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

3 5556 029 780160 



r-TTV OF CHICAGO 
rWTCAGQ-Q'HARE INT?.T?NATTONAT, ATRPQRT 



AUDIT REPORT 

AT 

DECEMBER 31. 1978 AND 1977 






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PTTV OF CHICAGO 

rwTPAnn-n'HARE international atrport 

AUDIT REPORT 

AT 

DECEMBER 31, 1978 AND 1977 

Page 

Report of Certified Public Accountants 1~2 

Balance Sheets 3 

Statements of Revenue, Expense 

and Changes in Retained Earnings 4 

Statements of Changes in Financial Position 5 

Notes to Financial Statements 6-15 

Supplementary Information: 

Reconciliation to "Net Revenues" as 

Defined in Revenue Bond Ordinance 16 

Analysis of Changes in Contributed Capital 17 



Analysis of Changes in Retained Earnings - Reserved 



18 



Analysis of Changes in Retained Earnings - Construction 19 



Hanbley and Kiener 
Certified Public Accountants 

300 WEST WASHINGTON STREET 

CHICAGO, ILLINOIS 60606 

AREA CODE 312 263-2700 



To the City Council of the 
City of Chicago, Illinois 

We have examined the balance sheets of Chicago-0 'Hare Interna- 
tional Airport as of December 31, 1978 and 1977, and the related state- 
ments of revenue and expense and changes in retained earnings, and changes 
in financial position for the years then ended. Our examinations were 
made in accordance with generally accepted auditing standards and, accord- 
ingly, included such tests of the accounting records and such other audit- 
ing 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 financial statements referred to above 
present fairly the financial position of Chicago-0 'Hare International 
Airport as of December 31, 1978 and 1977, and the results of its operations 
and the changes in its financial position for the years then ended, in 
conformity with generally accepted accounting principles and, except as 
stated in Note l-E-3 , the applicable provisions of the Revenue Bond Ordinance 
applied on a consistent basis. 



. 






■ 



-2- 

Our examinations have been made primarily for the purpose of 
expressing an opinion on the financial statements, taken as a whole. The 
accompanying supplementary information is presented for analysis purposes 
and is not necessary for a fair presentation of the financial statements 
referred to in the first paragraph. This information has been subjected 
to the tests and other auditing procedures applied in the examination of 
the financial statements mentioned above and, in our opinion is fairly 
stated in all material respects in relation to the financial statements 
taken as a whole. 



Certified Public Accountants 





June 13, 1979 
Chicago, Illinois 



CHTCAGQ-D'HARE I 



BALAN 
DECEMBER 31 



ASSETS 

CURRENT ASSETS: 

Cash on Deposit ties 

U.S. Government Securities - At C 
Accounts Receivable - (Less - All 

for Doubtful Accounts - 

1978 - $1,415,897.98 - 

1977 - $1,700,619.45) 
Due from Special Accounts 
Due from Other Funds 
Prepaid Expenses 

Total Current Assets 

RESTRICTED ASSETS: rS 

Cash on Deposit 

U.S. Government Securities - At C 
Due from Special Accounts 
Accrued Interest Receivable 



Total Restricted Assets 

PROPERTY, PLANT AND EQUIPMENT: 

Land, Buildings and Other Facilit 
Less - Accumulated Depreciation 

Property, Plant and 
Equipment - Net 

OTHER ASSETS: 

Deferred Engineering Costs 
Less - Amortization 

Other Assets - Net 



rved 



Total Assets 



The notes to the financial statemen 



EXHIBIT A 
-3- 



1978 



1977 



$ 5,449,000.00 $ 
11,033,438.24 
115,612.35 



5,165,000.00 
8,977,350.28 



$ 16.598,050.59 $ 14.162.350.28 



227,597.30 $ 

3,272,043.71 
2.760.005.00 _ 



202,038.55 

99,234.64 

3,626,219.41 

4.245.948.75 



$ 6.259.646.01 $ 8.173.441.35 



$106.001.000.00 $120.440.000.00 



$128.858.696.60 $142.775.791.63 



$ 95.617.150.94 $ 92.700.492.67 



$ 12,276,450. 
89,669. 
1,926,815. 
34,982,865 
4,939,177 
18.566.427 
$ 72,781,406 
18.719.752 



00 $ 13,759,895.00 

78 145,441.13 

94 2,539,055.92 

,30 31,453,318.07 

,13 4,622,561.37 

91 21.854,982.73 

,06 $ 74,375,254.22 

,51 12.901.271.07 



$ 91.501.158.57 $ 87.276.525.29 
$187.118.309.51 $179.977.017.96 
$■115.977.006.11 fp??-75?. 809.59 



CTTY OF CHICAGO 
CHTCAGO- rVHARE INTERNATIONAL AIRPORT 

BALANCE SHEETS 

AT 

DECEMBER 31. 1978 AND 1977 



EXHIBIT A 
-3- 



ASSETS 

CURRENT ASSETS: 
Cash on Deposit 

U.S. Government Securities - At Cost 
Accounts Receivable - (Less - Allowance 

for Doubtful Accounts - 

1978 - $1,415,897.98 - 

1977 - $1,700,619.45) 
Due from Special Accounts 
Due from Other Funds 
Prepaid Expenses 

Total Current Assets 

RESTRICTED ASSETS: 
Cash on Deposit 

U.S. Government Securities - At Cost 
Due from Special Accounts 
Accrued Interest Receivable 



Total Restricted Assets 

PROPERTY, PLANT AND EQUIPMENT: 

Land, Buildings and Other Facilities 
Less - Accumulated Depreciation 

Property, Plant and 
Equipment - Net 

OTHER ASSETS : 

Deferred Engineering Costs 
Less - Amortization 

Other Assets - Net 



1978 



1977 



$ 9,233,862.44 $ 10,563,560.63 
10,001,765.01 9,079,218.49 



9,255,075.65 

891,787.92 
332.987.48 



10,659,881.75 

99,234.64 

125,682.87 

304.754.63 



$ 29,715,478.50 $ 30.832.333.01 



$ 6,474,348.40 $ 8,545,634.26 

53,348,591.77 51,754,066.99 
115,612.35 

536.071.64 394,011.59 



$ 60,474.624.16 $ 60.693.712.84 



$363,770,146.23 $358,104,264.96 
138,080,296.03 127.023.622.55 



$225.689.850.20 $231.080,642.41 



$ 1,226,701.79 $ 1,226,701.79 
1.129.648.54 1.080.580.46 

$ 97,053.25 $ 146,121.33 



Total Assets $315.977.006.11 $322.7 52.809. 59 

The notes to the financial statements are an integral part of this statement. 



LIABILITIES AND EQUITY 

CURRENT LIABILITIES : 

Revenue Bonds Payable - Current Maturities 

Accounts Payable 

Due to Special Accounts 



1978 



1977 



Total Current Liabilities 

LIABILITIES PAYABLE FROM RESTRICTED ASSETS: 
Accounts Payable 
Due to Special Accounts 
Matured Interest on Revenue Bonds 
Matured Revenue Bonds 

Total Liabilities Payable from 
Restricted Assets 

LONG-TERM LIABILITIES: 
Revenue Bonds Payable - 
Less Current Maturities 



Total Liabilities 

EQUITY: 

Contributed Capital 

Retained Earnings - Reserved: 

Debt Service 

Revenue Bond Retirement 

Maintenance Reserve 

Emergency Reserve 

Construction 

Future Flight Fee Reduction 

Total Retained Earnings - Reserved 
Retained Earnings - Unreserved 

Total Retained Earnings 

Total Equity 

Total Liabilities and Equity 



$ 5,449,000.00 $ 5,185,000.00 
11,033,438.24 8,977,350.28 
115,612.35 



$ 16,598.050.59 $ 14.162.350.28 



227,597.30 $ 202,038.55 

99,234.64 

3,272,043.71 3,626,219.41 

2.760.005.00 4.245.948.75 



$ 6.259,646.01 $ 8.173.441.35 



$106.001.000.00 $120.440.000.00 



$128,858,696.60 $142.775.791.63 



$ 95.617.150.94 $ 92.700,492.67 



$ 12,276,450.00 

89,669.78 

1,926,815.94 

34,982,865.30 

4,939,177.13 

18,566.427.91 

$ 72,781,406.06 

18.719.752.51 



$ 13,759,895.00 

145,441.13 

2,539,055.92 

31,453,318.07 

4,622,561.37 

21.854.982.73 

$ 74,375,254.22 

12,901.271.07 



$ 91.501,158.57 $ 87.276.525.29 
$187,118,309.51 $179.977.017.96 
S315.977.006.il $ T9? . 7 S7 . 809 . 59 



CTTV OF CHICAGO 
CHTCAGO-O'HARE INTERNATIONAL AIRPORT 



EXHIBIT B 
-4- 



STATE MENTS OF REVENUE. EXPENSE AND CHANGE S IN RETAINED EARNINGS 
" FOR THE YEARS ENDED DECEMBER 31, 1978 AND 1977 

Year En ded December 31, 

197 7 



1978 



OPERATING REVENUES: 
Flight Fees 

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 
Operating Income 

NON-OPERATING INCOME AND (EXPENSE) : 
Interest Earned on Investments 
Discount on Revenue Bonds Retired 
Interest on Revenue Bonds 
Premium on Revenue Bonds Retired 

Total Non-Operating (Expense) 

NET INCOME BEFORE OPERATING TRANSFERS 
Depreciation and Amortization 

Transferred to Reduce Contributed 

Capital 
Reimbursement of Capital Expenditures 
Expenditures of Operating Revenue for 

Capital Improvements 

INCREASE IN RETAINED EARNINGS 
RETAINED EARNINGS - BEGINNING OF YEAR 
RETAINED EARNINGS - END OF YEAR 



$32,215,332.57 $40,401,849.70 

37,900,924.16 34,600,532.59 

$7 0,116,256.73 $7 5,002,382.29 



$22,949,062.76 $20,888,987.25 
11,056,67 3.48 10,678,783.30 



49,068.08 



49,068.08 



13,100,761.85 9,461,814.59 

18,317,822.28 14,891,897.38 

$65,47 3,388.45 $55,970,550.60 

$ 4,642,868.28 $19,031,831.69 



$ 4,749,693.70 $ 3,754,734.08 

61,516.25 
(6,528,509.35) (7,506,367.19) 
(371,255.45) (366,917.50 ) 
$(2,150,071.10) $(4,057,034.36 ) 

$ 2,492,797.18 $14,974,797.33 



2,721,485.58 



2,396,179.60 

4,302,354.24 



(989,649.48) (1,584,168.44 ) 

$ 4,224,633.28 $20,089,162.73 

87,276,525.29 67,187,362.56 

$91.501.158-57 $87,276.525.29 



The notes to the financial statements are an integral part of this 
statement . 



EXHIBIT C 
-5- 



CITY OF CHICAGO 
CHICAGO-O'HARE INTERNATIO NAL AIRPORT 

STATEMENTS OF CHANGES IN FINANCIAL POSITION 
FOR THE YEARS ENDED DECEMBER 31, 1978 AND 1977 



1978 1977 



SOURCES OF WORKING CAPITAL: 

Net Income from Operations $ 2,492,797.18 $14,974,797.33 

Expenses Not Requiring an Outlay 
of Working Capital: 

Depreciation 11,056,673.48 10,678,783.30 

Amortization of Deferred 

Engineering Costs 49,068.08 49,068.08 

Total Working Capital from 

Operations $13,598,538.74 $25,702,648.71 

Decrease in Restricted Assets - Net - 3,346,127.08 

City of Chicago Contributions 4,648,494.37 6,272,263.95 
Grant Received for Capital Expenditures - 4, 302, 354 . 24 

Total Sources of Working 

Capital $18,247,033.11 $39,623,393.98 

USES OF WORKING CAPITAL: 

Acquisition of Property, Plant and 

Equipment $ 5,665,881.27 $ 7,842,750.10 

Retirement of Long-Term Liabilities 14,439,000.00 18,806,000.00 

Increase in Restricted Assets - Net 1, 694, 706 . 66 - 

Total Uses of Working Capital $21,799,587.93 $26,648,750.10 

Net Increase (Decrease) in 

Working Capital $(3,552,554.82) $12,974,643.88 

COMPONENT ELEMENTS OF NET INCREASE 
(DECREASE) IN WORKING CAPITAL: 

Cash on Deposit $(1,329,698.19) $ 4,087,267.79 

U.S. Government Securities 922,546.52 2,072,646.32 

Accounts Receivable - Net (1,404,806.10) 1,851,772.22 

Due from Other Funds 766,105.05 (664,405.09) 

Due from Special Accounts (214,846.99) 4,904,409.37 

Prepaid Expenses 28,232.85 (75,440.43) 

Accounts Payable (2,056,087.96) 1,061,393.70 
Revenue Bonds Payable - Current 

Maturities (264,000.00) (263,000.00 ) 

Net Increase or (Decrease) 

in Working Capital $(3,552,554.82) $12,974,643.88 



The notes to the financial statements are an integral part of this statement 



-6- 



CHTCAGO-O 


CTTY OF CHICAGO 
HARE INTERNATIONAL AIRPORT 


NOTES 


TO FINANCIAL 


STATEMENTS 


DECEMBER 31, 1978 


AND 1977 



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES : 

A. Basis of Accounting : 

The accounts of Chicago-0 ' Hare international Airport are 
maintained and the accompanying financial statements have been 
prepared on the accrual basis of accounting. The Airport is 
accounted for as an enterprise fund. The financial statements 
of the Airport for the year 1977 have been reclassified so as 
to conform with the reporting requirements set forth in National 
Council on Governmental Accounting (NCGA) Statements 1 and 2. 

B. Restricted Assets : 

The authorizing Revenue Bond Ordinance requires that during 
the period in which bonds are outstanding the City shall main- 
tain trust accounts for the proceeds from the sale of bonds and 
certain allocations of net revenues (see Note 1-G) . The assets 
of the trust accounts may only be used for the specific purpose 
of each trust including bond interest, debt service, emergency 
reserve, bond retirement, maintenance reserve and construction. 

C. United States Treasury Bills and Treasury Notes : 

Investments in these securities are carried at cost. 
Interest is accrued only on those securities having stated 
interest rates, i.e., Treasury Notes. Discounts and premiums 
are recognized at the time of maturity or sale. The aggregate 
cost of the securities was $1,466,122.24 in excess of market 
value at December 31, 1978 while the market value exceeded 
cost by $36,771.64 at December 31, 1977. Components of this 
excess are as follows: 

Cost Market 

at December 31, at December 31, 



1978 1977 1978 "" ~ 1977 



Investments 
in U.S. 
Government 
Securities 



Unrestricted $10,001,765.01 $ 9,079,218.49 $10,014,557.14 $ 9,093,470.79 
Restricted 53,348,591.77 51,7 54,066.99 51,869,677.40 51,776,586.33 

Total $63.350.356.78 $60 . 833 . 285 . 48 $61.884,234.54 $60.870.057.12 



-7- 



CITY OF CHICAGO 
CHICAGQ^O'HARE miEENATIONAL ATRE QRI 

NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31, 1978 AND 1977 
(Continued) 



D. 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, 1978 and 1977, allowances of $1,415,897.98 
and $1,700,619.45 respectively were recorded for these accounts. 
Approximately $609,000.00 of the 1978 amount was subsequently 
collected by April 30, 1979. 

E. Property, Plant and Equipment : 

All fixed assets are recorded at cost. Land includes the 
cost of earthwork and landscaping. As of December 31, 1978 and 
1977, property, plant and equipment consisted of the following: 

1978 1977 



Land $ 50,994,641.32 $ 50,994,641.32 
Buildings and Other 

Facilities 303,693,905.25 299,307,692.66 

Construction in Progress 9, 081, 599.66 7,801, 930.98 

Total Property - at cost $363.770 .146.23 $358.104.264.96 

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 

The gross amounts of those assets acquired with money from 
other sources is shown below: 

At December 31, 



1978 1977 



Cost of fixed assets 

acquired with 

contributed capital $126,164,546.99 $120,526,403.14 
Accumulated depreciation 30,644,449.30 27,972,031.80 

Net - Contribution $ 95.520,097.69 $ 92.5 54.371.34 



•8- 



TTTY OF CHICAGO 
CHTCAGO-O'HARE IKTTF.PNATTONAT. ATRPORT 

notes to financial statements 
" December 31, 1978 and 1977 ~ 

(Continued) 

1. Fixed assets acquired with City money include capitalized 
interest for the use of City money. Interest in 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. The grants are recognized only 

as received. As of December 31, 1978 and 1977 a maximum 
of $26,486,584.27 and $26,381,444.62 respectively 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 Airlines 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. 

F. 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. 



9- 



CTTY OF CHICAGO 
CHTCAGO-O ' HARE INTERNATIONAL AIRPORT 

NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31, 1978 AND 1977 
(Continued) 



G. 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 
Emergency Reserve 

Further explanation of the allocations 
are detailed in Note 1-H. 

Interest earned on restricted asset accounts for 1978 and 
1977 is detailed below: 

1978 1977 



Restricted Asset Account: 

Reserve Maintenance $ 184,233.88 $ 127,305.51 
Emergency Reserve 2,329,828.73 1,927,209.14 
Construction Reserve 344, 353.18 216,060.60 

Total $2,858,41 5.79 $2 , 270 , 57 5 . 25 

While the restricted interest of the special accounts is 
accounted for through the Revenue Fund, no restricted interest 
is included in the allocation of revenues. Restricted interest 
of the construction accounts is accounted for in the individual 
construction accounts. 

H. 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 . 



-10- 



r-Trpy OF OHTCAGO 
P HT n^.n-n'TORR TNTF.RNATTONAT. ATRPORT 

NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31. 197 8 AND 197 7 
(Continued) 

2. For amounts equal to interest on bonds ^standing. 

interest paid during 1978 and 1977 totaled $6,528,509.35 
and $7,506,367.19 respectively. 

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, 197 5 
through allocations made in prior years. Bonds in the 
principal amounts of $14,175,000.00 and $18, 543 , 000 00 
were purchased or called during the years 1978 and 1977. 
The corresponding interest requirements of $1, 483,4bb . uu 
in 1978 and $1,947,055.00 in 1977 were transferred to the 
Revenue Bond Retirement Reserve. 

4 For required minimum payments to the Revenue Bond Retirement 
Reserve. The minimum payments for the periods 1978 and 19// 
were $5,185,000.00 and $4,922,000.00 respectively. Remain- 
ing minimum Bond Retirement deposits are detailed below: 

Required Minimum 
Period Bond Retirement Payment 

1979 $ 5,449,000.00 

1980 5,736,000.00 

1981 6,036,000.00 

1982 6,354,000.00 

1983 6,685,000.00 

1984 thru 1996 81.190,000.00 

Total $111 .450.000.00 

As mentioned in footnotes H-3 and H-8, additional payments 
to the Revenue Bond Retirement Reserve may be made. Allo- 
cations to the Revenue Bond Retirement Reserve totaled 
$14,119,228.65 for 1978 and $13,604,980.81 for 1977. 

5 For annual payment of $1,160,000.00 to the Maintenance 

Reserve until $4,833,334.00 is accumulated in the Reserve. 
This money is available for the payment of major repairs, 
renewals and replacements. Expenditures of $1,956,47 3.86 
during 1978 and $1,120,095.35 during 1977 were made from 
this account for the specified purposes. 



-11- 



6. 



£J[TX_QEL_CiiI£A£Q 
rHTf-Afln-O'HA RETrNTERNATTnNATi AIRPORT 

NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31, 1978 AND 1977 
(Continued) 



To pay to the Emergency Reserve an amount equal to the s 
of the annual provisions for depreciation and amortizati 
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 1978 and 1977 are as 

follows: ,-»--, 

1978 1977 



urn 
on 



Depreciation $ 266,163.78 $ 211,002.99 
Amortization 49,068.08 49,068.08 

interest 884,486 .64 893,197.60 

Total 

Allocation $1.199.718-50 $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 years ended December 
31, 1978 and 1977, $18,566,427.91 and $21,854,982.73 respec- 
tively had been deferred to reduce future flight fees. 

To provide for the retirement of Revenue Bonds in addition 
to the minimum payment referred to in Note H-4 . Any remain- 
ing revenues after making the previously listed allocations 
shall be allocated to the Revenue Bond Retirement Reserve; 
$7,450,783.65 and $6,7 35,925.81 were so credited for 1978 
and 1977. 



-12- 

njTV QE CHICAGO 
rHTCAGO-n'FrARF. INTERNA TTONAT, ATRPORT 

NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31, 1978 AND 1977 
(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, 
1978 and 1977. 

1978 1977 



Amount authorized $238,000,000.00 $238,000,000.00 

Amount sold 232,000,000.00 232,000,000.00 

Amount called or purchased ....„- 

and retired 117,789,995.00 102,129,051.25 

Amount called but not 

presented to bank trustee 

for retirement 2,760,005.00 4,245,948.75 

Amount outstanding 111,450,000.00 125,625,000.00 

The Revenue Bonds outstanding at December 31, 1978 and 1977 are 
composed of the following: 

1978 1977 



4 3/4% Series of 1959 $ 46,355,000.00 $ 53,759,000.00 

4 3/4% Series A of 1961 9,653,000.00 11,202,000.00 

4 1/4% Series B of 1961 1,386,000.00 1,636,000.00 

4 1/2% Series of 1967 2,150,000.00 2,478,000.00 

5% Series of 1968 8,801,000.00 9,930,000.00 

6 80% Series of March, 1970 36,980,000.00 39,945,000.00 

6% Series of 1972 6.125,000.00 6,675,000.00 

Total $111 .450.000. 00 $19 5.63.5.000.00 

The unexpended proceeds from Revenue Bond issues amounted to 
$4,939,177.13 and $4,622,561.37 at December 31, 1978 and 1977. 
The amounts are comprised of the following: 

December 31, 



1978 1977 



Construction Accounts' Assets $4,971,054.77 $4,634,441.20 
Less - Construction Accounts' 

Liabilities 31,877.64 11,879.83 

Reserve for Construction $4.939.177.13 $4.622.561,37. 



-13- 



PTTV OF CHICAGO 
CHTCAGO-O'HARE INTERNATIONAL ATRPORT 

NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31, 1978 AND 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, 1978. 

1977 1978 Cumulative 

Par value of Bonds 

purchased or 

called $18,543,000.00 $14,17 5,000.00 $120,550,000.00 

Cost of Bond 

purchased or 

called (exclud- 
ing premium) 18,481,483.75 14,17 5,000.00 114,249,030.7 5 
Premiums paid on 

Bonds purchased 

or called 366,917.50 371,255.45 1,395,727.95 

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, 1978 the City has never opted 
to retire Airport Bonds by this method. 



-14- 



CTTY OF CHICAGO 
CHTCAGO-O' HARE INTERNATIONAL ATRPORT 

NOTES TO FINANCIAL STATEMENTS 
" DECEMBER 31, 1978 AND 1977 
(Continued) 



NOTE 3 - PENSION PLANS : 

The employees of the City of Chicago are covered under 
various contributory retirement plans established by State 
Statute. The policemen are members of The Policemen's Annuity 
and Benefit Fund of Chicago; firemen are members of The Fire- 
men's Annuity and Benefit Fund of Chicago; other employees are 
members of either The Municipal Employees', Officers' and 
Officials' Annuity and Benefit Fund of Chicago or The Laborers' 
and Retirement Board Employees' Annuity and Benefit Fund of 
Chicago. The City of Chicago contributions are multiples of 
the employee contributions made two years prior. The City's 
share of contributions is funded by net tax levies. 

Substantially all full-time City employees whose salaries 
are paid through Chicago-0 ' Hare funds participate in one of 
the above pension plans. Pension contributions charged to 
operations for 1978 and 1977 were $2,244,069.78 and $2,014,215.36 
respectively. 

Based upon the most recent information submitted by the 
City's Consulting Actuary, the total unfunded liabilities of 
the four City of Chicago Pension Funds as of December 31, 1977 
is $1,526,710,250.00. 

The unfunded pension liabilities which are not reflected 
in these statements, of the four City of Chicago Pension Funds 
have not been determined for the year ended December 31, 1978. 

It is impossible to determine the portion of unfunded 
liabilities which pertain to employees paid through Chicago-0 ' Hare 
International Airport accounts. 

NOTE 4 - 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-H-6. 



-15- 



CXTV OF CHICAGO 
CHTCAGO-O'HARH INTERNATIONAL ATRPORT 

NOTES TO FINANCIAL STATEMENTS 
DECEMBER 31, 1978 AND 1977 
(Continued) 

NOTE 4 - OTHER INFORMATION : 

B. Matured interest on Revenue Bonds is comprised of the 
following: 

1978 1977 



Payment to bank trustee for 

coupons due January 1, 

1979 and 1978 $3,119,942.50 $3,545,333.75 

Prior payments to bank 

trustee - coupons not 

presented for redemption 152, 101.21 80,885.66 

Total $3.272.043.71 $3.626.219.41 

C. Matured Revenue Bonds represent bonds called but not 
presented to the bank trustee for retirement. 

D. Contract commitments to be financed by the Operation and 
Maintenance account at December 31, 1978 and 1977 totaled 
$16,565,266.14 and $11,246,301.04 respectively. 



SUPPLEMENTARY INFORMATION 



SCHEDULE A-l 
-16- 



CITY OF CHICAGO 
CHICAGO-O'HARE IN TERNATIONA L AIRPORT 

RECONCILIATION TO "NET REVENUES" AS DEFINED 

IN REVENUE BOND ORDINANCE 

FOR THE YEARS ENDED DECEMBER 31, 1978 AND 1977 



Year Ended December 31, 



1978 



1977 



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 
Discounts on Revenue Bonds 
Retired 
Amounts Not Included Above in 
Determination of Net Income: 
Expenditures of Operating 
Revenue for Capital 
Improvements 
Reimbursement of Capital 

Expenditures 
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: 

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 



$ 2,492,797.18 $14,974,797.33 



11,056,673.48 

49,068.08 

1,956,473.86 

(2,858,415.79) 
6,528,509.35 



10,678,783.30 

49,068.08 

1,120,095.35 

(2,270,575.25) 
7,506,367.19 

(51,516.25) 



(989,649.48) (1,584,168.44) 

4,302,354.24 

21,854,982.73 8,617,338.85 

$40,090,4 39.41 $43,332,544.40 

$ 6,528,509.35 $ 7,506,367.19 



5,185,000.00 
1,160,000.00 
1,199,718.50 



4,922,000.00 
1,160,000.00 
1,153,268.67 



18,566,427.91 21,854,982.73 
7,450,783.65 6,735,925.81 



TOTAL ALLOCATION OF "NET REVENUES" 



$40,090,439.41 $43.332.544.40 



CTTY C 



rHTrAflO-O'HARE TTS 



SCHEDULE A-2 
-17- 



ANALYSIS OF CHANGES 



FOR THE YEARS ENDED DE 



BALANCE - JANUARY 1, 



Add: 

Increase in Fixed Assets Acquired 
City Money 

State and Federal Money 
Public Utility, Concessionaire a. 48 



ity, 

ire 

ne 



1978 



1977 



Total 



Total 



.71 $92,700,492.67 $87,240,239.88 



Total 
Balance 



$ 4,648,494.37 $ 6,272,263.95 
989,649.48 1,584,168.44 



.48 $ 5,638,143.85 $ 7,856,432.39 



.19 $98,338.636.52 $95,096,672.27 



Less : 

Provision for Depreciation -.11 
Amortization of Deferred Engineer! 



$ 2,672,417.50 $ 2,347,111.52 
49,068.08 49,068.08 



Total 
BALANCE - DECEMBER 31, 



11 $ 2,721,485.58 $ 2,396,179.60 



.08 $95. 617.150.94 $92.70 0.492.67 



SCHEDULE A-2 
-17- 



CITY. OF CHTCAGO 

rwTrAr,n-n'HARF, international atrpqrt 

ANALYSIS OF CHANGES IN CONTRIBUTED CAPITAL 
FOR THE YEARS ENDED DECEMBER 31. 1978 AND 1977 



BALANCE - JANUARY 1, 

Add: 

Increase in Fixed Assets Acquired with: 
City Money- 
State and Federal Money 
Public Utility, Concessionaire and Airline Money 

Total 

Balance 

Less : 

Provision for Depreciation 

Amortization of Deferred Engineering Costs 

Total 

BALANCE - DECEMBER 31, 



City 


State 


Public Utility, 


of 


and 


Concessionaire 


Chicaqo 


Federal 


and Airline 



1978 



1977 



Total 



Total 



$22,050.818.38 $41.608.055.58 $29.041.618.71 $92.700.492.67 $87.240.239.88 



$ 4,648,494.37 $ - $ 

(6,097,742.63) 6,097,742.63 



$ 4,648,494.37 $ 6,272,263.95 





- 


- 


989.649.48 


989.649.48 


1.584,168.44 


$(1 


449,248.26) 


$ 6.097.742.63 


$ 989.649.48 


$ 5.638.143.85 


$ 7,856.432.39 


$20 


601,570.12 


$47,705,798.21 


$30,031,268.19 


$98,338,636.52 


$95,096,672.27 


$ 


266,163.78 
49.068.08 


$ 1,266,539.61 


$ 1,139,714.11 


$ 2,672,417.50 
49.068.08 


$ 2,347,111.52 
49,068.08 


$ 


315,231.86 


$ 1,266.539.61 


$ 1.139.714.11 


$ 2.721.485.58 


$ 2.396.179.60 


$2& 


.286.338.26 


$46,439,258.60 


S28.891.554.08 


$95,617,150.94 


S92.700.492.67 



SCHEDULE A -3 
-18- 





CITY OF 


3n 
re 
2es 




$ 




1978 
Total 




CHICAGO-0 


'HARE lis 




ANALYSIS OF CHANGES IN RI 




FOR THE YEARS 


ENDED DE 




Revenue 

Bond 
Interest 


1977 
Total 


JARY 1, $ 


$1*2. 


73 


74, 


375,254.22 


$64,483,737.42 



id: 

Allocation of 
Net Revenue 

Transfer of 
Premiums on 
Revenue Bonds 
Retired 

Interest Earned on 
Investments - 
Restricted 

Transfer from Debt 
Service Account 

Transfers to 

Matured Revenue 
Bond Interest and 
Matured Revenue 
Bond Accounts 



$6,528,509.35 $ 



27.91 $40,090,439.41 $43,332,544.40 



(1 



(6,428,675.00) 



371,255.45 



366,917.50 



2,858,415.79 2,270,575.25 



Total j£_ 
Balance _$_ 

= ss : 

Purchase of 

Chicago-0 ' Hare 
International 
Airport Revenue 
Bonds $ 

Application of 
Deferred Income 
from Preceding 
Year as Reduction 
of Flight Fees 

Expenditure from 
Reserve Main- 
tenance Account 

Expenditures for 
Fixed Assets 
Acquired with 
Revenue Bond 
Money 



99,834.35 $(3^ 91 



(9,495,750.00) (13,110,920.00 ) 
$33,824,360.65 $32,859,117.15 



99,834.35 $1^0.64 $108,199,614.87 $97,342,854.57 



99,834.35 $ 



$11,579,014.80 $13,243,848.44 



2.73 21,854,982.73 8,617,338.85 



1,956,473.86 1,120,095.35 



27,737.42 



(13,682.29) 



Total 

GLANCE - 
DECEMBER 31, 



1. 



99,834.35 $ J2.73 $35,418,208.81 $22,967,600.35 



$127.91 $72.781.406.06 $74.375.254.22 



SCHEDULE A-3 
-18- 



CITY OF CHICAGO 



CHICAGO-O'HARE INTERNATIONAL 


AIRPORT 
























ANALYSIS OF CHANGES IN RETAINED EARNINGS - RESERVED 




FOR THE YEARS ENDED DECEMBER 31, 1978 AND 1977 
























Revenue 

Bond Debt 
Interest Service 


Revenue 
Bond 
Retirement 


Maintenance 
Reserve 


Emergency 
Reserve 




Construction 
$4,622,561.37 


Reduction 
Of Future 

Fliqht Fees 

$21,854,982.73 


1978 
Total 




1977 
Total 




BALANCE - JANUARY 1, $ - $13,759,895.00 


$ 145,441.13 


$2,539,055.92 


$31,453,318 


.07 


$ 74,375,254 


?? 


$64,483,737 


/\ -> 


Add: 


























Allocation of 


























Net Revenue $6,528,509.35 $ 
Transfer of 


$12,635,783.65 


$1,160,000.00 


$ 1, 199,718 


.50 


$ 




$18,566,427 


91 


$40,090,439 


.41 


$43,332,544 


40 


Premiums on 


























Revenue Bonds 


























Retired 
Interest Earned on 


371,255.45 


- 


- 




- 




- 




371,255 


.45 


366,917 


.50 


Investments - 


























Restricted 
Transfer from Debt 


- 


184,233.88 


2,329,828 


.73 


344,353 


.18 


- 




2,858,415 


79 


2,270,575 


.25 


Service Account (1,483,445.00) 


1,483,445.00 


- 


- 




_ 




_ 












Transfers to 


























Matured Revenue 


























Bond Interest and 


























Matured Revenue 


























Bond Accounts (6,428,675.00) 


(3,067,075.00) 


- 


- 




- 




_ 




(9,495,750 


00) 


(13,110,920 


on 


Total $ 99,834.35 $(1,483,445.00) 


$11,423,409.10 


$1,344,233,88 


$ 3,529,547 


23 


$ 344,353 


18 


$18,566,427. 


91 


$ 33,824,360. 


65 


$32,859,117 


15 


Balance $ 99,834.35 $12,276,450.00 


$11,568,850.23 


$3,883,289.80 


$34,982,865 


30 


$4,966,914 


55 


$40,421,410. 


64 


$108,199,614. 


87 


$97,342,854. 


57 



Less: 

Purchase of 

Chicago-O'Hare 
International 
Airport Revenue 

Bonds , $ 99,834.35 $ - $11,479,180.45 $- $- $- $- $11,579,014.80 $13,243,848.44 

Application of 

Deferred Income 

from Preceding 

Year as Reduction 

of Flight Fees - - _ 21,854,982.73 21,854,982.73 8,617,338.85 

Expenditure from 

Reserve Main- 
tenance Account - - _ 1,956,473.86 - 1,956,473.86 1,120,095.35 
Expenditures for 

Fixed Assets 

Acquired with 

Revenue Bond 

Money 

Total 

BALANCE - 

DECEMBER 31, 





- 


- 


- 


- 


_ 


27,737.42 


- 


27,737 


.42 


(13,682.29 


? 


99,834.35 


$ 


$11,479,180.45 


$1,956,473.86 


$ 


$ 27,737.42 


$21,854,982.73 


$35,418,208 


.81 


$22,967,600.35 


$ 




$12,276,450.00 


$ 89,669.78 


$1,926,815.94 


$34,982,865.30 


$4,939,177.13 


$18,566,427.91 


$72,781,406. 


06 


S74. 375. 254.22 



CTTY ; 



CH TC AGO -O 'HARE T 



ANALYSIS OF CHANGES IN RE 



FOR THE YEARS ENDED D! 



BALANCE - JANUARY 1 



ing 
ision 



Add: 

Interest Earned on Investments - 729.26 



Balance 



Less : 

Expenditures for Fixed Assets Acqi 
with Revenue Bond Money 



720.44) 



BALANCE - DECEMBER 31 



718.90 $4.939.177 .13 $4.622.561.37 



SCHEDULE A-4 
-19- 



1978 



1977 



Total 



Total 



269.20 $4,622,561.37 $4,392,818.48 



344,353.18 



216,060.60 



598.46 $4,966,914.55 $4,608,879.08 



27,737.42 



(13.682.29) 



PTTV OF CHTCAGO 
rmC.AGO- O 'HARE IN TERNATIONAL ATRPORT 



ANALYSIS OF CHANGES IN RETAINED EARNINGS - CONSTRUCTION 
FOR THE YEARS ENDED DECEMBER 31, 1978 AND 1977 



SCHEDULE A-4 
-19- 



BALANCE - JANUARY 1 



General 
Construction 
of 1968 



Elevated 
Garage 



Pedestrian 
Access Roads 



$3,345,720.69 $532,019.16 $304,621.41 



Heating and 

Refrigeration 

Plant Expansion 

$250,930.91 



Fueling 

System 

Expansion 



1978 



Total 



1977 



Total 



$189,269.20 $4,622,561.37 $4,392,818.48 



Add: 

Interest Earned on Investments - Restricted 

Balance 



258.045.54 



36.115.35 



20,439.27 



17.023.76 



12.729.26 



344.353.18 



216.060.60 



$3,603,766.23 $568,134.51 $325,060.68 



$267,954.67 



$201,998.46 $4,966,914.55 $4,608,879.08 



Less : 

Expenditures for Fixed Assets Acquired 
with Revenue Bond Money 



31.421.50 



36.36 



(3.720.44) 



27.737.42 



(13.682.29) 



BALANCE - DECEMBER 31 



S3. 603. 76 6.23 S536. 713.01 $325.024.32 



$267.954.67 



$205.718.90 $4.939 .177.13 $4.622.561.37 



/ 



2/15/2010 
WT 190242 1 101 00 



GAYL0R0