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 $ 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.

-12-

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.

-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-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

-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.

3 5556 039 00647

"7/->

o

2/15/2010
WT 190242 1 102 00

i

a.

GAYLORD