COMPREHENSIVE ANNUAL FINANCIAL REPORT. FOR THE FISCAL YEARs ENDED December 31, 2016 and 2015 INDIANAPOLIS, INDIANA

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1 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEARs ENDED INDIANAPOLIS, INDIANA

2 CONTENTS INTRODUCTORY SECTION mission Statement 4 Facilities Map 5 board of Directors 6 Organizational Structure 8 Executive Management Team 8 Letter of Transmittal to the Board 10 Certificate of Achievement for Excellence in Financial Reporting 18 FINANCIAL SECTION Independent Auditor s Report 20 management s Discussion and Analysis 23 Audited financial statements Statements of Net Position 39 Statements of Revenues, Expenses and Changes in Net Position 41 Statements of Cash Flows Supplementary information Schedule of Statement of Net Position Information 78 Schedule of Revenues, Expenses, and Changes in Net Position Information 82 Schedule of Operating Revenues 84 Schedule of Operating Expenses 86 Schedule of Bond Debt Service Requirements to Maturity 90 STATISTICAL SECTION Financial trend data Statements of Net Position 94 Statements of Revenues, Expenses and Changes in Net Position 96 Changes in Cash and Cash Equivalents 98 Revenue capacity data Operating Revenues 100 Signatory Airline Rates and Charges 102 Debt capacity data Outstanding Debt by Type and Revenue Bond Debt Service Ratios 104 Revenue Bond Debt Service Coverage 106 Operating information Airline Landing Weight Statistics 108 Enplaned Passenger Statistics 110 Number of Airport Employees by Identifiable Activity 112 Schedule of Insurance in Force 114 Demographic and economic data Indianapolis Demographic and Economic Statistics 115 Principal Employers in Indianapolis 116 Capital Assets and Other Airport Information 117 COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal years ended, Indianapolis, IN Prepared by the COMPREHENSIVE ANNUAL FINANCIAL REPORT

3 MISSION STATEMENT INDIANAPOLIS AIRPORT AUTHORITY FACILITIES MAP INTRODUCTORY section BOARD OF DIRECTORS ORGANIZATIONAL STRUCTURE EXECUTIVE MANAGEMENT TEAM LETTER OF TRANSMITTAL TO THE BOARD CERTIFICATE OF ACHIEVEMENT 2 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

4 MISSION Statement INDIANAPOLIS AIRPORT AUTHORITY FACILITIES MAP Fostering I-65 I I-69 World-Class I Service 2 6 I-70 To Enhance 1 our Community I-70 I-65 I-74 1 Indianapolis International Airport 2 Hendricks County Airport-Gordon Graham Field 3 Eagle Creek Airpark 4 Metropolitan Airport 5 Indianapolis Regional Airport 6 Indianapolis Downtown Heliport 4 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

5 INDIANAPOLIS AIRPORT AUTHORITY BOARD BARBARA GLASS, PRESIDENT Consultant Lilly Foundation Years of service: 2 JACK MORTON, MEMBER Retired, Banking Executive Years of service: 13 Hancock County WORLD-CLASS CUSTOMER SERVICE STEVEN DILLINGER, VICE PRESIDENT Owner, S.C. Dillinger & Associates Insurance Agency Years of service: 20 Hamilton County ALFRED BENNETT, SECRETARY President, Bennett Associates Criminal Justice Consulting Firm Years of service: 12 Hendricks County KELLY FLYNN, MEMBER Principal Partner, Flynn & Zinkan Realty Company Years of service: 13, 1 as Board President MICHAEL WELLS, MEMBER President, REI Real Estate Services, LLC Years of service: 21, 13 as Board President BRETT VOORHIES, MEMBER President, Indiana AFL-CIO Years of service: 3 Mamon Powers III, Member Executive Vice President, President - Indianapolis office, Powers & Sons Construction Co. Years of service: 1 Toby McClamroch, Member Managing Partner, Bingham Greenebaum Doll LLP Years of service: 1 LYNN GORDON, ADVISORY MEMBER Retired, Banking Executive Years of service: 13 Morgan County Brian Tuohy, LEGAL COUNSEL Doninger Tuohy & Bailey LLP Years of service: 1 IND AWARDED BEST AIRPORT IN NORTH AMERICA 6 out of 7 YEARS 6 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

6 ORGANIZATIONAL STRUCTURE BOARD OF DIRECTORS FOSTERING Economic IMPACt Lisa Bierman Senior Executive Assistant mario rodriguez Executive Director maria wiley Senior Director of Audit & Compliance, Procurement 10,100 WORKERS AT IND ON AN AVERAGE DAY MiCHAEL medvescek Marsha stone Robert thomson shannetta griffin reid goldsmith Joseph Heerens BILL STINSON Rachel Hernandez $2.0 Billion payroll Senior Director of Operations & Public Safety Senior Director of Commercial Enterprise Senior Director of Finance & Treasurer Senior Director of Planning & Development Senior Director of Information Technology General Counsel Senior Director of Public Affairs Interim Senior Director of Human Resources EXECUTIVE MANAGEMENT TEAM MARIO RODRIGUEZ Executive Director 3 years of service MARIA WILEY Sr. Director of Audit & Compliance, Procurement 19 years of service MICHAEL MEDVESCEK Sr. Director of Operations & Public Safety 27 years of service MARSHA STONE Sr. Director of Commercial Enterprise 23 years of service ROBERT THOMSON Sr. Director of Finance & Treasurer 11 years of service SHANNETTA GRIFFIN Sr. Director of Planning & Development 4 years of service REID GOLDSMITH Sr. Director of Information Technology 8 years of service Joseph Heerens General Counsel 7 years of service Bill Stinson Sr. Director of Public Affairs Rachel Hernandez Interim Sr. Director of Human Resources 1 year of service 22,500 area JOBS 8 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

7 LETTER OF TRANSMITTAL 7800 Col. H. Weir Cook Memorial Dr. Suite 100 Indianapolis, Indiana office fax June 30, 2017 TO THE MEMBERS OF THE BOARD: The Comprehensive Annual Financial Report (CAFR) of the (Authority or IAA), for the fiscal years ended, is submitted herewith. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Authority and its management. To the best of our knowledge and belief, this report, in all material aspects, fairly presents and discloses the Authority s financial position, results of operations, and cash flows as of and for the year ended, in accordance with the requirements of the generally accepted accounting principles in the United States of America (GAAP). GAAP requires that management provide a narrative overview and analysis to accompany the financial statements in the form of a Management Discussion and Analysis (MD&A). This introductory letter should be read in conjunction with the MD&A, which can be found immediately following the Independent Auditor s Report on Financial Statements and Supplementary Information in the financial section of the CAFR. This CAFR has been prepared following the guidelines recommended by the Government Finance Officers Association of the United States and Canada (GFOA). All financial and non-financial information included in this CAFR relates solely to the Authority unless specifically stated otherwise. It is our belief that the accompanying 2016 Comprehensive Annual Financial Report meets program standards, and will be submitted to the Government Finance Officers Association for review. INDEPENDENT AUDIT At the close of each calendar year, an independent firm of certified public accountants audits the Authority s financial statements. In addition, the Indiana State Board of Accounts retains the right to audit the Authority. In connection with the Authority s federal financial assistance, a Single Audit (conducted in accordance with Uniform Guidance) is performed and reports are issued to the Indiana State Board of Accounts and filed with the Federal Audit Clearinghouse. PROFILE OF THE AUTHORITY Organizational Structure and Governance The Authority is a municipal corporation that was established on January 1, 1962, to own and operate airports in and around Indianapolis, Indiana. More information is included in the Management s Discussion and Analysis Authority Powers and Purposes. The Authority administers an airport system comprised of the Indianapolis International Airport (IND), three general aviation reliever airports, one general aviation airport and one general aviation reliever heliport located in downtown Indianapolis. The Authority is a separate reporting entity and is not a component of the consolidated City of Indianapolis-Marion County (Unigov) or any other government. You may also refer to Note 1 of the financial statements for more information regarding the financial reporting entity determination under the Government Accounting Standards Board (GASB) Statement No. 14, as amended by GASB Statement No. 61. The Authority s Board consists of nine voting members and one non-voting, advisory board member. Each member is appointed to a four-year term. ACCOUNTING / BUDGETARY CONTROL The Authority consists of a single enterprise fund and its financial statements are presented on the accrual basis of accounting using the economic resources measurement focus. This CAFR, and each of the Authority s monthly financial statements, use the accrual method preferred for enterprise funds. Annual budgets and monthly budget reports are also prepared using the accrual basis of accounting. The Authority s annual operating budget is prepared by the IAA Finance Department in concert with management and is ultimately adopted by ordinance upon approval of the Authority Board. It is submitted to the Indianapolis/Marion County City-County Council as part of the review process. The State of Indiana Department of Local Government Finance reviews the budget in the same manner. Public hearings are held at each step of the review process and a notice of said hearings is published in accordance with Indiana law. In addition, a long-term Capital Improvement Plan is prepared annually utilizing estimates of future capital improvements and their financial impact. Budgetary control is maintained at the fund, function and department level. ECONOMIC CONDITIONS AND OUTLOOK INTERNAL CONTROLS The Authority s management is responsible for the establishment and maintenance of internal accounting controls that ensure assets are safeguarded and financial transactions are properly recorded and adequately documented. To ensure that the costs of controls do not exceed the benefits obtained, management is required to use cost estimates and judgments to attain reasonable assurance as to the adequacy of such controls. The Authority has established internal controls to fulfill these requirements and these controls are reviewed annually by an external audit firm for applicability, relevance, and effectiveness. STATE OF THE AIRLINE INDUSTRY The U.S. airline industry remained strong through Airline operating costs were down due to lower fuel prices, translating to higher operating margins. As the economy continued to strengthen, so did business travel. This up-tick in the economy increased the purchasing power of the middle-class and has allowed for more leisure travel. This combination of lower fuel prices and increased leisure travel has provided a strong position for low-cost carriers such as Southwest, Allegiant, Frontier, and Spirit to succeed. In 2016, commercial air carrier domestic enplanements were up by 3.3 percent, while international enplanements were up 1.2 percent. Scheduled airline passenger capacity increased 9 percent over 2015 as a result of increased frequency on existing routes, bigger aircraft, and new routes. Domestic enplanement market share continued to rise for low-cost carriers due to improvements in the economy and the lower cost of tickets. 10 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

8 STATE OF INDIANAPOLIS AIRPORT AUTHORITY Passenger and Cargo Volume 2016 total passenger volume at IND increased 6.4 percent from 2015 to 8.5 million passengers. IND averaged 142 daily departures in 2016, an increase of 8.4 percent from the previous year. Four of the airport s signatory airlines improved passenger enplanements from 2015 with Allegiant (37.8%), Southwest (15.9%), Frontier (12.8%), and United (2.9%) posting 2016 increases. American (-4.6%) and Delta (-1.6%) were the only signatory airlines to post declines in enplanements during 2016, declining 46,369 and 15,798 passengers, respectively. Overall cargo volume at IND showed a slight decrease in 2016 at nearly 1.1 million tons, a decrease of 1.8 percent compared to the previous year. FedEx remained the largest contributor of cargo volume at 97.3 percent, followed by Cargolux at 1.9 percent. MAJOR INITIATIVES & DEVELOPMENT Airline Use Agreement A new three year Airline Use Agreement (AUA) became effective in January 1, 2016 between IAA and air/cargo carriers FedEx, Southwest, American, Delta, United, Allegiant, Frontier and Cargolux, effective through December 31, 2018, with the option of the Authority to offer each of the carriers two one-year extensions. The rate-making methodology of the new AUA considerably increased the capital funding necessary for IAA to invest in maintaining airfield infrastructure, the modern terminal and its related facilities, environmental sustainability and targeted revenue development projects. Economic Impact In 2016, IAA continued to honor its promise to enhance the communities that surround IND and our reliver airports by putting land, not needed for aviation purposes, back into productive use, returning the property to private ownership and on those community s property tax rolls. The IAA held several public listening sessions and key stakeholder events to learn from community members on the future of 128 acres of land which had previously used as the old terminal parking lots. Comments will be taken into consideration by the IAA as it prepares its new plan for the redevelopment of this critical area near the intersection of Sam Jones Expressway and Interstate 465. In addition, Holladay Properties began developing a master plan to attract economic development projects on more than 300 acres along or near West Washington Street. The IAA made progress with the Hendricks County Park Board and Town of Plainfield to eventually transfer control and responsibility for a portion of nearly 2,000 acres of conservation land. The land includes protected wetland areas that provide critical habitat for the endangered Indiana bat plus many other species of animal and plant life. The land also includes Sodalis Nature Park. The Town of Plainfield is working collaboratively with Hendricks County Parks and the IAA to explore creating an even better opportunity for residents to enjoy this natural environment. In addition, the IAA and the City of Fishers made progress to identify economic development opportunities for approximately 220 acres of undeveloped land at Metropolitan Airport Awards and Acknowledgements In pursuit of the IAA s mission of fostering world-class service to enhance the community, IND was recognized by the local community and industry organizations as top in its class; 2016 continued to be yet another award-winning year for IND. Continued Excellence in the Industry IND has been named the best airport in North America six out of the last seven years (2016, 2015, 2014, 2013, 2012, and 2010) in the Airport Service Quality (ASQ) awards given by Airports Council International (ACI). The ASQ program has become the world s leading airport passenger satisfaction benchmark, with over 300 airports participating. The ASQ Awards recognize and reward airports based on ACI s ASQ passenger satisfaction surveys and their commitment to continuous improvement of the passenger experience. Passengers continue to choose IND as a top airport with high marks for fast check-in time, ease of finding their way through the terminal, and the courtesy and efficiency of airport staff. In addition, J.D. Power ranked IND highest in customer satisfaction for medium airports in the J.D. Power 2016 North America Airport Satisfaction Study. The study examined six factors associated with traveler satisfaction: terminal facilities, airport accessibility, security check, baggage claim, check-in/baggage check, food and beverage and retail amenities. Best Airport in America, Again Readers of the popular luxury travel magazine, Condé Nast Traveler, named IND as the best airport in America for the third year in a row (2016, 2015, 2014). More than 300,000 people took part in the Condé Nast Readers Choice survey, the most in the survey s history. In the publication s top ten list of best airports, IND ranked higher than airports in Portland, Tampa and Austin, among others. IND s efficient terminal design allows passengers to breeze through TSA screening, and enjoy their time experiencing the airport s local favorites and offerings. In 2016, IND was recognized with two new awards further demonstrating the airport s world-class position among airports. Travel + Leisure named IND in their top ten list of best domestic airports in their World s Best Awards. IND was also named favorite U.S. airport in the TripAdvisor Travelers Choice Awards. Airport Concessions Program IND s world-class service touches every facet of the airport experience. IND was recognized by Airports Council International (ACI) for having the best food and beverage program among medium airports. The airport has an award-winning mix of local flavor, including Café Patachou, Harry & Izzy s, Shapiro s Deli and Just Pop In! while also offering an array of national restaurants to grab a quick bite or dine in. 12 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

9 Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, This was the 34th consecutive year that the IAA has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. Management believes this Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program requirements, and it will be submitted to the GFOA to determine its eligibility for another certificate. Acknowledgments The timely completion of this report could not be accomplished without the assistance and dedication of many individuals. The IAA acknowledges the assistance of BKD, LLP, Certified Public Accountants, and the IAA staff for their assistance in making this financial presentation possible. Appreciation is also expressed to the Authority Board members for their continued support of accounting and reporting in accordance with accounting principles generally accepted in the United States of America. Respectfully submitted, Robert B. Thomson Treasurer & Senior Director of Finance 14 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

10 LONG-TERM SUSTAINABILITY LARGEST SOLAR FARM ON AIRPORT PROPERTY IN THE WORLD more than 500,000 trees PLANTED IN 2,000 ACRES OF conservation land 16 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

11 FINANCIAL SECTION INDEPENDENT AUDITOR S REPORT MANAGEMENT S DISCUSSION AND ANALYSIS AUDITED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 18 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

12 Opinion To the Members of the Board Indianapolis, Indiana Independent Auditor s Report We have audited the accompanying financial statements of (Authority), which are comprised of statements of net position as of, and the related statements of revenues, expenses and changes in net position and of cash flows for the years then ended and the related notes to the basic financial statements, as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of as of, and the changes in its financial position and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis listed in the table of contents be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Authority s basic financial statements. The Schedules of Net Position Information, Schedules of Revenues, Expenses and Changes in Net Position Information, Schedules of Operating Revenues, Schedule of Operating Expenses and Schedule of Bond Debt Service Requirements to Maturity as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. The Schedules of Net Position Information, Schedules of Revenues, Expenses and Changes in Net Position Information, Schedules of Operating Revenues, Schedule of Operating Expenses and Schedule of Bond Debt Service Requirements to Maturity information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedules of Net Position Information, Schedules of Revenues, Expenses and Changes in Net Position Information, Schedules of Operating Revenues, Schedule of Operating Expenses and Schedule of Bond Debt Service Requirements to Maturity information is fairly stated, in all material respects, in relation to the basic financial statements as a whole

13 Other Information Our audit was conducted for the purpose of forming an opinion on the basic financial statements as a whole. The Introductory and Statistical Sections listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2016 (Unaudited) The following discussion and analysis of the financial performance and activity of the Indianapolis Airport Authority (Authority) is to provide an introduction and overview that users need to interpret the financial statements of the Authority as of and for the years ended. This discussion has been prepared by management and should be read in conjunction with the financial statements and the notes thereto, which follow this section. Authority Powers and Purposes Indianapolis, Indiana April 6, 2017 In 1962, the City Council of the City of Indianapolis (City), the Mayor of the City and the County Council of Marion County (County) created the Authority pursuant to the Authority Act as a municipal corporation, separate from the City and the County. The Authority Act authorizes the Authority to own and operate public airports. The Authority is empowered to do all things necessary or reasonably incident to carrying out the purposes of the Authority Act, including the power to: (i) acquire, establish, construct, improve, equip, maintain, control, lease and regulate municipal airports, landing fields and other air navigation facilities, either inside or outside the County; (ii) manage and operate airports, landing fields and other air navigation facilities acquired or maintained by the Authority; (iii) adopt a schedule of reasonable charges and collect them from all users of facilities and services within the County; (iv) lease all or any part of an airport, landing field or any buildings or other structures, and fix, charge and collect rentals, tolls, fees and charges to be paid for the use of the whole or a part of the airports, landing fields or other air navigation facilities by aircraft landing there and for the servicing of the aircraft; (v) make rules and regulations, consistent with laws regarding air commerce, for management and control of its airports, landing fields, air navigation facilities and other property under its control; and (vi) incur indebtedness in accordance with the Authority Act. The operations of the Authority depend heavily on revenues received from airlines serving Indianapolis International Airport. Airlines are given the option to sign an Agreement and Lease of Premises (Airline Agreement), which sets forth rates and charges for use of Authority assets and which utilizes a residual rate-making methodology. The residual nature of the Airline Agreement essentially requires the airlines to assume certain financial risks to guarantee the Airport has sufficient revenue to cover all operating and capital borrowing costs. In return, the Authority has less autonomy over capital asset development decisions in that the airlines must approve certain proposed capital improvement projects at the Airport. As of December 31, 2016, six passenger carriers and two cargo carriers represent the Signatory Airlines. The Authority and the Signatory Airlines negotiated a new Airline Agreement in This new Airline Agreement was approved by the Authority Board and is effective from January 1, 2016 through December 31, 2018, with two optional one-year extensions available. Airlines that sign the Airline Agreement are subject to favorable Signatory rates, as opposed to the Authority s Non-Signatory rates. 22 COMPREHENSIVE ANNUAL FINANCIAL REPORT

14 Airport Operations Activity and Financial Highlights Variance Enplaned passengers (1) 4,239,828 4,008, % Landed weight (1,000 lb. units) Passenger airlines 5,088,062 4,676, % Cargo airlines 5,334,670 5,335, % Total landed weights 10,422,732 10,012, % Aircraft operations 162, , % (1) Includes domestic air carriers, international air carriers and air taxi/commuter flights Airport Operations Activity In 2016, the number of enplaned passengers was 5.8% higher than The increase from 2015 is attributed to the continued strength of the local and domestic economy, lower fuel prices, and increased capacity to new markets from both new and existing carriers. As in 2015, the robust job market and competitive airfares continued to increase air travel demand in both the business and leisure markets. Meanwhile, fuel prices remained lower allowing carriers to sustain lower fares and consider new routes from medium sized airports. New nonstop destinations that were announced in 2016 include: LGA New York La Guardia (American); PHL Philadelphia, Pennsylvania (Frontier); PUJ Punta Cana, Dominican Republic (Vacation Express); RSW Fort Myers, Florida (Frontier); SAV Savannah/Hilton Head, Georgia (Allegiant); JAX Jacksonville, Florida (Allegiant); MSY New Orleans, Louisiana (Southwest); MDW Chicago, Illinois (Southwest) and SEA Seattle, Washington (Alaska Airlines). Passenger airlines accounted for approximately 49% of total landed weight at Indianapolis International Airport (IND) in 2016, 47% in prior year; cargo airlines accounted for the other 51% during 2016 and 53% in Passenger airline landed weights increased by 8.8% in 2016 from prior year; cargo airline landed weight was primarily flat with prior year. The increase in passenger landed weights is a result of the above mentioned market factors and is explained further in the Economic Factors section. FedEx continued to represent the majority of the cargo landed weights in Aircraft operations represent landings and takeoffs for air carrier (passenger and cargo), air taxi and commuter, general aviation and military operations. This activity increased 6.1% over the prior year. Financial Highlights The Authority experienced a decrease in total assets and deferred outflows of resources of $77.9 million during This decrease can be attributed to a number of changes in the statement of net position, including the normal decrease in capital assets due to depreciation and a decrease in the fair value of the Authority s derivative instruments. Total liabilities decreased $86.7 million in This change is primarily attributable to the reduction of bonds payable and other debt. The 2016 increase in net position was $10.7 million compared to an increase of $4.7 million for resulted in a loss from operations of $2.8 million, which is a $5.7 million decrease in the loss from operations of $8.5 million in net nonoperating revenues (expenses) of $(1.8) million increased $3.9 million from prior year driven by an increase in passenger facility charges, a decrease in interest expense, decrease in investment income and an increase in loss on disposal of assets. Capital contributions decreased $3.6 million to $15.2 million in 2016 compared to $18.8 million in the prior year, primarily due to a decrease in federal and state grants of $4.5 million and an increase in contributions from lessees of $0.9 million from Overview of Financial Statements The Authority only engages in business-type activities. These are activities that are intended to recover all or a significant portion of their costs through user fee charges to external parties for goods or services. The Authority reports its business-type activities in a single enterprise fund, meaning that its activities are operated and reported like a private-sector business. The Authority s financial report includes comparative Statements of Net Position, Statements of Revenues, Expenses and Changes in Net Position and Statements of Cash Flows. Also included are notes to the financial statements that provide more detailed data. These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America as promulgated by the Governmental Accounting Standards Board (GASB). The net position of the Authority is comprised of these categories: Net investment in capital assets - reflects the Authority s investment in capital assets (e.g. land, buildings, machinery and equipment), less any related debt used to acquire those assets that is still outstanding. The Authority uses these capital assets to provide services to the public; consequently, these assets are not available for future spending. Restricted - represent resources that are subject to external restrictions on how they may be used. Unrestricted - represent resources that may be used to meet the Authority s ongoing obligations to the public and creditors. 24 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

15 Statements of Net Position The Statements of Net Position present the financial position of the Authority at the end of the fiscal year and include all assets and liabilities of the Authority. The net position of the Authority represents the difference between total assets plus deferred outflows of resources, and total liabilities plus deferred inflows of resources and is an indicator of the current net value of the Authority. A summarized comparison of the Authority s assets, deferred outflows of resources, liabilities, deferred inflows of resources and net position at December 31, 2016, 2015 and 2014 follows: (Table Amounts in Thousands) Current assets - unrestricted $ 34,760 $ 28,660 $ 34,045 Current assets - restricted 43,001 53,855 55,220 Noncurrent assets Capital assets, net 1,821,200 1,889,782 1,958,582 Other noncurrent assets 231, , ,446 Total assets 2,130,729 2,192,960 2,240,293 Deferred outflows of resources 56,270 71,988 76,997 Total assets and deferred outflows of resources $ 2,186,999 $ 2,264,948 $ 2,317,290 Current liabilities - payable from unrestricted $ 10,028 $ 11,319 $ 8,169 Current liabilities - payable from restricted 75,384 82,086 80,670 Noncurrent liabilities - payable from restricted 1,026,858 1,105,607 1,164,718 Total liabilities 1,112,270 1,199,012 1,253,557 Deferred inflows of resources 15,172 17,071 19,545 Net position Net investment in capital assets 845, , ,463 Restricted 143, , ,374 Unrestricted 70,503 77,322 62,351 Total net position 1,059,557 1,048,865 1,044,188 Total liabilities, deferred inflows of resources and net position $ 2,186,999 $ 2,264,948 $ 2,317, to 2015 Comparative Statements of Net Position Unrestricted current assets increased $6.1 million, which is primarily attributable to an increase in cash and cash equivalents of $5.3 million. The decrease in restricted current assets of $10.9 million reflects a $9.8 million decrease in restricted cash and cash equivalents. Total noncurrent assets decreased by $57.5 million. This change is primarily attributable to a $74.6 million decrease in depreciable capital assets, a $6.0 million increase in non-depreciable capital assets and an $8.9 million increase in investments. Total current liabilities decreased by $8.0 million driven by a decrease of $5.9 million in the current portion of debt and a $3.2 million decrease in accounts payable. Total noncurrent liabilities decreased $78.7 million, attributable to a decrease in bonds payable and other debt to 2014 Comparative Statements of Net Position Unrestricted current assets decreased $5.4 million, which is attributable to a decrease of $4.1 million in grants receivable. The decrease in restricted current assets of $1.4 million primarily reflects a $2.1 million decrease in restricted cash and cash equivalents. Total noncurrent assets decreased by $40.6 million. This change is primarily attributable to a $64.6 million decrease in depreciable capital assets, a $4.2 million decrease in non-depreciable capital assets and a $31.8 million increase in investments. Total deferred outflows of resources decreased by $5.0 million, the result of a decrease in the amortization of deferred losses on the refunding of bonds of $2.6 million and a decrease in the accumulated changes in fair values of hedging derivative instruments of $2.4 million. Total current liabilities increased by $4.6 million driven by a $3.6 million increase in accounts payable. Total noncurrent liabilities decreased $59.1 million, attributable to a decrease in bonds payable and other debt to 2015 Comparative Statements of Revenues, Expenses and Changes in Net Position The Statements of Revenues, Expenses and Changes in Net Position reflect the operating activity of the Authority for the year using the accrual basis of accounting, similar to private sector companies. The change in net position for the years ended was $10.7 million and $4.7 million, respectively. The comparative analysis below is a summary of the Statements of Revenues, Expenses and Changes in Net Position for 2016 and $ Variance % Variance (Table Amounts in Thousands) Total operating revenues $ 158,248 $ 147,957 $ 10, % Total nonoperating revenues 56,787 56,840 (53) -0.1% Total revenues 215, ,797 10, % Total operating expenses 161, ,492 4, % Net nonoperating expenses 58,541 62,469 (3,928) -6.3% Total expenses 219, , % Loss Before Capital Contributions and Grants (4,543) (14,164) 9, % Capital Contributions and Grants 15,235 18,841 (3,606) -19.1% Increase in Net Position 10,692 4,677 6, % Net Position, Beginning of Year 1,048,865 1,044,188 4, % Net Position, End of Year $ 1,059,557 $ 1,048,865 $ 10, % Total deferred outflows of resources decreased by $15.7 million, the result of a decrease in the amortization of deferred losses on the refunding of bonds of $5.4 million and a decrease in the accumulated changes in fair values of hedging derivative instruments of $10.3 million. 26 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

16 Operating revenue in 2016 increased $10.3 million, or 7.0% from prior year. This represents increases in activity-based revenues along with applicable rental rate adjustments reflected in airfield, terminal complex, parking revenues, and rented buildings/other. This was offset by lower operating expense reimbursements related to the Indianapolis Maintenance Center. Airfield revenue in 2016 of $23.7 million increased from prior year by $1.2 million or 5.3%. Total landed weights increased a net 4.1% from prior year as passenger carriers increased 8.8% and cargo carriers remained flat. The 2016 Signatory landing fee rate increased 1.6% to $1.95 from $1.92 in The 2016 Non-signatory landing fee rate increased to $2.93, as compared to the 2015 rate of $2.88. Terminal complex revenues of $57.5 million increased $6.7 million or 13.2% from prior year. Airline terminal rental rates increased in 2016 to $ per square foot compared to the prior year rate of $95.11 per square foot. Concessionaire revenues were greater than prior year by $0.6 million or 7.4% and automobile rental commissions were higher than prior year by $0.4 million or 4.3% driven by an increase in enplaned passengers of 5.8%. Parking revenues increased from prior year by $3.5 million or 7.5%, resulting in $50.6 million in 2016 parking revenue. Year-to-date enplaned passengers exceeded prior year by 5.8%, as well as product mix differences. Revenues from rented buildings and other of $16.4 million increased by $0.4 million or 2.3%. The increase is attributable to various new and renegotiated building rentals. Revenues from Indianapolis Maintenance Center (IMC) of $7.2 million decreased by $1.4 million or 16.6%. This represents revenues due the Authority for reimbursement of eligible expenditures under the terms of the Settlement Agreement reached between the Authority and the trustee for the special facility revenue bonds the Authority had previously issued on behalf of United Airlines. Decrease from prior year relates to lower hangar bay utilization. Nonoperating revenues in 2016 of $56.8 million was primarily flat with prior year. The current year activity includes an increase in passenger facility charges and customer facility charges offset by a decrease in investment income. Passenger facility charges (PFC) income of $17.2 million increased $1.3 million or 8.3%. This increase is due to an increase in passenger numbers and ticket sales as PFC revenues are earned when tickets are sold. Customer facility charges (rental cars) (CFC) income of $7.3 million increased $0.6 million or 8.7%. Increase is due to higher passenger enplanements and an increased number of transactions. Investment income of $4.2 million decreased $2.4 million. Decrease was primarily attributable to a decrease in the basis swap market valuation of $1.9 million. Additionally, $0.9 million was received as a partial termination payment of the 2016 debt service reserve investment forward delivery agreement triggered by the 2016 refunding revenue bond transaction. Whereas in 2015, $1.5 million was received as a partial termination payment of the 2015 debt service reserve investment forward delivery agreement triggered by the 2015 refunding revenue bond transaction. Operating expenses (before depreciation) for the years ended totaled $67.2 million and $62.4 million, respectively, an increase of $4.8 million or 7.8%. The following analysis explores material operating expense change by both operating expense classes and operating expenses business area. Operating expenses by class (before depreciation): Total personal services expense increased 2.9% or $0.8 million to $28.2 million primarily due to annual merit increases. Total contractual services expense increased 15.7% or $3.0 million to $22.0 million due to higher professional fees relating to implementation of a land use and sale program, as well as greater outsourced maintenance services relating to elevator/escalator, terminal roof cleaning, terminal electrical substation maintenance and parking garage and lot re-striping. Total utilities expense of $9.2 million increased by $0.4 million or 4.2% driven by higher electricity, water & sewer rates, offset by lower natural gas usage and rates. Total supplies expense of $3.3 million remained level with prior year. Total materials expense increased by $0.3 million to $2.8 million which includes two replacement ground power units. Total general expense of $1.6 million exceeded prior year by $0.4 million primarily due to the recovery of previously recognized bad debt expense in the prior year. Airfield expenses (before depreciation) of $9.1 million increased $1.2 million, or 14.9% from the prior year. Variance attributable to greater professional fees related to environmental testing and audits, apron pavement repairs, increased sewage costs for glycol processing due to higher rates, and an increase in snow and ice chemical. Terminal complex expenses (before depreciation) of $15.6 million increased $0.1 million, or 0.6% from the prior year. Current year expenses included terminal roof cleaning and electrical substation maintenance that are offset by lower baggage system maintenance expenses. Parking expenses (before depreciation) of $7.9 million increased $0.3 million, or 4.3% from the prior year. Increase due to elevator/escalator repairs, parking garage and lot re-striping, grounds maintenance and parking garage expenses related to the quick turn around road access control project. Rented buildings and other expenses (before depreciation) of $2.0 million increased $0.6 million or 40.8% from prior year. Current year reflects increases in professional fees related to the implementation of a land use and sale program as well as insurance deductible costs for roof repairs due to wind damage for an outlying building. Indianapolis Maintenance Center (IMC) expenses (before depreciation) of $6.9 million increased $0.2 million, or 2.1%, primarily due to roof and door repairs, and higher Central Energy Plant utilities with increases in electricity, water and sewer rates, offset by lower natural gas usage and rates. Reliever airports expenses (before depreciation) of $1.5 million increased $0.1 million, or 6.3% from prior year. Variance primarily related to pavement and building repairs at the Heliport. Public safety expenses (before depreciation) of $10.6 million increased $0.4 million, or 3.9% from prior year. Variance includes an increase in Personal Services attributable to annual merit increases, as well as expenses related to the disaster drill not done in prior year, security camera replacements and active shooter training costs. Administration costs (before depreciation) of $13.6 million increased by $2.0 million, or 17.4% from prior year. Variance is the result of normal annual merit increases and an increase in professional fees related to Planning and Development, Communications/Marketing and Human Resource initiatives. Prior year included a significant recovery of bad debt expense, which is also contributing to the variance. 28 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

17 Net Nonoperating expenses for the years ended totaled $58.5 million and $62.4 million, respectively, a decrease of $3.9 million or 6.3%. The current year activity includes a decrease in interest expense and an increase in loss on disposals of capital assets and other. Interest expense of $45.9 million decreased $8.7 million over the prior year, or 15.9%; a net effect of various increases and decreases of interest expense over the year. The 2016 refunding transaction executed in late spring of 2016 had a net interest expense savings of $3.3 million and lower costs of issuance of $0.4 million. Additionally, there was interest expense savings of $4.6 million from the 2015A Bonds refunding transaction executed in the fall of 2015, savings of $0.5 million on pass-through debt related interest expense, and a reduction of $0.9 million in bond related costs. These decreases were netted against higher interest costs on the 2010C Bonds of $1.3 million from the partial swap termination payment in The remaining decline is due to the amortization of principal outstanding and the corresponding natural reduction in interest expense. Gain (loss) on disposals of capital assets and other of $(12.6) million decreased $4.8 million over the prior year. The current year loss is comprised of $(4.2) million loss on land sales and $(9.0) million for the demolition of the unit load structure at the Indianapolis Maintenance Center. Capital contributions and grants of $15.2 million decreased $3.6 million compared to prior year. Current year represents higher contributions from leased property tenant improvements and a decrease in federal and state grant revenues due to timing of completion of projects and related funding received to 2014 Comparative Statements of Revenues, Expenses and Changes in Net Position The Statements of Revenues, Expenses and Changes in Net Position reflect the operating activity of the Authority for the year using the accrual basis of accounting, similar to private sector companies. The change in net position for the years ended December 31, 2015 and 2014 was $4.7 million and $(5.3) million, respectively. The comparative analysis below is a summary of the Statements of Revenues, Expenses and Changes in Net Position for 2015 and $ Variance % Variance (Table Amounts in Thousands) Total operating revenues $ 147,957 $ 142,831 $ 5, % Total nonoperating revenues 56,840 51,587 5, % Total revenues 204, ,418 10, % Total operating expenses 156, ,503 (11) 0.0% Net nonoperating expenses 62,469 57,314 5, % Total expenses 218, ,817 5, % Loss Before Capital Contributions and Grants (14,164) (19,399) 5, % Capital Contributions and Grants 18,841 14,148 4, % Increase (Decrease) in Net Position 4,677 (5,251) 9, % Net Position, Beginning of Year 1,044,188 1,049,439 (5,251) -0.5% Net Position, End of Year $ 1,048,865 $ 1,044,188 $ 4, % Operating revenue in 2015 increased $5.1 million, or 3.6% from prior year. This represents increases in activity-based revenues along with applicable rental rate adjustments reflected in airfield, increased automobile rental commissions, parking revenues, rented buildings/other and reliever revenues. This was offset by lower operating expense reimbursements related to the Indianapolis Maintenance Center. Airfield revenue in 2015 of $22.5 million increased from prior year by $0.9 million or 4.0%. Total landed weights increased a net 3.9% from prior year as passenger carriers increased 9.3% and cargo carriers decreased 0.4%. The 2015 Signatory landing fee rate increased 2.1% to $1.92 from $1.88 in The 2015 Non-signatory landing fee rate increased to $2.88, as compared to the 2014 rate of $2.82. Other airfield revenues decreased $0.1 million or 9.0% from prior year relating to lower ground handling commissions. Terminal complex revenues of $50.8 million increased $1.3 million or 2.7% from prior year. Airline terminal rental rates increased in 2015 to $95.11 per square foot compared to the prior year rate of $91.68 per square foot. Concessionaire revenues were greater than prior year by $0.2 million relating to an increase in food and beverage and advertising/promotional revenues. Automobile rental commissions were higher than prior year by $0.6 million or 6.8% driven by an increase in enplaned passengers of 8.7%. Parking revenues increased from prior year by $3.6 million or 8.3%, resulting in $47.1 million in 2015 parking revenue. Year-to-date enplaned passengers exceeded prior year by 8.7%, as well as product mix differences. Revenues from Indianapolis Maintenance Center (IMC) of $8.6 million decreased by $0.6 million or 6.1%. This represents revenues due the Authority for reimbursement of eligible expenditures under the terms of the Settlement Agreement reached between the Authority and the trustee for the special facility revenue bonds the Authority had previously issued on behalf of United Airlines. Decrease from prior year relates to lower hangar bay utilization. Reliever airports revenue of $2.9 million decreased $0.2 million or 5.7% representing a decrease in fuel sales. Nonoperating revenues for the years ended December 31, 2015 and 2014 totaled $56.8 million and $51.6 million, respectively, an increase of $5.2 million or 10.2%. The current year activity includes a decrease in federal operating grant income offset by increases in passenger facility charges, customer facility charges and investment income. Federal operating grant income of $0.8 million decreased $0.2 million attributable to the reimbursement received in the prior year from Federal Emergency Management Agency (FEMA) for a severe winter storm in January Passenger facility charges (PFC) income of $15.9 million increased $1.3 million or 8.7%. This increase is due to an increase in passenger numbers and ticket sales as PFC revenues are earned when tickets are sold. Customer facility charges (rental cars) (CFC) income of $6.7 million increased $0.3 million or 4.0%. Increase is due to higher passenger enplanements and an increased number of transactions. Investment income of $6.7 million increased $4.0 million. Increase was primarily attributable to an increase in the basis swap market valuation of $2.3 million. Additionally, $1.5 million was received as a partial termination payment of the 2015 debt service reserve investment forward delivery agreement triggered by the 2015 refunding revenue bond transaction. 30 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

18 Operating expenses (before depreciation) for the years ended December 31, 2015 and 2014 totaled $62.4 million and $62.4 million, respectively. The following analysis explores material operating expense change by both operating expense classes and operating expenses business area. Operating expenses by class (before depreciation): Total personal services expense increased 4.5% or $1.2 million to $27.4 million primarily due to annual merit increases and higher selffunded medical insurance claims. Total contractual services expense increased 4.4% or $0.8 million to $19.0 million due to higher professional fees relating to land sales, airline use agreement negotiations and Environmental, Communications & Marketing strategic initiatives, as well as greater outsourced contract services relating to elevator/escalator, baggage conveyor and grounds maintenance contracts. Total utilities expense of $8.9 million decreased by $0.6 million or 5.9% driven by lower electricity and natural gas usage and rates, and lower sewer charges related to glycol processing. Total supplies expense of $3.3 million decreased by $0.7 million or 16.9% driven by lower fuel rates and decreased usage of snow and ice chemical. Total materials expense increased slightly by $0.1 million to $2.5 million reflecting higher airfield painting materials and light replacements. Total general expense of $1.2 million was lower than prior year by $0.9 million primarily due to the recovery of previously recognized bad debt expense and expiration of the amortization of leasehold enticement costs. Airfield expenses (before depreciation) of $7.9 million decreased $0.6 million, or 6.7% from the prior year. Variance attributable to a milder winter in 2015 and a decrease in snow related operations including sewage costs for glycol processing and snow and ice chemical. Current year also experienced reduced fuel costs due to lower rates and usage. Net Nonoperating expenses for the years ended December 31, 2015 and 2014 totaled $62.5 million and $57.3 million, respectively, an increase of $5.2 million or 9.0%. The current year activity includes a decrease in interest expense and a decrease in loss on disposals of capital assets and other. Interest expense of $54.6 million decreased $3.3 million over the prior year, or 5.8%; a net effect of various increases and decreases of interest expense over the year. The issuance of the 2015 refunding revenue bonds increased interest expense by $2.0 million and added $0.4 million in costs of issuance and bond related costs. These increases were netted against $1.0 million in savings in interest due to the amortization of debt and natural reduction in interest expense, lower interest costs on the 2010C Bonds of $1.0 million from the remarketing in early 2015, $4.3 million in savings from the 2014A Bonds refunding transaction executed in the fall of 2014 and savings of $1.2 million on pass-through debt-related interest expense. Gain (loss) on disposals of capital assets and other of $(7.9) million decreased $8.5 million over the prior year. The current year loss is comprised of $(6.3) million loss on land sales and $(1.7) million for the removal and retirement of the docking structure in hangar 1A and 1B at the Indianapolis Maintenance Center. Capital contributions and grants of $18.8 million increased $4.7 million compared to prior year. Current year represents higher contributions from leased property tenant improvements as well as an increase in federal and state grant revenues due to timing of completion of projects and related funding received. Terminal complex expenses (before depreciation) of $15.5 million increased $0.9 million, or 6.0% from the prior year. Variance attributable to a software upgrade for the baggage conveyor system, replacement of six terminal doors in the pedestrian bridge and movement of an airline ticket counter. Parking expenses (before depreciation) of $7.6 million decreased $0.1 million, or 1.5% from the prior year. Decrease due to lower costs associated with fuel, snow and ice chemical and outsourced contract services for snow removal. Rented buildings and other expenses (before depreciation) of $1.4 million increased $0.3 million or 25.8% from prior year. Current year reflects increases in professional fees related to land sales transactions. Indianapolis Maintenance Center (IMC) expenses (before depreciation) of $6.7 million decreased $0.7 million, or 10.0%, primarily due to lower costs associated with management and operation of the Central Energy Plant, and expiration of the amortization of lease enticement costs during Reliever airports expenses (before depreciation) of $1.4 million decreased $0.2 million, or 13.8% from prior year. Variance due to decreased fuel rates and lower demand of Av-Gas at Hendricks County Reliever and Jet Fuel at Indianapolis Heliport. Public safety expenses (before depreciation) of $10.2 million increased $0.4 million, or 4.6% from prior year. Variance primarily in Personal Services attributable to annual merit increases and higher health insurance costs. Administration costs (before depreciation) of $11.6 million increased slightly by $0.1 million, or 0.5% from prior year. Variance is the result of annual merit increases and higher health insurance costs offset by the recovery of bad debt expense. 32 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

19 The following is a graphic illustration of operating revenues by source for the years ended : The following is a graphic illustration of the total operating expenses by source for the years ended (excluding depreciation): Operating Revenues Operating Expenses (Excluding Depreciation) Rented Buildings and Other 10% Indianapolis Maintenance Center (IMC) 5% Reliever Airports 2% Airfield 15% Utilities 14% Materials 4% Supplies 5% General 2% Personal services 42% Parking 32% Terminal Complex 36% Contractual services 33% Operating Revenues Operating Expenses (Excluding Depreciation) Rented Buildings and Other 11% Indianapolis Maintenance Center (IMC) 6% Reliever Airports 2% Airfield 15% Utilities 14% Supplies 5% Materials 4% General 2% Personal services 44% Parking 32% Terminal Complex 34% Contractual services 31% 34 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

20 Capital Asset and Debt Administration Capital Assets During 2016, the Authority expended approximately $40.1 million on capital assets. The capital expenditures related to multiple construction and equipment acquisition projects, including the garage atrium canopy replacement, replace ground power units and lighting, phase two of the rehabilitate Taxiway B, rehabilitate Taxiway H and lighting, and the purchase of three diesel shuttle buses. During 2016, completed projects totaling $25.6 million were closed from construction-in-progress to their respective capital asset accounts. The more significant of these completed projects are as follows: Stormwater and Deicing Controls and Capacity - Phase III Ground Power Units and Lighting Rehabilitation of Runway and Taxiway Connectors - Metro Shuttle Bus Replacement Parking $6.3 million $5.9 million $3.0 million $1.1 million Note 4 to the financial statements provides additional information on the Authority s capital asset activity. Long-Term Debt Capital acquisitions can be funded using a variety of financing mechanisms, including federal and state grants, passenger facility charges, customer facility charges, public debt issues and airport operating revenues. The Authority s Master Bond Ordinance enables it to adopt an ordinance or resolution irrevocably designating certain revenues as Dedicated Revenues (which may include, without limitation, PFC & CFC revenues, state and/or federal grants, or other identified revenues) to be used to pay debt service on Authority revenue bonds. Note 5 of the financial statements explains the details of resolutions adopted in 2014, 2015 and As of December 31, 2016, the Authority had $975 million in outstanding senior lien bonds and no outstanding subordinate securities. The Authority, through its Master Bond Ordinance, has a covenant to maintain a debt service coverage ratio of not less than 1.25 for senior lien debt. Debt service coverage is calculated based on a formula included in the Master Ordinance and the Airline Agreements. Historically, the Authority has maintained a coverage ratio higher than its requirement. During 2016 and 2015, respectively, the Authority s debt service coverage was 2.07 and 1.84 for senior lien debt. Notes 5, 6, 7, 8 and 10 to the financial statements provide additional information regarding the Authority s debt activities. Economic Factors As the 8.8% increase in passenger landed weights might suggest, scheduled airline passenger capacity was up 9.0% over Additional capacity resulted from increased frequency on existing routes, bigger aircraft, and new routes. In total, IND launched or announced 12 new flights in Five of the existing 9 carriers added at least one new flight (American, Southwest, Frontier, Allegiant, and Vacation Express). Both United and Delta maintained connectivity levels and upgraded aircraft to offer more seats in the IND market to select destinations. IND is served by both major and national airlines operating at the majority of the domestic hubs. In addition, point-to-point service is provided to major business and leisure destinations, mainly in the Eastern and Central U.S., and improved coverage on the West coast. In August, the market entry of Alaska Airlines (AS) was announced. Alaska will begin daily service from IND to Seattle-Tacoma International Airport (SEA) on a Boeing beginning May 11, This is IND s first year-round nonstop service to Seattle. Before the SEA launch, Alaska decided to invest more at IND. In March 2017 the airline announced it will also offer nonstop flights daily to San Francisco beginning September 26, In addition to increased passenger activity, the Authority continues to benefit from sustained cargo operations, which again, is anchored by FedEx. IND s position as FedEx s second largest hub allows the airport to maintain high cargo landed weight levels, despite slowed growth in the cargo market overall. Cargo mail volumes were down 1.8% and landed weight levels were flat with prior year. Landed weight fluctuations may continue at IND as FedEx continues to transition their equipment to a newer, lighter and more efficient fleet mix. Looking Forward Future increases in passenger and cargo traffic at the Authority will be influenced by several key factors, which include, but are not limited to, the following: Economic and political conditions Airline consolidation and alliances Aviation security concerns Availability and price of aviation fuel Financial health of the airline industry Capacity of the airport Capacity of national air traffic control Airline competition and airfares and airport systems Airline service and routes As mentioned above, fuel costs and economic conditions have a significant effect on air travel and the transportation industry as a whole. The Authority cannot predict how future air travel, enplanements, or other variables relating to airport revenues may be impacted by various aforementioned market factors. Future passenger traffic may be impacted by the following: As noted earlier, IND experienced a 5.8% increase in the number of passenger enplanements over last year, resulting in total 2016 enplanements of 4,239,828. A strong economy, increased airline competition, lower fuel prices, and competitive airfare pricing led to stimulation in IND s passenger traffic. Load factors by carrier Average daily departures Scheduled seat capacity Average nonstop fares Average fares by market Airline communication Aircraft orders/retirements As a result of this passenger growth and the strength of the Indianapolis economy, carriers continue to invest in Indianapolis. IND has seen the highest capacity growth amongst peer airports. While airports such as Nashville (BNA) and Raleigh-Durham (RDU) see less than 15% growth, IND has experienced 19% growth in seat capacity (year ending 2016 vs. 2015). The low cost carrier (LCC) trio of Allegiant, Southwest, and Frontier continues to drive this growth, each adding approximately 20% more capacity in This represents over 250,000 more seats available for purchase in 2016 than in Although it is not anticipated, the restructuring or liquidation of one or more of the large network airlines could also drastically affect airline service at many connecting hub airports. Additionally, present business opportunities for the remaining airlines, and evolving travel patterns throughout the U.S. aviation system will continue to play a role in how the industry performs. 36 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

21 Request for Information: This financial report is designed to provide a general overview of the Authority s finances for all those interested. Questions concerning any of the information provided in this report or requests for additional information should be addressed in writing to Investor Relations, 7800 Col. H. Weir Cook Memorial Drive, Suite 100, Indianapolis, IN or via to INDir@indianapolisairport.com. Statements of Net Position Assets and Deferred Outflows of Resources Current Assets Unrestricted Assets Cash and cash equivalents $ 18,084,676 $ 12,753,924 Accounts receivable, net of allowance of $156,000 and $85,000, respectively 2,940,304 4,441,000 Unbilled revenues 4,734,031 2,128,092 Grants receivable 5,708,997 5,847,344 Supplies and materials inventories 1,516,058 1,661,118 Other 1,775,870 1,828,244 Total unrestricted current assets 34,759,936 28,659,722 Restricted Assets Cash and cash equivalents 34,638,339 44,461,827 Cash and cash equivalents - customer deposits 752, ,235 Receivable - passenger facility charges 1,749,435 1,614,957 Receivable - governments and other 4,093,283 3,945,410 Receivable - reimbursable IMC expenses 1,767,356 3,131,401 Total restricted current assets 43,000,633 53,854,830 Total current assets 77,760,569 82,514,552 Noncurrent Assets Cash and cash equivalents, restricted 78,898,203 73,581,894 Investment securities, unrestricted 44,741,552 58,644,653 Investment securities, restricted 92,122,788 69,369,252 Investment derivatives - basis swap agreements (196,621) 660,199 Rent receivable 1,029,745 1,336,100 Derivative instruments - forward delivery purchase agreements 15,172,361 17,070,659 Nondepreciable capital assets 316,578, ,584,351 Depreciable capital assets, net 1,504,621,754 1,579,197,930 Total noncurrent assets 2,052,968,122 2,110,445,038 Total assets 2,130,728,691 2,192,959,590 Deferred Outflows of Resources Deferred loss on refunding of debt 29,671,973 35,080,181 Accumulated decrease in fair value of hedging derivatives 26,598,230 36,907,541 Total deferred outflows of resources 56,270,203 71,987,722 Total assets and deferred outflows of resources $ 2,186,998,894 $ 2,264,947, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

22 Statements of Net Position Statements of Revenues, Expenses and Changes in Net Position Years Ended Liabilities, Deferred Inflows of Resources and Net Position Current Liabilities Payable From Unrestricted Assets Accounts payable $ 4,879,632 $ 6,508,104 Accrued and withheld items (including compensated absences) 5,148,615 4,810,581 Total current liabilities payable from unrestricted assets 10,028,247 11,318,685 Payable From Restricted Assets Accounts payable 9,188,649 10,739,924 Customer deposits payable 753, ,235 Current portion of debt 50,603,345 56,546,957 Accrued interest on debt 14,838,943 14,097,179 Total current liabilities payable from restricted assets 75,384,157 82,086,295 Total current liabilities 85,412,404 93,404,980 Noncurrent Liabilities Derivative instruments - interest rate swap agreements 74,241,978 84,551,289 Bonds payable and other debt, payable from restricted assets 952,616,451 1,021,056,134 Total noncurrent liabilities 1,026,858,429 1,105,607,423 Total liabilities 1,112,270,833 1,199,012,403 Deferred Inflows of Resources Accumulated increase in fair value of hedging derivatives 15,172,361 17,070,659 Net Position Net investment in capital assets 845,460, ,119,605 Restricted for Capital projects 75,676,933 52,631,491 Debt service 65,750,008 65,153,056 Other 2,165,562 3,638,308 Total restricted net position 143,592, ,422,855 Unrestricted 70,502,986 77,321,790 Total net position 1,059,555,700 1,048,864,250 Total liabilities, deferred inflows of resources and net position $ 2,186,998,894 $ 2,264,947, Operating Revenues Airfield $ 23,749,133 $ 22,545,493 Terminal complex 57,451,178 50,767,649 Parking 50,561,863 47,055,937 Rented buildings and other 16,382,134 16,015,887 Indianapolis Maintenance Center (IMC) 7,205,620 8,642,912 Reliever airports 2,896,773 2,928,417 Total operating revenues 158,246, ,956,295 Operating Expenses Personal services 28,244,122 27,446,386 Contractual services 22,018,423 19,033,676 Utilities 9,242,901 8,874,402 Supplies 3,343,328 3,311,432 Materials 2,792,128 2,508,822 General 1,578,871 1,205,094 Total operating expenses 67,219,773 62,379,812 Income From Operations Before Depreciation 91,026,928 85,576,483 Depreciation expense 93,817,692 94,112,528 Loss From Operations (2,790,764) (8,536,045) Nonoperating Revenues (Expenses) State and local appropriations 27,376,059 26,754,229 Federal operating grants 674, ,230 Passenger facility charges 17,237,996 15,915,760 Customer facility charges (rental cars) 7,284,896 6,702,440 Investment income 4,213,687 6,663,288 Interest expense, net of $259,393 and $338,882 interest capitalized in 2016 and 2015, respectively (45,883,264) (54,589,313) Loss on disposals of capital assets and other (12,657,346) (7,879,447) (1,753,227) (5,628,813) Decrease in Net Position Before Capital Contributions and Grants (4,543,991) (14,164,858) Capital Contributions and Grants Federal, state and local grants 11,891,360 16,441,051 Contributions from lessees and other 3,344,081 2,400,224 15,235,441 18,841,275 Increase in Net Position 10,691,450 4,676,417 Net Position, Beginning of Year 1,048,864,250 1,044,187,833 Net Position, End of Year $ 1,059,555,700 $ 1,048,864, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

23 Statements of Cash Flows Years Ended Statements of Cash Flows (Continued) Years Ended Cash Flows From Operating Activities Cash receipts from customers and users $ 158,752,798 $ 145,901,144 Cash payments to vendors for goods and services (37,686,440) (32,397,329) Cash payments for employees services (27,795,743) (27,275,989) Net cash provided by operating activities 93,270,615 86,227,826 Cash Flows From Noncapital Financing Activities Operating grants received 647, ,557 Customer facility charges received 7,284,896 6,702,440 Insurance recoveries 290,752 48,788 Net cash provided by noncapital financing activities 8,222,773 7,447,785 Cash Flows From Capital and Related Financing Activities Proceeds from issuance of revenue bonds 196,895, ,964,631 Principal paid on bonds (237,700,000) (226,630,000) Bond issue costs paid (1,202,239) (1,582,612) Interest paid (44,637,190) (51,815,506) Acquisition and construction of capital assets (40,119,452) (32,020,810) Demolition costs related to capital assets (7,769) (140,577) Proceeds from sale of capital assets 796,363 2,258,754 Passenger facility charges received 17,103,518 15,459,013 Capital grants received 12,057,327 20,689,475 Net cash used in capital and related financing activities (96,814,311) (74,817,632) Reconciliation of Loss From Operations to Net Cash Provided by Operating Activities Loss from operations $ (2,790,764) $ (8,536,045) Item not requiring cash Depreciation of capital assets 93,817,692 94,112,528 Change in assets and liabilities Accounts receivable and unbilled revenues 506,097 (2,055,151) Supplies and materials inventories 145,060 (76,511) Other assets 2,003,707 (80,986) Accounts payable (859,556) 2,693,594 Accrued and withheld items 448, ,397 Net cash provided by operating activities $ 93,270,615 $ 86,227,826 Noncash Capital and Related Financing Activities Capital assets included in accounts payable at end of year $ 4,216,464 $ 6,752,635 Capital assets contributed by lessees and other governments 1,392,748 2,400,224 State and local appropriations used to fund capital lease obligations and interest 27,252,477 26,750,946 Cash Flows From Investing Activities Purchase of investment securities (294,555,905) (61,495,265) Proceeds from sales and maturities of investment securities 287,148,753 28,321,170 Interest received on investments and cash equivalents 3,602,633 7,021,737 Net cash used in investing activities (3,804,519) (26,152,358) Net Increase (Decrease) in Cash and Cash Equivalents 874,558 (7,294,379) Cash and Cash Equivalents, Beginning of Year 131,498, ,793,259 Cash and Cash Equivalents, End of Year $ 132,373,438 $ 131,498, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

24 Note 1: Nature of Organization and Summary of Significant Accounting Policies The (Authority) is a municipal corporation established January 1, 1962, under authority granted by Indiana statute (1961 Acts, Chapter 283, I.C , superseded by I.C ). The Authority was established for the general purpose of acquiring, maintaining, operating and financing airports and landing fields in and bordering on Marion County, Indiana. In connection therewith, the Authority is authorized, among other things, to issue general obligation and revenue bonds and to levy taxes in accordance with the provisions of the statute. The Authority administers an airport system comprised of the Indianapolis International Airport, three general aviation reliever airports, one general aviation airport and one general aviation reliever heliport. The Authority has no stockholders or equity holders and all revenue and other receipts must be disbursed in accordance with such statute. The Authority s Board consists of nine members, five of which are appointed by the Mayor of the Consolidated City of Indianapolis-Marion County (a unified form of government commonly referred to as Unigov), one by the majority leader of the City-Council, and one each by the Hendricks, Hamilton and Hancock County Boards of Commissioners. Each member is appointed a four-year term. Also, the Board has one nonvoting, advisory board member from Morgan County. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Financial Reporting Entity The definition of the reporting entity under Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity, as amended, is based primarily on the concept of financial accountability. Although the Mayor appoints a voting majority of the Authority s governing body, neither of the other two tests of financial accountability are met. Unigov is unable to impose its will on the Authority. Also, the Authority does not impose a financial burden or provide a financial benefit to Unigov. Careful review of these criteria, therefore, has resulted in the conclusion that the Authority is a separate reporting entity and is not a component of Unigov or any other government. Basis of Accounting and Financial Reporting The financial statements consist of a single-purpose business-type activity, which is reported on the accrual basis of accounting using the economic resources measurement focus. The Authority prepares its financial statements in conformity with accounting principles generally accepted in the United States of America as applied to governmental units. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The Authority adopted and implemented GASB Statement No. 72, Fair Value Measurement and Application, and GASB Statement No. 79, Certain External Investment Pools and Pool Participants, effective for the Authority s year ended December 31, The implementation of GASB Statements No. 72 and No. 79 did not impact net position or the change in net position of the Authority as of or for the year ended December 31, Cash Equivalents The Authority considers all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents. At, cash equivalents consisted primarily of money market accounts with brokers. Investment Securities Investment securities are stated at fair value. Fair value is determined using quoted market prices. Investments in nonnegotiable certificates of deposit and repurchase agreements are carried at cost. Investment income consists of interest and dividend income and the net change for the year in the fair value of investments carried at fair value. Unbilled Revenues The Authority accrues revenue for rentals earned but not yet billed as of year-end. Inventories Inventories consist of parts, supplies and materials. Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. Lessee-Financed Improvements Certain leases include provisions whereby lessee-financed improvements become the property of the Authority. Prior to the adoption of GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions, the Authority recorded lessee-financed improvements only upon leasehold reversion or lease termination, at which time the improvements were capitalized at fair value and recorded as a capital contribution. Upon implementation of GASB Statement No. 33, the Authority began recognizing lessee-financed improvements at cost or estimated cost upon completion of construction, or upon the asset being placed in service, whichever occurs first. However, lessee-financed improvements placed in service prior to the adoption of GASB Statement No. 33 continue to be recognized only upon leasehold reversion or lease termination. 44 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

25 Capital Assets Capital assets are defined by the Authority as assets with an initial, individual cost of more than $2,500. Capital assets purchased by the Authority are stated at historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of such assets. The estimated lives by general classification are as follows: Years Buildings, including parking garage 20 to 50 Sewers 25 to 50 Runways, taxiways and aprons 15 to 25 Roads, ramps, parking areas, runway and apron lighting, etc. 15 to 20 Heavy equipment, furniture and fixtures and fencing 5 to 20 Vehicles, office equipment and other 3 to 10 Interest incurred during construction periods is capitalized and included in the cost of property and equipment. Maintenance and repairs are expensed as incurred. Environmental mitigation costs incurred to establish wetlands and habitats are capitalized, while costs related to maintaining wetlands and habitats are generally charged to expense as incurred. Gains and losses on disposition of capital assets are included in nonoperating revenues and expenses. Donated capital assets are measured at acquisition value, which is the price that would be paid to acquire an asset with equivalent service potential in an orderly market transaction at the acquisition date or the amount at which a liability could be liquidated with the counterparty at the acquisition date. Original Issue Premiums and Discount Original issue premiums and discounts on bonds are amortized using the interest method over the lives of the bonds to which they relate. Employee Health Benefits The Authority offers health benefit plans which provide employees with a choice of coverage under a Health Savings Account plan or a plan provided by a Preferred Provider Organization. Deferred Outflows of Resources The Authority reports increases in net position that related to future periods as deferred outflows of resources in a separate section of its statements of net position. Compensated Absences In accordance with the vesting method provided under GASB Statement No. 16, Accounting for Compensated Absences, accumulated vacation and personal time is accrued based on assumptions concerning the probability that certain employees will become eligible to receive these benefits in the future. Deferred Inflows of Resources The Authority reports decreases in net position that related to future periods as deferred inflows of resources in a separate section of its statements of net position. Net Position Net position of the Authority is classified in three components. Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by the outstanding balances of borrowings used to finance the purchase or construction of those assets. Restricted expendable net position is made up of noncapital assets that must be used for a particular purpose as specified by creditors, grantors or donors external to the Authority, including amounts deposited with trustees as required by bond indentures, reduced by the outstanding balances of any related borrowings. Unrestricted net position is the remaining net position that does not meet the definition of net investment in capital assets or restricted. Classification of Revenues The Authority has classified its revenues as either operating or nonoperating revenues according to the following criteria: Operating revenues - Operating revenues include activities that have the characteristics of exchange transactions. Nonoperating revenues - Nonoperating revenues include activities that have the characteristics of nonexchange transactions, such as grants, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Government Entities That Use Proprietary Fund Accounting, and GASB No. 34, such as state and local appropriations, facility charges and investment income. Federal and State Grants Outlays for airport capital improvements and certain airport operating expenses, primarily those relating to airport security, are subject to reimbursement from federal grant programs. Funds are also received for airport development from the State of Indiana. Funding provided from government grants is considered earned as the related approved capital outlays or expenses are incurred. Costs claimed for reimbursement are subject to audit and acceptance by the granting agency. 46 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

26 From time to time, the Authority disposes of land or other assets which were originally purchased with federal assistance. In accordance with the Airport Improvement Program (AIP), the Authority must reinvest the federal government s proportionate share of the proceeds realized from the sale or exchange of such assets in approved AIP projects or return such amounts to the federal government. Revenue and Expense and Net Position Recognition Revenues from airlines, concessionaires, lessees, and parking are reported as operating revenues. Operating expenses include the cost of administering the airport system, including depreciation and amortization of capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses or capital contributions, grants and charges. When both restricted and unrestricted net position are available for use, it is the Authority s policy to use restricted net position first, and then unrestricted net position as they are needed. Passenger Facility Charges The Authority received approval from the Federal Aviation Administration (FAA) to impose and use a passenger facility charge (PFC) of $3.00 per eligible enplaned passenger and has imposed the PFC since September PFC s are restricted for use in the acquisition of real estate and the construction of certain airport improvements and other costs, as approved by the FAA. During 2001, the Authority received approval from the FAA to increase the collection level from $3.00 to $4.50 per enplaned passenger beginning April In addition, approvals received in March 2001 and August 2003 allow the Authority to impose and use $524,907,606 in PFC s for various capital and debt-related purposes. Included in the use approval is $208,872,000 for principal payments on debt, $178,668,000 for interest payments on debt and $56,330,000 for the construction of new terminal and associated program construction. PFC s, which are recognized as earned, are included in nonoperating revenues and amounted to $17,237,996 and $15,915,760 for 2016 and 2015, respectively. Customer Facility Charges (Rental Cars) The Authority collects a customer facility charge (CFC) from all rental car concessionaires that operate facilities on the airport. The CFC, which started in 2007, was $3.00 per rental car transaction per day, up to 14 days. The Authority increased this charge to $4.00 per transaction in May Under the adopting ordinance, CFC s may be pledged or dedicated for the payment of airport bonds or other obligations, as defined by applicable bond documents, or other costs as agreed to by the Authority. CFC revenue totaled $7,284,896 and $6,702,440 for 2016 and 2015, respectively. Rental Income All leases wherein the Authority is the lessor are accounted for as operating leases. Rental income is generally recognized as it becomes receivable over the respective lease terms. The Authority has some leases which provide for waived rent during the initial period of the lease term and/or rental escalations throughout the lease term. In accordance with GASB Statement No. 13, Accounting for Operating Leases with Scheduled Rent Increases, the related rental income for leases in which the rental income stream is not systematic, if significant, is reported using the straight-line method rather than using the terms of the lease agreements. Accordingly, the Authority has recorded a receivable of $1,029,745 and $1,336,100 at, respectively. The current receivable will be recognized in full in Income Taxes As a instrumentality of the state, the income of the Authority is exempt from federal and state income taxes under Section 115(a) of the Internal Revenue Code and a similar provision of state law. Reclassifications Note 2: Certain reclassifications have been made to the 2015 financial statements to conform to the 2016 financial statement presentation. These reclassifications had no effect on the change in net position. Deposits Cash, Cash Equivalents and Investment Securities Custodial credit risk is the risk that in the event of a bank failure, the Authority s deposits may not be returned to it. The Authority s deposit policy for custodial credit risk requires compliance with the provisions of Indiana statutes. The Authority s cash deposits are insured up to $250,000 at financial institutions insured by the Federal Deposit Insurance Corporation (FDIC). Any cash deposits in excess of the $250,000 FDIC limits are partially or fully collateralized by the depository institution and insured by the Indiana Public Deposits Insurance Fund (Fund) via the pledged collateral from the institutions securing deposits of public funds. The Fund is a multiple financial institution collateral pool as provided under Indiana Code, Section COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

27 Investments Indiana statutes generally authorize the Authority to invest in United States obligations and issues of federal agencies, Indiana municipal securities, secured repurchase agreements fully collateralized by U.S. Government or U.S. Government agency securities, certificates of deposit, and open end money market mutual funds. At, the Authority had the following investment securities and maturities: December 31, 2016 Less Than 1-5 Rating Total 1 Year Years U.S. Treasury Security Notes AA+/Aa1 $ 105,841,689 $ 62,515,413 $ 43,326,276 U.S. Treasury Security Bills A-1+/P-1 10,484,740 10,484,740 - U.S. Government-sponsored enterprise securities Federal National Mortgage Association AA+/Aa1 5,517,950-5,517,950 Federal Home Loan Mortgage Corporation AA+/Aa1 4,456,965 3,108,720 1,348,245 Total U.S. Governmentsponsored enterprise securities 9,974,915 3,108,720 6,866,195 Indiana municipal securities AAA/Aaa 2,504,318 1,057,415 1,446,903 AA+/Aa1 25,453,315 15,511,623 9,941,692 AA/Aa2 2,348, ,966 1,944,170 AA-/Aa3 777, , ,482 A+/A1 927, , ,003 A/A2 1,340,566 1,029, ,364 A-/A3 608, ,683 - BBB+ 999, ,816 - BBB 865, , ,916 Not Rated 2,088,312 2,088,312 - Total Indiana municipal securities 37,914,027 23,015,497 14,898,530 Money market mutual funds AAA/Aaa 66,778,855 66,778,855 - Not Rated 25,628,437 25,628,437 - Total money market mutual funds 92,407,292 92,407,292 - External investment pools Not Rated 50,733 50,733 - $ 256,673,396 $ 191,582,395 $ 65,091,001 December 31, 2015 Less Than 1-5 Rating Total 1 Year Years U.S. Treasury Security Notes AA+/Aa1 $ 54,385,990 $ 6,258,585 $ 48,127,405 U.S. Government-sponsored enterprise securities Federal National Mortgage Association AA+/Aa1 11,920,359 6,390,722 5,529,637 Federal Home Loan Bank AA+/Aa1 6,153,552 6,153,552 - Federal Home Loan Mortgage Corporation AA+/Aa1 6,763,182 2,194,759 4,568,423 Total U.S. Governmentsponsored enterprise securities 24,837,093 14,739,033 10,098,060 Indiana municipal securities AAA/Aaa 1,190,414-1,190,414 AA+/Aa1 35,415,751 8,534,222 26,881,529 AA/Aa2 3,429,957 1,019,392 2,410,565 AA-/Aa3 363, , ,121 A+/A1 2,858,516 1,801,593 1,056,923 A/A2 3,525,903 2,773, ,274 A-/A3 1,368, , ,728 BBB+ 1,023,065-1,023,065 BBB 1,333, , ,481 Not Rated 4,755,627 2,570,879 2,184,748 Total Indiana municipal securities 55,264,160 17,812,312 37,451,848 Money market mutual funds AAA/Aaa 109,129, ,129,346 - External investment pools Not Rated 50,498 50,498 - $ 243,667,087 $ 147,989,774 $ 95,677,313 Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates, the Authority is limited to investing in municipal securities of Indiana issuers that have not defaulted within the previous 20 years and other securities with a stated maturity of not more than five years after the date of purchase or entry into a repurchase agreement, as defined by Indiana Code, Section The Authority s investment policy for interest rate risk requires compliance with the provisions of Indiana statutes. The money market mutual funds and external investment pools are presented as an investment with a maturity of less than one year because they are redeemable in full immediately. Credit Risk - Credit risk is the risk that the issuer or other counterparty to an investment will not fulfill its obligations. The Authority s investment policy for credit risk requires compliance with the provisions of Indiana statutes, and Indiana Code Section requires that the Authority only invest in money market mutual funds that are rated AAAm by Standard and Poor s or Aaa by Moody s Investors Service. Other securities, including municipal securities, may be rated lower than AAAm/Aaa or may be unrated. The Authority s investment policy restricts investments in unrated or below investment grade Indiana municipal securities to five percent of its total investment portfolio. 50 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

28 Custodial Credit Risk - For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Authority will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. At, the Authority s investments were not exposed to custodial credit risk. The Authority s investments in Indiana municipal securities and U.S. agency obligations are held by the pledging financial institution s trust department or agent in the Authority s name. Likewise, investments in repurchase agreements (which are secured by U.S. Government and U.S. Government agency obligations) are not subject to custodial credit risk as the underlying collateral was held in the Authority s name. The existence of the Authority s investment in money market mutual funds and external investment pools is not evidenced by securities that exist in physical or book entry form. The Authority s investment policy does not address how investment securities and securities underlying repurchase agreements are to be held. Concentration of Credit Risk - The Authority places the following limits on the amount that may be invested in any one issuer: (1) no more than 50% of total investments with any one governmental agency; (2) no more than 25% in any one money market mutual fund, investment pool or certificate of deposit; and (3) no more than 15% with any one Indiana municipal issuer. No single issuer of the Indiana municipal securities in which the Authority has invested exceeded 5% of total investments. The following governmental agency investments held by the Authority are not explicitly guaranteed by the U.S. Government and are subject to concentration of credit risk: Federal National Mortgage Association $ 5,517,950 $ 11,920,359 Federal Home Loan Bank - 6,153,552 Federal Home Loan Mortgage Corporation 4,456,965 6,763,182 $ 9,974,915 $ 24,837,093 Foreign Currency Risk - This risk relates to adverse effects on the fair value of an investment from changes in exchange rates. The Authority s investment policy prohibits investments in foreign investments. Summary of Carrying Values Cash, cash equivalents and investment securities included in the statements of net position are classified as follows: Cash and cash equivalents Current - unrestricted $ 18,084,676 $ 12,753,924 Current - restricted 35,390,559 45,163,062 Noncurrent - restricted 78,898,203 73,581,894 Total cash and cash equivalents 132,373, ,498,880 Investment securities Noncurrent - unrestricted 44,741,552 58,644,653 Noncurrent - restricted 92,122,788 69,369,252 Total investment securities 136,864, ,013,905 Investment Income Investment income for the years ended consisted of: $ 269,237,778 $ 259,512, Interest and dividend income $ 4,213,687 $ 6,663,288 Cash, cash equivalents and investment securities are restricted as follows: Revenue Bond Interest and Principal Fund $ 44,906,697 $ 44,075,487 Revenue Bond Reserve Fund 54,786,002 60,473,588 Operation and Maintenance Reserve Fund 11,398,298 11,299,404 Renewal and Replacement Fund 2,780,659 2,746,145 Capital Improvement Fund 58,004,320 39,533,699 Passenger Facility Charge Fund 15,923,178 11,482,835 Debt Service Coverage Fund 17,410,014 17,183,789 Escrow for owner controlled insurance program - 165,065 Customer deposits 752, ,235 Air Service Task Force and other 450, ,961 $ 206,411,550 $ 188,114, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

29 Note 3: Grants Receivable The above funds and accounts have been established in accordance with the Authority s General Ordinance No , the Consolidated and Restated Master Bond Ordinance (consolidating and restating all previously adopted Bond Ordinances, as amended), and further amended by various supplemental ordinances (collectively, the Ordinance). The Ordinance provides, among other things, that certain accounting procedures be followed and certain funds be established to provide bond holders a degree of security against certain contingencies. Brief descriptions of these funds follow. Deposits into the Airport System Fund are disbursed in accordance with the Authority s annual budget to provide for current operations and maintenance expenses. Such deposits are also used to replenish balances in other funds to their required levels under the Ordinance. Amounts in the Airport System Fund are pledged to secure the Authority Revenue Bonds, but all current operations and maintenance expenses of the Airport System are paid prior to debt service on the Authority Revenue Bonds. Assets included in the Revenue Bond Interest and Principal Funds and Revenue Bond Reserve Funds are used for the payment of bond principal, interest and redemption premiums, as well as any amounts due under Qualified Derivative Agreements (as defined under the Ordinance) entered into with regard to any of the Authority s Revenue Bonds. The Operation and Maintenance Reserve Fund must be maintained at a balance at least equal to one-sixth of the Authority s current operating budget as a reserve for payment of operation and maintenance expenses. Assets of the Renewal and Replacement Fund are used to pay extraordinary costs of replacing depreciable property and equipment and/or making extraordinary repairs, replacements, or renovations to the airport system. The Capital Improvement Fund can be used for any lawful airport system purpose, including payment for capital improvements and land acquisition. Finally, amounts in the Debt Service Coverage Fund are used for the purposes of establishing future coverage on outstanding Revenue Bonds. Funds not used for these purposes are transferred into a Prepaid Airline Revenue Fund. Balances included in the Airport System Fund and Prepaid Airline Revenue Fund are classified in current unrestricted assets in the accompanying statements of net position. The Authority has established a Customer Facility Charge Fund, which provides for a segregated account for receipt of CFC revenue. Such revenue is expended for reimbursement of capital and operating expenditures related to rental car operations on airport property, as well as to service debt associated with the financing of such capital projects. Balances in the CFC Fund are classified in current unrestricted assets in the accompanying statements of net position. The Authority s Passenger Facility Charge Fund provides for the segregation of PFC receipts, as required by the FAA. Such revenues are to be expended only for allowable capital projects, or to repay debt (principal and interest) issued for allowable capital projects, under a Record of Decision granted by the FAA. Note 4: Grants receivable from government agencies represent reimbursements due from the federal government and/or the State of Indiana for allowable costs incurred on federal and state award programs. Grants receivable at consist of: State of Indiana $ 44,373 $ 12,958 Federal Aviation Administration 5,568,274 5,765,656 U.S. Department of Homeland Security 96,350 68,730 $ 5,708,997 $ 5,847,344 The maximum amount of federal and state participation available for 2016 totaled $43,975,518. At December 31, 2016, a cumulative total of $30,853,625 has been received on these grant commitments. Capital Assets A summary of changes in capital assets for the years ended is as follows: 2016 Beginning Ending Balance, Transfers Transfers Balance, January 1, and and December 31, 2016 Additions Disposals 2016 Capital assets, not being depreciated: Land $ 290,980,218 $ 90,705 $ (4,353,545) $ 286,717,378 Construction in progress 19,604,133 10,597,118 (340,289) 29,860,962 Total capital assets, not being depreciated 310,584,351 10,687,823 (4,693,834) 316,578,340 Capital assets, being depreciated: Buildings 1,648,507,697 3,917,782 (20,000,002) 1,632,425,477 Runways and other airport infrastructure 990,994,978 10,915,258-1,001,910,236 Equipment, furniture and fixtures and other 234,246,194 13,455,166 (1,116,141) 246,585,219 Total capital assets, being depreciated 2,873,748,869 28,288,206 (21,116,143) 2,880,920,932 Less accumulated depreciation for: Buildings (574,767,746) (51,026,872) 10,958,333 (614,836,285) Runways and other airport infrastructure (542,153,123) (33,512,740) - (575,665,863) Equipment, furniture and fixtures and other (177,630,070) (9,278,080) 1,111,120 (185,797,030) Total accumulated depreciation (1,294,550,939) (93,817,692) 12,069,453 (1,376,299,178) Total capital assets, being depreciated, net 1,579,197,930 (65,529,486) (9,046,690) 1,504,621,754 Capital assets, net $ 1,889,782,281 $ (54,841,663) $ (13,740,524) $ 1,821,200, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

30 Note 5: Bonds Payable and Other Debt 2015 Beginning Ending Balance, Transfers Transfers Balance, January 1, and and December 31, 2015 Additions Disposals 2015 Capital assets, not being depreciated: Land $ 298,852,709 $ 57,274 $ (7,929,765) $ 290,980,218 Construction in progress 15,923,732 37,475,258 (33,794,857) 19,604,133 Total capital assets, not being depreciated 314,776,441 37,532,532 (41,724,622) 310,584,351 Capital assets, being depreciated: Buildings 1,645,680,004 6,494,359 (3,666,666) 1,648,507,697 Runways and other airport infrastructure 969,945,944 21,049, ,994,978 Equipment, furniture and fixtures and other 236,058,890 3,535,349 (5,348,045) 234,246,194 Total capital assets, being depreciated 2,851,684,838 31,078,742 (9,014,711) 2,873,748,869 Less accumulated depreciation for: Buildings (525,368,518) (51,513,447) 2,114,219 (574,767,746) Runways and other airport infrastructure (508,961,954) (33,191,169) - (542,153,123) Equipment, furniture and fixtures and other (173,549,068) (9,407,912) 5,326,910 (177,630,070) Total accumulated depreciation (1,207,879,540) (94,112,528) 7,441,129 (1,294,550,939) Total capital assets, being depreciated, net 1,643,805,298 (63,033,786) (1,573,582) 1,579,197,930 Capital assets, net $ 1,958,581,739 $ (25,501,254) $ (43,298,204) $ 1,889,782,281 Bonds and other debt outstanding at consist of: Revenue Bonds, Series 2016A-1 Serial bonds, maturing January 1, 2017 to January 1, 2035 in payments from $2,145,000 to $18,645,000. Interest at 3.00% to 5.00%, due semiannually on January 1 and July 1 $ 153,395,000 $ - Unamortized premium 18,569, ,964,498 - Revenue Bonds, Series 2016A-2 Serial bonds, maturing January 1, 2017 to January 1, 2023 in payments from $1,435,000 to $3,370,000. Interest at 1.050% to 2.561%, due semiannually on January 1 and July 1 19,885,000 - Term bonds, maturing January 1, 2024 to January 1, 2027 in payments from $85,000 to $95,000. Interest is fixed at 3.195%, due semiannually on January 1 and July 1 365,000 - Term bonds, maturing January 1, 2035 and January 1, 2036 in payments of $1,520,000 and $1,615,000, respectively. Interest is fixed at 3.894%, due semiannually on January 1 and July 1 3,135,000 - Revenue Bonds, Series 2015A Serial bonds, maturing January 1, 2023 to January 1, 2033 in payments from $6,770,000 to $19,875,000. Interest at 4.00% to 5.00%, due semiannually on January 1 and July 1 178,690, ,690,000 Unamortized premium 18,332,377 19,903, ,022, ,593,639 Revenue Bonds, Series 2014A Serial bonds, maturing January 1, 2017 to January 1, 2034 in payments from $1,490,000 to $17,075,000. Interest at 3.00% to 5.00%, due semiannually on January 1 and July 1 165,340, ,340,000 Unamortized premium 16,210,395 17,656, ,550, ,996,231 Revenue Bonds, Series 2013A Term bonds, maturing July 1, Interest is fixed at 1.800%, due semiannually on January 1 and July 1 11,690,000 12,135,000 Revenue Bonds, Series 2013B Term bonds, maturing July 1, Interest is fixed at 1.610%, due semiannually on January 1 and July 1 20,135,000 21,425,000 Revenue Bonds, Series 2012A Term bonds, maturing July 1, Interest is fixed at 1.253%, due semiannually on January 1 and July 1 21,530,000 29,455,000 Unamortized discount (28,566) (57,084) 21,501,434 29,397, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

31 (Continued) Revenue Bonds, Series 2010C Term bonds, maturing January 1, 2033, 2036 and Interest is variable (75% of the one-month LIBOR plus 0.523% (1.102%) at December 31, 2016), due monthly on the first business day $ 325,200,000 $ 332,600,000 Revenue Bonds, Series 2010A Serial bonds, maturing January 1, 2017 to January 1, 2027 in payments from $670,000 to $1,005,000. Interest at 4.00% to 4.50%, due semiannually on January 1 and July 1 9,075,000 9,720,000 Term bonds, maturing January 1, 2030 and Interest at 4.75% and 5.00%, respectively, due semiannually on January 1 and July 1 13,155,000 13,155,000 22,230,000 22,875,000 Unamortized discount (154,990) (167,802) 22,075,010 22,707,198 Revenue Bonds, Series 2006A Serial bonds, maturing January 1, 2017 to January 1, 2023 in payments from $14,135,000 to $20,390,000. Interest at 5.00%, due semiannually on January 1 and July 1-137,760,000 Term bonds, maturing January 1, 2027 and Interest at 4.70% and 5.00%, respectively, due semiannually on January 1 and July 1-82,235, ,995,000 Unamortized premium - 2,875, ,870,068 Total revenue bonds 974,523,714 1,022,725,052 Other debt Obligations under capital lease 28,696,082 54,878,039 28,696,082 54,878,039 Total bonds payable and other debt 1,003,219,796 1,077,603,091 Current portion (50,603,345) (56,546,957) Long-term portion $ 952,616,451 $ 1,021,056,134 Revenue Bonds 2016A Refunding Revenue Bonds In June 2016, the Authority issued the 2016A-1 ($153,395,000; tax-exempt) and 2016A-2 ($23,385,000; taxable) Refunding Revenue Bonds in the amount of $176,780,000 with an original issue premium of $20,115,131. The proceeds from the 2016A Revenue Bonds, in conjunction with transfers from the debt service reserve and principal and interest funds, were used to refund the outstanding balance of the 2006A Revenue Bonds of $219,995,000. The net present value savings resulting from this refunding were $38,211,902, and the aggregate difference in the required debt service between the 2006A Bonds and 2016A Bonds is $62,914, A Refunding Revenue Bonds In October 2015, the Authority issued the 2015A Refunding Revenue Bonds in the amount of $178,690,000 with an original issue premium of $20,274,631. The proceeds from the 2015A Revenue Bonds, in conjunction with transfers from the debt service reserve and principal and interest funds, were used to refund the outstanding balance of the 2005A Revenue Bonds of $197,385,000. The net present value savings resulting from this refunding were $22,073,861, and the aggregate difference in the required debt service between the 2005A Bonds and 2015A Bonds is $34,511, A Refunding Revenue Bonds In October 2014, the Authority issued the 2014A Refunding Revenue Bonds in the amount of $165,340,000 with an original issue premium of $19,435,412. The proceeds from the 2014A Revenue Bonds, in conjunction with transfers from the debt service reserve and principal and interest funds, were used to refund the outstanding balance of the 2004A Revenue Bonds of $189,400,000. The net present value savings resulting from this refunding were $17,667,274, and the aggregate difference in the required debt service between the 2004A Bonds and 2014A Bonds is $21,165,935. Redemption Requirements The Authority s Series 2010A, 2014A, 2015A, 2016A-1 and 2016A-2 Revenue Bonds are subject to optional redemption by the Authority at various dates in the future. The 2010C Revenue Bonds are subject to optional redemption by the Authority upon notification of the bondholders. The Series 2010A Revenue Bonds, maturing January 1, 2030 (the 2030 Term Bonds) and January 1, 2037 (the 2037 Term Bonds) are subject to redemption from mandatory sinking fund payments during 2028 to 2030 and 2031 to 2037, respectively. The Series 2010C Revenue Bonds, maturing January 1, 2033, 2036 and 2037 are subject to redemption from mandatory sinking fund payments during 2016 to The Series 2012A Refunding Revenue Bonds, maturing July 1, 2019, are subject to redemption from mandatory sinking fund payments during 2016 to COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

32 The Series 2013A and Series 2013B Refunding Revenue Bonds, maturing July 1, 2018, are subject to redemption from mandatory sinking fund payments during 2016 to The Series 2016A-2 Refunding Revenue Bonds, maturing January 1, 2027 (the 2027 Term Bonds) and January 1, 2036 (the 2036 Term Bonds), are subject to redemption from mandatory sinking fund payments during 2024 to 2027 and 2035 to 2036, respectively. The Master Bond Ordinance The Authority s Revenue Bonds are secured under the Master Bond Ordinance by a pledge of net revenues of the Airport System and on parity with each other, except with respect to their Revenue Bond Reserve Funds. Pursuant to its Master Bond Ordinance, the Authority has adopted resolutions beginning in 2003 and 2006 irrevocably dedicating revenues from passenger facility charges and customer facility charges (the Dedicated Revenues), respectively, to be used exclusively to pay debt service on the Authority s Revenue Bonds. The irrevocable designation of passenger facility charges revenue in 2016 and 2015 was approximately $12.8 million and $13.2 million, respectively. The customer facility charge revenue designation was $6.0 million and $6.2 million for 2016 and 2015, respectively. In accordance with the Rate Covenant contained in the Master Bond Ordinance, rates and fees charged by the Authority for the use of its facilities must be sufficient to provide annual net revenues when combined with moneys in the coverage fund to equal the larger of: (a) all amounts required to be deposited to the credit of the Revenue Bond Interest and Principal Fund and the Revenue Bond Reserve Fund; or (b) an amount not less than 125% of the Debt Service Requirement for all Revenue Bonds. For the purpose of complying with the Rate Covenant, the Authority includes within net revenues in any fiscal year amounts transferred from the Prepaid Airline Fund and amounts on deposit in the Debt Service Coverage Fund pursuant to the Master Bond Ordinance and excludes from interest due on Authority Revenue Bonds any interest paid from bond proceeds. The Authority can also exclude debt service to be paid from dedicated revenues from its Rate Covenant calculation. Debt Service Requirements Debt service requirements to maturity for all debt of the Authority, excluding any unamortized discount or premium and its capital lease agreements, are as follows at December 31, 2016: Years Ending Revenue Bonds December 31 Principal Interest Total 2017 $ 34,845,000 $ 29,870,257 $ 64,715, ,895,000 28,703,858 82,598, ,045,000 27,407,009 58,452, ,075,000 26,241,450 59,316, ,645,000 24,898,142 59,543, ,750, ,256, ,006, ,765,000 59,054, ,819, ,425,000 11,829, ,254, ,150,000 42,521 4,192,521 $ 921,595,000 $ 310,304,315 $ 1,231,899,315 The following is a summary of long-term obligation transactions for the Authority for the years ended : 2016 Beginning Ending Current Balance Additions Deductions Balance Portion Long-term obligations Revenue bonds payable $ 982,515,000 $ 176,780,000 $ (237,700,000) $ 921,595,000 $ 34,845,000 Bond (discounts)/premium 40,210,052 20,115,131 (7,396,469) 52,928,714 - Total revenue bonds payable 1,022,725, ,895,131 (245,096,469) 974,523,714 34,845,000 Obligations under capital lease 54,878,039 - (26,181,957) 28,696,082 15,758,345 Total long-term obligations $ 1,077,603,091 $ 196,895,131 $ (271,278,426) $ 1,003,219,796 $ 50,603, Beginning Ending Current Balance Additions Deductions Balance Portion Long-term obligations Revenue bonds payable $ 1,030,455,000 $ 178,690,000 $ (226,630,000) $ 982,515,000 $ 30,365,000 Bond (discounts)/premium 24,101,120 20,274,631 (4,165,699) 40,210,052 - Total revenue bonds payable 1,054,556, ,964,631 (230,795,699) 1,022,725,052 30,365,000 Obligations under capital lease 79,942,322 - (25,064,283) 54,878,039 26,181,957 Total long-term obligations $ 1,134,498,442 $ 198,964,631 $ (255,859,982) $ 1,077,603,091 $ 56,546, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

33 Note 6: Note 7: Special Facility Revenue Bonds To provide for the construction of the Indianapolis Maintenance Center (IMC) (formerly leased to United Air Lines, Inc.), the Authority issued special facility revenue bonds (conduit debt obligations). These bonds are special limited obligations of the Authority, payable solely from and secured by a pledge of lease rentals to be received by the Authority. The bonds do not constitute a debt or pledge of the faith and credit of the Authority, the County, the City or the State and are, therefore, not reported in the accompanying financial statements. At December 31, 2016, the Special Facility Revenue Bonds, Series 1995 (Indianapolis Maintenance Center), outstanding were $165,988,327. Derivative Financial Instruments Forward Delivery Purchase Agreements - Hedging Derivative Instruments The Authority has entered into three forward delivery purchase agreements (the Forward Delivery Agreements). The Forward Delivery Agreements require the counterparties to deposit securities in the Authority s debt service reserve trust accounts and provides the Authority a guaranteed rate of return. The securities that are deposited into the debt service reserve trust accounts are required to mature prior to scheduled debt service payment dates on the bonds that are secured by the respective debt service reserve funds. Eligible securities include (a) discount notes issued by a federal agency; and (b) securities backed by the full faith and credit of the United States Treasury or fully guaranteed by the United States of America, and issued by any of the following: the United States Treasury a federal instrumentality a federal agency a federal government-sponsored enterprise Objective of the Forward Delivery Agreements - The Forward Delivery Agreements allow the Authority to earn a guaranteed fixed rate of return over the life of the agreement. These Agreements are utilized by the Authority to earn a rate of return in excess of a rate that would otherwise be feasible by investing in securities with a shorter term. Terms - The general terms of each agreement are set forth in the table below: Debt Service Fund Date of Agreement Termination Date Scheduled Reserve Amount Guaranteed Rate Fair Value at December 31, 2016 Fair Value at December 31, 2015 Series 2014A December 1, 2004 December 30, 2033 $ 16,534, % $ 4,707,587 $ 5,131,436 Series 2015A December 28, 2005 December 31, ,000, % 3,996,006 4,354,641 Series 2016A August 1, 2006 January 1, ,321, % 6,468,768 7,584,582 $ 15,172,361 $ 17,070,659 The forward delivery agreement associated with the Series 2004A Debt Service Reserve Fund was amended when the 2004A Bonds were refunded by the 2014A Bonds. The amended agreement now provides for the delivery of the securities into debt service reserve fund of the 2014A Bonds. The forward delivery agreement associated with the Series 2005A Debt Service Reserve Fund was amended when the 2005A Bonds were refunded by the 2015A Bonds. The amended agreement now provides for the delivery of the securities into debt service reserve fund of the 2015A Bonds. The notional amount associated with the Series 2005A Debt Service Fund Agreement was reduced by $4,532,425 during 2015, the result of the refunding with the 2015A Bonds. The forward delivery agreement associated with the Series 2006A Debt Service Reserve Fund was amended when the 2006A Bonds were refunded by the 2016A-1 and 2016A-2 Bonds. The amended agreement now provides for the delivery of the securities into the debt service reserve funds of the 2016A-1 and 2016A-2 Bonds. Fair Value - The fair values of the Forward Delivery Agreements are based on the value of the future discounted cash flows expected to be received over the life of the agreement relative to an estimate of discounted cash flows that could be received over the same term based on current market conditions. The fair values of the Forward Delivery Agreements are classified as a noncurrent asset on the statements of net position as of. As the Forward Delivery Agreements are effective hedging instruments, the changes in fair value of the Forward Delivery Agreements of $(1,898,298) and $(983,254) for the years ended December 31, 2016 and 2015, respectively, are shown as an adjustment to the carrying amount of the related deferred inflows of resources on the statements of net position. Credit Risk - Credit risk is the risk that a counterparty will not fulfill its obligations. Under the terms of the Forward Delivery Agreements, the Authority is either holding cash or an approved security within the debt service reserve funds. None of the principal amount of an investment under the Forward Delivery Agreements is at risk to the credit of the counterparty. Should the counterparty default, the Authority s maximum exposure is the positive termination value, if any, related to these agreements. Interest Rate Risk - Interest rate risk is the risk that changes in interest rates will adversely affect the fair values of the Authority s financial instruments or cash flows. The fair market value of the Forward Delivery Agreements is expected to fluctuate over the life of the agreements in response to changes in interest rates. The Authority does not have a formally adopted policy related to interest rate risk on the Forward Delivery Agreements. Termination Risk - The Authority or the counterparties may terminate the Forward Delivery Agreements if the other party fails to perform under the terms of the contract. In addition, the Authority has an unrestricted option to terminate the Forward Delivery Agreements. If the Forward Delivery Agreements have a negative fair value at the time of termination, the Authority would be liable to the counterparty for a payment equivalent to the fair market value of the instrument at the time of termination. 62 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

34 Interest Rate Swap Agreements - Hedging Derivative Instruments The Authority is a party to four interest rate swap agreements (the Swap Agreements) that became effective on July 1, 2008, concurrent with the issuance of the 2008 Revenue Bonds. The Swap Agreements continued to hedge the 2008 Revenue Bonds until December 21, 2010, at which time the 2008 Revenue Bonds were refunded by the issuance of the 2010C Revenue Bonds. This refunding resulted in a terminating event and accordingly, the Authority included the balance of the deferred outflows associated with this hedge in its calculation of the deferred loss on refunding, which was $47,643,748. At that same time, the Swap Agreements became a hedge of the 2010C Revenue Bonds with terms and conditions that are identical to the previous hedge of the refunded 2008 Revenue Bonds. Objective of the Interest Rate Swaps - The Swap Agreements are used as a strategy to maintain acceptable levels of exposure to the risk of future changes in interest rates related to the Authority s existing variable rate debt. The primary intention of the Swap Agreements is to effectively convert the Authority s variable interest rates on its long-term debt to synthetic fixed rates. Terms - The general terms of each agreement are set forth in the table below: Notional Amount Trade Date Effective Date of Swap Agreement Termination Date Rate Authority Pays Variable Rate Authority Receives Fair Value at December 31, 2016 Fair Value at December 31, 2015 $ 110,695,000 October 14, 2004 July 1, 2008 January 1, % 75% One Month LIBOR $ (25,153,778) $ (28,360,365) 64,505,000 October 14, 2004 July 1, 2008 January 1, % 75% One Month LIBOR (15,762,386) (18,696,130) 50,000,000 October 7, 2005 July 1, 2008 January 1, % 75% One Month LIBOR (11,015,245) (12,421,198) 100,000,000 July 2, 2015 * July 1, 2015 * January 1, % 75% One Month LIBOR (22,310,569) (25,073,596) $ 325,200,000 $ (74,241,978) $ (84,551,289) * During 2015, there was an exchange of counterparties from UBS to Wells Fargo. This was not considered as a terminating event. Payments due under the Swap Agreements (excluding any termination payments) and payments on any repayment obligation will be payable from net revenues of the airport system on a parity with the Revenue Bonds. Under the Swap Agreements, the Authority pays or receives the net interest amount monthly, with the monthly settlements included in interest expense. The Swap Agreements resulted in no initial cash receipts or payments to be made by the Authority. Fair Value - The fair values of the Swap Agreements are based on estimated discounted future cash flows determined using the counterparties proprietary models based upon financial principles and estimates about relevant future market conditions. The fair values of the Swap Agreements are classified as a noncurrent liability on the statements of net position as of December 31, 2016 and As the Swap Agreements are effective hedging instruments, the changes in fair value of the Swap Agreements of $10,309,311 and $(22,348) for the years ended, respectively, are shown as an adjustment to the carrying amount of the related deferred outflows of resources on the statements of net position. Credit Risk - The fair value of each of the Swap Agreements represents the Authority s credit exposure to the counterparties as of December 31, Should the counterparties to these transactions fail to perform according to the terms of the Swap Agreements, the Authority has a maximum possible loss equivalent to the fair value at that date. As of December 31, 2016, the Authority was not exposed to credit risk because each of the swaps had a negative fair value. In order to mitigate the potential for credit risk, if any of the counterparties credit quality rating falls below a rating threshold of Aa3 by Moody s Investors Service or AA- by Standard & Poor s, the fair value of that counterparty s swap or swaps is to be fully collateralized by the counterparty with eligible securities (as defined in the Schedule to the Master Agreement) to be held by a third-party custodian on behalf of the Authority. The ratings of the various counterparties at December 31, 2016 are as follows: Ratings of the Counterparty Moody s Investors Standard & Service Poor s JPMorgan Chase Bank, N.A., counterparty of the interest rate swaps with notional amounts of $110,695,000 and $64,505,000 Aa3 A+ Merrill Lynch Capital Services, Inc., counterparty of the interest rate swap with the notional amount of $50,000,000 Baa1 1 BBB+ 1 Wells Fargo Bank, N.A., counterparty of the interest rate swap with the notional amount of $100,000,000 and both basis swap agreements Aa2 AA- 1 The swaps are guaranteed by both Merrill Lynch & Company and Merrill Lynch Derivative Products AG. Merrill Lynch Derivative Products AG has ratings of Aa3 and AA. Basis Risk - The Authority is not exposed to basis risk because the variable-rate payments received by the Authority under the Swap Agreements are based on an index that coincides with the interest rates the Authority pays on its 2010C Revenue Bonds. As of December 31, 2016, the interest rate on the Authority s 2010C Revenue Bonds is 1.102%, (calculated at 75% of the one-month LIBOR plus 0.523%), while the Authority receives payments under the Swap Agreements equal to 75% of the one-month LIBOR, or 0.579%. Termination Risk - The Authority or the counterparties may terminate the Swap Agreements if the other party fails to perform under the terms of the contract. In addition, the Authority has the unilateral option to terminate the Swap Agreements. If the Swap Agreements have a negative fair value at the time of termination, the Authority would be liable to the counterparty for a payment equal to the fair value of the respective swap. 64 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

35 Swap Payments and Associated Debt - The variable rate bond interest payments and net swap payments will vary with changes in interest rates. Using rates as of December 31, 2016, debt service requirements of the variable rate debt and net swap payments, assuming current interest rates remain the same, for their term are set forth in the table below. Variable Rate Bonds Interest Rate Total Principal Interest Swaps, Net Interest 2017 $ 5,170,000 $ 3,539,412 $ 10,770,849 $ 14,310, ,430,000 3,485,574 10,574,381 14,059, ,710,000 3,431,053 10,375,579 13,806, ,000,000 3,373,759 10,166,667 13,540, ,305,000 3,313,554 9,947,136 13,260, ,590,000 14,670,823 43,807,828 58,478, ,395,000 8,450,177 25,821,641 34,271, ,070,000 1,661,940 5,757,093 7,419, ,530,000 2,021 7,529 9,550 $ 325,200,000 $ 41,928,313 $ 127,228,703 $ 169,157,016 Basis Swaps - Investment Derivative Instruments The Authority also entered into basis swap agreements that are associated with the $100 million interest rate swap with a trade date of October 11, These basis swaps are considered investment derivative instruments. The general terms of these basis swaps are set forth in the table below: Notional Amount Trade Date Effective Date of Swap Agreement Termination Date Rate Authority Pays Variable Rate Authority Receives Fair Value at December 31, 2016 Fair Value at December 31, 2015 $ 100,000,000 March 15, 2011 July 1, 2019 January 1, % One 75% ISDA Ten Month LIBOR Year Swap Rate $ (196,621) $ 660,199 The fair value of the basis swaps is classified as a noncurrent asset on the statements of net position. Changes in the fair value of the basis swaps are classified as nonoperating revenues (investment income) on the statements of revenues, expenses and changes in net position. Note 8: Obligations Under Capital Leases In November 1991, the Authority entered into an agreement (the MOC-II Agreement) with the State of Indiana, the City of Indianapolis, and United Air Lines, Inc. (United) to provide a 300-acre site for United s Indianapolis Maintenance Center (IMC). The State, the City and Hendricks County, Indiana provided the initial funding for the IMC. The State provided $184.5 million from the proceeds of tax-exempt lease revenue bonds and a $15.2 million grant. The City provided approximately $111.0 million from the proceeds of tax-exempt current interest and capital appreciation bonds. Hendricks County provided $8.0 million in the form of a grant, from the proceeds of an economic development income tax revenue bond issue. Concurrently with the execution of the MOC-II Agreement in 1991, the Authority entered into a tenancy in common agreement and various lease agreements, which created certain leasehold interests in the IMC site and facilities and provided the framework for financing the costs of its construction. Accordingly, the Authority s leases with the State and the City for the IMC and its lease with the State for a building and related equipment ancillary to IMC, the Aviation Technology Center (ATC), have been reflected as capital lease obligations in these financial statements. The leases expire at various dates between 2016 and The gross amounts of capital assets and related accumulated depreciation recorded under these capital leases at follow: Capital assets $ 323,463,530 $ 343,463,530 Accumulated depreciation (159,997,880) (169,890,673) $ 163,465,650 $ 173,572,857 The present value of future minimum capital lease payments at December 31, 2016 follows: 2017 $ 16,643, ,115,199 Total minimum lease payments 32,758,439 Amounts representing interest (4,062,357) Present value of future minimum capital lease payments $ 28,696,082 Interest Rate Risk - Interest rate risk is the risk that changes in interest rates will adversely affect the fair values of the Authority s financial instruments or cash flows. The fair value of the basis swaps are expected to fluctuate over the term of the agreements. The Authority does not have a policy related to interest rate risk on these basis swap agreements. Credit Risk - Credit risk is the risk that the counterparty to an investment derivative will not fulfill its obligations. Should the counterparties to these transactions fail to perform according to the terms of the basis swap agreements, the Authority has a maximum possible loss equivalent to the fair value at that date. 66 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

36 Note 9: The Authority s capital lease payments to the State are payable solely from monies to be appropriated by the Indiana General Assembly, the governing body for the State. There is no requirement that these amounts be appropriated. However, the Authority cannot be held liable, should an appropriation not be made, for the State s debt obligations relative to the IMC and ATC facilities. Assuming appropriations from the General Assembly continue, the Authority expects to receive the following future amounts to fund its capital lease obligations with the State: 2017 $ 22,616, ,801,713 $ 43,418,519 The Authority s capital lease payments to the City were secured by an irrevocable pledge of a distributive share of Marion County Option Income Taxes (the Pledged Revenues). The City- County Council covenanted not to repeal or rescind that tax as long as such rentals remained due. The Authority was not obligated for the debt incurred by the City with regard to the IMC facilities. The bonds related to the City s capital lease obligation were paid off during 2016 and therefore, there are no future pledged revenues. Disclosures About Fair Value of Assets and Liabilities Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1 Level 2 Level 3 Quoted prices in active markets for identical assets or liabilities Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities Recurring Measurements The following table presents the fair value measurements of assets and liabilities recognized in the accompanying statements of net position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2016 and 2015: Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Fair Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) December 31, 2016 Investments U.S. Treasury Security Notes $ 105,841,689 $ 105,841,689 $ - $ - U.S. Treasury Security Bills 10,484,740 10,484, U.S. Government-sponsored enterprise securities Federal National Mortgage Association 5,517,950-5,517,950 - Federal Home Loan Mortgage Corporation 4,456,965-4,456,965 - Indiana municipal securities 37,914,027-37,914,027 - External investment pools 50,733-50,733 - Derivative Financial Instruments Forward delivery purchase agreements 15,172, ,172,361 Interest rate swap agreements (74,241,978) - (74,241,978) - Basis swaps (196,621) - - (196,621) December 31, 2015 Investments U.S. Treasury Security Notes $ 54,385,990 $ 54,385,990 $ - $ - U.S. Government-sponsored enterprise securities Federal National Mortgage Association 11,920,359-11,920,359 - Federal Home Loan Bank 6,153,552-6,153,552 - Federal Home Loan Mortgage Corporation 6,763,182-6,763,182 - Indiana municipal securities 55,264,160-55,264,160 - External investment pools 50,498-50,498 - Derivative Financial Instruments Forward delivery purchase agreements 17,070, ,070,659 Interest rate swap agreements (84,551,289) - (84,551,289) - Basis swaps 660, , COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

37 Following is a description of the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis and recognized in the accompanying statements of net position, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended December 31, Investments Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Derivative Financial Instruments Interest rate swaps classified in Level 2 of the fair value hierarchy are valued using a market approach that considers benchmark interest rates. The fair value of the forward delivery agreements and basis swaps are derived from proprietary models and are calculated on a midmarket basis, but do not include bid/offer spread and are therefore classified in Level 3. Note 10: Indianapolis Maintenance Center As discussed previously in these footnotes, the Authority, the State of Indiana, the City of Indianapolis and United financed the construction and equipping of the IMC. As a part of the financing of these facilities, the Authority issued $220,705,000 in special facility revenue bonds of which $165,988,327 remains outstanding at December 31, The Authority had, and continues to have, no obligation to make interest and principal payments on these special facility bonds. Revenues from the IMC are reserved for expense reimbursement to the Authority for operational expenses incurred. Revenue in excess of expenses are provided back to the bondholders and the Authority on a percentage basis bound by the Settlement Agreement, but not until all of the Authority expenses have been reimbursed. Previously, the interest and principal payments for the Series 1995 Special Facility Revenue Bonds were funded by rentals paid by United under its lease agreement with the Authority. On December 9, 2002, United filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. On May 9, 2003, the Bankruptcy Court made effective United s rejection of its lease of the IMC and United abandoned the IMC facilities, whereby all of the IMC assets reverted to the Authority s control. In February 2004, the Authority and the Trustee of the bondholders entered into a Settlement Agreement which, among other things, provides for up to $7.5 million in reimbursements for certain costs incurred after May The Settlement Agreement also provides for reimbursement for up to $6.5 million of the Tenant Improvement Expenditure Reserve (TIER) fund for use of capital improvements, if certain conditions are met. On the ten-year anniversary of the Settlement Agreement, all the funds accumulated in the TIER Fund were to be disbursed to the bondholders with the exception of $1 million. On February 13, 2014, these funds were disbursed. Since 2004, the Authority has entered into various leases for certain portions of the IMC. These leases include hangar space, office areas and the backshops (which are being used primarily for the maintenance, repair and overhaul of commercial aircraft) and certain warehouse space for nonaviation related use. A new ten-year lease was entered into in December 2014 with the IMC s main tenant, AAR Aircraft Services (AAR), while a lease extension was granted to Shuttle America and Express Scripts. AAR and Shuttle America make up the leasing of all hangar space. As a part of the Settlement Agreement, rentals collected for the IMC are not considered revenue to the Authority, but instead are required to be deposited into a trust held on behalf of the United bondholders. The monies held in trust are to be used to pay ongoing operating and maintenance costs of the IMC and must be applied in a manner prescribed by the terms of the Settlement Agreement. For the years ended, the Authority incurred approximately $6.9 million and $6.7 million of costs for the IMC, respectively. The Authority has received reimbursements for these costs under the Settlement Agreement aggregating approximately $7.7 million and $9.4 million for 2016 and 2015, respectively. In addition, as of December 31, 2016 and 2015, the Authority has accrued approximately $1.8 million and $3.1 million, respectively, in reimbursements from the Trustee for allowable costs incurred. The aforementioned lease agreements historically contained a number of incentives to be provided by the Authority in the form of grants and rent credits over the terms of these leases, which currently range from six months to ten years. These grants and rental credits were designed to assist the tenants with start-up costs and the acquisition of certain capital assets, including leasehold improvements, and to encourage them to expand their operations and/or increase the amount of space they lease. Grants for start-up costs are recorded as unamortized lease costs by the Authority and amortized over the respective lease term, while grants for capital improvements result in new depreciable assets of the Authority. Success payments (for expanding operations) and other similar grants were expensed as they were earned by AAR. Currently, rental credits are being utilized in the AAR Agreement for leasehold improvements. All existing IMC capital assets, as well as those acquired by the tenants through Authority grants or otherwise, remain the property of the Authority, subject only to the tenants rights to use such assets during their respective lease terms. As of December 31, 2016, the Authority has provided $7.5 million in grants and $9.2 million in rental credits to the lessees of the IMC. 70 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

38 Note 11: Risk Management Risk management is the responsibility of the Authority. Operationally, the Authority is exposed to various risks of loss related to the theft of, damage to and destruction of assets, natural disasters as well as certain tort liabilities for which commercial insurance is carried. The commercial insurance policies carry deductibles ranging from $0 to $100,000. Insurance policies procured, including commercial general liability and commercial property damage, are inclusive of coverage for certain war casualty and acts of terrorism. Coverage terms, limits, and deductibles have each been benchmarked in comparison with those maintained at other mid-size airports and found to be within the range of our peers. Although coverage limits are significant, no assurance can be given that such coverage will continue to be available at such amounts and/or at a reasonable cost. Claim settlements have not exceeded insurance coverage for the previous three years and no situation exists presently, to the best of the Authority s knowledge, which has the potential of doing so for the 2016 calendar year. The Authority has a self-insured arrangement for health care benefits provided to Authority employees and has established a self-insured liability for employee medical claims. The Authority utilizes a third-party company to provide individual stop loss coverage of $100,000 on each covered individual s health claims and $4,308,400 on overall health care program aggregate claims. The estimated self-insurance liability is based on claim trend and consultation with an actuary. There is no significant incremental claim adjustment expense, salvage or subrogation attributable to this liability. Note 12: Benefit Plan The Authority provides a 401(a) defined-contribution employee retirement plan for employer contributions and a 457(b) deferred compensation plan for employee contributions. The Authority is the administrator of these plans, which are available to substantially all of its employees. Employer contributions to the 401(a) plan can range from zero up to nine percent of eligible compensation. Contributions to the plan were $727,873 for 2016 and $718,806 for Note 13: Rental Income From Operating Leases The Authority leases space in the Indianapolis International Airport terminal along with other land and buildings on a fixed fee as well as a contingent rental basis. Many of the leases provide for a periodic review and adjustment of the rental amounts. Substantially all capital assets are held by the Authority for the purpose of rental or related use. Minimum future rentals on noncancelable operating leases to be received in each of the next five years and thereafter as of December 31, 2016 are as follows: 2017 $ 62,633, ,762, ,260, ,857, ,998,783 Thereafter 98,256,284 $ 315,769,153 The Authority has entered into an Agreement and Lease of Premises (Airline Agreement) with certain passenger, charter and cargo airlines serving the airport (collectively, the Signatory Airlines). Other airlines operate under an airport use permit that generally has a term of no more than two years. The Airline Agreement s residual rate-making features are designed to ensure that the Authority s debt service and related coverage obligations, including the Rate Covenant, will be met. The Airline Agreement authorizes the Authority to implement new fees and charges as necessary. In the event of an airline bankruptcy, the Authority may adjust the rates and charges for all Signatory Airlines in the current rate period to recover the rates and charges due from the bankrupt carrier. However, there can be no assurance that such other airlines will be financially able to absorb the additional costs. Rental rates under these agreements are determined annually. Contingent rentals and fees aggregated approximately 46.8 million in 2016 and $44.4 million in 2015, and are accrued in arrears. Note 14: Commitments and Contingencies Land Acquisition and Disposal In 1991, the Authority updated its FAA Part 150 Noise and Land Use Compatibility Study and final recommendations were adopted by the Authority Board in April The recommendations included expanding the existing Guaranteed Purchase Program (Phase I), which is now an inactive program, to add approximately 750 additional homes. As of December 31, 2016, the Authority has spent approximately $102.6 million (including relocation costs) under this inactive program (Phase II), substantially all of which was eligible for 80% reimbursement from the FAA. The owners of an estimated 30 homes did not participate in Phase II when it was an active program. A five-year review and update of the Authority s noise compatibility program (Phase III) began in Final recommendations were adopted by the Authority Board in February 1998, followed by FAA approval in October The recommendations included continuation of the Guaranteed Purchase Program with respect to approximately 132 additional homes, of which 127 were acquired by the Authority when the program was active. 72 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

39 The Sound Insulation Program, which is now an inactive program, paid for a home within the impacted noise area to be sound insulated with respect to doors, window treatments, etc., with no further cash outlay required by the Authority. At December 31, 2016, 316 homes were sound insulated under this program. Under the Purchase Assurance Program, which is now an inactive program, the Authority purchased the property, sound insulated the home and then resold the property on the open market. At December 31, 2016, 118 homeowners participated in the Purchase Assurance Program. Participation in either the Sound Insulation or Purchase Assurance programs required the homeowner to grant an aviation easement in favor of the Authority. The Sales Assistance program is the third and only active program at December 31, 2016 and applied to approximately 487 homes, of which 388 requests have been completed. Sales Assistance consists of a benefit payment to homeowners adjacent to the 65DNL noise contour. The benefit payment is equal to 10% of the contract sales price between the homeowner and thirdparty buyer, in exchange for the inclusion of a Noise Disclosure Statement in the deed of conveyance. The estimated cost of the Phase III programs approximate $98.5 million. These programs, excluding Sales Assistance, were eligible for reimbursement from passenger facility charges and FAA noise grants (at 80% reimbursement). The noise mitigation land use programs described above are voluntary on the part of the homeowner as there is no legal requirement that homeowners participate in any of these programs. The Authority has also acquired land south of Interstate 70 (I-70). With the exception of one small parcel of land, all parcels have been acquired for the future development of a third parallel runway in this area. As of December 31, 2016, the Authority has expended approximately $13.7 million for this project. In November 2014, the Authority Board approved and adopted Resolution No , establishing certain land use policies and guidelines for the implementation of a new land use initiative. The Authority owns approximately 9,000 acres of land in and around the Indianapolis International Airport, with large holdings not only in Wayne and Decatur Townships of Marion County, but also in neighboring Hendricks County. After an extensive review of its land holdings in 2014, the Authority developed this land use initiative under which more than 30 parcels of land (approximately 743 acres) would be made available for sale, and an additional six large parcels of land (470 acres) would be made available for leasing opportunities. During 2016, the Authority sold approximately 103 acres under this land use initiative for a total sales price of $890,500. During 2015, the Authority sold approximately 238 acres under this land use initiative for a total sales price of $2.42 million. With respect to the Authority s permanently protected bat and wetland habitat (containing approximately 2,000 acres), the Authority will pursue opportunities to divest itself of this land to a third party who has expertise in this area, such as a public or private conservation organization or governmental entity that has responsibility for environmental matters. As land is sold and proceeds received, the Authority will determine how those proceeds must be treated, including what amounts, if any, must be returned to the Federal Aviation Administration directly or reinvested in other AIP eligible projects pursuant to federal grant requirements. Environmental Mitigation and Remediation In order to comply with environmental laws, the Authority has implemented a natural resource mitigation program to create, monitor and maintain wetlands along with habitats for the endangered Indiana bat. As of December 31, 2016, the Authority had acquired approximately 2,000 acres in order to replace wetland and bat habitat areas that were removed by construction of the Indianapolis Maintenance Center and runway 5L-23R and the Midfield Terminal. The Authority will continue to maintain and monitor interim bat habitats under this program pursuant to a permit with the U.S. Fish & Wildlife Service through the year 2017 and approximately 2,000 acres of wetlands and certain associated summer bat habitats in perpetuity, or until control over such areas are transferred to an entity that will assume the responsibility. Approximately $22.9 million has been spent under this program, of which approximately 28% was eligible for reimbursement from the FAA. The Authority s share of the costs for this conservation plan was originally estimated to be $2.4 million, and as of December 31, 2016, the Authority has incurred $3.3 million in costs. The Authority is currently involved in two separate pollution remediation obligations that meet the requirements for accounting treatment under GASB Statement 49, Accounting and Financial Reporting for Pollution Remediation Obligations. These obligations are related primarily to the removal and/or treatment of contaminated soil associated with underground fuel tanks. The pronouncement dictates that for each obligating event, an estimate of the expected pollution remediation outlays is required to be accrued as a liability and expensed in the current period. Remeasurement of the liability is required when new information indicates increases or decreases in estimated outlays. The amount of the estimated liability as of was $80,000 and $190,000, respectively, which represents the approximate present value of the amounts the Authority expects to pay for future remediation activities. This estimate was generated using input and guidance from internal management and professional consultants, and represents a wide array of remediation activities ranging from one-time events to longer term sustained monitoring activity. The Authority will continue to closely monitor each of these obligations, working toward the point of ultimate resolution, and will make any necessary adjustments to the potential liability as new information becomes available. Capital Improvements As of December 31, 2016, the Authority had outstanding commitments for certain airport improvements aggregating approximately $15.7 million. 74 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

40 Litigation and Claims The nature of the business of the Authority generates certain litigation against the Authority arising in the ordinary course of business. As of December 31, 2016, there were five claims in litigation for alleged personal injury and/or other claims pending against the Authority. All of these claims were for personal injury and are fully insured. In addition, there were three worker s compensation claims pending as of December 31, The Authority was also aware of several claims for which legal action against the Authority might be threatened or possible in the future. The Internal Revenue Service (IRS) previously took the position that the Authority s 2006A bonds are subject to an arbitrage rebate obligation plus interest on that amount since June 2011 and a penalty. At December 31, 2015, the Authority accrued their best estimate of this contingent liability, which was subsequently settled during 2016 for $1.7 million. In addition to the foregoing, as of December 31, 2016, there was one claim in litigation filed by the Authority against a third party for various reasons, including breach of contract. The Authority, in these matters, is seeking the enforcement of certain provisions of an insurance policy, as well as judgment and damages. No amounts have been accrued as receivable in relation to this claim filed by the Authority. SUPPLEMENTARY INFORMATION 76 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

41 Schedule of Statement of Net Position Information December 31, Authority IMC Total 2016 Authority IMC Total Assets and Deferred Outflows of Resources Current Assets Unrestricted Assets Cash and cash equivalents $ 18,084,676 $ - $ 18,084,676 Accounts receivable, net 2,940,304-2,940,304 Unbilled revenues 4,734,031-4,734,031 Grants receivable 5,708,997-5,708,997 Supplies and materials inventories 1,516,058-1,516,058 Other 1,775,870-1,775,870 Restricted Assets Total unrestricted current assets 34,759,936-34,759,936 Cash and cash equivalents 34,638,339-34,638,339 Cash and cash equivalents - customer deposits 752, ,220 Receivable - passenger facility charges 1,749,435-1,749,435 Receivable - governments and other 635,606 3,457,677 4,093,283 Receivable - reimbursable IMC expenses - 1,767,356 1,767,356 Noncurrent Assets Total restricted current assets 37,775,600 5,225,033 43,000,633 Total current assets 72,535,536 5,225,033 77,760,569 Cash and cash equivalents, restricted 78,898,203-78,898,203 Investment securities, unrestricted 44,741,552-44,741,552 Investment securities, restricted 92,122,788-92,122,788 Investment derivatives - basis swap agreements (196,621) - (196,621) Rent receivable 1,029,745-1,029,745 Derivative instruments - forward delivery purchase agreements 15,172,361-15,172,361 Capital assets, net 1,578,612, ,587,523 1,821,200,094 Deferred Outflows of Resources Total noncurrent assets 1,810,380, ,587,523 2,052,968,122 Total assets 1,882,916, ,812,556 2,130,728,691 Deferred loss on refunding of debt 29,671,973-29,671,973 Accumulated decrease in fair value of hedging derivatives 26,598,230-26,598,230 Total deferred outflows of resources 56,270,203-56,270,203 Total assets and deferred outflows of resources $ 1,939,186,338 $ 247,812,556 $ 2,186,998,894 Liabilities, Deferred Inflows of Resources and Net Position Current Liabilities Payable From Unrestricted Assets Accounts payable $ 4,879,632 $ - $ 4,879,632 Accrued and withheld items 5,148,615-5,148,615 Total current liabilities payable from unrestricted assets 10,028,247-10,028,247 Payable From Restricted Assets Accounts payable 5,850,740 3,337,909 9,188,649 Customer deposits payable 753, ,220 Current portion of debt 35,640,474 14,962,871 50,603,345 Accrued interest on debt 14,668, ,724 14,838,943 Noncurrent Liabilities Total current liabilities payable from restricted assets 56,912,653 18,471,504 75,384,157 Total current liabilities 66,940,900 18,471,504 85,412,404 Derivative instruments - interest rate swap agreements 74,241,978-74,241,978 Bonds payable and other debt, payable from restricted assets 939,888,009 12,728, ,616,451 Total noncurrent liabilities 1,014,129,987 12,728,442 1,026,858,429 Total liabilities 1,081,070,887 31,199,946 1,112,270,833 Deferred Inflows of Resources Accumulated increase in fair value of hedging derivatives 15,172,361-15,172,361 Net Position Net investment in capital assets 633,850, ,609, ,460,211 Restricted for Capital projects 75,676,933-75,676,933 Debt service 62,463,055 3,286,953 65,750,008 Other 449,162 1,716,400 2,165,562 Total restricted net position 138,589,150 5,003, ,592,503 Unrestricted 70,502,986-70,502,986 Total net position 842,943, ,612,610 1,059,555,700 Total liabilities, deferred inflows of resources and net position $ 1,939,186,338 $ 247,812,556 $ 2,186,998, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

42 Schedule of Statement of Net Position Information December 31, Authority IMC Total 2015 Authority IMC Total Assets and Deferred Outflows of Resources Current Assets Unrestricted Assets Cash and cash equivalents $ 12,753,924 $ - $ 12,753,924 Accounts receivable, net 4,441,000-4,441,000 Unbilled revenues 2,128,092-2,128,092 Grants receivable 5,847,344-5,847,344 Supplies and materials inventories 1,661,118-1,661,118 Other 1,828,244-1,828,244 Restricted Assets Total unrestricted current assets 28,659,722-28,659,722 Cash and cash equivalents 44,461,827-44,461,827 Cash and cash equivalents - customer deposits 701, ,235 Receivable - passenger facility charges 1,614,957-1,614,957 Receivable - governments and other 610,098 3,335,312 3,945,410 Receivable - reimbursable IMC expenses - 3,131,401 3,131,401 Noncurrent Assets Total restricted current assets 47,388,117 6,466,713 53,854,830 Total current assets 76,047,839 6,466,713 82,514,552 Cash and cash equivalents, restricted 73,581,894-73,581,894 Investment securities, unrestricted 58,644,653-58,644,653 Investment securities, restricted 69,369,252-69,369,252 Investment derivatives - basis swap agreements 660, ,199 Rent receivable 1,336,100-1,336,100 Derivative instruments - forward delivery purchase agreements 17,070,659-17,070,659 Capital assets, net 1,624,249, ,532,549 1,889,782,281 Deferred Outflows of Resources Total noncurrent assets 1,844,912, ,532,549 2,110,445,038 Total assets 1,920,960, ,999,262 2,192,959,590 Deferred loss on refunding of debt 35,080,181-35,080,181 Accumulated decrease in fair value of hedging derivatives 36,907,541-36,907,541 Total deferred outflows of resources 71,987,722-71,987,722 Total assets and deferred outflows of resources $ 1,992,948,050 $ 271,999,262 $ 2,264,947,312 Liabilities, Deferred Inflows of Resources and Net Position Current Liabilities Payable From Unrestricted Assets Accounts payable $ 6,508,104 $ - $ 6,508,104 Accrued and withheld items 4,810,581-4,810,581 Total current liabilities payable from unrestricted assets 11,318,685-11,318,685 Payable From Restricted Assets Accounts payable 7,546,216 3,193,708 10,739,924 Customer deposits payable 702, ,235 Current portion of debt 31,112,103 25,434,854 56,546,957 Accrued interest on debt 13,845, ,723 14,097,179 Noncurrent Liabilities Total current liabilities payable from restricted assets 53,206,010 28,880,285 82,086,295 Total current liabilities 64,524,695 28,880,285 93,404,980 Derivative instruments - interest rate swap agreements 84,551,289-84,551,289 Bonds payable and other debt, payable from restricted assets 993,364,820 27,691,314 1,021,056,134 Total noncurrent liabilities 1,077,916,109 27,691,314 1,105,607,423 Total liabilities 1,142,440,804 56,571,599 1,199,012,403 Deferred Inflows of Resources Accumulated increase in fair value of hedging derivatives 17,070,659-17,070,659 Net Position Net investment in capital assets 640,796, ,322, ,119,605 Restricted for Capital projects 52,631,491-52,631,491 Debt service 62,069,467 3,083,589 65,153,056 Other 617,026 3,021,282 3,638,308 Total restricted net position 115,317,984 6,104, ,422,855 Unrestricted 77,321,790-77,321,790 Total net position 833,436, ,427,663 1,048,864,250 Total liabilities, deferred inflows of resources and net position $ 1,992,948,050 $ 271,999,262 $ 2,264,947, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

43 Schedules of Revenues, Expenses and Changes in Net Position Information Years Ended Operating Revenues Authority IMC Total Airfield $ 23,749,133 $ - $ 23,749,133 Terminal complex 57,451,178-57,451,178 Parking 50,561,863-50,561,863 Rented buildings and other 16,382,134-16,382,134 Indianapolis Maintenance Center (IMC) - 7,205,620 7,205,620 Reliever airports 2,896,773-2,896,773 Operating Expenses Total operating revenues 151,041,081 7,205, ,246,701 Personal services 27,853, ,101 28,244,122 Contractual services 18,545,119 3,473,304 22,018,423 Utilities 6,457,115 2,785,786 9,242,901 Supplies 3,185, ,526 3,343,328 Materials 2,836,711 (44,583) 2,792,128 General 1,488,324 90,547 1,578,871 Total operating expenses before depreciation 60,366,092 6,853,681 67,219,773 Income From Operations Before Depreciation Expense 90,674, ,939 91,026,928 Depreciation expense 78,168,307 15,649,385 93,817,692 Income (Loss) From Operations 12,506,682 (15,297,446) (2,790,764) Nonoperating Revenues (Expenses) State and local appropriations 825,542 26,550,517 27,376,059 Federal operating grants 674, ,745 Passenger facility charges 17,237,996-17,237,996 Customer facility charge (rental cars) 7,284,896-7,284,896 Investment income 4,213,687-4,213,687 Interest expense, net of capitalized interest (44,767,602) (1,115,662) (45,883,264) Loss on disposals of capital assets and other (3,615,679) (9,041,667) (12,657,346) (18,146,415) 16,393,188 (1,753,227) Increase (Decrease) in Net Position Before Capital Contributions and Grants (5,639,733) 1,095,742 (4,543,991) Capital Contributions and Grants Federal, state and local grants 11,891,360-11,891,360 Contributions from lessees and other 3,344,081-3,344,081 15,235,441-15,235,441 Increase (Decrease) in Net Position 9,595,708 1,095,742 10,691,450 Transfers (89,205) 89,205 - Net Position, Beginning of Year 833,436, ,427,663 1,048,864,250 Net Position, End of Year $ 842,943,090 $ 216,612,610 $ 1,059,555, Authority IMC Total $ 22,545,493 $ - $ 22,545,493 50,767,649-50,767,649 47,055,937-47,055,937 16,015,887-16,015,887-8,642,912 8,642,912 2,928,417-2,928, ,313,383 8,642, ,956,295 27,031, ,442 27,446,386 15,608,213 3,425,463 19,033,676 6,196,607 2,677,795 8,874,402 3,105, ,797 3,311,432 2,659,319 (150,497) 2,508,822 1,066, ,725 1,205,094 55,668,087 6,711,725 62,379,812 83,645,296 1,931,187 85,576,483 78,114,252 15,998,276 94,112,528 5,531,044 (14,067,089) (8,536,045) 825,542 25,928,687 26,754, , ,230 15,915,760-15,915,760 6,702,440-6,702,440 6,663,288-6,663,288 (53,023,237) (1,566,076) (54,589,313) (6,198,696) (1,680,751) (7,879,447) (28,310,673) 22,681,860 (5,628,813) (22,779,629) 8,614,771 (14,164,858) 16,441,051-16,441,051 2,400,224-2,400,224 18,841,275-18,841,275 (3,938,354) 8,614,771 4,676,417 (261,714) 261, ,636, ,551,178 1,044,187,833 $ 833,436,587 $ 215,427,663 $ 1,048,864, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

44 Schedules of Operating Revenues Years Ended Increase (Decrease) Airfield Landing fees - scheduled airlines $ 9,615,141 $ 8,644,711 $ 970,430 Landing fees - freight and other 10,601,365 10,373, ,412 Apron fees 1,894,273 2,011,024 (116,751) Commissions - aviation fuel sales 307, ,578 (2,068) Other 1,330,844 1,206, ,617 23,749,133 22,545,493 1,203,640 Terminal Complex Space rental Airlines 31,358,509 26,309,293 5,049,216 Concessionaires 8,181,719 7,620, ,475 Other space rental 2,022,169 1,564, ,646 Automobile rental commissions 10,518,326 10,085, ,320 Other commissions, fees, etc. 5,370,455 5,188, ,872 57,451,178 50,767,649 6,683,529 Parking - parking operations 50,561,863 47,055,937 3,505,926 Rented Buildings and Other Space rental - freight buildings 984, ,528 54,091 Space rental - hangars 621, ,166 23,533 Space rental - other buildings 8,034,802 7,707, ,963 Ground leases 6,090,889 6,170,816 (79,927) Farm income 149, ,272 (5,433) International building 16,900 18,100 (1,200) Other 483, ,166 48,220 16,382,134 16,015, ,247 Indianapolis Maintenance Center (IMC) 7,205,620 8,642,912 (1,437,292) Reliever Airports 2,896,773 2,928,417 (31,644) $ 158,246,701 $ 147,956,295 $ 10,290, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

45 Schedule of Operating Expenses Year Ended December 31, 2016 (With Comparative Totals for 2015) Personal Services Rented Indianapolis Terminal Buildings Maintenance Airfield Complex Parking and Other Center (IMC) Salaries and wages $ 1,988,816 $ 3,841,469 $ 2,684,732 $ 242,093 $ 308,469 Employee insurance 484, , ,426 26,676 49,101 Retirement and social security 194, , ,436 19,331 33,531 2,667,964 5,183,330 3,472, , ,101 Contractual Services Transportation and communication 79,459 35,911 26,770 5,495 30,251 Professional fees 790, ,710 36,658 1,011,720 23,376 Printing and advertising 80-31,574 4, Repairs and maintenance 497,408 2,398, , , ,724 Facilities maintenance and security 46,746 2,463, ,957 8,810 2,742,363 Other contractual services 177, ,267 1,416, , ,251 1,591,966 5,737,006 2,695,750 1,330,508 3,473, Year Ended Reliever Public December 31, Increase Airports Safety Administration Total 2015 (Decrease) $ 261,673 $ 6,261,975 $ 5,917,364 $ 21,506,591 $ 20,627,583 $ 879,008 42,827 1,297, ,449 4,424,897 4,556,307 (131,410) 28, , ,648 2,312,634 2,262,496 50, ,037 8,441,535 7,466,461 28,244,122 27,446, ,736 20, ,551 1,055,245 1,414, , ,056 29,500 76,459 2,687,428 4,785,433 3,546,219 1,239,214-2, , , ,402 32, ,468 80,579 1,325,978 5,979,114 5,053, ,676 13, ,546 5,561,395 5,435, , , , ,407 4,057,057 3,824, , ,311 1,249,084 5,603,494 22,018,423 19,033,676 2,984,747 Utilities 1,961,707 3,256, , ,135 2,785, , ,941 62,390 9,242,901 8,874, ,499 Supplies Fuel 213, ,012-48,878 Garage and motor 175,279 6,503 64, Institutional and medical 37, , ,217 13,672 10,575 Office supplies 11,532 14,468 9,230 1,481 1,248 Snow and ice chemicals 656,325 5, ,137-16,107 Other 62, , , ,552 1,156, , ,749 15, ,526 Materials General Building (28,843) 52,509 14,508 18,558 (97,083) Pavement and grounds 399, Repair parts 1,012, , ,666 10,923 20,856 Small equipment and tools 85,184 34,112 18,999-3,091 Other 89,705 16,859 16,068-28,553 1,557, , ,273 29,481 (44,583) Insurance 206, , , ,200 83,842 Equipment rental 1, ,430 Other (including bad debts) 4, , , , ,480 90, , , ,020 (71,918) 17,377 24,844 4, , ,170 20,503 10,209 33,619 2, , ,453 (52,966) ,249 55, , ,294 26,561 28, , , ,410 6, ,805 24, , ,417 (130,694) 371, ,646 86,513 3,343,328 3,311,432 31,896 8,148 4, (26,789) (67,515) 40,726 64, , ,102 (109,218) 76, , ,933 2,032,532 1,796, ,335 3,973 5,326 4, ,723 70,733 83,990 2,161 9,413 5, , ,305 31, , , ,845 2,792,128 2,508, ,306 70, ,099 22,056 1,296,305 1,272,847 23, ,674 66,179 92,269 (26,090) 1,450 13, , ,387 (160,022) 376,409 71, , ,477 1,578,871 1,205, ,777 Subtotal 9,148,615 15,559,259 7,899,184 2,013,442 6,853,681 1,514,857 10,612,555 13,618,180 67,219,773 62,379,812 4,839,961 Depreciation 27,827,422 21,490,911 4,005,411 20,674,326 15,649,385 $ 36,976,037 $ 37,050,170 $ 11,904,595 $ 22,687,768 $ 22,503,066 2,698, ,635 1,297,993 93,817,692 94,112,528 (294,836) $ 4,213,466 $ 10,786,190 $ 14,916,173 $ 161,037,465 $ 156,492,340 $ 4,545, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

46 Schedule of Operating Expenses Year Ended December 31, 2015 (With Comparative Totals for 2014) Personal Services Rented Indianapolis Terminal Buildings Maintenance Airfield Complex Parking and Other Center (IMC) Salaries and wages $ 1,952,781 $ 3,697,975 $ 2,546,626 $ 246,847 $ 324,208 Employee insurance 449,570 1,115, ,190 27,854 53,702 Retirement and social security 195, , ,783 24,164 36,532 Contractual Services 2,598,112 5,180,012 3,360, , ,442 Transportation and communication 78,401 28,575 13,733 19,739 37,961 Professional fees 570,683 46, , ,361 7,196 Printing and advertising 1, ,146 2, Repairs and maintenance 194,765 2,499, , , ,285 Facilities maintenance and security 40,630 2,402, ,473 30,699 2,731,034 Other contractual services 136, ,984 1,249, , ,429 1,022,408 5,681,492 2,298, ,875 3,425,463 Utilities 1,781,378 3,157, , ,509 2,677, Year Ended Reliever Public December 31, Increase Airports Safety Administration Total 2014 (Decrease) $ 252,450 $ 5,996,367 $ 5,610,329 $ 20,627,583 $ 20,143,488 $ 484,095 37,402 1,404, ,836 4,556,307 3,831, ,698 27, , ,045 2,262,496 2,285,999 (23,503) 317,330 8,245,816 7,031,210 27,446,386 26,261,096 1,185,290 20,346 59, , ,271 1,091,546 (105,275) 24,500 77,914 2,149,315 3,546,219 3,428, ,121-2, , , ,865 (112,463) 74,682 44,956 1,041,019 5,053,438 4,459, ,805 29, ,922 5,435,076 4,975, ,478 65, , ,762 3,824,270 3,929,545 (105,275) 214,579 1,143,974 4,413,287 19,033,676 18,185, , , ,368 63,726 8,874,402 9,431,004 (556,602) Supplies Fuel 225, ,184-32,916 Garage and motor 127,432 9,957 50,920 (8) 20,786 Institutional and medical 27, , ,765 13,484 7,982 Office supplies 6,740 6,566 6,671 1,969 2,993 Snow and ice chemicals 336,835 3, , ,486 Other 55, , ,382 1, , , , ,732 16, ,797 Materials Building 8,544 68,957 18,823 15,811 (194,973) Pavement and grounds 471,956 17, Repair parts 942, , , ,425 Small equipment and tools 18,939 31,718 3,710-2,589 Other 92,955 8,511 1, ,462 1,535, , ,972 16,395 (150,497) General Insurance 239, , ,907 4, ,663 Equipment rental ,000-4,787 Other (including bad debts) 3, , , ,933 5, ,725 Subtotal 7,959,368 15,462,873 7,574,044 1,430,174 6,711,725 Depreciation 27,259,966 21,951,548 3,715,465 21,094,228 15,998,276 $ 35,219,334 $ 37,414,421 $ 11,289,509 $ 22,524,402 $ 22,710, , ,020 1,408,208 (525,188) 16,267 42,803 4, , ,064 28,106 13,343 60,410 1, , , ,838 1,580 57,565 46, , ,590 11,704 32, , ,331 (337,253) 8, ,068 63, , ,817 (33,400) 381, , ,795 3,311,432 3,986,625 (675,193) 10,979 1,868 2,476 (67,515) 80,698 (148,213) 79,947 3, , , ,219 67, ,797 61,367 1,796,197 1,740,639 55,558 3,464 6,182 4,131 70,733 51,100 19,633 2,063 3,233 6, ,305 95,727 40, , ,382 74,143 2,508,822 2,423,047 85,775 77, ,135 22,729 1,272,847 1,311,293 (38,446) ,304 92, ,823 (122,554) (4,269) 13,588 (173,993) (160,022) 563,357 (723,379) 73, ,723 (94,960) 1,205,094 2,089,473 (884,379) 1,425,318 10,213,109 11,603,201 62,379,812 62,376,530 3,282 2,790, ,421 1,168,873 94,112,528 94,126,914 (14,386) $ 4,216,069 $ 10,346,530 $ 12,772,074 $ 156,492,340 $ 156,503,444 $ (11,104) 88 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

47 Schedule of Bond Debt Service Requirements to Maturity December 31, A-1 Revenue Bonds 2016A-2 Revenue Bonds 2015A Revenue Bonds 2014A Revenue Bonds 2013A Revenue Bonds Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest 2017 $ 7,290,000 $ 7,309,600 $ 1,435,000 $ 537,735 $ - $ 8,649,600 $ 1,490,000 $ 8,044,100 $ 450,000 $ 208, ,450,000 6,575,550 3,125, ,655-8,649,600-8,021,750 11,240, , ,070,000 5,864,800 3,170, ,143-8,649,600-8,021, ,885,000 5,040,925 3,230, ,078-8,649,600 6,205,000 7,866, ,745,000 4,175,175 3,295, ,525-8,649,600 6,515,000 7,548, ,645,000 3,265,425 3,370, ,243-8,649,600 6,840,000 7,214, ,490,000 2,462,050 2,260, ,678 6,770,000 8,480,350 7,185,000 6,864, ,775,000 2,055,425 85, ,381 12,240,000 8,066,300 11,070,000 6,407, ,910,000 1,913,300 90, ,585 16,250,000 7,496,500 8,130,000 5,927, ,055,000 1,764,175 95, ,630 16,925,000 6,748,375 8,535,000 5,511, ,210,000 1,607,550 95, ,595 17,800,000 5,880,250 8,965,000 5,073, ,145,000 1,473, ,077 18,720,000 4,967,250 9,415,000 4,614, ,255,000 1,363, ,077 16,215,000 4,093,875 13,375,000 4,044, ,365,000 1,248, ,077 17,055,000 3,262,125 14,045,000 3,358, ,485,000 1,126, ,077 17,955,000 2,386,875 14,750,000 2,639, ,610,000 1,012, ,077 18,885,000 1,465,875 15,485,000 1,883, ,715, , ,077 19,875, ,875 16,260,000 1,089, ,820, , , ,075, , ,475, ,500 1,520,000 92, ,615,000 31, $ 153,395,000 $ 50,330,025 $ 23,385,000 $ 4,031,711 $ 178,690,000 $ 105,242,250 $ 165,340,000 $ 94,472,475 $ 11,690,000 $ 408, B Revenue Bonds 2012A Revenue Bonds 2010C Revenue Bonds A Revenue Bonds Total Debt Principal Interest Principal Interest Principal Interest Principal Interest Service $ 10,310,000 $ 318,941 $ 8,030,000 $ 244,711 $ 5,170,000 $ 3,539,412 $ 670,000 $ 1,017,763 $ 64,715,257 9,825, ,266 8,130, ,750 5,430,000 3,485, , ,463 82,598, ,370,000 41,600 5,710,000 3,431, , ,063 58,452, ,000,000 3,373, , ,463 59,316, ,305,000 3,313, , ,663 59,543, ,630,000 3,250, , ,153 59,781, ,965,000 3,183, , ,281 59,507, ,965,000 2,978, , ,413 66,457, ,980,000 2,749, , ,372 67,260, ,050,000 2,508, , ,425 68,000, ,180,000 2,254,760 1,005, ,100 68,866, ,365,000 1,987,141 1,050, ,550 68,483, ,610,000 1,705,193 1,100, ,488 69,457, ,930,000 1,408,059 1,155, ,931 70,469, ,310,000 1,095,024 1,210, ,250 71,542, ,775, ,127 1,270, ,250 72,674, ,315, ,485 1,335, ,125 73,867, ,035, ,620 1,400, ,750 35,138, ,650, ,829 1,470, ,000 34,933, ,295,000 34,879 1,545, ,625 16,640, ,530,000 2,021 1,620,000 40,500 4,192,521 $ 20,135,000 $ 471,207 $ 21,530,000 $ 430,061 $ 325,200,000 $ 41,928,313 $ 22,230,000 $ 12,989,628 $ 1,231,899,315 1 The 2010C Revenue Bonds bear interest at a variable rate. See Note 5 to the financial statements. 90 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

48 STATISTICAL INFORMATION (UnAUDITED) FISCAL YEAR ENDED December 31, 2016 Financial trend data These schedules depict the financial position of the IAA over the past several years. The trend information provided allows for an understanding of how revenues and expenses have changed over the years as well as how cash has been utilized. Statements of Net Position Statements of Revenue, Expenses and Changes in Net Position Changes in Cash and Cash Equivalents Revenue capacity data These schedules identify the significant sources of IND s Operating Revenues and the airline rates and charges associated with generating these revenues. Operating Revenues Signatory Airline Rates and Charges Debt capacity data The data in these schedules reveals the trends in outstanding debt that the airport has carried over the past ten years, related debt service ratios, as well as the airport s ability to repay the outstanding debt. Outstanding Debt and Debt Service Ratios Revenue Bond Debt Service Coverage Operating information These schedules provide information on the distribution of IND s carriers, passenger traffic, and airport personnel over the past ten years as well as how the airport is insured against material risk. Airline Landing Weight Statistics Enplaned Passenger Statistics Airport Employee Statistics Schedule of Insurance Demographic and economic data The data in these schedules illustrates the current demographic and economic status of the Indianapolis Metropolitan Statistical Area (MSA) as well as trends over the past ten years. The Indianapolis MSA supports the majority of the traffic passing through IND. Demographic and Economic Statistics Principal Employers in Indianapolis Other Airport Information The Statistical Section provides information with up to ten years of comparable data, when available, and differs from the audited financial statements as some non-accounting data is presented. FINANCIAL TREND DATA REVENUE CAPACITY DATA DEBT CAPACITY DATA OPERATING INFORMATION DEMOGRAPHIC AND ECONOMIC DATA 92 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

49 Statements of Net Position for the last 10 years ended December 31 (in thousands) Statements of Net Position For the Last Ten Years Ended December 31 (in thousands) (1) Assets Current Assets - Unrestricted $ 34,760 $ 28,660 $ 34,045 $ 31,260 Current Assets - Restricted 43,001 53,855 55,220 63,511 Noncurrent Assets: Capital Assets, Net 1,821,200 1,889,782 1,958,582 2,024,932 Other Noncurrent Assets 231, , , ,187 Total Assets 2,130,729 2,192,960 2,240,293 2,292, (1) (2) 2009 (2) 2008 (2) 2007 $ 30,562 $ 32,238 $ 61,369 $ 62,851 $ 77,189 $ 70,050 51,009 67,476 61,744 54,300 40,017 41,359 2,077,729 2,122,516 2,208,994 2,140,139 2,182,891 1,844, , , , , , ,576 2,367,389 2,457,941 2,509,177 2,469,340 2,570,001 2,350,766 Deferred Outflows of Resources 56,270 71,988 76,997 47,476 80,796 34,108-36,627 75,332 - Total Assets and Deferred Outflows of Resources $ 2,186,999 $ 2,264,948 $ 2,317,290 $ 2,340,366 $ 2,448,185 $ 2,492,049 $ 2,509,177 $ 2,505,967 $ 2,645,333 $ 2,350,766 Liabilities Liabilities Current Liabilities - payable Current from Liabilities unrestricted - payable from unrestricted $ 10,028 $ $ 11,319 10,028 $ $ 8,169 11,319 $ $ 7,956 8,169 $ 7,956 $ 8,130 $ 8,042 $ 10,217 $ 10,335 $ 11,782 $ 8,784 Current Liabilities - payable Current from Liabilities restricted - payable from restricted 75,384 82,086 75,384 80,670 82,086 86,434 80,670 86,434 78,986 77,688 72,412 94, , ,690 Noncurrent Liabilities Noncurrent - payable from Liabilities unrestricted - payable from unrestricted ,328 2,213 - Noncurrent Liabilities Noncurrent - payable from Liabilities restricted - payable from restricted 1,026,858 1,105,607 1,026,858 1,164,718 1,105,607 1,196,537 1,164,718 1,196,537 1,309,616 1,352,169 1,343,608 1,440,493 1,531,446 1,140,558 Total Liabilities Total Liabilities 1,112,270 1,199,012 1,112,270 1,253,557 1,199,012 1,290,927 1,253,557 1,290,927 1,396,732 1,437,899 1,426,680 1,546,757 1,677,632 1,428,032 Deferred Inflows of Resources Deferred Inflows of Resources 15,172 17,071 15,172 19,545 17,071 19, , Net Position Net Position Net Investment in Capital Net Investment Assets in Capital Assets 845, , , , , , , , , , , , , ,132 Restricted Restricted 143, , , , , , , ,822 97, , , ,055 92, ,681 Unrestricted Unrestricted 70,503 77,322 70,503 62,351 77,322 57,666 62,351 57,666 70,063 61,710 63,903 55,067 67,501 66,921 Total Net Position Total Net Position 1,059,557 1,048,865 1,059,557 1,044,188 1,048,865 1,049,439 1,044,188 1,049,439 1,051,453 1,054,150 1,081, , , ,734 Total Liabilities, Deferred Total Inflows Liabilities, of Resources, Deferred Inflows and Net of Resources, and Net Position Position $ 2,186,999 $ $ 2,264,948 2,186,999 $ $ 2,317,290 2,264,948 $ $ 2,340,366 2,317,290 $ 2,340,366 $ 2,448,185 $ 2,492,049 $ 2,509,177 $ 2,505,967 $ 2,645,333 $ 2,350,766 (1) The Authority adopted (1) The GASB Authority Statement adopted No. GASB 65 in Statement FY 2013, resulting No. 65 in in FY changes 2013, to resulting the financial changes statements to the financial for the year statements ended for the year ended December 31, December The Statistical 31, Section The of Statistical the CAFR has Section also of been the adjusted CAFR has accordingly. also been adjusted accordingly. (2) The Authority adopted (2) The GASB Authority Statement adopted No. GASB 53 in Statement FY 2010, resulting No. 53 in in FY changes 2010, to resulting the financial changes statements to the financial for the years statements ended for the years ended December 31, 2009 December and December 31, , 2008 and December (in the Management's 31, 2008 (in Discussion the Management's and Analysis). Discussion and Analysis). The Statistical Section The of Statistical the CAFR has Section also of been the adjusted CAFR has accordingly. also been adjusted accordingly. 94 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

50 Indianapolis Airport Indianapolis AuthorityAirport Authority STATEMENTS OF REVENUES, Statements of Revenues, EXPENSES Statements Expenses of Revenues, AND and Changes CHANGES Expenses in Net and Position Changes IN NET in Net POSITION Position Indianapolis Airport Indianapolis AuthorityAirport Authority Statements of Revenues, Statements Expenses of Revenues, and Changes Expenses in Net and Position Changes in Net Position for the last 10 years ended December For the Last 31 (in Ten thousands) Years For the Ended Last December Ten Years 31 Ended December For 31 the Last Ten Years For the Ended Last December Ten Years 31 Ended December 31 (in thousands) (in thousands) (in thousands) (in thousands) (1) (1) (1) (1) (2) (2) 2009 (2) 2008 (2) 2007 Operating Revenues Operating Revenues $ 23,749 Airfield $ 22,545 23,749 Airfield $ $ 21,674 22,545 $ $ 23,749 21,468 21,674 $ $ 23,749 22,545 21,101 21,468 $ $ 22,545 21,674 22,191 21,101 $ $ 21,674 21,468 23,379 22,191 $ $ 21,468 22,742 23,379 $ $ 21,101 23,889 22,742 $ $ 22,191 24,750 23,889 $ $ 23,379 24,750 $ 22,742 $ 23,889 $ 24,750 57,451 Terminal complex 50,768 57,451 Terminal complex 49,435 50,768 57,451 49,458 49,435 57,451 50,768 50,312 49,458 50,768 49,435 50,257 50,312 49,435 49,458 51,178 50,257 49,458 49,960 51,178 50,312 36,529 49,960 50,257 31,786 36,529 51,178 31,786 49,960 36,529 31,786 50,562 Parking 47,056 50,562 Parking 43,469 47,056 50,562 40,719 43,469 50,562 47,056 38,436 40,719 47,056 43,469 38,764 38,436 43,469 40,719 38,284 38,764 40,719 34,660 38,284 38,436 29,437 34,660 38,764 28,581 29,437 38,284 28,581 34,660 29,437 28,581 16,382 Rented buildings and other 16,016 16,382 Rented buildings and other 15,949 16,016 16,382 15,660 15,949 16,382 16,016 16,612 15,660 16,016 15,949 13,436 16,612 15,949 15,660 12,972 13,436 15,660 13,099 12,972 16,612 12,406 13,099 13,436 10,922 12,406 12,972 10,922 13,099 12,406 10,922 C) 7,206 Indianapolis Maintenance 8,643 7,206 Center Indianapolis (IMC) Maintenance 9,200 8,643 Center (IMC) 7,206 9,396 9,200 7,206 8,643 8,779 9,396 8,643 9,200 8,779 9,396 8,803 9,200 9,396 6,852 8,803 8,779 7,253 6,852 9,200 6,478 7,253 8,803 6,478 6,852 7,253 6,478 2,897 Reliever airports 2,928 2,897 Reliever airports 3,105 2,928 2,897 2,961 3,105 2,897 2,928 3,019 2,961 2,928 3,105 2,649 3,019 3,105 2,961 2,474 2,649 2,961 2,414 2,474 3,019 2,402 2,414 2,649 2,205 2,402 2,474 2,205 2,414 2,402 2, ,247 Total Operating Revenues 147, ,247 Total Operating Revenues 142, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,722 Non-operating Revenues Non-operating Revenues 27,376 State and local appropriations 26,754 27,376 State and local appropriations 26,785 26,754 27,376 26,818 26,785 27,376 26,754 26,856 26,818 26,754 26,785 26,826 26,856 26,785 26,818 26,771 26,826 26,818 27,130 26,771 26,856 26,927 27,130 26,826 26,821 26,927 26,771 26,821 27,130 26,927 26, Federal operating grants Federal operating grants 1, , ,036 1, ,036 1,008 1, ,032 1, ,111 1, ,210 1,138 1,111 1,008 1,138 1,032 1,111 1,138 17,238 Passenger facility charges 15,916 17,238 Passenger facility charges 14,645 15,916 17,238 14,474 14,645 17,238 15,916 14,606 14,474 15,916 14,645 15,418 14,606 14,645 14,474 15,654 15,418 14,474 15,430 15,654 14,606 16,853 15,430 15,418 16,775 16,853 15,654 16,775 15,430 16,853 16,775 rs) 7,285 Customer facility charges 6,702 7,285 (rental Customer cars) facility charges 6,442 6,702 (rental cars) 7,285 6,098 6,442 7,285 6,702 6,316 6,098 6,702 6,442 6,065 6,316 6,442 6,098 5,365 6,065 6,098 4,208 5,365 6,316 5,115 4,208 6,065 5,137 5,115 5,365 5,137 4,208 5,115 5,137 4,214 Investment income 6,663 4,214 Investment income 2,678 6,663 4,214 5,237 2,678 4,214 6,663 5,678 5,237 6,663 2,678 7,815 5,678 2,678 5,237 6,211 7,815 5,237 9,531 6,211 5,678 8,235 9,531 27,621 7,815 8,235 6,211 27,621 9,531 8,235 27,621 56,787 Total Non-operating 56,840 56,787 Revenues Total Non-operating 51,586 56,840 Revenues 56,787 53,496 51,586 56,787 56,840 54,167 53,496 56,840 51,586 57,334 54,167 51,586 53,496 55,009 57,334 53,496 57,331 55,009 54,167 58,241 57,331 57,334 77,492 58,241 55,009 77,492 57,331 58,241 77, ,034 Total Revenues 204, ,034 Total Revenues 194, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,214 Operating Expenses 28,244 Personal services Operating Expenses 27,446 28,244 Personal services 26,261 27,446 28,244 26,533 26,261 28,244 27,446 29,218 26,533 27,446 26,261 27,985 29,218 26,261 26,533 27,398 27,985 26,533 30,340 27,398 29,218 26,333 30,340 27,985 25,583 26,333 27,398 25,583 30,340 26,333 25,583 22,018 Contractual services 19,034 22,018 Contractual services 18,185 19,034 22,018 17,228 18,185 22,018 19,034 16,035 17,228 19,034 18,185 17,462 16,035 18,185 17,228 16,661 17,462 17,228 18,225 16,661 16,035 16,526 18,225 17,462 18,798 16,526 16,661 18,798 18,225 16,526 18,798 9,243 Utilities 8,874 9,243 Utilities 9,431 8,874 9,243 8,480 9,431 9,243 8,874 7,977 8,480 8,874 9,431 8,776 7,977 9,431 8,480 8,391 8,776 10,572 8,480 8,391 7,977 10,572 9,220 8,776 7,382 9,220 8,391 7,382 10,572 9,220 7,382 3,343 Supplies 3,311 3,343 Supplies 3,987 3,311 3,343 3,904 3,987 3,343 3,311 3,678 3,904 3,311 3,987 3,567 3,678 3,987 3,904 3,121 3,567 3,904 3,157 3,121 3,678 3,704 3,157 3,567 2,618 3,704 3,121 2,618 3,157 3,704 2,618 2,792 Materials 2,509 2,792 Materials 2,423 2,509 2,792 1,932 2,423 2,792 2,509 1,944 1,932 2,509 2,423 1,440 1,944 2,423 1,932 1,453 1,440 1,932 1,498 1,453 1,944 1,258 1,498 1,440 1,284 1,258 1,453 1,284 1,498 1,258 1,284 1,579 General 1,205 1,579 General 2,089 1,205 1,579 2,125 2,089 1,579 1,205 1,835 2,125 1,205 2,089 2,313 1,835 2,089 2,125 2,222 2,313 2,125 2,585 2,222 1,835 2,599 2,585 2,313 1,247 2,599 2,222 1,247 2,585 2,599 1,247 93,818 Depreciation 94,113 93,818 Depreciation 94,127 94,113 93,818 95,821 94,127 93,818 94,113 95,336 95, ,271 94,113 94,127 95, ,589 94, ,271 95, ,954 95, ,589 95, ,954 73, ,271 44,090 73, ,589 44, ,954 73,551 44, ,038 Total Operating Expenses 156, ,038 Total Operating Expenses 156, , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,002 Non-operating Expenses 45,883 Interest expense Non-operating Expenses 54,589 45,883 Interest expense 57,935 54,589 45,883 58,192 57,935 45,883 54,589 64,532 58,192 54,589 57,935 69,327 64,532 57,935 58,192 70,151 69,327 58,192 73,564 70,151 64,532 36,265 73,564 69,327 33,954 36,265 70,151 33,954 73,564 36,265 33,954 ssets and other 12,657 (Gain) Loss on disposals 12,657 7,879 of (Gain) capital Loss assets on disposals and other of 7,879 (621) capital assets and other 12,657 2,449 (621) 12,657 7,879 (3,779) 2,449 7,879 (1,163) (3,779) (621) 2,449 (4,721) (1,163) (621) 2,449 (1,920) (4,721) (3,779) (1,920) 1,426 (1,163) 1,947 1,426 (4,721) 1,947 (1,920) 1,426 1,947 58,540 Total Non-operating 62,468 58,540 Expenses Total Non-operating 57,314 62,468 Expenses 58,540 60,641 57,314 58,540 62,468 60,753 60,641 62,468 57,314 68,164 60,753 57,314 60,641 65,430 68,164 60,641 71,644 65,430 60,753 37,691 71,644 68,164 35,901 37,691 65,430 35,901 71,644 37,691 35, ,578 Total Expenses 218, ,578 Total Expenses 213, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,903 ns, Grants and Income (Loss) Before Capital Income Contributions, (Loss) Before Grants Capital and Contributions, Grants and Charges (4,544) Charges (14,165) (4,544) (19,399) (14,165) (23,508) (19,399) (4,544) (14,165) (24,350) (4,544) (23,508) (14,165) (19,399) (42,147) (24,350) (19,399) (23,508) (35,166) (42,147) (23,508) (51,917) (35,166) (24,350) (51,917) (725) (42,147) 45,311 (725) (35,166) 45,311 (51,917) (725) 45,311 s Capital Contributions, Grants Capital and Contributions, Charges Grants and Charges 11,891 Federal and state grants 16,441 11,891 Federal and state grants 12,327 16,441 11,891 10,322 12,327 11,891 16,441 10,322 5,551 16,441 12,327 11,457 5,551 12,327 10,322 11,014 11,457 10,322 18,097 11,014 17,609 5,551 18,097 11,457 26,729 17,609 11,014 26,729 18,097 17,609 26,729 3,344 Contributions from lessees 2,400 3,344 Contributions from lessees 1,821 2,400 11,171 3,344 1,821 28,020 3,344 11,171 2,400 2,400 28,020 1,821 3, ,271 11,171 1,821 3,510 11, ,271 25,329 28,020 26,447 25,329 21,940 3,510 26, ,271 21,940 25,329 26,447 21,940 tal entity Contributions - from local governmental Contributions - entity from local governmental - entity nts and Charges 15,235 Total Capital Contributions, 18,841 15,235 Total Grants Capital and Charges Contributions, 14,148 18,841 Grants and Charges 15,235 21,493 14,148 15,235 18,841 33,571 21,493 18,841 14,148 14,967 33, ,285 14,148 21,493 14,967 21, ,285 43,426 33,571 44,082 43,426 14,967 48,797 44, ,285 48,797 43,426 44,082 48,797 Increase 10,691 (Decrease) in Net Increase Position 10,691 4,676 (Decrease) in Net Position (5,251) 4,676 10,691 (2,015) (5,251) 10,691 4,676 (2,015) 9,221 (27,180) (5,251) 4,676 9, ,119 (5,251) (27,180) (2,015) 122,119 (2,015) (8,491) 43,357 9,221 (8,491) (27,180) 94,108 43, ,119 94,108 (8,491) 43,357 94,108 ously reported 1,048,864 Net Position, Beginning of 1,044,187 1,048,864 Net Year, Position, as previously Beginning reported of 1,049,439 1,044,187 Year, as previously reported 1,048,864 1,051,453 1,049,439 1,048,864 1,044,187 1,054,150 1,051,453 1,044,187 1,049,439 1,081,329 1,054,150 1,049,439 1,051,453 1,081, ,210 1,051, , ,210 1,054, , ,701 1,081, , , , , , , ,625 nciple Cumulative - Effect of Change Cumulative in Acct. - Principle Effect of Change in Acct. - Principle -- (11,918) - - (11,918) (11,918) 1,609-1, ,609 - ted 1,048,864 Net Position, Beginning of 1,044,187 1,048,864 Net Year, Position, as restated Beginning of 1,049,439 1,044,187 Year, as restated 1,048,864 1,051,453 1,049,439 1,048,864 1,044,187 1,042,232 1,051,453 1,044,187 1,049,439 1,081,329 1,042,232 1,049,439 1,051,453 1,081, ,210 1,051, , ,210 1,042, , ,701 1,081, , , , , , , ,625 1,059,556 Net Position, $ End of Year 1,048,864 1,059,556 Net Position, $ End of Year 1,044,187 1,048,864 $ 1,059,556 1,049,439 1,044,187 $ $ 1,059,556 1,048,864 1,051,453 1,049,439 $ $ 1,048,864 1,044,187 1,054,149 1,051,453 $ $ 1,044,187 1,049,439 1,081,329 1,054,149 $ $ 1,049,439 1,051,453 1,081, ,210 $ $ 1,051,453 1,054, , ,210 $ $ 1,054,149 1,081, , ,700 $ $ 1,081, , ,733 $ 959, ,700 $ 967, ,733 $ 922,733 sulting ent No. in 65 changes in (1) FY The 2013, to Authority the resulting financial adopted in statements changes (1) GASB The to Statement for Authority the the financial year adopted No. ended statements 65 in December GASB FY 2013, Statement for 31, the resulting 2012 year No. ended in 65 changes in December FY 2013, to the 31, resulting financial 2012 in statements changes to for the the financial year ended statements December for the 31, year 2012 ended December 31, 2012 has ordingly. also been adjusted The Statistical accordingly. Section of the The CAFR Statistical has also Section been of adjusted the CAFR accordingly. has also been adjusted accordingly. sulting ent No. in 53 changes in (2) FY The 2010, to Authority the resulting financial adopted in statements changes (2) GASB The to Statement for Authority the the financial years adopted No. ended statements 53 in GASB December FY 2010, Statement for the resulting 31, years 2009 No. in ended 53 changes in FY December 2010, to the resulting 31, financial 2009 in statements changes to for the the financial years ended statements December for the 31, years 2009 ended December 31, 2009 nagement's Analysis). The Discussion Statistical and December and Section Analysis). 31, of 2008 the The CAFR (in Statistical and the December has Management's also Section been 31, of adjusted 2008 the Discussion (in CAFR accordingly. the has and Management's also Analysis). been adjusted Discussion The Statistical accordingly. and Section Analysis). of the The CAFR Statistical has also Section been of adjusted the CAFR accordingly. has also been adjusted accordingly.. 96 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

51 CHANGES IN CASH AND CASH EQUIVALENTS for the last 10 years ended December 31 (in thousands) Indianapolis Airport Indianapolis Authority Airport Authority Changes in Cash and Changes Cash in Equivalents Cash and Cash Equivalents For the Last Ten Years For the Ended Last December Ten Years Ended 31 December 31 (in thousands) (in thousands) Cash Flows From Operating Cash Activities Flows From Operating Activities Cash receipts from customers Cash receipts and users from customers and users $ 158,753 $ $ 145, ,753$ $ 143, ,901 $ 143,993 $ 143,537 $ 137,982 $ 134,248 $ 135,291 $ 130,966 $ 111,055 $ 107,470 Cash payments to vendors Cash for payments goods and to services vendors for goods and services (37,686) (32,397) (37,686) (36,513) (32,397) (36,513) (32,908) (29,614) (35,080) (31,849) (38,527) (31,349) (32,132) Cash payments for employees Cash payments services for employees services (27,796) (27,276) (27,796) (26,176) (27,276) (26,176) (27,097) (29,962) (27,725) (28,496) (29,955) (24,920) (23,551) Net cash provided by operating Net cash activities provided by operating activities 93,271 86,228 93,271 81,304 86,228 81,304 83,532 78,406 71,443 74,946 62,484 54,786 51,788 Cash Flows From Noncapital Cash and Flows Related From Financing Noncapital Activities and Related Financing Activities Operating grants received Operating grants received , , ,096 1,032 1,041 1,122 1,156 Customer facility charges Customer receivedfacility charges received 7,285 6,702 7,285 6,442 6,702 6,442 6,097 6,316 6,065 5,365 4,208 5,115 5,137 Insurance recoveries Insurance recoveries ,668 3,973 2, , ,502 Net cash provided by noncapital Net cash and provided related by financing noncapital activities and related financing activities 8,223 7,447 8,223 7,835 7,447 7,835 9,731 11,287 9,885 6,744 6,912 6,348 8,795 Cash Flows From Capital Cash and Related Flows From Financing Capital Activities and Related Financing Activities Proceeds from issuance Proceeds of commercial from paper issuance of commercial paper , , ,336 Proceeds from issuance Proceeds of revenue from bonds issuance of revenue bonds 196, , , , , ,775 37,845 46, , ,000 - Principal paid on bonds and Principal commercial paid on paper bonds and commercial paper (237,700) (226,630) (237,700) (221,800) (226,630) (221,800) (73,410) (115,130) (21,850) (421,657) (35,830) (803,480) (407,085) Bond issue costs paid Bond issue costs paid (1,202) (1,583) (1,202) (1,236) (1,583) (1,236) (420) (666) (45) (684) (489) (9,345) (566) Interest paid Interest paid (44,637) (51,816) (44,637) (54,875) (51,816) (54,875) (52,729) (60,153) (60,031) (62,904) (65,655) (22,861) (23,297) Proceeds from novation Proceeds of derivative from financial novation instrument of derivative - basis financial swapinstrument - basis swap , Advance payment on interest Advance rate payment swap agreement on interest rate swap agreement ,540 - Acquisition and construction Acquisition of capital and assets construction of capital assets (40,119) (32,021) (40,119) (25,993) (32,021) (25,993) (31,945) (20,358) (17,079) (35,358) (96,386) (363,431) (453,714) Demolition costs related Demolition to capital assets costs related to capital assets (8) (141)(8) (136) (141) (136) (5,315) Proceeds from sale of capital Proceeds assets from sale of capital assets 796 2, , ,982 1,487 1,235 5,543 Passenger facility charges Passenger receivedfacility charges received 17,104 15,459 17,104 14,715 15,459 14,715 14,494 14,937 15,463 15,491 15,404 16,748 17,370 Capital grants received Capital grants received 12,057 20,689 12,057 9,560 20,689 9,560 9, ,791 11,830 26,272 17,130 13,164 Contributions from other Contributions government from other government ,021 1,003 3,711 Net cash used in capital Net and cash related used financing capital activities and related financing activities (96,814) (74,818) (96,814) (94,797) (74,818) (94,797) (102,235) (134,221) (61,047) (114,791) (104,176) (211,795) (319,540) Cash Flows from Investing Cash Activities Flows from Investing Activities Purchase of investment Purchase securities of investment securities (294,556) (61,495) (294,556) (188,139) (61,495) (188,139) (118,087) (121,837) (130,596) (118,528) (134,297) (139,820) (171,495) Proceeds from sales and Proceeds maturities from of investment sales and maturities securitiesof investment securities 287,149 28, , ,553 28, , ,377 89,570 95, , , , ,652 Interest received on investments Interest received and cash on equivalents investments and cash equivalents 3,603 7,022 3,603 2,216 7,022 2,216 4,072 3,896 5,264 1,892 1,650 9,340 23,018 Cash received from monetization Cash received of investment from monetization derivativeof investment derivative ,117-3, Net cash provided by (used Net cash in) investing provided activities by (used in) investing activities (3,805) (26,152) (3,805) (19,253) (26,152) (19,253) 15,362 (28,371) (30,166) (329) (5,987) 22, ,175 Net Increase (Decrease) Net in Cash Increase and Cash (Decrease) Equivalents in Cash and Cash Equivalents 875 (7,294) 875 (24,910) (7,294) (24,910) (72,899) 6,391 (9,885) (72,899) (33,428) (9,885) (40,767) (33,428) (128,431) (40,767) (153,782) (128,431) (153,782) Cash and Cash Equivalents, Cash Beginning and Cash of Equivalents, Year Beginning of Year 131, , , , , , , , , , , , , , , , , , , ,504 Cash and Cash Equivalents, Cash End and of Cash YearEquivalents, End of Year $ 132,373 $ $ 131, ,373$ $ 138, ,499$ $ 163, ,793$ $ 157, ,704$ $ 230, ,313$ $ 240, ,212$ $ 273, ,096$ $ 314, ,524$ $ 442, ,291 $ 442, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

52 OPERATING REVENUES for the last 10 years ended December 31 (in thousands) Operating Revenues For the Last Ten Years Ended December 31 (in thousands) Airfield Landing fees - scheduled airlines $ 9,615 $ 8,645 $ 7,768 $ 7,875 Landing fees - freight and other 10,601 10,375 10,306 10,171 Apron fees 1,894 2,011 1,994 2,085 Commissions - aviation fuel sales Other 1,331 1,206 1,325 1,092 Total Airfield 23,749 22,546 21,674 21, $ 8,282 $ 8,552 $ 8,721 $ 8,970 $ 10,009 $ 10,222 9,722 9,685 9,472 9,166 10,416 10,570 2,796 3,692 4,911 4,386 3,190 3, ,101 22,191 23,379 22,742 23,889 24,750 Terminal Complex Space rental Airlines 31,359 26,309 26,102 26,429 26,635 27,121 28,774 28,646 19,601 16,253 Concessionaires 8,182 7,620 7,382 7,480 7,491 7,118 7,142 6,752 5,362 5,534 Administration Building Other space rental Other space rental 2,022 1,565 2,022 1,395 1,565 1,321 1,395 1,321 1,281 1, Automobile rental commissions Automobile rental commissions10,518 10,085 10,518 9,439 10,085 9,146 9,439 9,146 9,335 9,211 8,715 8,353 8,753 7,903 Security Fees Security Fees Other commissions, fees, etc. Other commissions, fees, etc. 5,370 5,189 5,370 5,117 5,189 5,081 5,117 5,081 5,570 5,622 5,535 5,265 1,858 1,182 Total Terminal Complex Total Terminal Complex 57,451 50,768 57,45149,435 50,76849,458 49,435 49,458 50,312 50,257 51,178 49,960 36,529 31,786 Parking - parking operationsparking - parking operations 50,562 47,055 50,56243,469 47,05540,718 43,469 40,718 38,435 38,764 38,284 34,660 29,437 28,581 Rented Buildings and Other Rented Buildings and Other Space rental - freight buildings Space rental - freight buildings , Space rental - hangars Space rental - hangars Space rental - other buildings Space rental - other buildings 8,035 7,708 8,035 7,660 7,708 7,641 7,660 7,641 6,945 5,857 5,616 5,869 5,986 4,532 Ground leases Ground leases 6,091 6,171 6,091 6,149 6,171 5,790 6,149 5,790 6,512 5,289 5,659 5,363 5,129 5,012 Farm income Farm income International building International building Other Other , Total Rented Buildings and Other Total Rented Buildings and 16,382 Other 16,016 16,38215,948 16,01615,659 15,948 15,659 16,611 13,436 12,972 13,099 12,406 10,922 Indianapolis Maintenance Center Indianapolis (IMC) Maintenance Center (IMC) 7,206 8,643 7,206 9,200 8,643 9,395 9,200 9,395 8,779 9,200 8,803 6,852 7,253 6,478 Reliever Airports Reliever Airports 2,897 2,928 2,897 3,105 2,928 2,961 3,105 2,961 3,019 2,649 2,474 2,414 2,402 2,205 Total Operating Revenues Total Operating Revenues $ 158,247 $ 147,957 $ 158,247 $ 142,831 $ 147,957 $ 139,659 $ 142,831 $ 139,659 $ 138,257 $ 136,497 $ 137,090 $ 129,727 $ 111,916 $ 104,722 Signatory Airline Rates and Signatory Charges Airline Rates and Charges Landing Fee (Per 1,000 lbs.) Landing Fee (Per 1,000 $ lbs.) 1.95 $ $ 1.92 $ 1.95 $ 1.88 $ 1.92 $ $ 1.88 $ 1.90 $ 1.95 $ 1.95 $ 1.95 $ 1.95 $ 1.95 Average Terminal Building Rate Average (Per Terminal Sq. Ft.) Building $ Rate (Per Sq. Ft.) $ $ $ $ $ $ $ $ $ $ $ $ $ Apron Rate (Per Sq. Ft.) Apron Rate (Per Sq. Ft.) $ 0.71 $ $ 0.27 $ 0.71 $ 0.34 $ 0.27 $ $ 0.34 $ 0.57 $ 1.86 $ 2.62 $ 2.62 $ 2.18 $ COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

53 SIGNATORY AIRLINE RATES AND CHANGES for the last 10 years ended December 31 Year Signatory Landing Fees (Per 1,000 lbs.) Average Terminal Building Rates (Per Sq. Ft.) Apron Rates (Per Sq. Ft.) 2016 $ 1.95 $ $ (1) The revenue bases to which the rates are applied and lists of principal payors can be found in other schedules. (2) The Authority uses a residual rate-making methodology for its Airline Agreements. This provides for the review and adjustment of Signatory Airline Terminal Complex rental rates, Apron Area rents, and Landing Fees each Fiscal Year to ensure that the Gross Revenues of the Airport System are sufficient to meet the Operation and Maintenance Expenses of the Airport System, the Debt Service Requirements of the Authority s Outstanding Revenue Bonds and Subordinate Securities, and other funding requirements established by the Bond Ordinance. 102 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

54 OUTSTANDING DEBT BY TYPE AND REVENUE BOND DEBT SERVICE RATIOS for the last 10 years ended December 31 Outstanding Debt by Type and Revenue Bond Debt Service Ratios For the Last Ten Years Ended December (2) 2007 Outstanding Debt Outstanding Debt Revenue Bonds Revenue Bonds $ 974,523,714 $ 1,022,725,052 $ 974,523,714 $ 1,054,556,120 $ 1,022,725,052 $ 1,094,668,006 $ 1,054,556,120 $ 1,0 $ 1,094,668,006 $ 1,082,664,813 $ 1,149,569,629 $ 1,168,856,378 $ 1,250,769,922 $ 1,262,438,413 $ 946,557,200 Commercial Paper & Credit Facility Agreements Commercial Paper & Credit Facility Agreements ,000, ,000,000 Obligations under Obligations under Capital Lease Capital Lease 28,696,082 54,878,039 28,696,082 79,942,322 54,878,039103,844,418 79,942, ,844, ,647, ,415, ,134, ,835, ,955, ,990,469 Total Outstanding Debt Total Outstanding $ Debt 1,003,219,796 $ 1,077,603,091 $ 1,003,219,796 $ 1,134,498,442 $ 1,077,603,091 $ 1,198,512,424 $ 1,134,498,442 $ 1,2 $ 1,198,512,424 $ 1,209,312,621 $ 1,297,984,680 $ 1,337,990,957 $ 1,464,605,512 $ 1,470,393,996 $ 1,342,547,669 Outstanding Debt Per Capita Outstanding Debt Per $ Capita $ $ $ $ $ $ $ $ $ $ $ $ $ $ Total Enplaned Passengers Total Enplaned Passengers 4,239,828 4,008,256 4,239,828 3,686,245 4,008,256 3,598,718 3,686,245 3,598,718 3,687,742 3,770,469 3,770,383 3,740,873 4,088,526 4,142,657 Outstanding Debt / Enplaned Passenger Outstanding Debt / $ Enplaned Passenger $ $ $ $ $ $ $ $ $ $ $ $ $ $ Outstanding Debt as % of Personal Outstanding Income Debt as Data % of Not Personal Available Income Data 0.56% Not Available 0.66% 0.56% 0.74% 0.66% 0.74% 0.73% 0.79% 0.87% 1.03% 0.90% 0.84% Revenue Bond Debt Service Revenue Bond Debt Service Principal Principal $ 32,850,000 $ 29,245,000 $ 32,850,000 $ 32,400,000 $ 29,245,000 $ 24,625,000 $ 32,400,000 $ $ 24,625,000 $ 25,110,000 $ 21,850,000 $ 11,390,000 $ 10,830,000 $ 35,815,000 $ 31,750,000 Interest Interest 42,970,440 44,258,956 42,970,440 50,046,187 44,258,956 52,706,166 50,046,187 52,706,166 58,290,969 58,230,465 60,137,740 54,368,589 46,938,584 48,997,004 Total Revenue Bond Debt Service Total (1) Revenue Bond $ Debt 75,820,440 Service (1) $ 73,503,956 $ 75,820,440 $ 82,446,187 $ 73,503,956 $ 77,331,166 $ 82,446,187 $ $ 77,331,166 $ 83,400,969 $ 80,080,465 $ 71,527,740 $ 65,198,589 $ 82,753,584 $ 80,747,004 Total Expenses (Less Depreciation) Total Expenses (Less $ Depreciation) 125,760,383 $ 124,848,572 $ 125,760,383 $ 119,690,767 $ 124,848,572 $ 120,842,636 $ 119,690,767 $ 1 $ 120,842,636 $ 121,439,037 $ 129,706,035 $ 124,676,237 $ 138,021,318 $ 97,330,848 $ 92,812,310 Revenue Bond Debt Service (1) / Total Expenses Revenue Bond Debt Service (1) / Total Expenses 60.29% 58.87% 60.29% 68.88% 58.87% 63.99% 68.88% 63.99% 68.68% 61.74% 57.37% 47.24% 85.02% 87.00% Revenue Bond Debt Service (1) / Enplaned Passenger Revenue Bond Debt Service (1) / Enplaned Passenger $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ (1) These Revenue Bond Bond Debt Debt Service Service (1) These figures figures Revenue are are gross gross Bond debt debt Debt service service Service requirements requirements figures are on gross a on cash a cash debt basis, basis, service they they are requirements not are net not of net Capitalized on of a Capitalized cash basis, Interest. Interest. they are not net of Capitalized Interest. (2) Revenue Bond Debt Service exceeds prior year due to the payoff of the 1996 revenue bonds. (2) Revenue Bond Debt Service exceeds prior year due to the payoff of the 1996 revenue bonds. 104 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

55 REVENUE BOND DEBT SERVICE COVERAGE for the last 10 years ended December 31 (in thousands) (3) 2007 (3) Gross Revenues Total Operating Revenues $ 158,247 $ 147,957 $ 142,831 $ 139,659 Other revenues not deemed Gross Revenues Reduced (Excess) Rental Revenue Recognized Under GASB Federal Payments (762) (536) (522) (478) Total Gross Revenues 157, , , ,487 $ 138,257 $ 136,497 $ 137,090 $ 129,727 $ 111,916 $ 104, (7,256) (6,478) (816) (742) (700) (658) (583) (635) 137, , , , ,225 97,712 Operating and Maintenance Expenses Total Operating Expenses 161, , , ,022 Capital Assets Expensed Under Ordinance 1, ,055 Environmental Mitigation Costs ,182 Depreciation (93,818) (94,113) (94,127) (95,821) Total Operating & Maintenance Expenses 68,634 63,502 62,810 62, , , , , , , ,130 2, , (502) (2,350) (95,336) (106,271) (102,589) (100,954) (73,551) (44,090) 62,833 62,278 59,906 67,507 61,299 55,242 Net Revenues Available for Debt Service 89,157 84,225 79,806 77,048 74,819 73,648 76,632 61,710 42,926 42,470 Fund Transfers Transfers from Debt Service Coverage Fund (1) 17,380 17,171 17,173 15,130 Transfers from Prepaid Airline Revenue Fund (2) 17,000 7,500 1, Total Funds Available for Debt Service $ 123,537 $ 108,896 $ 98,478 $ 92,678 16,218 16,140 16,032 13,648 7,464 5,940 2,019 4,013 4,000 4,000 3,959 3,004 $ 93,055 $ 93,800 $ 96,665 $ 79,357 $ 54,349 $ 51,414 Debt Service Requirements Debt Service Requirements for Revenue Bonds $ 59,606 $ 59,035 $ 60,819 $ 58,801 $ 60,262 $ 62,306 $ 60,706 $ 52,246 $ 14,680 $ 13,621 Debt Service Coverage Revenue Bond Debt Service Coverage (1) Pursuant to the Authority s Master Bond Ordinance, amounts deposited into the Authority s Coverage Fund will be added to Net Revenues for purposes of determining the Authority s Revenue Bond Debt Service Coverage. (2) Reflects actual transfer versus calculated Prepaid Airline Credit as defined in the Authority s Master Bond Ordinance. (3) Debt service coverage exceeds prior year primarily as net debt service requirements decreased from Additional committed revenues from CFCs and capitalized interest contributed to the decrease in the net debt service requirements. 106 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

56 AIRLINE LANDING WEIGHT STATISTICS for the last 10 years ended December 31 Listed by current rank Airline Landing Weight Statistics For the Last Ten Years Ended December Airline 31 Landing Weight Statistics Listed by Current RankFor the Last Ten Years Ended December 31 Listed by Current Rank Landing Wts. Landing Wts (000 lbs.) % of Total 2015 (000 lbs.) Scheduled Air Carrier: Landing Wts. Landing Wts. (000 lbs.) % of Total (000 lbs.) Southwest (1) 1,605, % 1,387, , , , , , , , ,058 Scheduled Air Carrier: American (1) 1,277, % 502, , , , , , , , ,645 Southwest (1) 1,605, % 1,387, , , , , , , , , ,058 Delta (1) American (1) 1,136, % 1,133,755 1,153,816 1,190,901 1,229,200 1,174,008 1,130, , , ,745 1,277, % 502, , , , , , , , , ,645 United (1) Delta (1) 669, % 667, , , , , , , , ,364 1,136, % 1,133,755 1,153,816 1,190,901 1,229,200 1,229,200 1,174,008 1,130, , , ,745 Allegiant United (1) Air (4) 179, % 125, , % 667, , , , , , , , , ,364 Frontier Airlines (1) 129, % 115, , , , , , , , ,211 Allegiant Air (4) 179, % 125, Indianapolis Aviation Frontier Airlines (1) Partners (2) 30, % 17,141 48,576 65,667 77,332 57,888 57,011 26, , % 115, , , , , , , , , ,211 US Airways (1) Indianapolis Aviation Partners (2) - 0.0% 672, , , , , , , , ,785 30, % 17,141 48,576 65,667 77,332 77,332 57,888 57,011 26, AirTran Airways US Airways (1) - 0.0% - 211, , , , , , , , % 672, , , , , , , , , ,785 Continental (1) - 0.0% , ,262 89,598 92, , ,392 AirTran Airways (1) - 0.0% - 211, , , , , , , , ,160 Expressjet (1) Continental (1) - 0.0% ,324 50, , , , % ,211 94, ,262 89,598 92, , ,392 American Expressjet (1) Eagle, et.al. (1) - 0.0% , , , , % ,324 37,324 50, , , ,721 - Northwest (1) American Eagle, et.al. (1) - 0.0% ,213 1,188,324 1,246, % , , , ,242 ATA TWA (3) Northwest (1) - 0.0% ,581-65, % ,213 1,188,324 1,246,371 Other ATA (3) 47, % 42,539 35,156 33,670 49,388 37,417 97,557 49, , , % ,581 65,458 Subtotal 5,075, % 4,665,198 4,269,465 4,258,982 4,433,783 4,436,440 4,448,036 4,552,170 5,192,566 5,242,962 Other 47, % 42,539 35,156 33,670 49,388 49,388 37,417 97,557 49, , ,531 Subtotal Net Change from Prior Year 5,075, % 48.7% 4,665, % 4,269, % 4,258, % 4,433, % -0.3% -2.3% 4,433, % 4,436, % 4,448, % 4,552,170 5,192,566 5,242,962 Net Freight Change and from Charter: Prior Year Net 8.8% Change from Prior Year 9.3% 0.2% 8.8% -3.9% 9.3% -2.6% 0.2% -3.9% -2.6% -0.3% -2.3% -12.3% -1.0% -1.9% Federal Express 5,190, % 5,186,724 5,216,438 5,141,051 4,803,868 4,714,088 4,617,965 4,448,460 5,051,199 5,125,126 Freight and Charter: Freight and Charter: Cargolux Airlines International S.A. 102, % 100,937 98, , ,223 68,065 66,557 64,601 67,265 68,597 Federal Express 5,190,106 Federal Express 49.8% 5,186,724 5,216,438 5,190,106 5,141, % 5,186,724 4,803,868 5,216,438 5,141,051 4,803,868 4,714,088 4,617,965 4,448,460 5,051,199 5,125,126 Mountain Air Cargo 33, % 26,564 23,360 22,300 29,510 25,809 20,939 19, Cargolux Airlines International S.A. 102,121 Cargolux Airlines International 1.0% 100,937 S.A. 102,121 98, , % 100, ,223 98, , ,223 68,065 66,557 64,601 67,265 68,597 Eli Lilly International (3) 12, % 11,286 10,758 12,870 12,474 12,870 15,972 18,216 19,206 19,140 Mountain Air Cargo Mountain 33,232 Air Cargo0.3% 26,564 23,360 33, % 22,300 26,564 29,510 23,360 22,300 29,510 25,809 20,939 19, Tradewinds Airlines (1) Eli Lilly International (3) - 0.0% Eli 12,408 Lilly International 0.1% (3) ,360 89,217-11,286 10,758 12, % 12,870 11,286 12,474 10,758 12,870 12,474 12,870 15,972 18,216 19,206 19,140 Other Tradewinds Airlines (1) 9,211 Tradewinds - Airlines 0.0% (1) 0.1% 21,363 18,314 13,292 15,553 20,948 17,052 19,085 23, , % ,360 89,217 - Subtotal 5,347, % 5,346,874 5,367,445 5,291,446 4,962,628 4,841,780 4,738,485 4,598,377 5,250,166 5,325,616 Other Other 9, % 21,363 18,314 9, % 13,292 21,363 15,553 18,314 13,292 15,553 20,948 17,052 19,085 23, ,753 Subtotal Net Change from Prior Year 5,347,078 Subtotal 0.0% 51.3% 5,346, % 5,367,445 5,347, % 5,291, % 6.6% 5,346,874 4,962, % 5,367, % 5,291, % 4,962, % 4,841, % 4,738, % 4,598,377 5,250,166 5,325,616 Net Change from Prior Year Net 0.0% Change from Prior Year -0.4% 1.4% 0.0% 6.6% -0.4% 7.9% 1.4% 6.6% 7.9% 2.2% 3.0% -12.4% -1.4% 1.0% Total Airline Landing Weights 10,422,732 10,012,072 9,636,910 9,550,428 9,396,411 9,278,220 9,186,521 9,150,547 10,442,733 10,568,578 Total Net Airline Change Landing from Prior Weights Year 10,422,732 Total Airline 4.1% Landing 100% Weights 10,012, % 10,422,732 9,636, % 9,550, % 10,012,072 9,396, % 9,636, % 9,550, % 9,396, % 9,278, % 9,186, % 9,150,547 10,442,733 10,568,578 Net Change from Prior Year Net 4.1% Change from 100% Prior Year 3.9% 0.9% 4.1% 100% 1.6% 3.9% 1.3% 0.9% 1.6% 1.3% 1.0% 0.4% -12.4% -1.2% -0.4% (1) Airline either merged with another airline, serves another airline, discontinued operations or no longer serves Indianapolis International Airport. (2) Indianapolis Aviation Partners (dba Million Air) began operations in April (1) (3) Airline Eli Lilly either was merged in the "Other" with another category airline, in 2006 serves (1) and Airline another prior. either airline, merged discontinued with another operations airline, or serves no longer another serves airline, Indianapolis discontinued International operations Airport. no longer serves Indianapolis International Airport. (2) (4) Indianapolis Allegiant Air Aviation began Partners operations (dba in Million February Air) (2) began Indianapolis operations Aviation in April Partners (dba Million Air) began operations in April (3) Eli Lilly was in the "Other" category in 2006 (3) and Eli prior. Lilly was in the "Other" category in 2006 and prior. (4) Allegiant Air began operations in February (4) Allegiant Air began operations in February COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

57 ENPLANED PASSENGER STATISTICS for the last 10 years ended December 31 Listed by current rank Enplaned Passenger Statistics For the Last Ten Years Ended December 31 Listed by Current Rank Number of Number of Enplanements % of Total Enplanements Scheduled Air Carrier: Southwest (1) 1,382, % 1,193, , ,082 American (1) 965, % 473, , ,870 Delta (1) 942, % 958, , ,336 United (1) 589, % 572, , ,850 Allegiant Air (2) 183, % 120, Frontier Airlines (1) 134, % 119, , ,911 Indianapolis Aviation Partners (3) 11, % 7,014 20,264 21,025 US Airways (1) - 0.0% 537, , ,547 AirTran Airways (1) - 0.0% - 206, ,719 Continental (1) - 0.0% Expressjet (1) - 0.0% American Eagle, et.al. (1) - 0.0% ATA (4) - 0.0% Northwest (1) - 0.0% Other 29, % 24,413 21,106 15,378 Total Enplanements 4,239, % 4,008,256 3,686,245 3,598,718 Net Change from Prior Year 5.8% 8.7% 2.4% -2.4% , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,094 26,686 19,273 20,986 10, , , , , , , , , , , , ,407 77, ,243 71,590 74, , ,830 36,959 52, , ,023 97, , , , , ,489 2, , , ,814 18,225 16,769 58, ,311 76,207 97,086 3,687,742 3,770,469 3,770,383 3,740,873 4,088,526 4,142, % 0.0% 0.8% -8.5% -1.3% 2.4% Airline Costs Air Carrier Landing Fees $ 20,216,506 $ 19,018,664 $ 18,073,410 $ 18,048,151 Terminal Apron Fees 1,894,273 2,011,024 1,993,759 2,085,167 Airline Terminal Fees 31,358,509 26,309,293 26,102,447 26,428,972 Security Fees Freight Landing Fees (10,601,365) (10,373,953) (10,304,967) (10,172,021) Total Costs $ 42,867,923 $ 36,965,028 $ 35,864,649 $ 36,390,269 $ 18,004,897 $ 18,237,382 $ 18,193,453 $ 18,136,229 $ 20,425,307 $ 20,791,512 2,017,343 2,934,327 3,806,095 3,388,955 2,621,632 3,066,732 26,634,747 27,120,577 28,773,865 28,645,741 19,600,939 16,252, , , , ,021 (9,722,167) (9,684,646) (9,472,048) (9,166,294) (10,416,247) (10,569,883) $ 36,934,820 $ 38,607,652 $ 41,676,554 $ 41,376,679 $ 32,634,596 $ 29,956,083 Total Costs/ Enplaned Passenger $ Total Costs/ Enplaned Passenger $ $ $ 9.73$ $ $ 9.73 $ $ $ $ $ $ 7.98 $ 7.23 Net Change from Prior Year Net 9.6% Change from Prior Year -5.2% 9.6% -3.8% -5.2% 1.0% -3.8% 1.0% -2.2% -7.4% -0.1% 38.6% 10.4% 7.2% (4) (5) (1) Airline either merged with another airline, (1) serves Airline either another merged airline with or no another longer serves airline, Indianapolis serves another International airline or no Airport. longer serves Indianapolis International Airport. (2) Allegiant Air began operations in February (2) Allegiant Air began operations in February (3) Indianapolis Aviation Partners (dba Million (3) Air) Indianapolis began operations Aviation Partners in April (dba Million Air) began operations in April (4) Variance attributable to a decrease in (4) apron Variance fees and attributable the elimination to a decrease of security in apron fees with fees the and new the airline elimination use agreement of security along fees with the new airline use agreement along with an increase in cargo activity at IND. with an increase in cargo activity at IND. (5) Variance attributable to an increase in (5) terminal Variance and attributable apron fees due to an to increase a full year in of terminal operation and in apron the New fees Indianapolis due to a full Airport year of operation in the New Indianapolis Airport terminal along with a decrease in the year's terminal enplaned along passenger with a decrease count. in the year's enplaned passenger count. 110 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

58 NUMBER OF AIRPORT EMPLOYEES BY IDENTIFIABLE ACTIVITY for the last 10 years ended December 31 Listed by current rank Number of Number of Department Employees % of Total Employees Parking % Terminal Services % Police % Fire % Airfield % Building Maintenance % Airport Security and Dispatch % Information Technology % Engineering % Accounting and Finance % Personnel 9 2.2% Operations 7 1.7% Guest Services 6 1.5% Reliever Airports 5 1.2% Administration 5 1.2% Audit Services 4 1.0% Legal 4 1.0% IMC 3 0.7% Properties 3 0.7% Conservation Management 3 0.7% Marketing 3 0.7% Retail 1 0.2% Executive 1 0.2% Diversity 1 0.2% Public Safety Officers - 0.0% Total Employees % Note: These figures include full and part time employees as of each year end. 1) The Public Safety Officer positions were outsourced during COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

59 SCHEDULE OF INSURANCE IN FORCE as of December 31, 2016 Carrier Name Policy Number Policy Term Abstract of Coverage Limit of Liability Premium American Home Insurance Company /30/2015 to Property All Risk; Real/Personal; Blanket $ 1,000,000,000 $ 687,373 11/30/17 Boiler & Machinery, (incl. in Blanket) included Business Interruption, (as p/o Blanket) included included Terrorism Risk Insurance Act included included IMC specific; Property All Risk; R&P; Blanket incl. above included Boiler & Machinery, (incl. in Blanket) incl. above included Loss or Rents (per finance req. as p/o Blanket) incl. above included Terrorism Risk Insurance Act incl. above included Commerce & Industry Insurance Company AP /30/2016 to Airport and Aviation General Liability 100,000, ,559 11/30/17 Aviation Non-Certified War & Terrorism 100,000,000 5,578 Commerce & Industry Insurance Company AP /30/2016 to Excess Liability - Auto; Excess Liability - EL 150,000,000 included 11/30/17 Excess Non-Certified War & Terrorism 150,000,000 2,092 The Charter Oak Fire Insurance Company P8102G COF-15 11/30/2016 to Automobile Liability and Physical Damage 1,000, ,385 11/30/17 INDIANAPOLIS MSA DEMOGRAPHIC AND ECONOMIC STATISTICS for the last 10 years ended December 31 For the Last Ten Years Ended December 31, 2016 Personal Per Capita Annual Average Income Personal Unemployment Year Population (1) (in millions) (1) Income (1) Rate (2) ,004,230 n/a n/a 4.0% ,986,542 $ 96,004 $ 48, % ,971,060 91,761 46, % ,953,043 88,156 45, % ,928,964 86,719 44, % ,910,347 82,919 43, % ,888,082 77,224 40, % ,873,460 71,127 37, % ,850,321 73,616 39, % ,826,515 70,806 38, % Starr Indemnity & Liability Company WC /30/2016 to Workers Compensation and Statutory 466,837 10/26/17 Employers Liability 1,000,000 included Starr Indemnity & Liability Company WC /30/2016 to Foreign Workers Compensation and Statutory included 10/26/17 Employers Liability 1,000,000 included ACE American Insurance Co. PFFD /30/2016 to Foreign Liability 2,000,000 1,687 11/30/17 Allied World Surplus Lines Insurance Co /30/2016 to Law Enforcement Liability 2,000,000 54,677 11/30/17 (1) The data represents the Indianapolis-Carmel-Anderson Metropolitan Statistical Area (MSA). (2) The data represents the Indianapolis-Carmel-Anderson Metropolitan Statistical Area (MSA) and is not Seasonally Adjusted. n/a = Information is not available. Evanston Insurance Company EO /30/2016 to Medical Professional Liability 250,000/750,000 12,876 11/30/17 Indiana Patient Compensation Fund 12,876 Illinois National Insurance Co /30/2016 to Employed Lawyers Professional Liability 2,000,000 5,104 11/30/17 Westchester Insurance Company G /30/2016 to IAA Board, Directors & Officers Liability 10,000,000 68,168 11/30/17 Crime 1,000,000 included Fiduciary Liability 3,000,000 included Employment Practices Liability 4,000,000 included Note: As defined by the U.S. Office of Management and Budget, the Indianapolis-Carmel-Anderson Metropolitan Statistical Area (MSA) includes Boone, Brown, Hamilton, Hancock, Hendricks, Johnson, Madison, Marion, Morgan, Putnam and Shelby counties in Indiana. Sources: Indiana Department of Workforce Development ( Bureau of Economic Development U.S. Department of Commerce ( Western Surety Various Bond #'s Various Individual Public Official Bonds, 100, ,000 5,325 according to term IAA Board Members per bond Life Insurance Co. of North America SPS /1/2016 to Volunteers Accident/Medical; 2,500/25, /1/17 xs N/O Auto 500,000 included ACE American Insurance Co. G /30/2016 to Underground Storage Tanks Liability 4,000,000 1,373 11/30/17 Lloyd's of London W1D2F /30/2016 to Cyber/Network Liability 5,000,000 41,174 11/30/17 Annual Insurance Premiums; estimated as of December 31, 2016 $ 1,589, COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

60 PRINCIPAL EMPLOYERS IN INDIANAPOLIS-CARMEL-ANDERSON MSA as of December 31, 2016 Capital Asset and Other Airport Information as of December 31, 2016 % of Total Employed in MSA # of Employees Employer Name (1) St. Vincent Hospital and Health 1.75% 17,398 Indiana University Health 1.19% 11,810 Eli Lilly and Company 1.15% 11,479 Community Health Network 1.05% 10,402 Wal-Mart 0.89% 8,830 Marsh Supermarkets 0.80% 8,000 Kroger 0.79% 7,840 IUPUI 0.74% 7,365 Peyton Manning Children's Hospital 0.70% 7,000 IU School of Medicine 0.60% 6,000 Total Employed by Principal Employers 9.66% 96,124 Total Employed in Indianapolis - Carmel - Anderson MSA % 995,254 About the Airport: Indianapolis International Airport (IND) is managed by the (IAA). IAA was established as a municipal corporation by the Indiana General Assembly in 1962 and is responsible for developing, operating, and managing six aviation facilities in the greater metropolitan area. In 2016, IND served about 8.5 million passengers on six major airlines and transported 1.1 million tons of cargo. IND is ranked the seventh largest cargo facility in the nation; and 23rd in the world. It is an important contributor to central Indiana s growing economy, especially in the life sciences, technology, and logistics sectors. based companies improve their competitive position against their foreign counterparts by allowing them to defer, reduce or even eliminate Customs duties on products admitted to the zone. FTZs also benefit the community at-large thanks to the retention and expansion of jobs, capital investment, and increase in the local tax-base. According to the most recent report to Congress, Indiana ranks 16th in the annual dollar volume of merchandise received into FTZs and 10th in the annual dollar volume of merchandise exported from them, out of a total of nearly 250 active zones in the U.S. INzone currently serves 14 active firms employing over 6,500 individuals at their FTZ sites. % of Total Employed in # of Employees Employer Name (1) MSA Eli Lilly and Company 1.36% 12,500 Community Health Network 0.96% 8,800 St. Vincent Hospital and Health 0.85% 7,750 Clarian Health Partners, Inc 0.82% 7,503 IUPUI 0.77% 7,066 Federal Express 0.69% 6,311 Rolls-Royce 0.47% 4,300 WellPoint Inc. 0.46% 4,200 Allison Transmission / Division of GMC 0.44% 4,000 AT&T 0.38% 3,500 Total Employed by Principal Employers 7.19% 65,930 Total Employed in Indianapolis - Carmel - Anderson MSA % 916,391 (1) Principal employers for the Indianapolis - Carmel - Anderson MSA (Local, state and federal employers are excluded). Sources: Principal employers--the Indy Partnership ( Total employed in the Indianapolis-Carmel-Anderson MSA from Indiana Department of Workforce Development, as of December Location: Conveniently located sixteen miles southwest of downtown Indianapolis and within easy expressway access to all parts of the metro area. Col. H. Weir Cook Terminal: The Col. H. Weir Cook Terminal has approximately 1.2 million square feet with 20 gates in Concourse A and 19 gates in Concourse B. TSA security checkpoints are situated before the entrance to each concourse and include separate lines dedicated for the expert traveler, the casual traveler, and for families, those with special needs, and those traveling with medicine or medical devices. Each checkpoint contains up to 12 screening lanes. Once past the checkpoints, a walkway is available for passengers to walk freely between the two concourses. For international arrivals, two gates on Concourse A have been configured to lead directly to a dedicated federal inspection area and baggage claim. International Facilities: INzone is Central Indiana s Foreign Trade Zone (FTZ) service provider. The FTZ program is a national economic incentives program designed to enhance foreign trade. The FTZ program helps U.S. Runways: IND has two primary parallel runways and one crosswind runway: Runway One: 5L/23R 11,200 L, 150 W; CAT III ILS (5L), CAT I ILS (23R) Runway Two: 5R/23L 10,000 L, 150 W; CAT III ILS (5R), CAT I ILS (23L) Runway Three: 14/32 7,280 L, 150 W; CAT I ILS Parking Spaces: The airport s total parking capacity is approximately 14,500 vehicles. Parking Garage: 6,000 spaces Economy Lot: 7,950 spaces Park & Walk Lot: 541 spaces Concessionaires: Food and Beverage: 24 Specialty Retail: 18 News and Gift: 7 Rental Car Companies: 8 NOTE: This page was provided for additional information only. 116 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

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