$50,355,000* Turnpike Refunding Revenue Bonds Series 2013A

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1 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. NEW ISSUE BOOK-ENTRY ONLY PRELIMINARY OFFICIAL STATEMENT DATE APRIL 23, 2013 RATING: S&P: AA- See RATING herein In the opinion of Gilmore & Bell, P.C., Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended (the Code ), (1) the interest on the Series 2013A Bonds (including any original issue discount properly allocable thereto) is excludable from gross income for federal income tax purposes, except as described in this Official Statement, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, (2) the interest on the Series 2013A Bonds is exempt from income taxation by the State of Kansas, and (3) the Series 2013A Bonds have not been designated as qualified tax-exempt obligations within the meaning of Section 265(b)(3) of the Code. See the caption TAX MATTERS. Dated: Date of Delivery $50,355,000* Turnpike Refunding Revenue Bonds Series 2013A Due: As shown on inside cover The Series 2013A Bonds will be issued as fully registered bonds in the denomination of $5,000 or any integral multiple thereof. The Series 2013A Bonds will be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Series 2013A Bonds (the Securities Depository ). Individual purchases will be made in book-entry form only, and purchasers of the Series 2013A Bonds will not receive certificates representing their interest in the Series 2013A Bonds. So long as the Series 2013A Bonds are in book-entry form, principal of and interest on the Series 2013A Bonds will be paid by Security Bank of Kansas City, Kansas City, Kansas, at its principal corporate trust office, as Trustee, Paying Agent, Registrar and Depository, to the Securities Depository, which will remit such payments in accordance with its normal procedures, as described herein. Interest on the Series 2013A Bonds will be payable on September 1, 2013, and semiannually thereafter on March 1 and September 1 of each year. Maturity Schedule on Inside Cover The Series 2013A Bonds are being issued by the Kansas Turnpike Authority (the Authority ) to provide, together with certain other available funds, the amounts required to (a) refund certain bonds described herein that were issued by the Authority to finance or refinance the costs of certain improvements to the Kansas Turnpike, (b) make a deposit to the Series 2013A Debt Service Reserve Account, and (c) pay certain costs incurred in connection with the issuance of the Series 2013A Bonds. The Series 2013A Bonds are not subject to redemption by the Authority prior to maturity. The Series 2013A Bonds and the interest thereon are special, limited obligations of the Authority payable solely out of the Net Revenues and other funds derived by the Authority under the First Amended and Restated Trust Indenture, dated as of November 1, 2009 (the First Amended and Restated Indenture ), between the Authority and Security Bank of Kansas City, as trustee (the Trustee ), and are secured by a pledge and assignment of such Net Revenues and other funds as provided in the First Amended and Restated Indenture, as supplemented by the Series 2013A Supplemental Trust Indenture, dated as of June 1, 2013 (the Series 2013A Supplemental Indenture ). The Series 2013A Bonds will be issued on a parity with the Authority s Outstanding Turnpike Revenue Bonds, Series 2002, Turnpike Revenue Bonds, Series 2004A-1, Taxable Turnpike Revenue Bonds, Series 2009A (Build America Bonds Direct Payment to Issuer), Turnpike Refunding Revenue Bonds, Series 2010A, and Turnpike Refunding Revenue Bonds, Series 2012A, and any Bonds issued in the future on a parity therewith, as described herein. The Series 2013A Bonds shall not be deemed to constitute a debt or liability of the State of Kansas or of any political subdivision thereof within the meaning of any state constitutional provision or statutory limitation and shall not constitute a pledge of the full faith and credit of the State or of any political subdivision thereof, but shall be payable solely from the funds provided for in the First Amended and Restated Indenture and the Series 2013A Supplemental Indenture, as more fully described herein. The Series 2013A Bonds are offered for delivery when, as and if issued and received by the Underwriters, subject to the unqualified approval of their legality by Gilmore & Bell, P.C., Bond Counsel. Certain other legal matters will be passed upon for the Authority by its General Counsel, Larson & Blumreich, Chartered, and by its Special Disclosure Counsel, Kutak Rock LLP. It is expected the Series 2013A Bonds in definitive form will be available for delivery to DTC in New York, New York, on or about June 6, Piper Jaffray & Co. RBC Capital Markets George K. Baum & Company Jefferies *Preliminary, subject to change. This Official Statement is dated April, 2013

2 $50,355,000* KANSAS TURNPIKE AUTHORITY Turnpike Refunding Revenue Bonds Series 2013A Maturities, Principal Amounts, Interest Rates and Yields* Maturity September 1 Principal Amount Interest Rate Yield CUSIP Base: $ 9,520, ,380, ,670, ,985, ,300, ,500,000 CUSIP is a registered trademark of the American Bankers Association. CUSIP numbers have been assigned to this issue by CUSIP Global Services, managed by Standard & Poor s Financial Services LLC, on behalf of the American Bankers Association, and are included solely for the convenience of the Owners of the Series 2013A Bonds. Neither the Authority nor the Underwriters shall be responsible for the selection or correctness of the CUSIP numbers set forth above. *Preliminary, subject to change.

3 KANSAS TURNPIKE AUTHORITY 9401 East Kellogg Wichita, Kansas Telephone - (316) Mary E. Turkington, Chairman Representative Mark Hutton, Secretary-Treasurer Senator Mike Petersen, Member Representative Richard J. Proehl, Member Mike King, KDOT Secretary & Member Michael L. Johnston, President/Chief Executive Officer Carl Compton, Chief Financial Officer and Assistant Secretary-Treasurer Certified Public Accountants Allen, Gibbs & Houlik, L.C. Wichita, Kansas General Counsel Larson & Blumreich, Chartered Topeka, Kansas Bond Counsel Gilmore & Bell, P.C. Financial Advisor Columbia Capital Management, LLC Overland Park, Kansas

4 No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriters to give any information or to make any representation in connection with the offering of the Series 2013A Bonds, other than the information and representations contained in this Official Statement and, if given or made, such information or representation must not be relied upon as having been authorized by the Authority or the Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy the Series 2013A Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information, estimates and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority since the date hereof. The information set forth herein has been obtained from the Authority and is believed to be reliable. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information and this Official Statement is not to be construed as the promise or guarantee of the Underwriters. This Official Statement does not constitute a contract between the Authority or the Underwriters and any one or more of the purchasers or registered owners of the Series 2013A Bonds. This Official Statement contains statements that are forward-looking statements as defined in the Private Securities Litigation Reform Act of When used in this Official Statement, the words estimate, intend, expect and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. THE COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. THE COVER PAGE IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING ALL APPENDICES ATTACHED HERETO TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. APPENDICES C AND D HERETO CONTAIN DEFINITIONS USED IN THIS OFFICIAL STATEMENT. THE SERIES 2013A BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE REGISTRATION, QUALIFICATION OR EXEMPTION OF THE SERIES 2013A BONDS IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE SECURITIES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE JURISDICTIONS NOR ANY OF THEIR AGENCIES HAVE GUARANTEED OR PASSED UPON THE SAFETY OF THE SERIES 2013A BONDS AS AN INVESTMENT, UPON THE PROBABILITY OF ANY EARNINGS THEREON OR UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. THIS PRELIMINARY OFFICIAL STATEMENT IS DEEMED TO BE FINAL (EXCEPT FOR PERMITTED OMISSIONS) BY THE KANSAS TURNPIKE AUTHORITY FOR PURPOSES OF COMPLYING WITH RULE 15c2-12 OF THE SECURITIES AND EXCHANGE COMMISSION.

5 TABLE OF CONTENTS Page INTRODUCTION... 1 THE SERIES 2013A BONDS... 2 Purpose of the Series 2013A Bonds... 2 Description of the Series 2013A Bonds... 2 No Optional Redemption of the Series 2013A Bonds... 3 ESTIMATED SOURCES AND USES OF FUNDS... 3 SECURITY FOR THE SERIES 2013A BONDS... 4 Limited Obligations... 4 Debt Service Reserve Fund... 4 Tolls and Revenues... 4 Additional Bonds... 6 Other Investment Considerations... 8 SECOND AMENDED AND RESTATED INDENTURE... 9 THE KANSAS TURNPIKE AUTHORITY OUTSTANDING BOND ISSUES SCHEDULE OF COMBINED DEBT SERVICE REQUIREMENTS UNDERTAKING TO PROVIDE ONGOING DISCLOSURE TAX MATTERS Opinion of Bond Counsel Regarding the Series 2013A Bonds Other Tax Consequences UNDERWRITING FINANCIAL ADVISOR RATING LITIGATION LEGALITY FOR INVESTMENT ANNUAL FINANCIAL REPORT APPROVAL OF LEGAL PROCEEDINGS MISCELLANEOUS APPENDIX A The Kansas Turnpike APPENDIX B Audited Financial Statements (Fiscal Years Ended December 31, 2012 and 2011) APPENDIX C Summary of Certain Provisions of the First Amended and Restated Indenture APPENDIX D Summary of Certain Provisions of the Second Amended and Restated Indenture APPENDIX E Proposed Form of Opinion of Bond Counsel APPENDIX F Proposed Form of Continuing Disclosure Certificate APPENDIX G Summary of Refunded Bonds APPENDIX H Book-Entry System

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7 OFFICIAL STATEMENT $50,355,000* KANSAS TURNPIKE AUTHORITY Turnpike Refunding Revenue Bonds Series 2013A INTRODUCTION The purpose of this Official Statement, which includes the cover page and the Appendices, is to set forth certain information concerning the Kansas Turnpike Authority (the Authority ) and the Kansas Turnpike (the Turnpike ) in connection with the issuance of the Authority s Turnpike Refunding Revenue Bonds, Series 2013A, in the original aggregate principal amount of $50,355,000* (the Series 2013A Bonds ). The Series 2013A Bonds are issued pursuant to Kansas Statutes Annotated et seq., as amended and supplemented (the Act ), are authorized by a resolution of the Authority adopted on March 28, 2013 (the Bond Resolution ), and are issued under and secured by the First Amended and Restated Trust Indenture dated as of November 1, 2009 (the First Amended and Restated Indenture ), between the Authority and Security Bank of Kansas City, as trustee (the Trustee ), and the Series 2013 Supplemental Trust Indenture, dated as of June 1, 2013 (the Series 2013 Supplemental Indenture ), between the Authority and the Trustee. The Authority s Turnpike Revenue Bonds, Series 2002 (the Series 2002 Bonds ), Turnpike Revenue Bonds, Series 2004A-1 (the Series 2004A-1 Bonds ), Taxable Turnpike Revenue Bonds, Series 2009A (Build America Bonds Direct Payment to Issuer) (the Series 2009A Bonds ), Turnpike Refunding Revenue Bonds, Series 2010A (the Series 2010A Bonds ) and Turnpike Refunding Revenue Bonds, Series 2012A (the Series 2012A Bonds ), described under OUTSTANDING BOND ISSUES herein, are collectively herein referred to as the Outstanding Bonds. The Series 2013A Bonds, the Outstanding Bonds and any parity Bonds that may be issued hereafter, as described under SECURITY FOR THE SERIES 2013A BONDS Additional Bonds herein, are herein referred to collectively as the Parity Bonds. Definitions of certain capitalized terms are set forth in Appendices C and D hereto. All references herein to the First Amended and Restated Indenture and the Series 2013A Supplemental Indenture, are qualified in their entirety by reference to the texts thereof and references herein to the Series 2013A Bonds are qualified in their entirety by reference to the form thereof included in the Series 2013A Supplemental Indenture. Executed copies of such documents will be available for inspection at the administrative offices of the Authority following the delivery of the Series 2013A Bonds. Prior to the issuance of the Series 2012A Bonds on June 7, 2012, all Outstanding Bonds of the Authority were issued pursuant to the Trust Indenture, dated as of June 15, 1985 (the 1985 Indenture, as amended from time to time, the "Original Indenture"), among the Authority, Security Bank of Kansas City (the Trustee ), and the co-trustee named therein, together with thirteen supplemental indentures thereto, pursuant to which the Authority has issued multiple series of revenue bonds to finance and refinance certain Turnpike Projects. The First Amended and Restated Indenture amended and restated the 1985 Indenture in its entirety and became effective on June 7, 2012, the date of issuance of the Series 2012A Bonds. In connection with the authorization of the issuance of the Series 2009A Bonds on November 19, 2009, and the execution and delivery of the Twelfth Supplemental Indenture under the Original Indenture, the Authority, for the purpose of providing certain amendments designed to modernize and simplify the administration of the Original Indenture, also authorized the execution and delivery of two amended and restated trust indentures, pursuant to the provisions of the Twelfth Supplemental Indenture, to replace and be *Preliminary, subject to change.

8 substituted for the Original Indenture. The First Amended and Restated Indenture described above became effective on June 7, 2012, the date of issuance of the Series 2012A Bonds. The Second Amended and Restated Trust Indenture dated as of November 1, 2009 (the Second Amended and Restated Indenture ), between the Authority and the Trustee, will become effective subsequent to the issuance and delivery of the Series 2013A Bonds as described under SECOND AMENDED AND RESTATED INDENTURE herein. The Owners of the Series 2013A Bonds, by reason of their purchase thereof, shall be deemed to have consented to the terms and conditions of the Second Amended and Restated Indenture. The Series 2013A Bonds and the interest thereon are special, limited obligations of the Authority payable solely out of the Net Revenues and other funds derived by the Authority under the First Amended and Restated Indenture and the Series 2013A Supplemental Indenture, and are secured by a pledge and assignment of such Net Revenues and other funds as provided in the First Amended and Restated Indenture, as supplemented by the Series 2013A Supplemental Indenture. The Series 2013A Bonds shall not be deemed to constitute a debt or liability of the State of Kansas or of any political subdivision thereof within the meaning of any state constitutional provision or statutory limitation and shall not constitute a pledge of the full faith and credit of the State of Kansas or of any political subdivision thereof, but shall be payable solely from the funds provided for in the First Amended and Restated Indenture, as supplemented by the Series 2013A Supplemental Indenture, as more fully described herein. The issuance of the Series 2013A Bonds shall not, directly, indirectly or contingently, obligate the State or any political subdivision thereof to levy any form of taxation therefor or to make any appropriation for their payment. See SECURITY FOR THE SERIES 2013A BONDS herein. The Series 2013A Bonds will be issued on a parity with the Outstanding Bonds and any Parity Bonds issued in the future, as described herein. Purpose of the Series 2013A Bonds THE SERIES 2013A BONDS The Series 2013A Bonds are being issued to provide funds, together with certain other funds that are and will become available, to (a) refund the Refunded Bonds (as hereinafter defined), which were issued to finance or refinance the costs of certain repairs, replacements and improvements to the Turnpike, (b) make a deposit to the Series 2013A Debt Service Reserve Account, and (c) pay certain costs incurred in connection with the issuance of the Series 2013A Bonds. See ESTIMATED SOURCES AND USES OF FUNDS herein. Description of the Series 2013A Bonds The Series 2013A Bonds will be dated the date of delivery thereof. The Series 2013A Bonds will mature on the dates and will bear interest (computed on the basis of a 360-day year of twelve 30-day months), payable on March 1 and September 1 in each year, commencing September 1, 2013 (each, an Interest Payment Date ), at the rates per annum as set forth on the inside cover page of this Official Statement. Security Bank of Kansas City, as Trustee, is designated as the Authority s Paying Agent for the payment of the principal of, premium, if any, and interest on the Series 2013A Bonds. Payment of the principal of and premium, if any, on the Series 2013A Bonds shall be made upon the presentation and surrender of such Series 2013A Bonds as the same become due and payable at the principal office of the Trustee. Payment of the interest on each Series 2013A Bond shall be made by the Trustee on each Interest Payment Date to the person appearing on the registration books of the Authority maintained by the Trustee as the registered owner thereof on the Record Date by wire transfer to the registered owner of the Series 2013A Bonds, if such registered owner shall have requested in writing payment by such method and shall have provided the Trustee with an account number and other necessary information for such purpose before the Record Date. 2

9 The Series 2013A Bonds shall bear interest from the Interest Payment Date to which interest has been paid next preceding the authentication date thereof, unless the authentication date thereof is an Interest Payment Date in which case from such date or unless the authentication date shall be prior to the first Interest Payment Date, then from the Issue Date; provided, however, that if interest on any Series 2013A Bond shall be in default at the time of authentication of such Series 2013A Bond, it shall bear interest from the date to which interest has been paid in full on the Series 2013A Bond surrendered for exchange or transfer, or if no interest has been paid, then from the Issue Date. The Series 2013A Bonds are issued only in fully registered form, and will be initially offered only in book-entry form, registered in the name of Cede & Co., as nominee of The Depository Trust Company ( DTC ), New York, New York, which will act as Securities Depository of the Series 2013A Bonds. See Appendix H hereto. For so long as Cede & Co. remains the registered owner of the Series 2013A Bonds, payments of principal and interest on the Series 2013A Bonds will be made by the Trustee directly to DTC or Cede & Co. as the nominee of DTC. The Series 2013A Bonds are issuable in minimum denominations of $5,000 or any integral multiple thereof. No Optional Redemption of the Series 2013A Bonds The Series 2013A Bonds are not subject to redemption prior to maturity. ESTIMATED SOURCES AND USES OF FUNDS The proceeds from the sale of the Series 2013A Bonds, together with certain other funds that are and will become available, will be used to (i) current refund the entire $51,430,000 outstanding principal amount of the Series 2003A Bonds described in Appendix G hereto (the Refunded Bonds ), (ii) make a deposit to the Series 2013A Debt Service Reserve Account, and (iii) pay costs of issuance of the Series 2013A Bonds. The Authority will irrevocably deposit moneys with Security Bank of Kansas City as Escrow Trustee in accordance with the provisions of an Escrow Deposit Agreement in an amount sufficient to make the full and timely payment of all principal of and interest on the Refunded Bonds on or prior to their redemption date on September 1, Upon such irrevocable deposit, the Refunded Bonds will no longer be deemed to be Outstanding. The Authority will irrevocably direct the redemption of the Refunded Bonds on the redemption dates and at the redemption prices as described in Appendix G hereto. The proceeds of the Series 2013A Bonds are expected to be expended by the Authority as follows: Sources of Funds: Principal Amount of the Series 2013A Bonds Less Underwriters Discount Less Original Issue Discount Plus Original Issue Premium Other Available Funds Total Sources of Funds Uses of Funds: Deposit to Escrow Fund Deposit to Series 2013A Debt Service Reserve Account 1 Costs of Issuance 2 Total Uses of Funds $ $ $ $ $ $ $ $ $ $ 1 An amount equal to the Debt Service Reserve Requirement for the Series 2013A Bonds. 2 Includes all costs of issuance, the payment of which is contingent upon the issuance of the Series 2013A Bonds. 3

10 SECURITY FOR THE SERIES 2013A BONDS Limited Obligations The Series 2013A Bonds and the interest thereon are limited obligations of the Authority, payable exclusively out of the Net Revenues of the Authority and all moneys and securities from time to time deposited in certain funds and accounts established by the First Amended and Restated Indenture and the Series 2013 Supplemental Indenture and held by the Trustee. The Series 2013A Bonds will stand on a parity as to the payment of principal and interest with the Series 2002 Bonds, the Series 2004A-1 Bonds, the Series 2009A Bonds, the Series 2010A Bonds and the Series 2012A Bonds described under OUTSTANDING BOND ISSUES herein, and any Parity Bonds and Parity Indebtedness hereafter authorized and issued under the First Amended and Restated Indenture or the Second Amended and Restated Indenture. The Series 2013A Bonds do not constitute a debt or a general obligation of the State of Kansas, or any political subdivision thereof, and are not payable in any manner by taxation, and neither the faith and credit nor the taxing power of the State of Kansas or of any political subdivision thereof is pledged to the payment of the principal of or the interest on the Series 2013A Bonds, and the Series 2013A Bonds shall not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Debt Service Reserve Fund The Original Indenture and the First Amended and Restated Indenture require that the Authority establish separate debt service reserve accounts for each respective series of Bonds. Thus, the Trustee has created separate debt service reserve accounts for the Series 2002 Bonds, the Series 2004A-1 Bonds, the Series 2009A Bonds, the Series 2010A Bonds, the Series 2012A Bonds and, pursuant to the Series 2013A Supplemental Indenture, the Trustee will create a separate debt service reserve account for the Series 2013A Bonds (the Series 2013A Debt Service Reserve Account ) and deposit therein proceeds of the Series 2013A Bonds in an amount equal to the Debt Service Reserve Requirement of the Series 2013A Bonds. Moneys in each respective debt service reserve account may be used solely for the payment of principal of and interest on the corresponding series of Bonds if sufficient funds therefor are not available in the Debt Service Fund. Once the Second Amended and Restated Indenture becomes effective, the Debt Service Reserve Fund will become a common reserve fund for all Outstanding Bonds rather than consisting of separate accounts contained therein that are restricted to the payment of principal of and interest on particular series of Outstanding Bonds. See the caption SECOND AMENDED AND RESTATED INDENTURE herein for a brief description of certain other provisions regarding the Debt Service Reserve Fund that will become applicable once the Second Amended and Restated Indenture becomes effective. Also see Summary of Certain Provisions of the Second Amended and Restated Indenture in Appendix D hereto. Tolls and Revenues The Authority is authorized under all applicable laws and has the legal right and power to fix, revise, charge and collect tolls for the use of the Turnpike and has covenanted in the First Amended and Restated Indenture to promptly cause to be collected all tolls imposed for use of the Turnpike. Pursuant to the First Amended and Restated Indenture, the Authority covenants that tolls will be classified in a reasonable manner to cover all traffic, so that the tolls may be uniform in application to all traffic falling within any reasonable class regardless of the status or character of any person, firm or corporation participating in the traffic, that no reduced rate of toll will be allowed within any such class except through the use of commutation or other tickets or privileges based upon frequency or volume of use (e.g., commuter discounts) or toll collection methods (e.g., discounts for electronic or other automatic toll collection users), and that no free vehicular passage will be permitted over the Turnpike except (1) in the discretion of the 4

11 Authority, to current or former officers and employees of the Authority and those engaged in the performance of duties in connection with the operation of the Turnpike and, provided the Authority is in compliance with the provisions described in the next paragraph, such other person as the Authority, in its discretion, may determine, so long as such free vehicular passage is not provided to the general public and does not have a material adverse affect on the Revenues, (2) as to that portion of the Turnpike from its Eastern terminus in Kansas City, Kansas, to the interchange at Kansas Highway 7 in Wyandotte County, Kansas, and (3) as to that portion of the Turnpike from its Southern terminus at the Kansas-Oklahoma state line, to the exit at South Haven, Kansas. Classifications of tolls may be based on a variety of factors as reasonably determined by the Authority, including without limitation, characteristics of individual vehicles (e.g., weight, number of axles, fuel efficiency, level of emissions), travel conditions (e.g., congestion pricing based on time of day, speed travelled or otherwise) and level of service provided (e.g., use of high occupancy lanes, weight-distance based tolls). Pursuant to the First Amended and Restated Indenture, the Authority shall, in accordance with applicable legal requirements, fix, revise, and charge such tolls for the use of the Turnpike, that, together with any other available funds, will produce Revenues at least equal to the greater of: (1) an amount sufficient to: (A) pay the costs of the operation and maintenance of the Turnpike; (B) pay the principal of and interest on all Indebtedness as and when the same becomes due; and (C) satisfy the requirements provided in this Indenture with respect to deposits to the Debt Service Reserve Fund and the Replacement Reserve Fund; and (2) an amount sufficient to enable the Authority to have in each Fiscal Year a Debt Service Coverage Ratio that will be not less than If in any Fiscal Year the Revenues are insufficient to satisfy the above requirements, within 120 days after the end of such Fiscal Year, the Authority shall increase the tolls, and reduce Authority expenses, in such manner as may be necessary such that the above requirements shall be met for the following Fiscal Year. If (i) the Authority fails to take such action within 135 days after the end of such Fiscal Year, (ii) the Net Revenues for such Fiscal Year are less than 120% of the Debt Service Requirements for such Fiscal Year or (iii) the Revenues are insufficient to meet the requirements set forth in clauses (1) and (2) above in any two consecutive Fiscal Years, the Authority shall employ a Consultant within 30 days thereafter to make recommendations as to a revision of the schedule of tolls and/or reductions in Authority expenses in order to provide that the above requirements shall be met for subsequent Fiscal Years. A copy of the Consultant's report and recommendations shall be filed with the Authority and the Trustee and each Credit Facility Provider within 150 days after the end of such Fiscal Year and shall be furnished to any Owner of the Bonds requesting a copy of the same at such requesting Owner's cost. The Authority shall follow the recommendations of the Consultant to the extent feasible. So long as provisions of this paragraph are complied with and so long as the Debt Service Reserve Fund has not been drawn upon to pay debt service as a result of the failure of the Authority to satisfy the provisions of clauses (1) or (2) above, the requirements described in this paragraph shall be deemed to have been complied with for such Fiscal Year even if the Revenues are insufficient to satisfy the above requirements for such Fiscal Year and will not constitute an Event of Default under this Indenture. The Authority covenants not to reduce any tolls imposed for the use of the Turnpike that would cause the total projected toll revenues for any of the next five succeeding Fiscal Years, as projected by the Authority, to decrease by greater than one percent (1%), unless prior to such reduction in tolls there is delivered to the Trustee a written report of a Consultant to the effect that the projected Debt Service Coverage Ratio for each of the next five succeeding Fiscal Years, after giving effect to such reduction in tolls, is not less than See Summary of Certain Provisions of the First Amended and Restated Indenture in Appendix C hereto and Summary of Certain Provisions of the Second Amended and Restated Indenture in Appendix D hereto for additional regarding the fixing and revisions of tolls. 5

12 Additional Bonds The Authority is authorized to issue Bonds in one or more Series from time to time under the First Amended and Restated Indenture and pursuant to one or more Supplemental Indentures for the purpose of (a) paying all or a portion of the Costs of the Project, (b) refunding all or a portion of one or more Series of Bonds then Outstanding or all or a portion of any Indebtedness issued or incurred by the Authority to finance a portion of the Turnpike, (c) funding reserve deposits and capitalized interest with respect to such Bonds and/or (d) paying Costs of Issuance. The number of Series of Bonds and the aggregate principal amount of the Bonds which may be executed, authenticated and delivered under the First Amended and Restated Indenture is not limited except as described herein in Appendix C under the captions Authorization of Bonds, General Provisions for Issuance of Bonds and Permitted Indebtedness. A Series of Bonds may be issued in one or more subseries. Parity Bonds may be issued under and equally and ratably secured by the First Amended and Restated Indenture on a parity (except as otherwise provided in the First Amended and Restated Indenture) with any other Parity Bonds at any time and from time to time, upon compliance with the conditions set forth in the First Amended and Restated Indenture. See the captions Authorization of Bonds, General Provisions for Issuance of Bonds, and Permitted Indebtedness in Appendix C. The Authority shall designate each series of Parity Bonds as Parity Bonds in the Supplemental Indenture authorizing such Parity Bonds. Subordinate Bonds may be issued under the First Amended and Restated Indenture on a subordinate basis as to the payment of principal, premium and interest to the Parity Bonds at any time and from time to time, upon compliance with the conditions set forth in First Amended and Restated Indenture. The Authority shall designate each series of Subordinate Bonds as Subordinate Bonds in the Supplemental Indenture authorizing such Subordinate Bonds. In the First Amended and Restated Indenture, the Authority covenants not incur any Indebtedness, other than the Indebtedness described below, which may be incurred upon satisfaction of the following conditions and so long as there shall not exist any Event of Default under the First Amended and Restated Indenture (unless such Indebtedness is to be incurred to cure such Event of Default): (a) Long-Term Indebtedness. The Authority may incur Long-Term Indebtedness if prior to incurrence thereof or, if such Long-Term Indebtedness was incurred in accordance with category of Permitted Indebtedness and the Authority desires to have such Indebtedness reclassified as having been issued as Long-Term Indebtedness, prior to such reclassification, there is delivered to the Trustee the following: (1) (A) An Authority Certificate demonstrating that the ratio determined by dividing (x) a numerator equal to the Net Revenues for the most recent Fiscal Year for which audited financial statements are available by (y) a denominator equal to the Maximum Annual Debt Service with respect to all Outstanding Parity Bonds and Parity Indebtedness after giving effect to the incurrence of such Long-Term Indebtedness, is not less than 1.25; or (B) If toll increases with respect to the Turnpike have been approved and become effective but have not been in effect for a full Fiscal Year or if the Bonds proposed to be issued will finance an expansion of the Turnpike roadway, a written report of a Consultant to the effect that, for each of the next five succeeding Fiscal Years (or, if such Bonds are being incurred in connection with an expansion of the Turnpike roadway, the five Fiscal Years succeeding the projected completion date of such expansion), the ratio determined by dividing (x) a numerator equal to the projected Net Revenues for each of such Fiscal Years by (y) a denominator equal to the Maximum Annual Debt Service with respect to all Outstanding Parity Bonds and Parity Indebtedness 6

13 after giving effect to the incurrence of such Long-Term Indebtedness, is not less than 1.30; and (2) In the event such Long-Term Indebtedness is issued as Variable Rate Bonds or other Indebtedness bearing interest at a variable rate and an accelerated repayment of the principal of such Indebtedness is required in the event of a failure to remarket such Long-Term Indebtedness or a similar market or credit failure in connection therewith by the Supplemental Indenture or other document pursuant to which such Long-Term Indebtedness is authorized and issued, or would be required by a related Qualified Liquidity Facility or Qualified Credit Facility in the event that the provider of such facility became the owner of such Indebtedness following such event, an Authority Certificate or written report of a Consultant meeting the requirements of (1) above with the following modifications: (x) the Maximum Annual Debt Service with respect to all Outstanding Parity Bonds and Parity Indebtedness after giving effect to the incurrence of such Long-Term Indebtedness shall be increased by the maximum amount of principal payments that would be required during any Fiscal Year as a result of the accelerated repayment of principal contemplated by such documents or facilities; and (y) 1.05 is substituted for 1.25 in (1)(A) above and 1.10 is substituted for 1.30 in (1)(B) above. (3) In addition to compliance with the requirements of subparagraphs (1) and (2) above, before any Long-Term Indebtedness is incurred, the Authority shall deliver to the Trustee a certificate of a Consultant to the effect that : (A) (B) The Net Revenues for the last completed Fiscal Year (calculated assuming that the schedule of tolls in effect on the date of the certificate had been in effect for such Fiscal Year) were equal to or greater than the Net Revenue Requirement calculated for such Fiscal Year; and The estimated Net Revenues to be received in each of the five Fiscal Years immediately following the completion of the Additional Project, if any, to be paid for out of the proceeds of the Additional Bonds, will be equal to or greater than the Net Revenue Requirement for the respective Fiscal Years; provided, that with respect to the issuance of Refunding Indebtedness, the certificate required in subparagraph (3)(B) above shall not be required. (b) (c) Refunding Indebtedness. The Authority may incur Refunding Indebtedness for the purpose of refunding any Outstanding Long-Term Indebtedness, if the Authority determines that such refunding is in the best interest of the Authority and that, taking into account the issuance of the proposed Refunding Indebtedness and the application of the proceeds thereof and any other funds available to be applied to such refunding, the annual Debt Service Requirements of such Refunding Indebtedness (net of any Government Interest Subsidy Payments) does not exceed the annual Debt Service Requirements of the Outstanding Long-Term Indebtedness being refunded (net of any Government Interest Subsidy Payments) in any Fiscal Year. The Authority may also incur Refunding Indebtedness under any other category of Permitted Indebtedness if the conditions of the First Amended and Restated Indenture are satisfied. Subordinated Indebtedness. The Authority may from time to time issue Subordinate Bonds or Subordinated Indebtedness without limit as to principal amount for any purpose in connection with the Turnpike, including, without limitation, the financing of any part of the Costs of the Project with respect to a Project being financed by such Subordinate Bonds or Subordinated Indebtedness or the refunding of any Outstanding Bonds or other Indebtedness of the 7

14 Authority. Such Subordinate Bonds or Subordinated Indebtedness shall be payable out of and may be secured by a pledge of such amounts in the Subordinated Indebtedness Fund as may from time to time be available therefor; provided, however, that any such payment or pledge shall be, and shall be expressed to be, subordinate and junior in all respects to the pledge and lien created under the First Amended and Restated Indenture as security for the Parity Bonds and any Parity Indebtedness. Any issue of Subordinated Bonds or Subordinated Indebtedness may have such rank or priority with respect to any other issue of Subordinate Bonds or Subordinated Indebtedness as may be provided in the First Amended and Restated Indenture or other resolution, indenture or instruments, including any Supplemental Indentures, securing such issue of Subordinate Bonds or Subordinated Indebtedness and may contain such other provisions as are not in conflict with the provisions of the First Amended and Restated Indenture. The Authority may not incur any Indebtedness other than Bonds unless the Authority shall have delivered to the Trustee an Opinion of Counsel to the effect that the incurrence of such Indebtedness is permitted by the Act. Indebtedness may be classified and incurred under any of the above-referenced categories with respect to which the tests set forth above are met. The Authority may elect to have Indebtedness that was classified and issued pursuant to one category, reclassified as having been incurred under another category of Permitted Indebtedness described in the First Amended and Restated Indenture, by demonstrating compliance with such other provision on the assumption that such Indebtedness is being reissued on the date of delivery of the materials required to be delivered under such other provision. From and after such demonstration, such Indebtedness shall be deemed to have been incurred under the provision with respect to which such compliance has been demonstrated until any subsequent reclassification of such Indebtedness. See Summary of Certain Provisions of the First Amended and Restated Indenture in Appendix C hereto and Summary of Certain Provisions of the Second Amended and Restated Indenture in Appendix D hereto for additional information with respect to the issuance of Additional Bonds. Other Investment Considerations The amount of Net Revenues available to the Authority for payment of the principal of and interest on the Series 2013A Bonds is subject to various factors, including, but not limited to, the availability and cost of gasoline and related oil products, general economic conditions in either the geographic region of the Turnpike or nationally causing a change in the use of the Turnpike, demand for and the availability of reliable and cost efficient mass transit systems, the costs of maintaining and operating the Turnpike or any change in potential liability arising from the Authority s operation of the Turnpike and the Authority s ability to obtain affordable liability insurance therefor. Adverse conditions of any one of such elements, or other not described, could adversely affect the amount of Net Revenues available to the Authority for its payment of the Series 2013A Bonds. No representations or assurance can be made or given that revenues will be realized in amounts necessary to make the payments in amounts sufficient to pay the principal of and interest on the Series 2013A Bonds. Future revenues and expenses are subject to future events that are unpredictable and may be beyond the Authority s influence or control. It is possible that the Bondholders could suffer a loss of all or a part of their investments if an Event of Default occurs by the Authority. The rights of any owner of the Series 2013A Bonds and the enforceability of the Series 2013A Bonds, the First Amended and Restated Indenture and the Second Amended and Restated Indenture and any other agreements or obligations referred to herein are subject to: (a) the exercise of judicial discretion in accordance with general principles of equity (whether applied by a court of law or a court of equity), including judicial limitation on rights to specific performance; (b) the valid exercise of the constitutional powers of the United 8

15 States of America and of the sovereign police and taxing powers of state and other governmental units having jurisdiction; and (c) bankruptcy, insolvency, reorganization, moratorium or other similar laws heretofore or hereafter in effect affecting creditors rights, to the extent constitutionally applicable. SECOND AMENDED AND RESTATED INDENTURE The Second Amended and Restated Indenture shall automatically become effective as an amendment and restatement of the First Amended and Restated Indenture on the first date upon which there are no longer any Outstanding Bonds that were issued before the date of issuance of the Series 2009A Bonds. The Owners of the Series 2009A Bonds, the Series 2010A Bonds, the Series 2012A Bonds, the Series 2013A Bonds and any other Series of Bonds issued after the date of issuance of the Series 2009A Bonds, by reason of their purchase of such Series of Bonds, have and shall be deemed to have consented to the terms and conditions of the Second Amended and Restated Indenture. See OUTSTANDING BOND ISSUES herein and Summary of Certain Provisions of the Second Amended and Restated Indenture in Appendix D hereto. Upon the issuance of the Series 2013A Bonds, the only Outstanding Bonds issued before the date of issuance of the 2009A Bonds will be the Series 2002 Bonds in the aggregate principal amount of $8,915,000 (with a final principal maturity of September 1, 2017) and the Series 2004A-1 Bonds in the aggregate principal amount of $34,355,000 (with a final maturity of September 1, 2034). Assuming retirement of the Outstanding Series 2002 Bonds and Series 2004A-1 Bonds in accordance with their scheduled principal maturities and no advancement of their retirement by means of a refunding, a cash defeasance or a purchase and cancellation, the Second Amended and Restated Indenture will become effective on September 1, The Authority has expressed an intention, subject to market conditions, to refund or otherwise redeem the Series 2004A-1 Bonds (which are subject to redemption on and after September 1, 2014) in advance of their maturity, in which event the Second Amended and Restated Indenture would become effective no later than September 1, In addition to the changes to be effected by the Second Amended and Restated Indenture described above under the caption SECURITY FOR THE SERIES 2013A BONDS Debt Service Reserve Fund, other changes become effective on the effective date of the Second Amended and Restated Indenture, including: (i) provisions with respect to the calculation of Debt Service Requirements on Variable Rate Bonds and defeasance provisions applicable to Variable Rate Bonds; (ii) provisions permitting the Authority to deduct Government Interest Subsidy Payments in calculating Debt Service Requirements for certain purposes; (iii) provisions permitting the Authority to enter into Qualified Swap Agreements and the treatment of payments with respect to Qualified Swap Agreements; (iv) new definitions of Balloon Indebtedness, Commitment Indebtedness, Completion Indebtedness, Parity Indebtedness, Purchase Money Indebtedness and Short-Term Indebtedness and new provisions and conditions with respect to the incurrence of various types of Permitted Indebtedness by the Authority; (v) provisions permitting the Replacement Reserve Fund Requirement to be determined by the Authority instead of a Consultant; (vi) provisions permitting the Authority to deposit a Qualified Reserve Facility instead of cash to satisfy any or all of the Debt Service Reserve Requirement; and 9

16 (vii) expanded provisions permitting the Authority and the Trustee to amend the Second Amended and Restated Indenture without consent of the Owners of the Bonds. For a more complete summary of certain provisions of the Second Amended and Restated Indenture, see Summary of Certain Provisions of the Second Amended and Restated Indenture in Appendix D hereto. THE KANSAS TURNPIKE AUTHORITY The Authority was created by the Kansas Legislature in 1953 pursuant to the Act as a body politic and corporate, constituting a public instrumentality of the State of Kansas. The Act empowers the Authority to acquire, construct, maintain, repair and operate projects at such locations as may be determined by law, and the Authority may issue its bonds for any of its corporate purposes, payable solely from the tolls and revenues pledged for their payments, and to refund its bonds all as provided in the Act. The Authority operates the Turnpike which was completed and opened for travel in The Turnpike, the only toll road in the State of Kansas, is 236 miles long and connects at its northern end with Kansas City, Kansas, and at its southern end with the Kansas/Oklahoma border near South Haven, Kansas. The Turnpike is a multi-lane, divided highway with full control of access with acceleration and deceleration lanes provided at all access points and service areas which offer fuel, food and other conveniences at various intervals. See Appendix A hereto for additional information concerning the Turnpike and the Authority, including a discussion of recent statutory changes. See Appendix B hereto for the financial statements of the Authority for the years ended December 31, 2012 and The Act permits the Authority to fix, revise, charge and collect tolls and charges for the use of any of its turnpike projects and to charge and collect rents, fees, rates and other income. Such tolls are not subject to supervision or regulation by the State of Kansas or any other commission, board, bureau or agency thereof. OUTSTANDING BOND ISSUES In 1954, the Authority issued its Turnpike Revenue Bonds in the aggregate principal amount of $160,000,000 for the construction of the Turnpike. Thereafter the Authority issued various series of bonds for the purpose of constructing additional improvements to the Turnpike and for the purpose of refunding all or part of various series of its bonds. As of the date of this Official Statement and prior to the issuance of the Series 2013A Bonds, Series 2002 Bonds in the aggregate principal amount of $8,915,000 (with a final principal maturity of September 1, 2017), Series 2003A Bonds in the aggregate principal amount of $51,430,000 (with a final principal maturity of September 1, 2018), Series 2004A-1 Bonds in the aggregate principal amount of $34,355,000 (with a final principal maturity of September 1, 2034), Series 2009A Bonds in the aggregate principal amount of $77,425,000 (with a final principal maturity of September 1, 2039), Series 2010A Bonds in the aggregate principal amount of $59,445,000 (with a final principal maturity of September 1, 2027) and Series 2012A Bonds in the aggregate principal amount of $35,735,000 (with a final principal maturity of September 1, 2027) are Outstanding under the Original Indenture. Upon the issuance of the Series 2013A Bonds, the $215,495,000 aggregate remaining Outstanding principal amounts of the Series 2002 Bonds, Series 2004A-1 Bonds, Series 2009A Bonds, Series 2010A and Series 2012A Bonds (collectively, the Outstanding Bonds ) will be secured on a parity with the Series 2013A Bonds under the First Amended and Restated Indenture. See ESTIMATED SOURCES AND USES OF FUNDS and SCHEDULE OF COMBINED DEBT SERVICE REQUIREMENTS herein. 10

17 SCHEDULE OF COMBINED DEBT SERVICE REQUIREMENTS The following table assumes the refunding and defeasance of the Refunded Bonds and sets forth for the years ending December 31 the annual debt service requirements of the Series 2013A Bonds and the Outstanding Bonds (columns may not total due to rounding): Year Ending Series 2013A Series 2013A Outstanding Combined Dec. 31 Principal Interest Bonds (1) Debt Service 2013 $ 14,847, ,718, ,719, ,710, ,717, ,221, ,766, ,596, ,985, ,760, ,278, ,882, ,367, ,363, ,418, ,198, ,119, ,040, ,954, ,867, ,776, ,679, ,576, ,356, ,130, ,895, ,645,334 Total $400,594,390 (1) Interest on the Series 2009A (Build America Bonds Direct Payment to Issuer) is included on a gross basis and does not include expected receipt of federal subsidy payments. See Historical Financial Information and Projected Financial Information in Appendix A hereto for a presentation of certain historical information and certain projected information with respect to the operations of the Authority and historical and projected debt service coverage of the Bonds. UNDERTAKING TO PROVIDE ONGOING DISCLOSURE Pursuant to the terms contained in the Bond Resolution, the Authority will execute and deliver a Continuing Disclosure Certificate for the benefit of the Bondowners and the Beneficial Owners of the Series 2013A Bonds and to assist the Underwriters in complying with the requirements of Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 (17 C.F.R. Part 240, c2-12) (the Rule ). The proposed form of the Continuing Disclosure Certificate is attached hereto as Appendix F. The Authority has not failed in any material respect to comply with any covenants made in connection with any previous continuing disclosure undertakings pursuant to the Rule. 11

18 TAX MATTERS The following is a summary of the material federal and State of Kansas income tax consequences of holding and disposing of the Series 2013A Bonds. This summary is based upon laws, regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly on a retroactive basis). This summary does not discuss all aspects of federal income taxation that may be relevant to investors in light of their personal investment circumstances or describe the tax consequences to certain types of owners subject to special treatment under the federal income tax laws (for example, dealers in securities or other persons who do not hold the Series 2013A Bonds as a capital asset, tax exempt organizations, individual retirement accounts and other tax deferred accounts, and foreign taxpayers), and, except for certain tax laws of the State of Kansas, does not discuss the consequences to an owner under any state, local or foreign tax laws. The summary does not deal with the tax treatment of persons who purchase the Series 2013A Bonds in the secondary market. Prospective investors are advised to consult their own tax advisors regarding federal, state, local and other tax considerations of holding and disposing of the Series 2013A Bonds. Opinion of Bond Counsel Regarding the Series 2013A Bonds In the opinion of Gilmore & Bell, P.C., Bond Counsel, under the law existing as of the issue date of the Series 2013A Bonds: Federal Tax Exemption. The interest on the Series 2013A Bonds (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes. Alternative Minimum Tax. Interest on the Series 2013A Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations, but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. Kansas Tax Exemption. The stated interest on the Series 2013A Bonds is exempt from income taxation by the State of Kansas. Bank Qualification. The Series 2013A Bonds have not been designated as qualified tax-exempt obligations for purposes of Section 265(b) of the Code. Bond Counsel s opinions are provided as of the date of the original issue of the Series 2013A Bonds, subject to the condition that the Authority comply with all requirements of the Internal Revenue Code of 1986, as amended (the Code ) that must be satisfied subsequent to the issuance of the Series 2013A Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The Authority has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Series 2013A Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2013A Bonds. Bond Counsel is expressing no opinion regarding other federal, state or local tax consequences arising with respect to the Series 2013A Bonds, but has reviewed the discussion under the heading TAX MATTERS Other Tax Consequences. The proposed form of Bond Counsel s opinion is attached as Appendix E. Other Tax Consequences Original Issue Discount. For federal income tax purposes, original issue discount ( OID ) is the excess of the stated redemption price at maturity of a bond over its issue price. The issue price of a Series 2013A Bond is the first price at which a substantial amount of the Series 2013A Bonds of that maturity have 12

19 been sold (ignoring sales to bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers). Under Section 1288 of the Code, OID on tax exempt bonds accrues on a compound basis. The amount of OID that accrues to an owner of a bond during any accrual period generally equals (1) the issue price of that bond, plus the amount of OID accrued in all prior accrual periods, multiplied by (2) the yield to maturity on that bond (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), minus (3) any interest payable on that bond during that accrual period. The amount of OID accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes, and will increase the owner s tax basis in that bond. Prospective investors should consult their own tax advisors concerning the calculation and accrual of OID. Original Issue Premium. If a Series 2013A Bond is purchased at a price that exceeds the stated redemption price at maturity of the bond, the excess of the purchase price over the stated redemption price at maturity constitutes premium on that Series 2013A Bond. Under Section 171 of the Code, the purchaser of that bond must amortize the premium over the term of the bond using constant yield principles, based on the purchaser s yield to maturity. As premium is amortized, the owner s basis in the bond and the amount of tax exempt interest received will be reduced by the amount of amortizable premium properly allocable to the owner. This will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of the bond prior to its maturity. Even though the owner s basis is reduced, no federal income tax deduction is allowed. Prospective investors should consult their own tax advisors concerning the calculation and accrual of bond premium. Sale, Exchange or Retirement of Series 2013A Bonds. Upon the sale, exchange or retirement (including redemption) of a Series 2013A Bond, an owner of the Series 2013A Bond generally will recognize gain or loss in an amount equal to the difference between the amount of cash and the fair market value of any property received on the sale, exchange or retirement of the Series 2013A Bond (other than in respect of accrued and unpaid interest) and the owner s adjusted tax basis in the Series 2013A Bond. To the extent the Series 2013A Bonds are held as a capital asset, such gain or loss will be capital gain or loss and will be long term capital gain or loss if the Series 2013A Bond has been held for more than 12 months at the time of sale, exchange or retirement. Reporting Requirements. In general, information reporting requirements will apply to certain payments of principal, interest and premium paid on the Series 2013A Bonds, and to the proceeds paid on the sale of the Series 2013A Bonds, other than certain exempt recipients (such as corporations and foreign entities). A backup withholding tax will apply to such payments if the owner fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. The amount of any backup withholding from a payment to an owner will be allowed as a credit against the owner s federal income tax liability. Collateral Federal Income Tax Consequences. Prospective purchasers of the Series 2013A Bonds should be aware that ownership of the Series 2013A Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with excess net passive income, foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Series 2013A Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Series 2013A Bonds should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Series 2013A Bonds, including the possible application of state, local, foreign and other tax laws. 13

20 UNDERWRITING The Series 2013A Bonds are being purchased by the underwriters identified on the cover page hereof (the Underwriters ), for whom Piper Jaffray & Co. is acting as Senior Manager and Representative. The Underwriters have agreed, subject to certain customary conditions precedent to closing, to purchase the Series 2013A Bonds from the Authority at an aggregate price of $ (which represents the principal amount of the Series 2013A Bonds less an underwriting discount of $, less original issue discount of $ and plus original issue premium of $ ). The Bond Purchase Agreement between the Underwriters and the Authority provides that the Underwriters will purchase all of the Series 2013A Bonds if any are purchased. The obligation of the Underwriters to accept delivery of the Series 2013A Bonds is subject to various conditions contained in the Bond Purchase Agreement. Piper Jaffray & Co., one of the Underwriters of the Series 2013A Bonds, has entered into a distribution agreement ( Distribution Agreement ) with Charles Schwab & Co., Inc. ( CS&Co ) for the retail distribution of certain securities offerings at the original issue prices. Pursuant to the Distribution Agreement, CS&Co will purchase Series 2013A Bonds from Piper Jaffray & Co. at the original issue price less a negotiated portion of the selling concession applicable to any Series 2013A Bonds that CS&Co sells. Piper Jaffray & Co. and Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation, entered into an agreement (the Agreement ) which enables Pershing LLC to distribute certain new issue municipal securities underwritten by or allocated to Piper Jaffray & Co., including the Series 2013A Bonds. Under the Agreement, Piper Jaffray & Co. will share with Pershing LLC a portion of the fee or commission paid to Piper Jaffray & Co. The Underwriters intend to offer the Series 2013A Bonds to the public initially at the offering prices set forth on the inside cover page of this Statement, which may subsequently change without any requirement of prior notice. The Underwriters reserve the right to join with dealers and other underwriters in offering the Series 2013A Bonds to the public. The Underwriters may offer and sell Series 2013A Bonds to certain dealers at prices lower than the public offering price. In connection with this offering, the Underwriters may overallot or effect transactions which stabilize or maintain the market price of the Series 2013A Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriters and their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriters and their affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Authority, for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority. The Underwriters and their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. 14

21 FINANCIAL ADVISOR Columbia Capital Management, LLC, Overland Park, Kansas, is serving as financial advisor to the Authority with respect to the Series 2013A Bonds. The financial advisor has assisted the Authority in matters relating to the issuance of the Series 2013A Bonds and provided other financial advice regarding the Authority s financial plan. Columbia Capital Management, LLC, is a financial and investment advisory and consulting organization and is not engaged in the underwriting, marketing or trading of municipal securities or other negotiable instruments. RATING Standard & Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ) has assigned a rating of AA- with a stable outlook to the Series 2013A Bonds. Such rating reflects only the views of such organization at the time such rating is given, and the Authority and the Underwriters make no representation as to the appropriateness of such rating. An explanation of the significance of such rating may be obtained only from such rating agency. The Authority furnished such rating agency with certain information and materials relating to the Series 2013A Bonds that have not been included in this Official Statement. Generally, rating agencies base their ratings on the information and materials so furnished and on investigations, studies and assumptions by the rating agencies. There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing such rating, circumstances so warrant. Neither the Underwriters nor the Authority has undertaken any responsibility to bring to the attention of the owners of the Series 2013A Bonds any proposed revision or withdrawal of a rating of the Series 2013A Bonds or to oppose any such proposed revision or withdrawal. Any such revision or withdrawal of such a rating could have an adverse effect on the market price and marketability of the Series 2013A Bonds. LITIGATION There is no litigation or administrative action pending in any court or, to the best knowledge of the Authority, threatened, which would restrain or enjoin the issuance of the Series 2013A Bonds or in any way contest or affect the validity of the Series 2013A Bonds, or which concerns the proceedings of the Authority taken in connection with the issuance of the Series 2013A Bonds, the adoption of the Series 2013A Supplemental Indenture or the collection of the Revenues or pledge or application of the Net Revenues, or which contests the powers of the Authority, with respect to the foregoing. LEGALITY FOR INVESTMENT The Act provides in relevant part that: Bonds issued by the authority under the provisions of this act are hereby made securities in which all insurance companies, trust companies, banking associations, investment companies, executors, administrators, trustee and other fiduciaries may properly and legally invest funds, including capital in their control or belonging to them. Such bonds are hereby made securities which may properly and legally be deposited with and received by any state or municipal officer or any agency or political subdivisions of the state for any purpose for which the deposit of bonds or obligations of the state is now or may hereafter be authorized by law. K.S.A ANNUAL FINANCIAL REPORT The financial statements of the Authority for the years ended December 31, 2012 and 2011 set forth in Appendix B of this Official Statement have been audited by Allen, Gibbs & Houlik, L.C., Wichita, Kansas, independent auditors, as stated in their report appearing therein. 15

22 APPROVAL OF LEGAL PROCEEDINGS All legal matters incident to the authorization and issuance of the Series 2013A Bonds by the Authority are subject to the unqualified approving opinion of Gilmore & Bell, P.C., Bond Counsel. Certain legal matters will be passed upon for the Authority by its General Counsel, Larson & Blumreich, Chartered, and by its Special Disclosure Counsel, Kutak Rock LLP. MISCELLANEOUS The references herein to the Act, the First Amended and Restated Indenture, the Second Amended and Restated Indenture and the Series 2013A Bonds, respectively, are brief outlines of certain provisions thereof. Such outlines do not purport to be complete or comprehensive. All references herein to the Act, the First Amended and Restated Indenture, the Second Amended and Restated Indenture, the Series 2013A Bonds, the Constitution and laws of the State of Kansas, as well as the proceedings of the Authority, are qualified in their entirety by reference to such documents, laws and proceedings. Reference is made to such reports in their entirety for complete information with respect to the subjects discussed in said references and copies thereof are available for inspection at the administrative offices of the Authority. All statements in this Official Statement involving matters of opinion, estimates, forecasts, projections or the like, whether or not expressly so stated, are intended as such and not as representations of fact. No representation is made that any of such statements will be realized. This Official Statement is submitted in connection with the initial offering and sale of the Series 2013A Bonds and may not be used, as a whole or in part, for any other purpose. The execution and delivery of this Official Statement by the President/Chief Executive Officer of the Authority has been duly authorized by the Authority. KANSAS TURNPIKE AUTHORITY By Michael Johnston, President/Chief Executive Officer 16

23 APPENDIX A General THE KANSAS TURNPIKE The Kansas Turnpike (the Turnpike ) was completed and opened for travel in The Turnpike, the only toll road in the State of Kansas, is 236 miles long and connects at its northern end with Kansas City, Kansas, and at its southern end with the Kansas/Oklahoma border near South Haven, Kansas. The Turnpike is a multi-lane, divided highway with full control of access with acceleration and deceleration lanes provided at all access points and service areas which offer fuel, food and other conveniences at various intervals. Powers The Authority was established pursuant to the Act as a body politic and corporate, constituting a public instrumentality of the State of Kansas. The Act empowers the Authority to acquire, construct, maintain, repair and operate projects at such locations as may be determined by law, and the Authority may issue its bonds for any of its corporate purposes, payable solely from the tolls and revenues pledged for their payments, and to refund its bonds all as provided in the Act. The Act permits the Authority to fix, revise, charge and collect tolls and charges for the use of any of its Turnpike projects and to charge and collect rents, fees, rates and other income. Such tolls are not subject to supervision or regulation by the State of Kansas or any other commission, board, bureau or agency thereof. Members The Authority consists of five members, one of whom is elected as Chairman. Two of the members are appointed by the Governor of the State of Kansas for four-year terms. Two members serve by reason of their positions in the Kansas Legislature, one being Chairman of the Kansas Senate Transportation Committee and the other being a member of the House Transportation Committee appointed by the Speaker of the House. The fifth member is the Secretary of the Kansas Department of Transportation. The latter three members serve on the Authority for the duration of their respective State terms. The present members of the Authority are as follows: Mary E. Turkington, Chairman, Representative Mark Hutton, Secretary-Treasurer; Senator Mike Petersen, Member; Representative Richard J. Proehl, Member; and Mike King, KDOT Secretary and Member. Mary E. Turkington, Chairman. Ms. Turkington was appointed as a Member of the Authority on May 1, 1997, and was appointed to serve a fourth four-year term on the Authority Board which will end in April Ms. Turkington retired as Executive Director of the Kansas Motor Carriers Association ( KMCA ). She represented the highway transportation industry before the Kansas Legislature and worked with state and federal agencies on transportation issues during her tenure with KMCA. She serves on many civic and business boards and is active in various other organizations in the highway safety and related industry fields. Representative Mark Hutton, Secretary-Treasurer. Representative Hutton was appointed to the Board by Gov. Sam Brownback in July He is CEO of Hutton Construction Corp. and is a lifelong Kansan. He serves on numerous construction industry boards, including the Board of Directors of the Associated General Contractors of Kansas, Kansas State University College of Engineering Advisor Board and the Kansas Construction Education Foundation. Senator Mike Petersen, Member. Senator Petersen became a Member of the Authority in January 2013 as a result of his position as the Chairman of the Senate Transportation Committee. He was first

24 elected to the Legislature in He is an industrial electrician in Wichita, where he resides with his wife, Shelby, when not in Topeka. Representative Richard J. Proehl, Member. Representative Proehl was appointed a Member of the Authority by the Speaker of the House of Representatives in January He is the Chairman of the House Transportation Committee. He has served in the Legislature since He is a banker in Parsons, and he and his wife, Linda, have two children and five grandchildren. Mike King, Member. Mr. King was appointed to the Board as an ex-officio Member after being named Interim Secretary of the KDOT by Gov. Sam Brownback in March 2012 and was confirmed by the State Senate on May 2, Secretary King is a former McPherson business owner serving the oil/gas/industrial markets in Kansas and adjoining states. He and his wife, Peggy, are from Hesston and have four children. As discussed under Recent Statutory Changes below, Secretary King has been designated as the Director of Operations of the Turnpike effective July 1, Staff Michael L. Johnston, born 1945, was appointed President and Chief Executive Officer in January Immediately prior to his appointment he was the Secretary of Transportation for the State of Kansas, a cabinet-level position he was appointed to in July As Secretary of Transportation he was a member of the Authority. Mr. Johnston served as a State Senator from 1976 to 1991 and was Senate Democratic Leader from 1985 to He served as a member of the 1987 Governor s Task Force on Kansas Highways, which outlined a comprehensive highway program now undertaken by the Kansas Department of Transportation. He earned a Bachelor s Degree in Business Administration from Pittsburg State University and a Master s Degree in Public Administration from the University of Kansas. Mr. Johnston is 67 and expects to retire from the Authority on or about July 1, See Recent Statutory Changes below. Carl W. Compton, born 1961, has been the Authority s Chief Financial Officer since 2008 and also serves as the Authority s Assistant Secretary-Treasurer. He manages the Authority s financial operations and strategic financial planning. He has been with the Authority for more than 20 years and played a vital role in the research and development of the Authority s K-TAG program. He is a Wichita State University Accounting graduate and completed the Uniform CPA examination in David E. Jacobson, P.E., born 1962, began employment with the Authority in 1994 as a Design and Construction Engineer. He was named Chief Engineer in December 2005 overseeing the engineering, design and construction of projects on the Kansas Turnpike. He received a Bachelor of Science Degree in Civil Engineering from Kansas State University in 1986 and is a Professional Engineer in the State of Kansas. He is a member of the Kansas Society of Professional Engineers. Eric J. Becker, born 1970, began employment with the Authority in 1998 as Trainer/Special Projects Manager. In December 2005 he was named Maintenance Director overseeing more than 100 employees and is responsible for road and building maintenance on the Kansas Turnpike. He received a Degree in Business Management in 1992 from Kansas State University. Marty R. Wiltse, born 1958, began employment with the Authority in May 1978 as a part time Communications Operator. Three years later he became a full time employee of the Authority and in January 1983 was promoted to Accountant in the Controller s Department. In 1984 Mr. Wiltse became a Systems Analyst in the Toll Audit Department and in August 1985 he was appointed Director of Audit and Information Systems. In January of 1998, he became the Chief Information Officer, assuming oversight of all technologyrelated areas of the Authority. Mr. Wiltse served as Chairman of the Information Resources Management Subcommittee of the International Bridge, Tunnel and Turnpike Association ( IBTTA ) in 1988, and currently serves as a board member for the Greater Wichita Area Sports Commission. He received a Bachelor s Degree in Business Administration and Accounting from Wichita State University. A-2

25 Alan D. Bakaitis, born 1953, began employment as Director of Toll Operations in April of Mr. Bakaitis oversees the operations and personnel at 22 toll plaza locations. There are six District Supervisors who report directly to him. Additionally, the department employs 13 Assistant Toll Supervisors, approximately 225 toll collectors, and other support personnel. Lisa C. Callahan, born 1954, began employment as Public & Employee Relations Director with the Authority in July Ms. Callahan received a Bachelor of Science Degree in Journalism/Business from Wichita State University in She serves in various executive capacities for the Authority and as a representative on various professional and business boards and served as President of IBTTA in Recent Statutory Changes On April 19, 2013, Governor Sam Brownback signed into law legislation which designates the Secretary of Transportation of the State of Kansas (the Secretary ) as the director of operations of the Turnpike effective July 1, 2013 through July 1, Under the new law, the Secretary or the Secretary s designee is granted all powers necessary to carry out the daily administration of the toll roads, bridges, structures and facilities constructed, maintained of operated under the Act. The new law also provides that the Turnpike may not use Turnpike toll or other revenue in ways other than those previously established under Kansas statutes: maintaining, repairing and operating turnpike projects; paying principal and interest on bonds and creating reserves for the same; fixing and collecting tolls; and entering into certain types of contracts. The new law adds an effective date of July 1, 2016, to provisions in previous law regarding contracting between the Turnpike and the Kansas Department of Transportation ( KDOT ) for three years (generally, allowing the Turnpike to contract with KDOT for use of KDOT resources for certain types of work related to Turnpike projects) and adds a new provision with respect to contracting between the Turnpike and KDOT that expires on July 1, The new law requires that duplication of effort, facilities, and equipment between KDOT and the Turnpike be minimized in operation and maintenance of turnpikes and highways in the state, and authorizes the Turnpike and the Secretary to take actions including the temporary transfer of personnel, property and equipment from the Turnpike to the Secretary and from the Secretary to the Turnpike. The provisions described in this paragraph expire July 1, Interchanges The Turnpike currently provides 23 interchanges including the Eastern Terminal near Bonner Springs and the Southern Terminal near the Oklahoma border. Because the Turnpike employs a closed ticket system method of toll collection, most present interchanges are of the trumpet design which uses a structure over the Turnpike mainline to bring interchange ramp movements together at a common toll plaza. Each interchange is equipped with a number of toll lanes. Service Areas There are six service areas currently operating on the Turnpike. Each facility serves both directions of travel at the service area locations. The facilities constructed by the Authority are leased to concessionaires for the sale of motor fuel, food and other customer conveniences. Rental payments are set using both fixed annual minimum rates and payments based upon the number of gallons of fuel sold as well as a percentage of non-fuel sales. A-3

26 Historical Operating Statistics General. The 236-mile Turnpike was completed in 1956 and since then its toll-paying traffic has grown almost continuously from 3.6 million vehicles in 1957 to over 35 million vehicles in Turnpike tolls were most recently increased on February 1, This toll increase was approximately 10% for cash customers driving 2-, 3- or 4-axle vehicles and 5% for cash customers driving vehicles with 5 or more axles. All Electronic Toll Collection ( ETC ) fees also were increased approximately 5%. For ETC customers, a full-length 236-mile trip from the South Haven interchange near the Oklahoma border to the Eastern Terminal in Kansas City costs $9.75 (or 4.1 cents per mile) for passenger cars and $30.25 (or cents per mile) for a five-axle tractor-trailer. In contrast, the same trip for cash customers costs $12.00 (or 5.08 cents per mile) for passenger cars and $31.50 (or cents per mile) for a five-axle tractor-trailer. Traffic. After dropping 1.3% in 2011 in comparison to 2010, passenger car traffic on the Turnpike for 2012, grew by over 7.6% in comparison to 2011, reflecting improved weather conditions and the opening of a new toll plaza at the Kansas Star Casino. Commercial vehicle traffic increased 3.15% in 2011 in comparison to For 2012, commercial traffic increased slightly, in comparison to Overall revenues, while dropping slightly from 2010 to 2011, increased 3.8% from 2011 to Certain interchanges and sections of the Turnpike are more heavily used than others. As would be expected, traffic is greater around the cities of Kansas City, Topeka and Wichita. Traffic between interchanges, or Turnpike section density, also is heaviest around the large cities. Turnpike traffic varies by month of the year. Traffic is heaviest in the summer months when the weather is good and many vacationers are on the interstates. The winter months have the least traffic. February, with the fewest days of any month and much inclement weather, is typically the lightest month for Turnpike traffic. Toll Revenues The Turnpike. Gross toll revenues have generally increased between 1957 ($3.9 million) and 2012 ($87.57 million). Gross toll revenues grew by over 43% between 2000 and A toll increase of 10% for passenger vehicle cash customers and 5% for all other customers was made effective February 1, Electronic Toll Collection. Since 1994 the Authority has been installing electronic equipment at each toll plaza to allow automatic toll collection and improve efficiency. Known as the K-TAG system, customers participating in the program are provided with a transponder to affix to vehicle windshields to which the Authority s electronic toll collection equipment both reads and writes information at entry on the Turnpike which is then electronically retrieved at exit in order to charge the proper fare and make the necessary charges to the customer s account. In 1995 over 38,000 tags were in use. In 2012 there were more than 147,000 active accounts. Every interchange received modifications as part of the implementation of electronic toll collection ranging from adding toll collection equipment to complete remodeling. The Authority continues to expand the distribution of a new version of thin, lightweight electronic tags. The new tags, descriptively referred to as Sticker tags, do not have a battery. The new tags are also less expensive, yet provide better performance than the tags originally issued to customers for the K-TAG program. The smaller form factor also helped the Turnpike begin sale of tags at staffed KTA toll booths in Self-Pay Technology. Starting with the opening of the fully-automated Leavenworth County interchange in late 2009, the Turnpike installed more unstaffed toll booths throughout the system. Referred to as Self-Pay locations, these are similar to the self-checkout lanes available in many large retail stores. While two formerly staffed plazas have been converted to be almost exclusively Self-Pay, most of the installations were in toll booths staffed during the daytime that are switched over to the Self-Pay mode during overnight shifts. A-4

27 Future Plans for the Turnpike System Following conclusion of a 9-mile pavement replacement project, the substantial completion of the Kansas River Bridges replacement project, and the construction of a new toll plaza at the Kansas Star Casino near Mulvane in 2011, the Kansas Turnpike looks forward to a relatively quiet construction period in 2013 and a ramp-up of bridge rehabilitation projects starting in 2014, the cost of which is expected to be paid with funds on hand. Historical Financial Information The following table presents certain historical information (dollars in thousands) with respect to the operations of the Authority. See Appendix B for the audited financial statements of the Authority for the fiscal years ended December 31, 2012 and Year Toll Revenues 1 Miscellaneous Income 2 Operating History (dollars in thousands) Total Revenues Operation & Maintenance Expenses Net Revenues Debt Service Debt Service Coverage 2003 $67,954 $5,824 $73,778 $33,428 $40,351 $19, x ,670 7,677 79,347 34,438 44,909 19, ,622 9,706 83,328 36,253 47,075 21, ,746 12,375 88,121 37,226 50,895 21, ,196 13,396 91,592 40,221 51,371 20, ,437 10,916 89,353 39,489 49,864 20, ,475 7,274 86,749 37,293 49,456 20, ,586 10,322 94,908 38,438 56,470 24, ,363 9,288 93,651 38,913 54,738 24, ,568 8,102 95,671 40,280 55,390 25, Net of adjustments and discounts. 2 Includes interest earnings on all Authority funds except construction funds. Also includes BABS subsidy. [Remainder of this page intentionally left blank] A-5

28 Projected Financial Information The following table presents certain projected financial information (dollars in thousands) with respect to the operations of the Authority prepared by Authority staff. The projections reflect a toll increase of 5% for all customers effective February 1, 2013, and assume a toll increase of 5% in Because the Authority instituted a 10% toll increase for passenger vehicle cash customers, the projections below may understate Toll Revenues. Year Toll Revenues 1 Misc. Income 2 Total Revenues Operating Projections* (dollars in thousands) Operation & Maintenance Expenses Net Revenues Debt Service 3 Debt Service Coverage BAB Interest Subsidy 4 Coverage with Subsidy 2013 $94,402 $7,439 $101,841 $43,172 $58,669 $24, x $1, x ,346 7, ,108 44,834 58,274 24, , ,300 7, ,249 46,584 57,665 24, , ,126 8, ,315 48,427 61,888 24, , ,147 8, ,501 50,370 61,131 24, , Net of adjustments and discounts. 2 Includes interest earnings on all Authority funds. 3 Debt Service rounded to nearest $1,000; Above columns reflect the issuance of the Series 2013A Bonds and the refunding and defeasance of the Refunded Bonds as described under ESTIMATED SOURCES AND USES OF FUNDS in the Official Statement. Debt Service Requirements with respect to the Series 2013A Bonds and all other Outstanding Bonds that are not Refunded Bonds are described under SCHEDULE OF COMBINED DEBT SERVICE REQUIREMENTS in the Official Statement. 4 Assumes the timely receipt of the cash subsidy payments from the United States Treasury with respect to the Authority s Series 2009A Bonds issued on November 19, 2009, that the Authority elected to treat as Build America Bonds as an addition to Net Revenues. Assumes that the Authority will receive subsidy payments during 2013 of $1,725,000 (decreased from an originally expected $1,806,000) and that it will receive subsidy payments during of $1,643,000 annually (decreased from an originally expected $1,806,000 annually). Subsidy payments were originally expected to be in an amount equal to 35% of the interest payable on the Series 2009A Bonds, but are assumed to be reduced as a result of federal budgetary reductions from sequestration and future expected budget reductions. The Authority cannot provide any assurance that receipts will not be further reduced. Note: Does not include any Additional Bonds that may be issued subsequent to the issuance of the Series 2013A Bonds. Pension Obligations Authority employees participate in the Kansas Public Employees Retirement System ( KPERS ), a defined benefit plan that is funded through contributions by employers and the individual employees. The employer rate of contributions is determined under State law and the Authority, as a participating employer, pays the statutorily mandated contribution amount. Currently, the employees contribute either 4% or 6% of their salary to the retirement system, depending on their date of entrance into the system. The Authority makes an annual contribution to the retirement system in an amount based on a percentage of each employee s salary. This percentage is determined by actuarial studies and legislative action and fluctuates annually. The KPERS Comprehensive Annual Financial Report for its fiscal year ended June 30, 2011 indicates that as of December 31, 2010, the date of the most recent actuarial valuation described in the report, KPERS s funded ratio was 59% compared with a funded ratio of 62% for the prior year, and that the unfunded actuarial liability had increased from $8.3 billion at December 31, 2010 to $9.2 billion at December 31, The Comprehensive Annual Financial Reports of KPERS are available by contacting KPERS at 611 S. Kansas Avenue, Suite 100, Topeka, Kansas *Preliminary, subject to change. A-6

29 Kansas law places a cap on employer contributions to the KPERS plans, which has resulted in a statutory contribution rate for employers that has been below the actuarial required contribution rate for many years. In an effort to address the unfunded actuarial liability of the KPERS plans, the Kansas Legislature approved legislation in 2011 that, following consideration of additional reforms identified by a study commission created by such legislation, may become effective to increase employer contributions at a rate greater than the 0.6% of covered compensation rate of increase in recent years. The 2012 Kansas Legislature approved changes to the KPERS plans, including the creation of a new cash balance retirement plan for most employees hired after 2014 and the application of a portion of state-owned casino revenues to pay down KPERS unfunded liabilities. There can be no assurance regarding what effect any future legislative action with respect to KPERS would have on the amount of employer contributions by the Authority. The Authority made contributions to the KPERS plan of $1,390,719, $1,250,160 and $1,155,853 for fiscal years ended June 30, 2012, 2011 and Employees and Patrol The Authority employs approximately 320 persons full-time, supported by over 100 part-time employees, to administer and operate the Turnpike. There is no union representation of any of the personnel, and no work stoppages or concerted job actions have occurred since the opening of the Turnpike. In addition, the Authority pays the costs of patrolling the Turnpike by the Kansas Highway Patrol. Maintenance Routine maintenance on the Turnpike is performed by personnel employed by the Authority and principally includes minor repairs to road surfaces, shoulders and buildings, as well as snow removal, grass mowing, striping, sealing and equipment repair. The expenses of routine maintenance and the costs of improvements, replacements and other capital expenditures are included as operating expenses; provided, however, that certain major repairs may be charged to the Replacement Reserve Fund and/or the General Fund. The budgets for maintaining and operating the Turnpike during Fiscal Years ending December 31, 2013, and 2012 are summarized as follows: Operation and Maintenance Budgets Fiscal Year 2013 Fiscal Year 2012 Administration $ 7,172,900 $ 6,954,315 Toll Collection 11,294,400 10,986,700 Maintenance 10,255,825 9,912,800 Patrol 6,253,890 5,971,300 Insurance 7,833,280 7,766,500 TOTAL $42,810,295 $41,591,615 Recent Improvements to the Turnpike Fully-Automated Leavenworth County Interchange. In December 2009, the Authority opened its first fully-automated interchange located at Milepost 212 in Leavenworth County. The new interchange serves customers in the towns of Tonganoxie and Eudora. Automatic Ticket Issuing Machines (also in use at many other Turnpike plazas) provide toll tickets automatically to customers entering the Turnpike. Fares for exiting customers are calculated and paid using cash or credit/debit cards via Self-Pay machines. K-TAG electronic toll collection customers can enter and exit through the interchange without stopping. Service Areas. In 2011, at no monetary cost to the Authority, the restaurant franchisee at the Topeka service area renovated that facility and inaugurated new food concepts. The improvements and more popular food brands increased sales and rental income at that location, in comparison to sales and income prior to the A-7

30 renovations. All service area locations, except for the Topeka restaurant, were re-bid in late 2012 resulting in generally higher minimum guaranteed rents for the Authority. The new 10-year contracts start in April The restaurant franchisee at Topeka was also the winning bidder for the Towanda and Matfield Green service area restaurants. They plan to remodel these restaurants and offer one additional new food concept at each service area at the outset of their leases. Replacement of Lawrence Interchanges and Kansas River Bridges. A major construction project was substantially completed in 2011 to replace the bridges over the Kansas River in Lawrence. As part of the project to replace the bridges, work was done to both plaza 202 and plaza 204 on either side of the river to facilitate the flow of traffic through the construction zone. Pavement Replacement Project. A 6.3 mile pavement replacement project was completed in This project provided the complete replacement of the pavement, including the pavement base, on a segment of the Turnpike east of Lawrence. Safety improvements also were made to the ramps leading to and from the Lawrence Service Area. Additionally, this project marked the replacement of the final section of original 1950s era concrete pavement on the I-70 portion of the Turnpike. Litigation At the present time the Authority and its related entities are involved in only a few lawsuits arising in the ordinary course of activities, including claims in which the Authority is a named party. These cases involve claims for compensatory damages, which in the opinion of the Authority s General Counsel are within the limits of the liability insurance policies carried by the Authority. These claims, when finally determined, will not likely result, in the opinion of General Counsel, either in the aggregate or individually, in a final judgment against the Authority which would materially and adversely affect the financial position of the Authority. None of the claims or cases now pending challenge either the Series 2013A Bonds or the authority to issue the Series 2013A Bonds, or the Authority s pledge of revenues and funds, as outlined herein. Additional Statistical Information Please see tables presenting unaudited information prepared by the Authority with respect to Operating Summaries; Service Area Traffic and Sales; Activity by Interchange, and Monthly Vehicles, Mileage and Toll Revenue which appear on pages in the Statistical Data section of Appendix B. A-8

31 APPENDIX B AUDITED FINANCIAL STATEMENTS (FISCAL YEARS ENDED DECEMBER 31, 2012 AND 2011)

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33 KANSAS TURNPIKE AUTHORITY FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION YEARS ENDED DECEMBER 31, 2012 AND 2011 WITH INDEPENDENT AUDITORS REPORT

34 KANSAS TURNPIKE AUTHORITY FINANCIAL STATEMENTS WITH SUPPLEMENTARY INFORMATION YEARS ENDED DECEMBER 31, 2012 AND 2011 WITH INDEPENDENT AUDITORS REPORT

35 KANSAS TURNPIKE AUTHORITY FINANCIAL STATEMENTS Years Ended December 31, 2012 and 2011 TABLE OF CONTENTS Page Independent Auditors Report Management s Discussion and Analysis Basic Financial Statements: Balance Sheets Statements of Revenues, Expenses and Changes in Net Position Statements of Cash Flows Notes to Financial Statements Required Supplementary Information Supplementary Information: Combining Balance Sheet Combining Statement of Revenues, Expenses and Changes in Net Position Summary of Toll Revenue Statistical Data: Operating Summaries Vehicles, Mileage and Revenue Schedule of Service Area Traffic and Sales Schedule of Activity by Interchange Schedule of Monthly Vehicles, Mileage and Toll Revenue This is a copy of the Company s annual financial statements reproduced from an electronic file. An original copy of this document is available at the Company s office.

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37 INDEPENDENT AUDITORS REPORT Board of Directors Kansas Turnpike Authority Report on the Financial Statements We have audited the accompanying financial statements of the Kansas Turnpike Authority as of and for the years ended December 31, 2012 and 2011, and the related notes to the financial statements, which collectively comprise the Turnpike s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and the 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. Auditors 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 audits to obtain reasonable assurance about whether the financial statements are free of 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 qualified audit opinion. 301 N. Main, Suite 1700 Wichita, Kansas (316) (316) fax