Audit report, George L. Smith, II, Georgia World Congress Center Authority, a component unit of the state of Georgia, year ended June 30, 2003

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
-TABLE OF CONTENTS-

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S REPORT ON BASIC FINANCIAL STATEMENTS

ACCOMPANIED BY REQUIRED SUPPLEMENTARY INFORMATION AND

SUPPLEMENTARY INFORMATION

1

MANAGEMENT'S DISCUSSION AND ANALYSIS

5

EXHIBITS

BASIC FINANCIAL STATEMENTS

A BALANCE SHEET

PROPRIETARY FUNDS-ENTERPRISE FUNDS

12

B STATEMENT OF REVENUES, EXPENSES AND CHANGES IN

FUND NET ASSETS

PROPRIETARY FUNDS-ENTERPRISE FUNDS

14

C STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS-ENTERPRISE FUNDS

16

D STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES

FIDUCIARY FUNDS-AGENCY FUNDS

19

E NOTES TO THE FINANCIAL STATEMENTS

20

SUPPLEMENTARY INFORMATION

SCHEDULES

1 CASH AND CASH EQUIVALENTS

38

2 INVESTEMENTS

39

3 RECONCILIATION OF SALARIES

40

SECTION II

COMPLIANCE AND INTERNAL CONTROL REPORT

REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL

REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED

IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

43

SECTION I FINANCIAL

DEPARTMENT OF AUDITS AND ACCOUNTS

254 Washington Street, S.W., Suite 214

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

Atlanta, Georgia 30334-8400

September 19, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the George L. Smith, II Georgia World Congress Center Authority
and Honorable Daniel A. Graveline, Executive Director

INDEPENDENT AUDITOR'S REPORT ON BASIC FINANCIAL STATEMENTS ACCOMPANIED BY REQUIRED SUPPLEMENTARY INFORMATION AND SUPPLEMENTARY INFORMATION

Ladies and Gentlemen:

We have audited the accompanying basic financial statements of the George L. Smith, II Georgia World Congress Center Authority, a component unit of the State of Georgia, as of and for the year ended June 30, 2003, as listed in the table of contents. These financial statements are the responsibility of the Authority's management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the proprietary major funds and the agency funds of the George L. Smith, II Georgia World Congress Center Authority, as of June 30, 2003, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

-1-

In accordance with Government Auditing Standards, we have also issued a report dated September 19, 2003 on our consideration of the George L. Smith, II Georgia World Congress Center Authority's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report considering the results of our audit. The management's discussion and analysis on pages 5 through 9 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the George L. Smith, II Georgia World Congress Center Authority's basic financial statements. The accompanying supplementary information (Schedules 1 through 3) is presented for purposes of additional analysis and is not a required part of the basic financial statements. The accompanying supplementary information (Schedules 1 through 3) has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
Respectfully submitted,
~~~
Rus ell W. Hinton, CPA, CGFM Sta Auditor
RWH:jbw
-3-

MANAGEMENT'S DISCUSSION AND ANALYSIS
The following is a discussion and analysis of the George L. Smith, II Georgia World
Congress Center Authority's financial performance, providing an overview of the activities for the fiscal year ended June 30, 2003 and comparing them to fiscal year ended June 30, 2002. The Georgia World Congress Center Authority manages the activities of the Georgia World Congress Center, the Georgia Dome and Centennial Olympic Park. Please read it in conjunction with the Authority's financial statements, which follow this section.
HIGHLIGHTS
Net Assets: As of the close of fiscal year 2003, the Authority's combined ending net assets totaled $65.5 million. Of this total, $31.5 is invested in capital assets, $3.2 million is restricted to Phase IV construction, $20 million is restricted by Georgia Dome Bond Covenants and $10.7 is unrestricted. The net assets of $65.5 million are down from fiscal year 2002's $99.6 million due to the Authority paying out $28.4 million to the Georgia State Financing and Investment Commission for Phase IV construction and Furniture, Fixtures & Equipment costs.
Long-term Debt: The Authority's total long-term debt obligations consist of $172.7 million in revenue bonds for the Georgia Dome.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the Georgia World Congress Center Authority's basic financial statements. The Authority's basic financial statements are reported as a special purpose government (component unit of the State of Georgia) engaged in business-type activities and are comprised of fund financial statements for proprietary (enterprise) funds and fiduciary (agency) funds. A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities or objects. The Georgia World Congress Center Authority uses fund accounting to reflect results of operations and to ensure and demonstrate compliance with financial-related legal requirements.
This report also contains other supplementary information in a9dition to the basic financial statements.
Proprietary Funds: The Georgia World Congress Center Authority uses Enterprise Funds, a type of Proprietary Fund, to account for activities of the Georgia World Congress Center (Regular) Fund, the Georgia Dome Fund and the Centennial Olympic Park Fund, all of which are considered to be major funds. Enterprise funds utilize accrual accounting; the same method used by private sector businesses and report activities that provide materials and services to the general public. The basic proprietary fund financial statements are the Balance Sheet, the Statement of Revenues, Expenses and Changes in Fund Net Assets and the Statement of Cash Flows. These statements can be found on pages 12 - 17 of this report.
-5-

Fiduciary Funds:

- ,_.

~

l'

. 't'-' ...

Fiduciary funds are used to account for resources held for the benefit of parties outside

the government. Accounting used for fiduciary funds is much like that used for

proprietary funds. The basic fiduciary fund financial statement is the Statement of

Fiduciary Assets and Liabilities. This statement can be found on page 19 of this report.

Notes to the financial statements: The notes to financial statements provide additional information that is essential toa full understanding of the data prOVided in the fund financial statements. The notes to financial statements can be found on pages 20 - 36 of this report.

Other information:
In addition to the basic financial statements and accompanying notes, this report also presents certain supplementary information concerning the Authority's cash, investments and salaries exp~nses. Schedules can be found on pages 38 - 40 of this report.

FINANCIAL ANALYSIS

Georgia World Congress Center Authority Net Assets

Other Assets Capital Assets (net of deprecia~i,C?n)

FY 2003

FY 2002

$ 68,349,474 $ 101,768,622

209,820,530 214,633,757

Total Assets

. $ 278,170,004 $ 316,402,379

Other Liabilities Long-Term Liabilities:
Current Noncurrent

$ 25,761,534 $ 33,198,824

5,112,359

5,310,000

181,755,604 178,300,000

Total Liabilities

$ 212,629,497 $ 216,808,824

Net Assets: Invested in capital assets, net of debt $ Restricted Unrestricted

31,520,530 $ 23,348,053 10,671,924

31,023,757 53,115,137 15,454,661

Total Net Assets

$ 65,540,507 $ 99,593,555

The Authority's investment in capital assets (e.g. land, buildings, equipment, etc) is $31.5 million or 48% of the Authority's total net assets. Georgia Dome revenue bond covenants, $20.1 million, make up another 31 % of the total net assets. The Authority has a remaining $10.7 million in unrestricted assets.

-6-

The Georgia World Congress Center Authority's net assets decreased by $34 million in FY 2003. This was due to-payouts for Phase IV construction and Furniture, Fixtures & Equipment for Phase IV. As in FY 2002, attendance for most events was significantly down, which meant less revenue virtually across the board (rental, utility, parking and catering fees/commissions along with reduced hotel/motel tax collections).
The following is a summary of Revenues, Expenses and Changes in Net Assets for FY 2003 compared to FY 2002:

Revenues: Program Revenues: Sales and Services Donations Rents and Royalties General Revenues: Hotel and Motel Tax Investment Income Other

FY 2003

FY 2002

$ 17,109,580 $
295,550 33,104,743

15,873,242 105,233
33,710,920

17,678,297 1,026,984 3,590

18,683,678 2,826,048 5,284

Total Revenue:

$ 69,218,744 $ 71,204,405

Expenses: Operating Nonoperating

$ 64,095,842 $ 65,729,950

10,774,127

10,643,110

Total Expenses:

$ 74,869,969 $ 76,373,060

Decrease in Net Assets Before Transfers

$ -5,651,225 $ -5,168,655

Transfers

-28,401,823

Changes in Net Assets

$ -34,053,048 $ -5,168,655

Net Assets, Beginning of Year

99,593,555 105,958,390

Adjustments Change in Capitalizaiton Threshold Change in Accounting of Inventories

-1,050,844 -145,336

Total Net Assets, End of Year

$ 65,540,507 $ 99,593,555

-7-

CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets: The Georgia World Congress Center.Authority's investment in capital assets, as of June 30, 2003 amounts to $298.7 million, which with accumulated depreciation of $88.9 million, leaves a net book value of $209.8' million. This investment in capital assets includes land, bUildings, improvements and equipment. The Authority's capital assets decreased $4.8 million. Actual depreciation charges for the year totaled $10.3 million. It should be noted that the land for the Georgia Dome and the land and buildings for the convention center are owned by the Department of Industry, Trade and Tourism and are therefore reflected on the State of Georgia's'financial statements. Since 1999 the State of Georgia has issued $252.1 million in bonds through Georgia State Financing and Investment Commission to fund construction of Phase IV on the Georgia World Congress Center. Included in this amount is $15 million for the purchase of equipment for the new building. The Georgia World Congress Center Authority had net assets in the amount of $31.6 million restricted for the Authority's contribution to the Phase IV project at the beginning of FY 2003. ,In FY 2003, $28.4 million was tra'nsferred to Georgia State Financing and, Investment Commission for this project. Additional information on the Authority's ,capital assets can be found in note 6 on page 28 on this report.
Debt Administration: The Georgia World Congress Center Authority issued Revenue Bonds in the amount of $200 million in 1990 for the construction of the Georgia Dome. These bonds are the only long-term debt held by the Authority. These bonds were refunded in 2000 in order to obtain a more favorable interest rate. A principal payment of $ 5,.3 million was made in 2003. Additional information on the Authority's long-term debt can be found in note 8 on pages 29 - 31 of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The Georgia World Congress Center hosted nearly 250 different events, from major trade shows to consumer shows to sporting events. The transition of Phase IV from a construction project to a state-of-the-art Building C gave the congress center an additional 420,000-square-feet of exhibit space and a new 25,700-square-foot Georgia Ballroom. A highlight of the year was an announcement made by Georgia Governor Sonny Perdue confirming the selection of the GWCC and Georgia Dome for the Microsoft Global Briefing Meeting in FY2005.
The Georgia Dome hosted everything from bull riding competition to the NCAA Women's Final Four to NFL, College and High School football during FY 2003. The facility also experienced internal growth with a number of capital outlay projects including two new Mega Vision Video boards, eight LED message boards and new football and basketball scoreboards. In the spring, Dome officials announced the installation of a new artificial playing surface- FieldTurf- replacing the 11-year-old Astroturf. The Dome served as host for more than 42 major events during FY 2003 and the staff looks forward to a very
-8 -

--
bright future as the Falcons popularity soars, long-time partnerships continue to flourish and new events find success at the Georgia Dome. Centennial Olympic Park continues to be the gathering place for downtown Atlanta, offering quality family programming, lively concerts, holiday fun and a great place to enjoy a little peace and quiet in the center of the city. During FY 2003, the park hosted 150 events, including 85 concerts, 13 film shoots, 7 corporate receptions and 2 parades. The Fourth Saturday Family Fun Day, offered April through September, continues to grow and this year was recognized by the Georgia Festival Events Association as the "Best Community Involvement Program in the State."
-9-

BASIC FINANCIAL STATEMENTS -11 -

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
BALANCE SHEET PROPRIETARY FUNDS-ENTERPRISE FUNDS
JUNE 3D, 2003

EXHIBIT"A"

REGULAR FUND

GEORGIA DOME FUND

CENTENNIAL OLYMPIC
PARK FUND

TOTAL

Current Assets Cash and Cash Equivalents Accounts Receivable Prepaid Items Inventories
Total Current Assets
Noncurrent Assets Restricted Cash and Cash Equivalents Customer Deposits Revenue Bond Covenant Accounts Investments Revenue Bond Covenant Accounts Accounts Receivable Customer Deposits
Total Restricted Assets
Investments
Intemal Balances
Capital Assets Land Building Less: Accumulated Depreciation Improvements other than Buildings Less: Accumulated Depreciation Equipment Less: Accumulated Depreciation
Capital Assets (Net of Accumulated Depreciation)
Total Noncurrent Assets
Total Assets

$ 22.396.705.73 $ 1.026.215.68 9.263.00 487.089.83

9.059.960.27 $ 1.043.231.19
615.856.54

$ 23,919.274.24 $ 10,719,048.00 $

934.723.28 $ 53.129.21 46,219.00

32.391.389.28 2.122.576.08 671.338.54 487.089.83

1.034.071.49 $ 35.672.393.73

$ 7,275,062.50 10,757.359.40 14,441,087.97 157.850.00
$ 32.631.359.87 $
$ 1,181,454.39 $ -1.181,454.39

$ 7.275,062.50 10.757,359.40

14,441,087.97

157,850.00

$ 32,631,359.87

45.721.04 $

45.721.04

$

0.00

$

800.000.00

$ 36,482.885.56 $ 37.282.885.56

$ 209.402.736.05

209,402.736.05

-77,556,590.67

-77,556,590.67

35,797,674.53

35,797.674.53

-2,386,511.64

-2,386.511.64

4.550,310.23

11.138,195.09

515.143.81

16,203.649.13

-3,548,306.90

-5,019.517.68

-355,488.54

-8.923.313.12

$ 1.802,003.33 $ 137.964.822.79 $ 70,053,703.72 $ 209.820.529.84 $ 2.983,457.72 $ 169,414,728.27 $ 70,099,424.76 $ 242,497,610.75

$ 26.902.731.96 $ 180,133.776.27 $ 71.133,496.25 $ 278,170,004.48

The notes to the financial statements are an integral part of this statement.
- 12-

GEORGE L. SMITH, II
GEORGIA WORLD CONGRESS CENTER AUTHORITY BALANCE SHEET
PROPRIETARY FUNDS-ENTERPRISE FUNDS JUNE 30, 2003

LIABILITIES AND NET ASSETS

. vREGULAR FUND

GEORGIA DOME FUND

CENTENNIAL OLYMPIC
PARK FUND

EXHIBIT "An
TOTAL

Current liabilities

Vouchers Payable

$

Accounts Payable

Salaries Payable

Payroll Withholdings

Compensated Absences Payable

Key Employee Incentive Compensation Payable

Deferred Revenue

Total Current liabilities

$

Current liabilities Payable from Restricted Assets Accrued Interest Payable Revenue Bonds Payable

Total Current liabilities Payable from Restricted Assets

Noncurrent liabilities

Compensated Absences Payable

$

Key Employee Incentive Compensation Payable

Customer Deposits Payable

Revenue Bonds Payable

Total Noncurrent liabilities

$

Total liabilities

$

229,767.65 $ 787,584.15
19,560.18 63,125.31 88,777.09 190,313.00 2,281,793.15

67,557.19 $ 583,533.05
7,247.63 16,042.69 25,789.06 36,892.00 15,633,769.00

3,660,920.53 $ 16,370,830.62 $

$ 5,112,359.38 5,645,000.00

$ 10,757,359.38

1,048,765.10 $ 191,785.00

304,658.13 $ 59,981.00
7,432,912.50 172,655,000.00

1,240,550.10 $ 180,452,551.63 $

4,901,470.63 $ 207,580,741.63 $

9,134.88 $ 50,363.51
1,182.81 3,924.12 4,815.37 5,612.00 9,750.00

306,459.72 1,421,480.71
27,990.62 83,092.12 119,381.52 232,817.00 17,925,312.15

84,782.69 $ 20,116,533.84

$ 5,112,359.38 5,645,000.00

$ 10,757,359.38

56,886.17 $ 5,616.00

1,410,309.40 257,382.00
7,432,912.50 172,655,000.00

62,502.17 $ 181,755,603.90

147,284.86 $ 212,629,497.12

Net Assets Invested in Capital Assets, Net of Related Debt Restricted for: Phase IV Construction Revenue Bond Covenants Maintenance of Art Unrestricted (Deficit)
Total Net Assets

$ 1,802,003.33 $ -40,335,177.21 $ 70,053,703.72 $ 31,520,529.84

3,198,177.68 17,001,080.32

20,086,087.99 -7,197,876.14

63,787.51 868,720.16

3,198,177.68 20,086,087.99
63,787.51 10,671,924.34

$ 22,001,261.33 $ -27,446,965.36 $ 70,986,211.39 $ 65,540,507.36

Total liabilities and Net Assets

$ 26,902,731.96 $ 180,133,776.27 $ 71,133,496.25 $ 278,170,004.48

The notes to the financial statements are an integral part of this statement.
- 13-

GEORGE L. SMITH. II

EXHIBIT liB"

GEORGIA WORLD CONGRESS CENTER AUTHORITY

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS-ENTERPRISE FUNDS

YEAR ENDED JUNE 30, 2003

OPERATING REVENUES
Sales and Charges for Services Commissions Catering Sales

REGULAR FUND

GEORGIA DOME FUND

CENTENNIAL OLYMPIC
PARK FUND

TOTAL

$ 4,718,776.36 $ 2,492,046.19 $

355,767.70

53,467.32

$ 5,074,544.06 $ 2,545,513.51 $

172,984.39 $ 7,383,806.94

47,055.48

456,290.50

220,039.87 $ 7,840,097.44

Sales and Services Advertising Business Center Services Coat Check Contract Labor Dome Tours Exhibit utility Services Fuel Sales Souvenirs

$ 2,732,568.74

$

69,361.84

57,152.50

210.00

356,131.78

124,224.17 $

1,943.00

5,747,666.62

56,170.22

4,883.77

100,657.70

$
4,206.25 12,455.00
1,851.10

2,732,568.74 69,361.84 57,362.50
484,562.20 1,943.00
5,816,291.84 4,883.77
102,508.80

$ 6,235,196.51 $ 3,015,773.83 $

18,512.35 $ 9,269,482.69

Total Sales and Charges for Services $ 11,309,740.57 $ 5,561,287.34 $ 238,552.22 $ 17,109,580.13

Rents and Royalties Rental Income Booth Space Conference Center, Ballroom and Auditorium Customer Deposit Forfeitures Equipment Exhibit Halls Georgia Dome Atlanta Falcons Football Club, LLC Suites and Seats Other Meeting Rooms Parking

$

21,341.00

672.324.44

$

300,407.96

11,781,599.00

$
150,490.00 23,520.72

361,744.14 2,718,401.53

1,893.524.14 13,255,570.60
1,413,179.92
396,721.76

111,325.00 $ 4,592.37

132,666.00 672,324.44 150,490.00 328,521.05 11,781,599.00

1,893,524.14 13,255,570.60
1,413,179.92 361,744.14
3,115.123.29

Total Rents and Royalties

$ 15,855,818.07 $ 17,133,007.14 $ 115,917.37 $ 33,104,742.58

Total Operating Revenues

$ 27,165,558.64 $ 22,694,294.48 $ 354,469.59 $ 50,214,322.71

The notes to the financial statements are an integral part of this statement.
- 14-

GEORGE L. SMITH, II ~:GEORGIA WORLD CONGRESS CENTER AUTHORITY

EXHIBIT liB"

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS-ENTERPRISE FUNDS

YEAR ENDED JUNE 30, 2003

REGULAR FUND

GEORGIA DOME FUND

CENTENNIAL OL YMPIC
PARK FUND

TOTAL

OPERATING EXPENSES

Personal Services Regular Operating Expenses Travel Equipment Computer Charges Telecommunications Per Diem and Fees Contracts Capital Outlay Contractual- Game Tickets Contractual- Falcons Depreciation

$ 18,555,565.22 $ 8,108,366.43 87,046.45 145,858.09 511,484.31 262,672.58 484,782.99 2,311,497.67 993,929.55
480,366.57

6,208,437.92 $ 4,311.979.40
26.069.66 35,023.04 234,551.07 160,840.84 425,849.31 1,795,478.56 120,318.20 2,823,600.00 4,000,000.00 8,526.262.13

1.187,622.49 $ 472,659.12 2,033.22 1,733.35 300.00 20,092.00 13.352.56 515,213.83
1.272,855.13

25,951,625.63 12,893.004.95
115.149.33 182,614.48 746,335.38 443,605.42 923,984.86 4,622,190.06 1.114,247.75 2,823,600.00 4,000.000.00 10.279,483.83

Total Operating Expenses

$ 31,941,569.86 $ 28,668,410.13 $ 3,485,861.70 $ 64,095,841.69

Operating Loss

$ -4,776.011.22 $ -5,974,115.65 $ -3,131.392.11 $ -13,881.518.98

NONOPERATING REVENUES (EXPENSES)

'Hotel and Motel Tax

Atlanta, City of (Net)

$

Fulton County (Net)

Donations

Investment Income

Vendor's Compensation on Sales Tax Collections

Financingrrrustee Fees

Housing - Georgia World Congress Center

Housing - Atlanta Convention and Visitors Bureau

Debt Service

Gain (Loss) on Capital Asset Disposals

3,487,637.77 $ 12,509.663.34

90,719.19 1,590,276.86

$

567,620.62

446,099.96

168.88

3.410.47

-5,637.00

-179,618.40

-119,745.60

-10,384,018.76

3.705.00

-89,041.42

$ 15.997,301.11

1.680,996.05

295,550.00

295,550.00

13,263.52 1.026,984.10

10.65

3,590.00

-5,637.00

-179,618.40

-119,745.60

-10,384.018.76

229.00

-85,107.42

Total Nonoperating Revenues (Expenses) $ 3,850,487.46 $ 4.070,753.45 $ 309.053.17 $ 8,230.294.08

Net Loss Before Transfers

$ -925.523.76 $ -1,903,362.20 $ -2,822,338.94 $ -5.651.224.90

TRANSFERS

Transfer In Transfers Out

-30,045.995.56

-40,000.00

1,684,173.24 1,684.173.24 -30,085.995.56

Changes in Net Assets

$ -30,971.519.32 $ -1.943.362.20 $ -1,138,165.70 $ -34,053,047.22

TOTAL NET ASSETS - JULY 1

52,972,780.65 -25,503.603.16 72,124,377.09 99,593,554.58

TOTAL NET ASSETS - JUNE 30

$ 22,001.261.33 $ -27,446,965.36 $ 70,986,211.39 $ 65,540,507.36

The notes to the financial statements are an integral part of this statement.
-15-

GEORGE L. SMITH. II ."

..

GEORGIA WORLD CONGRESS CENTER AUTHORITY' .

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS-ENTERPRISE FUNDS

YEAR ENDED JUNE 30, 2003

EXHIBIT"C"

REGULAR FUND

GEORGIA DOME FUND

CENTENNIAL OLYMPIC
PARK FUND

TOTAL

CASH FLOWS FROM OPERATING ACTIVITIES

Cash Received from Customers Customer Deposit Forfeitures - Georgia Dome Customer Seat and Suite Deposits - Georgia Dome Customer Seat and Suite License Fees - Georgia Dome Cash Paid to Vendors Cash Paid to Employees Annual Payment (Contractual- Falcons)

$ 43,596,393.63 $
-37,049,998.91 -9,932,140.34

19,064,127.59 $ 653,385.61 $ 150,490.00 572,082.50
14,197,634.34 -18,116,377.81 -1,778,367.60
-4,200,536.16 -581,458.20 -5,238,210.60

63,313,906.83 150,490.00 572,082.50
14,197,634.34 -56,944,744.32 -14,714,134.70
-5,238,210.60

Net Cash Provided by (Used In) Operating Activities

$ -3,385,745.62 $ 6,429,209.86 $ -1,706,440.19 $ 1,337,024.05

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Donations Received

Hotel and Motel Tax Received

$ 10,932,368.16

Hotel and Motel Tax Distributed

-7,653,375.20

Operating Transfer - Centennial Olympic Park Operations -1,644,173.24 $

Repayment of Funds from Georgia Dome Fund

3,604,423.48

Operating Transfer - Georgia Slate Financing and

Investment Commission

-28,401,822.32

Vendor's Compensation on Sales Tax Collections

168.88

$ 295,550.00 $
-40,000.00 1,684,173.24 -3,604,423.48

295,550.00 10,932,368.16 -7,653,375.20
0.00 0.00

3,410.47

10.65

-28,401,822.32 3,590.00

Net Cash Provided by (Used In) Noncapilal Financing Activities

$ -23,162,410.24 $ -3,641,013.01 $ 1,979,733.89 $ -24,823,689.36

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Financingrrrustee Fees Paid

Interest Paid on Refunding Revenue Bonds

Principal Payment on Refunding Revenue Bonds

Hotel and Motel Tax Received - Dedicated to Georgia Dome

Acquisition and Construction of Capital Assets

$

$ -152,909.42

-5,637.00 -10,384,018.78
-5,310,000.00 14,099,940.20 -5,241,972.03 $

$ -30,644.00

-5,637.00 -10,384,018.78
-5,310,000.00 14,099,940.20 -5,425,525.45

Net Cash Used In Capital and Related Financing Activities

$ -152,909.42 $ -6,841,687.61 $ -30,644.00 $ -7,025,241.03

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of Investment Securities Proceeds from Sale and Maturity of Investments Interest on Investments

$ -130,706,583.25 $

$ 39,668,094.65 142,830,001.47

567,620.62

446,099.96

-45,721.04 $ -130,752,304.29

44,924.13 182,543,020.25

13,263.52

1,026,984.10

Net Cash Provided by Investing Activities

$ 40,235,715.27 $ 12,569,518.18 $ 12,466.61 $ 52,817,700.06

Net Increase in Cash and Cash Equivalents

$ 13,534,649.99 $ 8,516,027.42 $ 255,116.31 $ 22,305,793.72

CASH AND CASH EQUIVALENTS - JULY 1

8,862,055.74

18,576,354.75

679,606.97 28,118,017.46

CASH AND CASH EQUIVALENTS - JUNE 30

$ 22,396,705.73 $ 27,092,382.17 $ 934,723.28 $ 50,423,811.18

The notes to the financial statements are an integral part of this statement.
- 16 -

GEORGE L. SMITH, II

EXHIBIT"C"

GEORGIA WORLD CONGRESS CENTER AUTHORITY

STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS-ENTERPRISE FUNDS

YEAR ENDED JUNE 30, 2003

......
:.;._._I_":':':"'~.:-::~, _:. .

REGULAR FUND

GEORGIA DOME FUND

CENTENNIAL OLYMPIC
PARK FUND

TOTAL

RECONCILIATION OF OPERATING LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

Operating Loss

$ -4,776,011.22 $ -5,974,115.65 $ -3,131,392.11 $ -13,881,518.98

Adjustments to Reconcile Operating Loss to

Net Cash Provided by (Used in) Operating Activities:

Administrative Overhead

$

Depreciation

Contract with ITR, Inc. for Equipment Purchases

Contract with MGR, Inc. for Equipment Purchases

Changes in Assets and Liabilities:

(Increase) Decrease in Accounts Receivable

Decrease in Prepaid Items

Increaseinlnventones

Increase (Decrease) in Liabilities (Other than Customer

Deposits)

Increase in Customer Deposits Payable

Increase (Decrease) in Deferred Revenues

-23,480.38 $ 480,366.57
-87,908.56
2,851,081.88 37,455.21 -49,969.89
398,231.58
-2,215,510.81

23,480.38 8,526,262.13 $
-20,630.32 -17,300.00

$ 1,272,855.13

0.00 10,279,483.83
-20,630.32 -105,208.56

-202,756.43 1,090,804.65

178,063.01 29,546.86

2,826,388.46 1,157,806.72
-49,969.89

-856,153.80 572,082.50 3,287,536.40

-35,013.08 -20,500.00

-492,935.30 572,082.50 1,051,525.59

Total Adjustments

$ 1,390,265.60 $ 12,403,325.51 $ 1,424,951.92 $ 15,218,543.03

Net Cash Provided by (Used In) Operating Activities

$ -3,385,745.62 $ 6,429,209.86 $ -1,706,440.19 $ 1,337,024.05

The notes to the financial statements are an integral part of this statement.
- 17-

GEORGE L. SMITH, II
GEORGIA WORLD CONGRESS CENTER AUTHORITY STATEMENT OFFIDUCIARY ASSETS AND LIABILITIES
FIDUCIARY FUNDS-AGENCY FUNDS JUNE 30, 2003
ASSETS

EXHIBIT liD"

Cash and Cash Equivalents

$ =====8~,O~1;;;;2,;,;.9~4

LIABILITIES Due to Others

$ =====8~,0~1~2,;,;.9~4

-19-

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY ,.
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT "E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. REPORTING ENTITY The George L. Smith, II Georgia World Congress Center Authority (Authority) is an instrumentality of the State of Georgia and a public corporation created for the purposes of operating and maintaining a comprehensive international trade and convention center consisting of a complex of facilities suitable for multipurpose use. The management of the business and affairs of the Authority is vested in a Board of Governors. The Official Code of Georiga Annotated (OCGA) Section 10-9-6 provides that the Board of Governors consist of fifteen (15) members appointed by the Governor. At June 30, 2003, there were nine (9) appointed members of the Board of Governors. The Authority is considered a component unit of the State of Georgia for financial reporting purposes because of the significance of its legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 ofthe Govemmental Accounting Standards Board Codification of Governmental Accounting and Financial Reporting Standards.
B. BASIS OF PRESENTATION The Authority reports its financial position and the results of its operations under accounting principles generally accepted in the United States of America for a special purpose government (componentunit of the State of Georgia) engaged in business-type activities utilizing the following funds:
Major Funds PROPRIETARY FUND TYPES Enterprise Funds These funds account for those activities for which the intent of management is to recover, primarily through user charges, the cost of providing goods or services to the general public, or where sound financial management dictates that periodic determinations of results of operations are appropriate.
Regular Fund - Used to report activity associated with operations of the Georgia World Congress Center and certain administrative responsibilities related to the Georgia World Congress Center, Georgia Dome and Centennial Olympic Park.
Georgia Dome Fund - Used to report activity associated with operations ofthe Georgia Dome.
Centennial Olympic Park Fund - Used to report activity associated with operations of the Centennial Olympic Park.
Non-Major Funds FIDUCIARY FUNDS Agency Funds These funds report assets held for use by other funds, governments, or individuals.

- 20-

GEORGE L. SMiTH, II GEORGIA wORnf"cONGRESS CENTER AUTHORITY
.NOTESTO THE FINANCfAL STATEMENTS JUNE 3D, 2003

EXHIBIT"E"

. . . . . . . . . . . j I .;... ..~.

; : "..

..'_

B. BASIS OF PRESENTATION Interfund Eliminations In accordance with the License Agreement (See Note 13), the Regular Fund ofthe Authority collects an administrative overhead fee from the Georgia Dome Fund. The effect of this interfund activity has been eliminated from the Regular Fund's operating expenses.

C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Proprietary fund types are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of cash flows.

The Authority has elected to follow generally accepted accounting principles prescribed by the Governmental Accounting Standards Board (GAS B) as well as Statements and Interpretations of the Financial Accounting Standards Board, Accounting Principles Board Opinions and Accounting Research Bulletins of the Committee on Accounting Procedure issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. _The principal operating revenues of the Authority's enterprise funds are charges to customers for sales and services and rents and royalties. Operating expenses include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

Agency Funds are custodial in nature and do not measure results of operations or have a measurement focus. The accrual basis of accounting is utilized for recognizing assets and liabilities.

D. ASSETS, LIABILITIES AND NET ASSETS CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include currency on hand, demand deposits with banks and other financial institutions, and the State investment pool that has the general characteristics of demand deposit accounts in that the Authority may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty. Cash and Cash Equivalents also include short-term, highly liquid investments with maturities of three months or less from the date of acquisition. Funds of the Georgia Dome Fund on deposit with the Trustee for the purpose of continual investment are reflected as investments regardless of the term of the instruments. The aforementioned definitions were applied in the preparation of the Statement of Cash Flows.

The State investment pool (Georgia Fund 1) is an extemal investment pool that is not registered with the Securities and Exchange Commission (SEC) but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. The State of Georgia's Office of Treasury and Fiscal Services (OTFS) manages Georgia Fund 1 in accordance with policies and procedures

- 21 -

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT liE"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

D. ASSETS, LIABILITIES AND NET ASSETS CASH AND CASH EQUIVALENTS established by State law and the State Depository Board, the oversight Board for OTFS.' 'This investment is valued at the pool's share price, $1.00 per share.

The Authority does not have any risk exposure related to investments in derivatives or similar

investments in Georgia Fund 1 as the investment policy of OTFS does not provide for investments in

derivatives or similar investments through the Georgia Fund 1.

'

INVESTMENTS Investments are defined as those financial instruments with terms in excess of three months from the date of purchase. Also reported as investments are funds of the Georgia Dome Fund on deposit with the Trustee of the Series 2000 Refunding Revenue Bonds for the purpose of continual investment and certain other securities held for the production of revenue. Investments are stated at cost or amortized cost. Accounting principles generally accepted in the United State of America require that investments be reported at fair value, however, the variance in cosUamortized cost and fair value is deemed immaterial to the financial statements.

The Authority may invest regular funds in U. S. Government securities; certificates of deposit and repurchase agreements. In addition, the Series 2000 Refunding Revenue Bond covenants restrict the Authority to the following forms of investments for the Georgia Dome Fund:

(1) Obligations issued by the United States government.

(2) Obligations of any corporation of the United States government fully guaranteed by the United States government.

(3) Obligations of the Federal Home Loan Bank.

(4) Repurchase Agreements.

ACCOUNTS RECEIVABLE Accounts receivable arising from operations are reported at gross value. Based on management's evaluation that amounts uncollectible are not material, no provision has been made for such amounts.

PREPAID ITEMS

,

Payments made to vendors for services that will benefit periods beyond June 30, 2003, are recorded

as prepaid items.

INVENTORIES Supply inventories are valued at cost, using the first-in/first-out (FIFO) method. These expendable supplies are recorded as inventories at the time of purchase and are recorded as expense based on consumption.

- 22-

.. 1 ~ ~;

GEORGE L. SMITH, II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT liE"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) ,.

D. 'ASSETS, LIABILITIES AND NET ASSETS RESTRICTED ASSETS Certain refunding revenue bond resources recorded in the Dome Fund are reflected as restricted assets on the Balance Sheet because their use is limited by applicable bond covenants.
In addition, restricted assets include customer deposits paid to the Authority based on contracts for the rental of seats and suites within the Georgia Dome. Certain customer deposits are subject to refund upon expiration of the contracts.

INTERNAL BALANCES Internal balances are comprised of interfund receivables and payables for construction expenses incurred by the Regular Fund for construction of the Georgia Dome. These balances are expected to be repaid within one year.
CAPITAL ASSETS Capital assets, which include property, plant and equipment, are recorded in the Balance Sheet at historical cost. Donated capital assets are recorded at fair market value on the date donated and disposals are deleted at recorded cost. All land is capitalized regardless of cost. Buildings and Building Improvements are capitalized when the cost of individual items or projects exceeds $100,000. Equipment is capitalized when the cost of individual items exceeds $5,000. The costs of normal maintenance and repairs that do not add to the value of assets or materially extend asset lives are not capitalized.

Capital assets of the Authority are depreciated using the straight-line method over the following estimated useful lives:

Assets

Buildings Improvements Other than BUildings Equipment

30 30 3 -10

Under a contractual agreement with the State of Georgia Department of Industry, Trade and Tourism, the Authority operates the Georgia World Congress Center. The Georgia World Congress Center consists of exhibition facilities for conventions, trade shows and meetings catering to national, international and corporate groups. The Georgia World Congress Center was financed with the proceeds from State of Georgia General Obligation Bonds and is owned by the State of Georgia.

- 23-

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT"E"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
D. ASSETS, LIABILITIES AND NET ASSETS LONG-TERM OBLIGATIONS Long-term debt is recognized as a liability of proprietary fund types if those liabilities are expected to be financed from proprietary fund operations.
NET ASSETS The difference between fund assets and liabilities is "Net Assets". Net assets are reported in three categories:
Net Assets Invested in Capital Assets, Net of Related Debt consist of capital assets, net of accumulated depreciation and reduced by outstanding balances for bonds, notes and other debt that are attributed to the acquisition, construction, or improvement of those assets.
Restricted Net Assets result when constraints placed on net asset use are either externally imposed by creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation. The Authority reports the following restricted net assets:
Phase IV Construction - represents the Authority's required local match for state bond proceeds . utilized through the Georgia State Financing and Investment Commission for construction of Phase IV of the Georgia World Congress Center.
Revenue Bond Covenants - represents the balance of assets restricted by the revenue bond covenants not obligated for payment of current liabilities.
Maintenance of Art - represents restriction placed by contract with AHEPA Centennial Foundation, Inc. for the maintenance and repair of works of art placed in Centennial Olympic Park.
Unrestricted Net Assets consist of net assets that do not meet the definition of the two preceding categories. Unrestricted net assets often are designated, indicating they are not available for general operations. Such designations have internally imposed constraints on resources, but can be removed or modified.
The Authority does not have a policy to distinguish between restricted and unrestricted resources for expenses of the Georgia Dome Fund with the exception of certain expenses paid in accordance with refunding revenue bond covenants, which are paid from restricted resources. When both restricted and unrestricted resources are available for use, it is the Authority's policy to use restricted resources first, then unrestricted resources as they are needed.

- 24-

GEORGE L. SMITH, II GEORGIA vVOR'LD'C0NGRESS CENTER AUTHORITY
"NOTES TO THE FINANCIAL"STATEMENTS JUNE 30, 2003

EXHIBIT liE"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
.... l ~~ :-:". _. : :.: A._:
E. REVENUES AND EXPENSES SHARED REVENUES Pursuant to the Hotel and Motel Tax Act as enacted and amended by the General Assembly of Georgia, the City of Atlanta and Fulton County, Georgia, have agreed to levy and collect an excise tax in the amount of seven percent on rooms, lodgings and accommodations within the special district defined in the Hotel and Motel Tax Act. Pursuant to the Stadium Funding Agreement between the Authority and the City of Atlanta and Fulton County, Georgia, 48.9% of such collections are to be paid to the Authority, with 39.3% dedicated to the purposes of the Domed Stadium Project and the remaining 9.6% to be used at the Authority's discretion. The flow of future shared revenues dedicated to the purposes of the Domed Stadium Project may not be terminated prior to the liquidation of all Series 2000 Refunding Revenue Bonds.
COMPENSATED ABSENCES Compensated absences represent obligations of the Authority relating to employee's rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulated annual leave. Annual leave is recorded as an expense as earned. Cost of annual leave of terminated employees is covered by operations of the related fund.
KEY EMPLOYEE INCENTIVE COMPENSATION Key employee incentive compensation represents the obligation of the Authority to pay certain administrative employees bonuses based on annual personal performance evaluations and an evaluation of the overall performance ofthe Authority made by the Board. The annual bonuses are expensed in the fund from which the employee's salary is paid in the year earned and paid over a three year period. If an employee terminates prior the complete payout of the bonus, the balance is forfeited at termination. .
F. TRANSFERS Transfers are made up of interfund transfers which are used to move a portion of Hotel/Motel tax revenues and general revenues from the Regular and Dome Funds to the Centennial Olympic Park . Fund for operations of Centennial Olympic Park and operating transfers representing contributions to the Georgia State Financing and Investment Commission for the construction of Phase IV of the World Congress Center. The Georgia State Financing and Investment Commission is a part of the State of Georgia reporting entity.

NOTE 2: BUDGETS
An internal operations budget for management purposes is prepared by the Authority. The budget is not subject to review or approval by the General Assembly of the State of Georgia and therefore, is a nonappropriated budget.

- 25-

GEORGE L. SMITH,'" GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2003

EXHIBIT"E"

NOTE 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

COMPLIANCE WITH REVENUE BOND COVENANTS

The Authority is sUbject to certain covenants with regard to the issuance of the Serie~ 2000

Refunding'Revenue Bonds (Domed Stadium Project),

'

,

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds of the State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral anyone or more of the folloWing securities as enumerated in the OCGA Section 50-17-59:

(1) Bonds, bills, certificates of indebtedness, notes, or other direct obligations of the United States or of the State of Georgia.

(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or

municipalities of the State of Georgia.

'

(3) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use of the bonds for this purpose,

(4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.

(5) Bonds, bills, certificates of indebtedness, notes, or other obligations of a subsidiary corporation of the United States government, which are fUlly guaranteed by the United States government both as to principal and interest, or debt obligations issued by or securities guaranteed by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Corporation, orthe Federal National Mortgage Association.

(6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

OCGA Section 45-8-11 provides that the Authority may waive the requirement for security in the case of operating funds placed in demand deposit checking accounts.

- 26-

GEORGE L. SMITH, II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

. EXHIBIT "E"

NOTE 4: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 2003, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk.

Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the Authority or by its agent in the Authority's name.

Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Authority's name.

Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution or by its trust department or agent, but not in the Authority's name, and amounts uncollateralized.

Cash Deposits

Carrying Amount

Bank Balances

Risk Categories

2

3

$ 49 431 688 45$ 50 693 567 83$ 205 433 08$ 39 830 775 35$ 10 657 359 40

CATEGORIZATION OF INVESTMENTS For purposes of analysis of custodial credit risk, investments consist of U. S. Government securities and repurchase agreements and are summarized and classified as to custodial credit risk within the categories described below:

Category 1 - Insured or registered, or securities held by the Authority or its agent in the Authority's name.

Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the Authority's name.

Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the Authority's name.

The carrying amounts of investment balances as of June 30, 2003, are categorized below. These amounts also include amounts maintained in the State investment pool by the Office of Treasury and Fiscal Services that are not subject to risk categorization.

Type of Investment

Risk Categories

2

3

Carrying Amount

Fair Value

u. S. Government

Securities

$,==~O~O~O$ 14441 087 97 $===o!!0~O~O$ 14,441,087.97$ 14,491,525.17

State Investment Pool

786,654.71

786,654.71

$ 1522774268$ 1528017988

- 27-

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT"E"

NOTE 5: TRANSFERS

Transfers during the year ended June 30, 2003, consist of the following:

Transfers In Interfund

$ 1,684,173.24

Transfers Out Interfund Georgia State Financing and Investment Commision .

$ -1,684,173.24
-28,401,822.32 $ -30,085,995.56

Total Transfers

$ -28,401,822.32

NOTE 6: CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2003, was as follows:

..

Balance

July 1, 2002

.Additions

Capital Assets Not Being Depreciated:

Land

$

Total Capital Assets fItlt Being Depreciatoo $

37,282,885.56 37.282,885.56 $

0.00 $

Capital Assets Being Depreciated: Buildings Irrprc7IIel1l8nts Other Than Buildings Equiprrent
Total Capital Assets Being Depreciatoo

$ 200,402,736.05 35,797,674.53 10,796,939.20 $
$ 255,997,349.78 $

5,605,280.33 $ 5.605,280.33 $

Less h:wnuIatoo Depreciation For. Buildings Irrpl"O'J8lTl8nts Other Than Buildings Equipment
Total Axtmulatoo Depreciation

$ (69,800,930.67) $ (7,755,660.00)

(1,193,255.82)

(1,193,255.82)

(7,652,292.09)

(1,330,568.01) $

$ (78,646,478.58) $ (10,279,483.83) $

Total Capital Assets Being Depreciated, Net $ 177,350,871.20 $ (4,674,203.50) $

Total Capital Assets, Net

$ 214,633,756.76 $ (4,674,203.50) $

Deletions

Balance Jure 30, 2003

$ 37,282,885.56 0.00 $ 37,282,885.56

$
(198,570.40) (198,570.40) $

200,402,736.05 35,797,674.53 16,203,649.13 261,404,059.71

$
59,546.98 59,546.98 $

(77,556,500.67) (2,386,511.64) (8,923,313.12) (88,866,415.43)

(139,023.42) $ 172,537,644.28

(139,023.42) $ 209.820,529.84

- 28-

.GEORGE L SMITH,.II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES to THE FINANCIAL StATEMENTS JUNE 30, 2003

EXHIBIT"E"

NOTE...,: .OPERATING LEASES

The Authority has entered into,certain agreements to lease motor vehicles and trash haul services which are classified as operating leases. Future minimum commitments for operating leases as of June 30, 2003, are listed below. Amounts are included only for multi-year leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Fiscal Year

Ended June 30

2004

$

2005

2006

2007

57,189.99 46,160.18 32,283.20
1,490.95

$ 137,124.32

Expenditures for rental of real property and equipment under operating leases for the year ended June 30, 2003, totaled $352,706.85.

NOTE 8: LONG-TERM DEBT

Long-term obligations at June 30, 2003, and changes for the fiscal year then ended are as follows:

July 1, 2002

Refunding Revenue Bonds $ 183,610,000.00 $

Compensated Abesences

1,488,648.'80

Key Employee Incentive

Compensation

488,000.00

Increases 0.00 $
1,182,875.69

Amounts Due

Decreases

June 30, 2003 Within One Year

(5,310,000.00) $ 178,300,000.00 $ 5,645,000.00

(1,141,830.57)

1,529,693.92

119,381.52

210,712.00

(208,513.00)

490,199.00

232,817.00

$ 185,586,648.80 $ 1,393,587.69 $ (6,660,343.57) $ 180,319,892.92 $ 5,997,198.52

- 29-

GEORGE L. SMITH, II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT "E"

NOTE 8: LONG-TERM DEBT (continued)

REVENUE BONDS PAYABLE The Authority has issued Refunding Revenue Bonds (Domed Stadium Project), Series 2000, whi~h' are backed'by a Hotel and Motel Tax imposed by the City of Atlanta and Fulton County, Georgia, as well as future operating revenues derived from the operation of the Georgia Dome. Refunding revenue bonds outstanding at June 30,2003, are as follows:

Purpose

Interest Rates

Amount

Domed Stadium Project

5.50% - 6.00% $ 178,300,000.00

Revenue bond debt service requirements to maturity are as follows:

Fiscal Year Ended June 30

Principal

Interest

Total

2004 2005 :2006
2007 2008 2009-2013 2014-2018 2019-2021

$ 5,645,000.00 $ 6,000,000.00
c.' -'.6,380,000.00 6,780,000.00 7,210,000.00
43,480,000.00 58,590,000.00 44,215,000.00

4,943,009.38 $ 9,706,018.76 9,334,618.76 8,939,818.76 8,520,118.76 35,334,659.42 20,719,137.50 3,740,962.50

10,588,009.38 15,706,018.76 15,714,618.76 15,719,818.76 15,730,118.76 78,814,659.42 79,309,137.50 47,955,962.50

$ 178,300,000.00 $ 101,238,343.84 $ 279,538,343.84

Interest due on July 1, 2003, in the amount of $5,112,359.38 was recorded as a liability of the Enterprise Fund at June 30, 2003.
COMPENSATED ABSENCES Compensated absences are liquidated by the fund they are reported in and do not have scheduled future debt service requirements beyond one year.

- 30-

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

NOTE 8: LONG-TERM DEBT (continued)

KEY EMPLOYEE INCENTIVE COMPENSATION Future debt service requirements are as follows:

Fiscal Year Ended June 30

2004 2005 2006

$

232,817.00

155,328.00

102,054.00

$

490,199.00

EXHIBIT IIE"

FINANCIAL GUARANTY INSURANCE POLICY The Authority maintains a Financial Guaranty Insurance Policy issued by the MBIA Insurance Corporation and dated April 4, 2000. The Financial Guaranty Insurance Policy is available to ensure timely payments of interest and bond principal should funds not be readily available from the Authority. The terms of this policy extend through the expiration of the Series 2000 Refunding Revenue Bond Issue. In the event that principal and interest payments become necessary by the Insurer, the Authority is liable to the Insurer for reimbursement of such payments plus interest thereon. As of June 30, 2003, no monies have been paid by the Insurer on this policy.
NOTE 9: RISK MANAGEMENT
Public Entity Risk Pool
The Department of Community Health administers for the State of Georgia a program of health benefits for the employees of units of government of the State of Georgia, units of county government and local education agencies located within the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly of Georgia. The Department of Community H.ealth has contracted with various outside parties to process claims in accordance with the State Employees' Health Benefit Plan as established by the Department. Details on the liability for unpaid claims are disclosed in the State ofGeorgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2003.

- 31 -

GEORGE L. SMITH, II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS' JUNE 30, 2003

EXHIBIT"E"

NOTE 9: RISK MANAGEMENT (continued)
Other Risk Management "
The Department of Administrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Authority is part ofthe State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment. Details on the liability for unpaid claims are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2003.
In addition, the Authority has obtained commercial insurance for automobile liability regarding its leased motor vehicles. The Authority has neither significantly reduced coverage for these risks nor incurred losses (settlements) which exceeded the Authority's commercial insurance coverage in any of the past three years.

NOTE 10: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The Authority participates in the Employees' Retirement System of Georgia ("ERS"), a singleemployer, defined benefit plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia.
The benefit structure of ERS is defined by State statute and was significantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 65. If 10 years of service is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.

- 32-

GEORGE L. SMITH; ,II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT "E"

NOTE 10: RETIREMENT PLANS (continued)
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-Iiving adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
In addition, the ERS Board of Trustees created the Supplemental Retirement Benefit Plan (SRBP) effective January 1,1998. The SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code (IRC) as a portion of ERS. The purpose of SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC 415.
The ERS issues a financial report each fiscal year which may be obtained through ERS.
Funding Policy As established by State statute, all full-time employees of the State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The Authority's payroll for the year ended June 30, 2003, for employees covered by ERS was $15,829,588.64. The Authority's total payroll for all employees was $20,254,977.00.
Under the old plan, member contributions consist of 4% of annual compensation up to $4,200.00 and 6% of annual compensation in excess of $4,200.00. Of these member contributions, the employee pays the first 1.25% and the employer pays the remainder on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% of annual compensation paid by employee. The Authority also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 2003, the ERS employer contribution rate for the Authority amounted to 10.05% of covered payroll and included the amounts contributed on behalf of the employee under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.
Total contributions to the plan made during fiscal year 2003 amounted to $1,847,312.14, of which $1,590,931.78 was made by the Authority and $256,480.36 was made by employees. These contributions met the requirements of the plan. There is no net pension obligation for the plan. Employer contributions (annual pension cost) for the current fiscal year and the preceding two fiscal years are as follows:

- 33-

- . - . _ - - - - - - - - ,----------------------~-~.- .

GEORGE L..SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT "E"

NOTE 10: RETIREMENT PLANS (continued)

EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA Funding Policy

Fiscal Year

Annual Pension Cost (APC)

Percentage ofAPC
Contributed

Net Pension Obligation

2003

$ 1,590,831.78

100%

N/A

2002

$ 1,556,675.39

100%

N/A

2001

$ 1,958,105.60

100%

N/A

The required contribution for 2003 was determined as partofthe June 30, 2001, actuarial valuation using the entry age actuarial cost method. The actuarial assumptions included (a) 7% investment rate of return, (b) projected salary increases ranging from 5.2% to 9% per year. Both (a) and (b) included an inflation component of 3.5%. The assumptions did not include postretirement cost-ofliving adjustments. The actuarial value of assets was determined using the techniques that smooth the effects of short term volatility in the market value of investments over a five-year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The employer contributions are projected to liquidate the actuarial accrued funding excess within 20 years based upon the actuarial valuation at June 30, 2001.

Actuarial and Trend Information

Actuarial and historical trend information is presented in the ERS June 30, 2003, financial report

which may be obtained through ERS.

.

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description The Authority participates in the Georgia Defined Contribution Plan ("GDCP") which is a singleemployer defined contribution plan established by the Georgia General Assembly for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Employees' Retirement System Board of Trustees.

Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be'based upon mortality tables and interest assumptions to be adopted by the Board. If a member has less than $ 3,500 credit to his/her account, the Board has the option of requiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.

The Employees' Retirement System of Georgia (ERS) issues a financial report each fiscal year which may be obtained through ERS.

- 34-

GEORGE L. SMITH, II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

.EXHIBIT "E"

NOTE 10: RETIREMENT PLANS (continued)
GEORGIA DEFINED CONTRIBUTION PLAN
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board. Upon termination of employment, the amount of the member's account is refundable upon request by the member. The Authority's payroll for the year ended June 30,2003, for employees covered by GDCP was $2,207,887.75. The Authority's total payroll for all employees was $20,254,977.00.
Total contributions made by employees during fiscal year 2003 amounted to $165,603.57 which represents 7.5% of covered payroll. These contributions met the requirements of the plan.

NOTE 11: POSTEMPLOYMENT BENEFITS
In addition to the pension benefits described in Note 10, the State of Georgia provides postretirement health care benefits through the State Health Benefit Plan to retirees pursuant to OCGA Section 45-18. An individual eligible for these benefits must have been a full time employee at the time of retirement of either the State of Georgia or a county social service agency and must be receiving monthly retirement benefits from either the ERS or a county employees' retirement system. The State Health Benefit Plan (Plan) is a public entity risk pool funded by employee and employer contributions. Employees and retirees subject to the Plan contribute amounts determined by the Department of Community Health for various health insurance plans. The various agencies of the State contribute to the health insurance fund based upon amounts recommended by the Department of Community Health and set forth in the State of Georgia's Appropriations Act. The plan is funded on a "pay-as-you-go" basis. Expenses ofthe Plan include provisions for incurred but not reported claims. The portion of employer contributions and expenses attributable to postretirement health care benefits cannot be reasonably estimated.

NOTE 12: LEAVE POLICIES
Employees earn ten hours of sick leave each month with a maximum accumulation of ninety days. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.
Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length of continuous State service with a maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. See Note 1E - Compensated Absences. Certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement System of Georgia.

- 35-

.--------------------------------~~---~------

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003

EXHIBIT"E"

NOTE 13: OTHER FINANCIAL NOTES
LICENSE AGREEMENT On July 1, 1990, the Authority entered into a License Agreement (Falcons Agreement) with Atlanta Falcons Football Club, LLC, the holder of the National Football League Franchise for and owner of the Atlanta Falcons (Falcons). The expiration of the Falcons Agreement is the latter of June 30, of the license year (state fiscal year) of the maturity of the refunding revenue bonds or June 30 of the twentieth license year. As part of the Falcons Agreement, certain financial obligations between the Authority and the Falcons were established. These obligations pertain to the license fee payable by the Falcons to the Authority and the annual payments due from the Authority to the Falcons as described below.
LICENSE FEE The license fee is payable by the Falcons to the Authority and amounts to ten percent (10%) of the net ticket proceeds, as defined in the Falcons Agreement, for each game day or exhibition performed by the Falcons in the Georgia Dome and cannot be less than $50,000.00 for each Falcons game at the Georgia Dome.
ANNUAL FIXED PAYMENT The Authority has agreed to pay the Falcons the amount of $4,000,000.00 each year beginning on April 1, 1993, and continuing each April 1 thereafter for the term of the Falcons Agreement.

NOTE 14: CONTINGENCIES
Litigation, claims and assessments filed against the Authority, if any, are generally considered to be actions against the State of Georgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2003.

- 36-

SUPPLEMENTARY INFORMATION - 37-

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
CASH AND CASH EQUIVALENTS JUNE 30, 2003

SCHEDULE "1"

INTEREST BEARING ACCOUNTS
Bank of America, Atlanta, Georgia
Bank of New York, Atlanta, Georgia
Cash Investment Accounts Debt Service Interest Debt Service Principal
Wachovia Bank of Georgia, Atlanta, Georgia
Cash Investment Accounts No. 2000016396434 No. 2000070123287 No. 2000124448106 No. 2000133439504 No. 2000141117944 No. 2000182065880 No. 2000185446516 No. 2000185446736 No. 2000187774998 No. 2000187775104
Funds on Deposit with Office of Treasury and Fiscal Services Slate Investment Pool

$

385.28

$ 5,112,359.40 5,645,000.00 10,757,359.40

$

500.00

19,106,326.38

636,637.23

2,223,340.57

330,384.05

7,275,062.50

652,970.61

72,750.00

7,286,457.39

1,043,794.00

38,628,222.73

786,654.71 $ 50,172,622.12

Cash on Hand

259,202.00 $ 50,431,824.12

See notes to the financial statements.

- 38-

GEORGE L. SMITH, II

SCHEDULE "2"

GEORGIA WORLD CONGRESS CENTER AUTHORITY

INVESTMENTS

JUNE 30, 2003

FUNDIINVESTMENT lYPE

PURCHASE DATE

GEORGIA DOME FUND

Restricted

Funds Held by Refunding Rellenue Bond Trustee

Bank of New York,

New York, New York

Rellenue Fund

U. S. TreaslUY Bill

June 26, 2003

Renewal and Extension Fund

U. S. TreaslUY Bill

June 19, 2003

Eany Retirement and Surplus Fund

U. S. Treasury Bill .

May 29, 2003

CENTENNIAL OLYMPIC PARK FUND

Wachovia Bank of Georgia, Atlanta, Georgia
Certificates of Deposit No. 6043469 No. 6043496

February 11 , 2003 April 1, 2003

MATURITY DATE

July 24,2003

$ 10,550,963.43

December 16,2003

1,266,316.66

NOllember 26,2003

2,623,767.66 $ 14,441,087.97

February 11, 2004 $ March 31 , 2004

39,226.71 6,492.33

45,721.04

$ 14,466,609.01

See the notes to the financial statements.

- 39 -

r-----------------------------------------

GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
RECONCILIATION OF SALARIES YEAR ENDED JUNE 30, 2003

SCHEDULE "3"

Total per Annual Supplement
Accruals Salaries Payable June 30, 2003
Compensated Absences Payable June 30,2002 June 30, 2003
Key Employee Incentive Compensation Payable June 30, 2002 June 30, 2003
Adjustments Prior Year's Voided Checks Reimbursement for Temporary Salaries Special Events

$ 20,619,967.13
27,990.62
-1,382,857.22 1,420,985.52
-488,000.00 490,199.00
-2,040.02 -431,268.03

Total

$ 20,254,977.00

See notes to the financial statements.

- 40-

SECTION II COMPLIANCE AND INTERNAL CONTROL REPORT
- 41 -

DEPARTMENT OF AUDITS AND ACCOUNTS

254 Washington Street, S.W., Suite 214

RUSSELL W. HINTON
STATE AUDITOR (404) 656-2174

Atlanta, Georgia 30334-8400

September 19, 2003

Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia Members of the George L. Smith, II Georgia World Congress Center Authority
and Honorable Daniel A. Graveline, Executive Director
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the basic financial statements of the George L. Smith, II Georgia World Congress Center Authority, a component unit of the State of Georgia, as of and for the year ended June 30, 2003, and have issued our report thereon dated September 19, 2003. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance As part of obtaining reasonable assurance about whether the George L. Smith, /I Georgia World Congress Center Authority's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government AUditing Standards.
Internal Control Over Financial Reporting In planning and performing our audit, we considered the George L. Smith, /I Georgia World Congress Center Authority's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the
- 43-

financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation' of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involVing the internal control over financial reporting and its operation that we consider to be material weaknesses.

This report is intended solely for the information and use of management, members of the Authority and management of the State of Georgia, and is not intended to be and should not be used by anyone other than these specified parties.

Respectfully submitted,



~W~

Russ II W. Hinton, CPA, CGFM Stat Auditor

RWH:jbw

- 45-