.620.25

$87,240,239.88

See notes to financial statements.

EXHIBIT E
-6-

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

ANALYSIS OF CHANGES IN RETAINED EARNINGS
DECEMBER 31, 1976

BALANCE - JANUARY 1, 1976

Add:

Increase in Deferred

Income to Reduce

Future Flight Fees
Increase in Fixed Assets

Acquired with Revenue

Bond Money
Revenue Bonds Retired

during 1976

Total

Balance

Less :

Provision for Depreciation
of Assets Acquired with
Revenue Bond Money

Deferred
Income to
Reduce Future
Flight Fees

City
Equity

Total

$5,088,992.34 $ 766,485.41 $ 5,855,477.75

$3,528,346.51 $

$ 3,528,346.51

207,404.02 207,404.02
10,055,000.00 10,055,000.00

$3,528,346.51 $10,262,404.02 $13,790,7 50.53
$8,617,338.85 $11,028,889.43 $19,646,228.28

8,325,264.29 8,325,264.29

BALANCE - DECEMBER 31, 1976 $8.617.338.85 $ 2.703,625.14 $11.320,963.99

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, 1976 AND 197 5

Years Ended December 31 ,

1976

1975

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)
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
Debt Service
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"

$12,219,891.89 $ 1,641,904.80

10,495,702.61

49,068.08

259,993.15

9,898,559.07

49,068.08

3,692,363.05

(2,259,774.47) (2,261,851.03)
8,134,742.44 8,701,980.28

(3,958,620.37) (9,161,656.30)

5,088,992.34 13,730,138.21

$30.029.995.67 $26.290.506.16

$ 8,134,742.44 $ 8,701,980.28

9,576.00

4,676,000.00
1,160,000.00
1,088,363.82

8,617,338.85

6,353,550.56

4,452,000.00

1,160,000.00

877,220.82

5,088,992.34

6,000,736.72

$30.029.995.67 $26.290.506.16

See notes to financial statements.

Add

SCHEDULE A-2

-8-

CITY

CHICAGO-O'HARE I

ANALYSIS OF CHANGES I

FOR THE YEAR END

ing and

Fueling

geration

System

Expansion

Expansion
$187,854.88

Total

JANUARY 1, 1976

,682.50

$4,348,448.85

Earned on Investments -

,345.00

9,637.16

251,773.65

Balance

,027.50

$197,492.04

$4,600,222.50

Less:

Expenditures for Fixed Assets Acqi
Revenue Bond Money

BALANCE - DECEMBER 31, 197 6

,130.56

34,580.66

207,404.02

.896.94

$162,911.38

$4,392,818.48

See notes to financial statements

CITY OF CHICAGO
CHICAGO-O'HARK INTERNATIONAL AIRPORT

ANALYSIS OF CHANGES IN RESERVE FOR CONSTRUCTION
FOR THE YEAR ENDED DECEMBER 31, 1976

SCHEDULE A-2
-8-

BALANCE - JANUARY 1, 1976

Add:

Interest Earned on Investments - Restricted
Balance

General

Construction

of 1968

Elevated
Garage

$3,024,965.44 $565,371.88

169,954.85

37,040.64

Pedestrian
Tunnels and
Access Roads

$317,574.15

16,796.00

Heating and

Refrigeration

Plant Expansion

$252,682.50

18,345.00

Fueling

System

Expansion

Total

$187,854.88 $4,348,448.85

9,637.16

251,773.65

$3,194,920.29 $602,412.52

$334,370.15

$271,027.50

$197,492.04 $4,600,222.50

Less:

Expenditures for Fixed Assets Acquired with
Revenue Bond Money

BALANCE - DECEMBER 31, 1976

97,008.27

41,684.53

34,130.56

34,580.66

207,404.02

$3.194.920.29 $505.404.25 $292.685.62

$236.896.94

$162.911.38 $4.392.818.48

See notes to financial statements.

■9-

CITY OF CHICAGO
CHICAGO-O'HARF. INTERNATIONAL AIRPORT

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1976

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, 1976, was $866,939.72 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
B. Accounts Receivable:

$ 7,006,572.17 $ 7,007,750.12

13,222,409.29 13,254,924.00
33,016,835.95 33,838,597.93

4,596,587.39

4,608,072.47

$57.842.404.80 $58.709.344.52

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, 1976, an allowance of $1,316,082.13 is
recorded for these accounts. Approximately $266,000.00 of this
amount was subsequently collected through April 30, 1977.

C. Fixed Assets:

All fixed assets are recorded at cost. Land includes the
costs 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-

CITY OF CHICAGO
CHICAGO-O ' HARE INTERNATIONAL AIRPORT

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31 , 1976

(Continued)

C. Fixed Assets (Continued) ;

At December 31, 1976, the gross amount of those assets
acquired with money from other sources is $112,669,970.75 less
allowances for depreciation of $25,624,920.28. 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 to the City for
fixed assets acquired with City money. These grants are
recognized only as received. As of December 31, 1976, a
maximum of $14,77 2,696.88 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 25 years.

-11-

CITY OF CHICAGO
CHICAGO-0 ' HARE INTERNATIONAL AIRPORT

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31f 1976

(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 1976 are detailed in Note IF.

Restricted interest earned on investments is comprised of:

Special Accounts:

Reserve Maintenance
Emergency Reserve

Construction Accounts

Total

$ 115,684.94
1,892,315.88 $2,008,000.82

251,773.65

$2,259,774.47

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,
of $8,134,742.44 was paid during 1976.

Interest

To maintain the balance of the Debt Service Reserve at an
amount equal to two years1 interest requirements. Bonds
in the principal amount of $10,055,000.00 were purchased
during 1976 and the corresponding interest requirement of
$1,035,050.00 for 1976 was transferred to the Revenue Bond
Retirement Reserve.

-12-

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1976

(Continued)

F. Allocation of Revenues (Continued) :

4. For required minimum payments to the Revenue Bond Retire-
ment Reserve, which range from $4,676,000.00 in 1976 to
$14,545,000.00 in 1998. Additional allocations for 1976
are $1,035,050.00 and $6,353,550.56 as explained in
Notes F-3 and F-8 respectively. The total allocation

to the Revenue Bond Retirement Reserve during 197 6 was
$12,064,600.56.

5. 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 $2 59,993.15 were
made from this account during 1976 for the specified
purposes.

6. 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 1976 are:

Depreciation $ 179,489.64

Amortization 49,068.08

Interest 859,806.10

Total $1,088.363.82

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.

7. 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,
1976, $8,617,338.85 has been deferred to reduce flight fees
for 1977.

8. 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,
$6,353,550.56 was so credited for 1976.

-13-

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1976

(Continued)

NOTE 2 - REVENUE BONDS AND RETIREMENT:

A. Revenue Bonds :

The Chicago-O'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,
1976:

Amount authorized $238,000,000.00

Amount sold 232,000,000.00

Amount called or purchased

and retired 87,806,605.00

Amount called or purchased

but not presented to bank

trustee for retirement 25,395.00

Amount outstanding 144,168,000.00

The Revenue Bonds outstanding are composed of the following:

4-3/4% Series of 1959 $ 63,252,000.00

4-3/4% Series A of 1961 13,234,000.00

4-1/4% Series B of 1961 1,982,000.00

4-1/2% Series of 1967 2,913,000.00

5% Series of 1968 11,447,000.00

6.80% Series of March, 1970 44,040,000.00

6% Series of 1972 7,300,000.00

Total $144,168.000.00

The unexpended proceeds from Revenue Bond issues amounted to
$4,392,818.48 at December 31, 1976. This amount is comprised of:

Construction Accounts' Assets $4,634,243.34
Less - Construction Accounts'

Liabilities 241,424.86

Reserve for Construction $4.392.818.48

-14-

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 197 6

(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 for retirement through December 31,
1976.

1976 Cumulative

Par value of Bonds purchased $10,055,000.00 $87,832,000.00

Cost of Bonds purchased 9,673,826.90 81,592,547.00
Premiums paid on Bonds

purchased 76,462.50 657,555.00

Premiums paid on Bonds purchased are charged to Airport
operations in the year of payment. Discounts on Bonds purchased
are retained in the Bond Retirement Reserve to purchase addi-
tional 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, 1976, 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 F-6.

-15-

CITY OF CHICAGO
CHICAGO-O'HARE INTERNATIONAL AIRPORT

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1976

(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, 1977 $3,926,7 37.50

Prior payments to bank trustee -

coupons not presented for

redemption 118,834.91

Total $4.045,572.41

C. The Reserve for Matured Bonds represents bonds called or
purchased but not presented to the bank trustee for retirement.

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GAYLORD