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

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 $ 3 r 528 r 346.51 



See notes to financial statements. 



EXHIBIT C 
-4- 



CITY 
CHICAGQ-O'HARE 

ANALYSIS OF < 
FOR THE YEAR EN! 



Revei Ma tured 



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. 95 0.00 $ 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 $1 2.901.271.07 $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 INT ERNATIONAL 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^ a *. 

Revenue Bond Money SSStS A ° q 

BALANCE - DECEMBER 31, 1977 



NOTE - 



Ne resu^ s T Unt (Fueli ng S ys 
results from adjustment t 
liability. 



Fueling 
System 
J±xpansion 



$162,911.38 



-Q_ 



SCHEDULE A-2 
-8- 



JTotal 
$4,392,818.48 

216,0 60.60 
08 




;eS n ° teS to financial statement 



s. 



CITY OF CHICAGO 
CHICAGO-O'HARE INTERNATIO NAL 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 INTERNA TIONAL 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 INTERNAT IONAL 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. 



-12- 



CITY OF CHICAGO 
CHICAGO -O'HARE INTERNATIO NAL A IRPORT 

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. 



-13- 

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-O 1 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 



-14- 



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. 



-15- 



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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