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Full text of "Financial statements for the year ended ..."

Digitized by the Internet Archive 

in 2012 with funding from 

CARLI: Consortium of Academic and Research Libraries in Illinois 



http://www.archive.org/details/financialstateme1966chic 



4*5 N.&S. Form CO. 584 10M 




RICHARD J. DALEY 

MAYOR 

OTTO H. LOSER 

CITY COMPTROLLER 

THOMAS P. MURPHY 

DBPUTY COMFTROU.Ut 



CITY OF CHICAGO 

OFFICE OF THE CITY COMPTROLLER 

ROOM 501. CITY HALL, CHICAGO. ILLINOIS 60602 

TELEPHONE 744-4000 



CHICAGO-O'HARE INTERNATIONAL AIRPORT 

FINANCIAL STATEMENTS 
FOR THE YEAR ENDED DECEMBER 31, 1?66 



Prepared by the Accounting Division 
Office of the City Comptroller 
City of Chicago, Illinois 
May 8, 1?67 



CONTENTS 

Pages 
Exhibit A - Balance Sheet - December 31 , 1966 2 

Exhibit B - Summary of Changes in Fund Balances - All Funds Other 

than Revenue Fund, for the year ended December 31 , 1966 3 

Exhibit C - Summary of Changes in Account Balances - Revenue Fund 

for the year ended December 31? 1966 U 

Exhibit D - Comparative Statement of Revenues and Expenses for the 

years ended December 31, 1966 and 1965 5-6 

Exhibit E - Reconciliation of "Balance of Net Income", Exhibit D, 
to "Net Revenues" as Defined in Bond Ordinance for the 
years ended December 31 , 1966 and 1965 7 

Exhibit F - Details of Application of Proceeds of Revenue Bonds 

for the year ended December 31? 1966 8 

Notes to Financial Statements 9-H 



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EXHIBIT D 
Page 1 of 2 



CHICAGO-O'HARE INTERNATIONAL AIRPORT 
COMPARATIVE STATEMENT OF REVENUES AND EXPENSES 
FOR THE YEARS ENDED DECEMBER 31, 1966 AND 1965 



Period 



T?56~ 



T?6T 



Increase 

or 

(Decrease) 



REVENUES ; 

Flight "fees exclusive of ramp rentals 
Rentals, utility sales, concessions and income 
from investments 

Total 

EXPENSES , excluding fixed charges: 

Salaries and wages- 
Department of Aviation - Administrative 
Department of Aviation - Operating 
Corporation Counsel's office 
Comptroller's office 
Fire department 
Police department 
Indirect administrative and general 



Fire department supplies and maintenance 
Gasoline 

Heat, light, power and water 
Insurance - general 

Insurance - workmen's compensation and disability- 
Materials and supplies 
Professional services 
Provision for doubtful accounts 
Provision for pensions 
Bank service charges 
Financial publication 
Repairs and maintenance 
Telephone and telegraph 
Tools 
Travel 
Vehicles 

Machinery and equipment 
Miscellaneous 
Indirect administrative and general expenses: 

Department of Aviation 

Other 

Total operating expenses, excluding fixed 
charges 

NET OPERATING INCOME BEFORE FIXED CHARGES 
AND APPLICATION OF REVENUES 



$ 3,63U,6Uii.05 $ U, 295,617. 15 ($ 660,973.10) 
l8,3UU,7U5.1k 17,2U2,llU.llt 1,102,631.00 
$21,979,389.19 $21,537,731.29 $ l0a,657.9O 



$ 318,360.79 $ 313,302.32 $ 5,058.U7 



2,965,106.25 
U3,278.85 
23,505.30 
1*77,590.68 
10*9,352.00 
213,859-69 



2,7UO,3l6.06 

53,3lU.39 ( 

22,921.32 

358,335-98 

U06, 728.00 

19U,7U5.90 



22U,790.19 
10,035.5U) 
583-98 

119,25*1.70 
U2,62U.OO 
19,113.79 



$ 14,1*91,053.56 $ li,089,663.97 $ U01,389- 59 



3,656.75 

11,552.75 

906,LU3-77 

201,096.28 

85,01U.52 

350,165.80 

373,792.56 

90,596.00) 

Uoi,825-l6 

51,851.59 

12,382.93 

1,128,233.05 

12,979-Ul 

2,586.57 

5,898.80 

106,257.67 

37,U15-2U 

76, 560.UU 

36,U60.U9 
213,859.69 



9,832.97 ( 
12,035.03 ( 
92lt,l57.26 ( 
18U,612.00 
72, 516. Oli 
285,972. U9 
2lO-,62k.6l 
101,892.80 ( 
356,663.91 
28,051.15 
9, 018.1k 
1,ULU,953.35 ( 
11,582.18 
2,U98.37 
U, 122. 38 
202,369.67 ( 
153,371.18 ( 
58,111.73 

35,510.70 
19U,7U5.90 



6,176.22) 
182.28) 

18,013.U9) 
16,U8U.28 
12,U98.U8 
6H,193.31 
132,167.95 
192,U88.80) 

U5,l6l.25 
23,800.Uli 
3,36k- 79 
286,720.30) 
1,397.23 
88.20 
1,776.U2 
96,112.00) 
115, 955- 9k) 
I8,kk8.71 

9U9.79 
19,113.79 



( ) Indicates negative amount 



$ 8,U18,191.03 $ 8,393,305.83 $ 2k, 885. 20 



$13,561,198.16 $13,lkk,k25.k6 $ kl6,772.70 
(Continued to next page) 



-5- 



CHICAGO- 0' HARE INTERNATIONAL AIRPORT 
COMPARATIVE STATEMENT OF REVENUES AND "EXPENSES 
FOR THE YEARS ENDED DECEMBER 31, 1966 AND 1963 



EXHIBIT D 
Page 2 of 2 



VET OPERATING INCOME BEFORE FIXED CHARGES 
AND APPLICATION OF REVENUES (brought forward) 

PROVISION FOR FIXED CHARGES : 
Interest on revenue bonds 
Premium on bonds retired 
Depreciation - all properties 
Amortization of deferred engineering cost 



EXPENSES IN EXCESS OF INCOME 

3PERATING REVENUES USED FOR Capital 
improvements (Note D) 



Period 



T^6" 



T?oT 



Increase 

or 
(Decrease) 



BALANCE (EXHIBIT E) 



$13,561,198.16 $13,1UU,1;25.U6 $ Ul6,772.7Q 

$ 6,881,137.69 $ 7,057,500.00 ($ 176,362.31) 

178,U10.60 95,832.50 82,578.10 

6, 607, 328. 5U 6,U09,53U.U5 197, 79k. 09 

U9,068.08 U9,068.08 

$13,7l5,9Uli.9l $13,611,935.03 $ 10U,009.88 

($ l51i,7U6.75) ($ 1*67,509-57) $ 312,762.82 

1,3U2,210.87 277,886.16 1,06U, 321+.71 

($ I,li96,957.62) ($ 7ii5,395.73)($ 751,561.89) 



See notes to financial statements. 



-6- 



CHICAGO-O'HARE INTERNATIONAL AIRPORT 
RECONCILIATION TO "NET REVENUES" "" 
AS DEFINED IN BOND ORDINANCE 
FOR THE YEARS ENDED DECEMBER 31, 1966 AND 1965 



EXHIBIT E 



1966 



196^ 



Balance of expenses in excess of income (Exhibit D) 

Add (deduct) adjustments to reflect ordinance basis 
of accounting: 
In respect of items included above in determination 
of income and expenses: 
Depreciation of fixed assets and amortization of 

deferred engineering costs 
Interest on revenue bonds 

Interest earned on investments of reserve maintenance 
and emergency reserve accounts 

In respect of items not included above in determination 
of income and expenses: 
Carryover from revenue of preceding year as 
reduction of flight fee requirements 

"Net Revenues" as defined in bond ordinance 

Allocation of net revenues (In order of priority): 
Interest Account 
Debt Service Reserve Account 

Sinking Fund Account - Minimum sinking fund payment 
Reserve Maintenance Account 
Emergency Reserve Account 

To reduce flight fee requirements - future periods 
Remainder (allocated to Sinking Fund Account) 

Total 



($ 1,1+96,957.62) ($ 71+5,395-73) 



6,656,396.62 
6,881,137.69 



6,1+58,602.53 
7,057,500.00 



( 1+26,101.62) ( 292, 093- 9k) 



1,532,107.61 
$13,11+6,582.68 

$ 6,881,137-69 

l,93l+,000.00 
71+5,000.00 
888,108.08 
382,81+9-60 

2,315,1+87.31 

$13,11+6,582.68 
(Exhibit C) 



1,809,768.53 
$11+, 288, 381. 39 



$ 7,057,500.00 

1,756,877-50 

1,81+7,000.00 

71+5,000.00 

880,61+8.78 

1,532,107.61 

1+69,21+7.50 

$li+,288,38l.39 



Total allocation to Sinking Fund Account: 
Minimum payment 
Additional allocation of remaining net revenues 



See notes to financial statements. 
( ) Indicates negative amount. 



$ l,93l+,000.00 
2,315,1+87.31 



$ 1,81+7,000.00 
1+69,21+7.50 



$ l+,2l+9,l+87.31 $ 2,316,21+7.50 



-7- 



EXHIBIT F 



CHICAGO-O'HARE INTERNATIONAL AIRPORT 



DETAILS OF APPLICATION OF PROCEEDS OF REVENUE BONDS 
FOR THE YEAR ENDED DECEMBER 31, 1966 



Chicago-0 ' Hare International Airport 

Construction Fund 

General 



Hangar 

Construction 

Account 



Construction 
Account 



Total 



BALANCE, JANUARY 1, 1966 



$2,991.12 $ 977,U35.1i8 $ 980,126.60 



ADDITIONS ; 

Interest earned on investments 
To close balance of Hangar Construction Account 
to General Construction Account 



DEDUCTIONS : 

Expenditures for: 

Hangars, terminals and other facilities 
Engineering fees 

Elimination of amounts previously included 
in accounts payable, due to reductions in 
final contract settlements 

Total deductions 

AVAILABLE BALANCE OF PROCEEDS, DECEMBER 31, 1966 

Balance at December 31, 1966 represented by: 
Cash on deposit 

U. S. Government securities at cost 
Due from other funds 

Total 

Less - Accounts and contracts payable 

BALANCE 



( 2,991.12 ) 
$ - 



$ 



$ 



8l,U06.23 
2,991.12 



8l,U06.23 



$1 , 061,832 . 83 $1,061,832.83 



$ 22,320.00 
l,876.6ii 



( 7,399.93) ( 



22,320.00 
1,876.6U 



7,399-93) 



$ 16,796.71 $ 16,796.71 
$1,0^,036.12 $l,Ol;5,Q36.12 



$ 13,226.99 

1,211;, 931. 19 

8,233.32 

$1,236,391.50 

191,355.38 



$ 13,226.99 

1,21U,931.19 

8,233.32 

$1,236,391.50 

191,355.38 



$l,OU5,036.12 $l,OU5,036.12 
(Exhibit B) 



See notes to financial statements. 
( ) Indicates negative amount. 



-8- 



CHICAGO-O'HARE INTERNATIONAL AIRPORT 
NOTES TO FINANCIAL STATEMENTS 
December 31? 1966 



Note A - General: 



The issuance of Chicago-O'Hare International Airport Revenue Bonds was authorized 
by an ordinance adopted December 29, 1958, and by supplemental ordinances dated 
February 1, 1961, and July 13, 1962. The purpose of the issues was to provide funds 
for the extension and improvement of the Airport and its facilities. The proceeds of 
the issues had been substantially expended for such purposes at December 31, 1966, 
except for $l,OU5,036. 

At December 31, 1966, the total principal amount of Revenue Bonds authorized 
amounted to $1^^,000,000 of which $H|9,000,000 had been sold. Of the amount sold, 
$7,030,000 had been called or purchased by tender and retired as of December 31, 1966 
($U, 990, 000 during 1966), leaving $11*1,970,000 outstanding as of December 31, 1966. 

Operating revenues from flight fees, rentals, concessions, and other sources 
(accounted for collectively through the Revenue Fund) are restricted as to use by the 
Bond Ordinance for the purposes enumerated in Note BU. For each specified purpose, a 
separate account is provided within the Revenue Fund. 

The financial statements include amounts in respect of Airport facilities paid 
for by the City, State, and Federal governments and private parties (totaling 
approximately $63,000,000 at cost - carried in the accounts net of accumulated 
depreciation at approximately $5U, 100,000 at December 31, 1966) as well as those 
acquired with proceeds of the Revenue Bonds. 

Note B - Accounting Policies: 

1. United States Government securities: 

The aggregate market value of the securities at December 31, 1966, is approximately 
$375,000 in excess of cost. Accrued interest is included only on those securities 
having stated interest rates. Discounts and premiums are recognized at time of maturity 
or disposition. 

2 . Property and Equipment : 

All land acquisitions have been made with money provided by the City, State, and 
Federal governments. Earthwork and landscaping paid for with Revenue Bond proceeds 
money has been charged to the land account. Land is considered to be devoted to Air- 
port use simultaneously with the acquisition thereof. Interest charges are not 
capitalized on land purchase costs and on attendant legal and appraisal costs. Interest 
is capitalized from the commencement of work through the year of completion on land 
improvements provided through the use of City money. 

Capitalized expenditures from Revenue Bond proceeds include the cost of: construc- 
tion; engineering fees; legal expenses; financing and other incidental expenses; discount, 
less premium, on Revenue Bonds issued; and interest on Revenue Bonds through December 
31, 1961. 

All replacements of vehicles, furnishings, signs, and other equipment are expensed 
during the year of acquisition in accordance with the terms of the Ordinance. 

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Grants from the State and Federal governments are recognized only as received. 
As of December 31, 1966, a maximum of $3,396,000 was available from such grants. 

Depreciation is provided in respect of facilities other than land on a straight- 
line basis, using annual rates calculated to amortize the cost of the individual assets 
over their estimated useful lives commencing in the year following the year of acquisi- 
tion or completion of construction. 

Under the terms of the Ordinance, only depreciation and amortization applicable 
to facilities acquired with City money are taken into account in establishing flight 
fee revenue requirements. 

3. Interest on City's Investment in Airport Property: 

The Ordinance provides that "airport expense", for the purpose of computing flight 
fees collectible from the airlines, shall take into account interest on money of the 
City invested in property and equipment and deferred engineering costs. (See Note Bhf) 

U. Allocation of Operating Revenues: 

The Ordinance requires the allocation of revenues for specified purposes in the 
following order of priority: 

a. Ordinary costs of operation and maintenance, but not in excess of the 
amount budgeted by the City for such purposes. 

b. Amounts equal to interest on bonds outstanding. During 1966, interest 
of $6,881,137 was paid. 

c. The debt service reserve must be maintained at an amount equal to two 
years' interest requirement, and was fully funded at December 31* 1965* 
through allocations made in prior years. Bonds in the principal amount 
of $U, 990, 000 were called or purchased by tender and retired during 1966; 
accordingly, the interest requirement ($U72,590) applicable to the bonds 
retired during 1966 was transferred to the sinking fund. 

d. For the sinking fund, a minimum payment ranging from $1,93H,000 for 1966 

to $8,500,000 in 1998. Additional amounts are allocable to the sinking fund 
as explained in note BUc ($1*72,590 f or 1966) and in note Blih ($2,3l5,U87 
for 1966) . The total amount added to the sinking fund from all sources during 
1966 totaled $U, 722,077. 

e. For reserve maintenance, $7U5,000 annually until $3,10lj.,l66 is accumulated. 
Major repairs, renewals, and replacements may be paid for out of these funds. 
During 1966, expenditures for these purposes totaling $15U,129 were made 
from this account . 

f. For the emergency reserve, amounts (total for 1966 - $888,108) equal to 
the annual provisions for (a) depreciation and amortization on assets 
acquired with City money (for 1966 - $27U,5U9) and (b) interest on City 
money invested in Airport assets (for 1966 - $613,559). These funds may 
be used to abate landing fees in the event the Airport is closed. 



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g. To the extent that revenues for the year as defined by the Ordinance, 

including deferred income from the preceding year, exceed "airport expense" 
as defined, the excess shall be considered deferred income and as revenues 
of the next succeeding year. In accordance with this provision, revenues 
of $382,850 for the year ended December 31, 1966, have been so deferred in 
the Revenue Fund, to be carried over to reduce flight fee revenue require- 
ments for 1967. 

h. Any remaining revenues, after making the aforementioned allocations, are 
to be allocated to the sinking fund. For the year ended December 31, 1966, 
$2,3l5,U87 of the remaining revenues were so allocated. 

Note C - Revenue Bond Retirement: 

Money in the sinking fund account is to be applied as rapidly as practicable to 
the retirement of bonds by call, purchase in the open market, or by tender. 

Bonds may be redeemed to December 31, 1973, by call from funds in the sinking 
fund account at prices ranging downward from 103$ of principal amount in the case of 
Series B bonds and 10U-3/U$ in the case of Series A bonds, plus accrued interest, or 
by purchase in the open market or by tender at prices not in excess of call prices. 
After January 1, 197U, bonds also may be redeemed from resources other than revenues 
at prices ranging downward from 103-1/2$ of principal amount in the case of Series B 
bonds and 10\\-3>/k% in the case of Series A bonds, plus accrued interest. 

During the year, bonds in the principal amount of $2,608,000 were called and 
retired at prices stipulated in the Bond Ordinance (Series A Bonds - 10l±-3/U$ of 
principal amount; Series B Bonds - 103$ of principal amount). Bonds in the principal 
amount of $2,382,000 were purchased by tender at a net premium of $55,861. 

The cash equal to the principal portion ($U, 990, 000) of the bonds called or 
purchased by tender for retirement was provided by the sinking fund. The premium 
($178,1*11) paid on the bonds called or purchased by tender is considered an expense 
for the year and was charged against operating revenues. 

Note D - Use of Operating Revenues: 

The Bond Ordinance does not permit the use of operating revenues for capital 
improvements; however, the Airlines Representative has agreed to this practice which 
has the effect of increasing flight fee requirements. 

Note E - Contingent Liabilities: 

The amounts shown in the balance sheet as accounts payable of the Bond Proceeds 
Fund represent the cost of work performed and services rendered, but not paid for to 
December 31, 1966. All contracts for Airport facilities to be financed by Revenue 
Bond money were substantially completed at December 31, 1966, although final settle- 
ment had not yet taken place. 

Certain contractors who were engaged in Airport construction under the Revenue 
Bond program have presented claims or filed suit for approximately $6,000,000 in 
excess of contract amounts. The City of Chicago has refused payment of these claims. 
No amounts have been recorded in the financial statements for any additional payments 
which may arise from these claims or suits. 



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