Audit report, George L. Smith, II, Georgia World Congress Center Authority, a component unit of the state of Georgia, year ended June 30, 2008

STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor
AUDIT REPORT GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY A COMPONENT UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 2008

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

1

MANAGEMENT'S DISCUSSION AND ANALYSIS

5

EXHIBITS

BASIC FINANCIAL STATEMENTS

A STATEMENT OF NET ASSETS

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 NOTES TO THE FINANCIAL STATEMENTS

18

SECTION II

INTERNAL CONTROL AND COMPLIANCE REPORT

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON

COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT

AUDITING STANDARDS

37

SECTION I FINANCIAL

DEPARTMENT oF AuDITS AND AccouNTS
270 Washington St. S.W. Suite 1-156 Atlanta, Georgia 30334
RussELL W. HINToN
STATE AUDITOR (404) 656-2174
October 28, 2008
Honorable Sonny Perdue, Governor of Georgia Members of the General Assembly of the State 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
Ladies and Gentlemen:
We have audited the accompanying 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, 2008, 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 of the George L. Smith, II Georgia World Congress Center Authority, as of June 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the
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year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated October 28, 2008 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 in 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.
Respectfully submitted,
~~~~ Russell W. Hinton, CPA, CGFM. State Auditor
RWH:wlt
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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, 2008 and comparing them to fiscal year ended June 30, 2007. 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 2008, the Authority's combined ending net assets totaled $73.2 million. Of this total, $20.3 is invested in capital assets, $34.6 million is restricted by Georgia Dome Bond Covenants and $18.3 is unrestricted. The net assets of $73.2 million is down from fiscal year 2007's $76.6 million.
Long-term Debt: The Authority's total long-term debt obligations consist of $138.6 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 governmental entity (component unit of the State of Georgia) engaged in business-type activities and are comprised of financial statements for proprietary (enterprise) 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.
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 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 supplies and services to the general public. The basic proprietary funds financial statements are the Statement ofNet Assets, 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.
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Notes to the financial statements: The notes to financial statements provide additional information that is essential to a full understanding of the data provided in the fund financial statements. The notes to financial statements can be found on pages 18-35 of this report.
FINANCIAL ANALYSIS
Georgia World Congress Center Authority Net Assets

Other Assets Capital Assets (Net of Depreciation)
Total Assets
Other Liabilities Long-Term Liabilities:
Current Non-Current
Total Liabilities
Net Assets: Invested in Capital Assets, Net of Debt Restricted Unrestricted
Total Net Assets

FY 2008 $ 101,781,792
166,543,348
$ 268.325.140
$ 35,040,998
11,816,909 148,246,536
$ 195.104.443

FY 2007 $ 100,730,465
176,132,857
$ 276.863.322
$ 31,881,774
11,578,209 156,823,693
$ 200.283.676

$ 20,258,348 34,631,310 18,331,039
$ 73~220~697

$ 22,637,857 38,236,144 15,705,645
$ 76~5792646

The Authority's investment in capital assets (e.g. land, buildings, equipment, etc) is $20.2 million or 28% of the Authority's total net assets. Georgia Dome revenue bond covenants, $34.6 million, make up another 47% of the total net assets. The Authority has a remaining $18.3 million in unrestricted assets.
The Georgia World Congress Center Authority's net assets decreased by $3.4 million in FY 2008.

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The following is a summary of Revenues, Expenses and changes in Net Assets for FY 2008 compared to FY 2007.

Revenues: Operating Revenue Non-Operating Revenue: HoteVMotel Tax (Net) Investment Income Other Non-Operating Revenue
Total Revenues
Expenses: Personal Services Other Operating Expense Depreciation Expense Debt Service Expense Other Non-Operating Expense
Total Expenses
Increase (Decrease) in Net Assets
Net Assets, Beginning of Year
Adjustments: Transfer In Transfer Out
Total Net Assets, End of Year

FY 2008
$ 92,693,186
24,111,679 3,021,588 4,497,885
$ 124,324,338

FY 2007
$ 70,262,680
24,410,873 3,772,581 3,121,518
$ 101 ,567,652

$ 29,858,622 77,830,133 10,755,424 8,308,819 930,289
$ 127,683,287
$ -3,358,949
76,579,646

$ 28,210,620 45,039,528 10,432,669 8,741,822 276,001
$ 92,700,640
$ 8,867,012
67,712,634

1,629,602 -1,629,602
$ 73!220!697

1,632,509 -1,632,509
$ 76!579!646

-7 -

CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets: The Georgia World Congress Center Authority's investment in capital assets as of June 30, 2008 amounts to $306.5 million, which with accumulated depreciation of $140 million leaves a net book value of $166.5 million. This investment in capital assets includes land, buildings, improvements and equipment. Actual depreciation charges for the year totaled $10.8 million. It should be noted that land for the Georgia Dome and land and buildings for the convention center are owned by the Department of Economic Development and are therefore reflected on the State of Georgia's financial statements. Additional information on the Authority's capital assets can be found in note 6 on page 26 of 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 $ 7.2 million was made on July 1, 2007. Additional information on the Authority's long-term debt can be found in note 7 on page 27 of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The 200-acre campus of the Georgia World Congress Center Authority serves as an economic catalyst for the community, generating economic benefits to the citizens of the state, as well as enhancing the overall quality of life for every Georgian.
An estimated 6 million visitors attended over 500 events at the Georgia World Congress Center, the Georgia Dome and Centennial Olympic Park during Fiscal Year 2008. According to a University of Georgia study conducted by the Selig Center for Economic Growth, those visitors spent over $1.7 billion new dollars, which generated an estimated economic impact of more than $2.8 billion. Trade shows, conventions, sporting events and concerts also helped generate an estimated $230 million in tax revenues for the state. Additionally, the GWCCA contributes to the region's economy by creating jobs.
Fiscal Year 2008 was an excellent year by many measures and proved to be both a challenging and rewarding year for the Georgia World Congress Center Authority. We hosted many exciting events on campus including the SEC Football Championship, SEC Men's Basketball tournament, 10 Falcon games, many trade shows, corporate events, high school and college graduations and concerts in the park. On Friday, March 14th Atlanta experienced the wrath of a vicious tornado. It ripped through the central portion ofthe downtown area with winds reaching 135 mph. The campus of the Georgia World Congress Center Authority sustained severe damage totaling an estimated $80 million dollars. But, not even the ferocity of Mother Nature herself that night was a match for the Authority's team.
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The Authority's quick response left many in awe. Within minutes of the tornado touching down, key staff members were already operating in emergency mode. With 30,000 SEC fans filling the Georgia Dome, and simultaneously over 900 JROTC youth in attendance at the Georgia World Congress Center, customer safety was first and foremost. The Authority team members quickly and courageously steered customers away from hazardous areas. Not only did the team members serve as customer service warriors, they served as comrades by comforting frightened men, women and children. The staffs calm, methodical approach and "ready to serve" attitude throughout the storm minimized the possibility of any crowd related issues.
Annually, the GWCCA pours million of dollars into the local and state economy making the recovery efforts critical. Hundreds of people in the hospitality community rely on the GWCCA for their livelihood. Upcoming events such as International Windows Coverings Expo, National Propane Gas Association, the AJC International Auto Show, FIRST, Arbonne International and DECA were at stake, all having tremendous financial impact on the city, state and GWCCA. Emergency response teams had already moved into action quickly and established timelines for recovery.
Amazingly, on Sunday, March 23, The Georgia Dome hosted Easter Service for the New Birth Missionary Church. A mere five days later, 16 of the 21 acres of Centennial Olympic Park were soft opened and just two weeks later the full Park hosted 15,000 runners and fans for the lNG Marathon. The Georgia World Congress Center began moving business into one of the three buildings within a two week time frame. Six weeks later, full occupancy was restored. Despite the dire conditions, the Georgia World Congress Center Authority remained focused on honoring commitments to customers, staff and the city of Atlanta and State of Georgia by delivering "Service in Action".
Additionally, the Georgia World Congress Center Authority completed several major projects amounting to $14+ million and the Falcons contributed in excess of $23 million toward renovations of the Georgia Dome. The major projects include repainting the Dome, renovating the upper and lower concourses of the Dome, replacing all the seats in the Dome, completing the all-access playground in Centennial Park, installing a severe weather/lighting prediction system, repairing International Plaza joint and sidewalk repairs, installed insulation on chilled water pipes in GWCC and installed air-handling units and controls in building A of the Georgia World Congress Center. Needless to say, it was a very intensive and busy year for construction and repairs on the Georgia World Congress Center Campus.
The 200-acre campus of the Georgia World Congress Center Authority is committed to servicing the State of Georgia as the leading economic generator and is committed to the tradeshow manager, convention attendee, football fan and the downtown community to provide the best atmosphere, customer service and environment for everyone, everyday.
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BASIC FINANCIAL STATEMENTS -11 -

GEORGE L. SMITH. II
GEORGIA WORLD CONGRESS CENTER AUTHORITY STATEMENT OF NET ASSETS
PROPRIETARY FUNDS-ENTERPRISE FUNDS JUNE 30. 2008

EXHIBIT"A"

GWCC FUND

MAJOR FUNDS
GEORGIA DOME FUND

CENTENNIAL OLYMPIC
PARK FUND

TOTAL

C~.~Tent Assets Cash and Cash Equivalents hvastments Accounts Receivable Prepaid lems hvantories

$

21 ,546,940.28 $

15,723,971.33 $

7,000,000.00

2,442,639.88

5,285,482.59

47,834.98

7,610.60

295242.11

Total CI.ITent Assets

31,332,657.25 $

21,017,064.52 $

Noncurrent Assets Restricted Cash and Cash Equivalents Customer Deposits hvastments Revenue Bond Covenant Accounts Accounts Receivable Customer Deposits

$

7,975,472.33

38,718,253.69

165 000.00

Total Restricted Assets

$ _ _,:!46~85~8!.J7'-"2~6~.0~2

Capital Assets Land Building Less: Accumulated Depreciation mprovements other than Buildings Less: Accumulated Depreciation Equipment Less: Accumulated Depreciation

$

800,000.00

$

$

209,402,736.05

-116,334,868.72

4,920,117.23 -4159148.10

15,398,963.51 -10 375 538.28

Capital Assets (Net of Accumulated Depreciation) $ _ ____c1""56"'0:96"""9'-'.1_,_3 $

98,091,292.56 $

Total Nonci.ITent Assets

$ _ ____c1,56,0!<:96"""9'-'.1_,_3 $

144,950,018.58 $

Total Assets

$

32,893 626.38 $

165967083.10 $

1,429,388.66 $ 1,136,617.34
7,338.61
2 573 344.61 $

38,700,300.27 7,000,000.00 8,864,739.81 62,784.19 295 242.11
54,923,086.38

$

7,975,472.33

38,718,253.69

165000.00

$ _ _..:;:4;::.6,"'85,8.._,7:...2,6"'.0.,_2

36,482,885.56 $
35,797,67 4.53 -8,352,790.74 3,695,587.27
-732 270.36

37,282,885.56 209,402,736.05 -116,334,868.72
35,797,674.53 -8,352,790.74 24,014,668.01 -15 266 956.74

66,891 ,086.26 $ ---'1"'86"""'54"'3:3e::4!.!.7'-".9-"-5 66,891,086.26 $ _ __,2'-'1"'3,:,:40,_,2,_,0"'7-"3'-".9:!....7

69 464 430.87 $ _....:2;:::68:::,.~32:;:5::.,.1:.;;4~0-=.3~5

The notes to the financial statements are an integral part of this statement.
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GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
STATEMENT OF NET ASSETS PROPRIETARY FUNDS-ENTERPRISE FUNDS
JUNE 30. 2008

EXHIBIT"A"

GWCC FUND

MAJOR FUNDS
GEORG!~\
DOME FUND

CENTENNLI\L OLYMPIC
PARK FUND

TOTAL

LIABILITIES AND NET ASSETS

Current Liabilities Accomts Payable Accrued Payroii/Payrol Wilhholdings Compensated Absences Deferred Revenue Other Liabilities
Total Current Liabilities
Current Liabilities Payable from Restricted Assets Accrued klterest Payable Revenue Bonds Payable
Total current Liabilities Payable from Restricted Assets
NonctJTent Liabilities Compensated Absences Customer Deposits Payable Revenue Bonds Payable Other Liabilities
Tolal Noncurrent Liabilities
Tolal Liabilities
Net Assets Invested in Capital Assets, Net of Related Debl Restricted for: Revenue Bond Cownants Maintenance of Art Unrestricted (Deficit)
Total Net Assets
Total Liabilities and Net Assets

$

3,528,521.94 $

101,822.40

175,647.97

3,640,209.12

271 133.46

$----'-"7'7-1'7-3'3-4'.8=9~ $

$

4,218,605.26 $ 33,531.80 46,571.61
22,459,805.26 59 773.17
26818287.10$
4,151,909.38 7 665 000.00

$

11 816 909.38

$

1,078,980.36 $

550 483.09 $ _ _~1 = 62: 9 4!63=.4~ 5 $ $--9~34~ 6 7~ 98.~ 34 $

286,082.75 $ 7,510,585.00 138,620,000.00
121 357.64
146,538,025.39 $
185 173 221.87 $

399,198.29 $ 5,294.29 9,651.50
81,500.00 9 732.17
505 376.25 $

8,146,325.49 140,648.49 231,871.08
26,181,514.38 340 638.80
35,040,998.24

$

4,151,909.38

7 665 000.00

$

11816909.38

59,287.81 $
19 759.25 79 047.06 $ 584 423.31 $

1,424,350.92 7,510,585.00 138,620,000.00
691 599.98
148,246,535.90
195,104,443.52

$

1,560,969.13 $

-48,193,707.44 $

66.891,086.26 $

20,258,347.95

21 965 858.91

34,566,344.31 -5 578 775.64

64,965.46 1 923 955.84

34,566,344.31 64,965.46
18 331 039.11

$

23,546,828.04 $ _ ___;-:1.9.:2.0:6..1~3~8~!.7..7_ $

68,880,007.56 $

73,220,696.83

$

32,893,626.38 $-.....:=1~.6.5..:9::6:7..:0:8..3:..1:0:. $

69 464 430.87 $

268,325,140.35

The notes to the financial statements are an integral part of this statement.
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GEORGE L. SMITH. II

EXHIBIT"B"

GEORGIA WORLD CONGRESS CENTER AUTHORITY

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS-ENTERPRISE FUNDS

YEAR ENDED JUNE 30, 2008

OPERATING REVENUES
Space Rental Rental - Suite Rental- Equipment Utility Services Parking Catering Advertising Seats/Suites License Fee Telecommunications Contribution from Falcons Cancellation Fee Holiday in Lights Revenue Sponsorship Miscellaneous

GWCC FUND

MAJOR FUNDS
GEORGIA DOME FUND

CENTENNIAL OLYMPIC
PARK FUND

TOTAL

$ 13,437,114.89 $
271,315.15 6,396,422.68 3,134,263.13 6,858,925.02
453,075.48
360,842.87

6,080,715.12 $ 1 ,069,608.00
33,295.32 100,627.70 704,157.84 3,730,296.87 4,067,586.25 20,780,204.36
34,818.20 23,074,891.16

1,028,425.75

431 059.41

179,614.80 $ 7,099.75
33,500.64 198,559.48
73,031.50 114,411.00
39,323.42

19,697,444.81 1,069,608.00 311,710.22 6,530,551.02 3,838,420.97
10,787,781.37 4,067,586.25
20,780,204.36 487,893.68
23,074,891.16 360,842.87 73,031.50 114,411.00
1,498,808.58

Total Operating Revenues

$ 31,940,384.97 $

60,107,260.23 $

645,540.59 $

92,693,185.79

OPERATING EXPENSES
Personal Services Regular Operating Expenses Equipment/Computer Per Diem and Fees Other Special Projects/Capital Outiay Contractual - Game lickets Contractual- Falcons Contractual - Commissions

$ 20,835,813.72 $ 9,928,532.80 2,239,184.52 2,095,005.06 384,711.30 1,292,434.08

7,777,686.40 $ 5,402,075.25 1,190,331.18 2,434,225.47
211,920.63 34,490,013.88
7,294,716.00 4,000,000.00 5,248,958.69

1,245,121.93 $ 441,947.63 5,764.77 322,393.78 14,420.49 833,498.08

29,858,622.05 15,772,555.68
3,435,280.47 4,851,624.31
611,052.42 36,615,946.04
7,294,716.00 4,000,000.00 5,248,958.69

Total Operating Expenses

$ 36,775,681.48 $

68,049,927.50 $ 2,863,146.68 $ 107,688,755.66

Operating Profit (loss) Before Depreciation $ -4,835,296.51 $

-7,942,667.27 $ -2,217,606.09 $ -14,995,569.87

Depreciation Operating Profit (Loss)

242,691.48

8,967,934.90

1,544,797.25

10,755,423.63

$ -5,077,987.99 $ -16,910,602.17 $ -3,762,403.34 $ -25,750,993.50

The notes to the financial statements are an integral part of this statement.
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GEORGE L. SMITH. II

EXHIBIT"B"

GEORGIA WORLD CONGRESS CENTER AUTHORITY

STATEMENT OF REVENUES. EXPENSES AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS-ENTERPRISE FUNDS

YEAR ENDED JUNE 30. 2008

NONOPERATING REVENUES (EXPENSES)
Hotel and Motel Tax Investment Income Vendo~s Compensation on Sales Tax Collections Debt Service Insurance Recovery Gain (Loss) on Capital Asset Disposals Bond Money Revenue- Georgia State Financing
and Investment Commission Bond Money Expense- Georgia State Financing
and Investment Commission Construction Project Revenue - Georgia Department
of Transportation Construction Project Expense - Georgia Department
of Transportation
Total Nonoperating Revenues (Expenses)
Net Income (Loss) Before Transfers
TRANSFERS
Transfer In Transfers Out
Total Transfers
Changes in Net Assets
TOTAL NET ASSETS-JULY 1

GWCC FUND

MAJOR FUNDS
GEORGIA DOME FUND

CENTENNIAL OLYMPIC
PARK FUND

$ 4,376,255.67 $ 1,115,158.77 2,875.94
2,389,595.00 21,816.72
843,766.60
-843,766.60
62,796.31
-62 796.31 $ 7 905 702.10 $
$ 2827714.11 $

19,735,423.38 1,855,229.14 $ 3,596.47 -8,308,818.76 602,217.00 14,388.00

$ 51,200.26
49.57
107,806.00 485.00
448,492.00
-23,725.75

13,902,035.23 $ -3 008 566.94 $

584 307.08 $ -3,178,096.26 $

$ -1 629 602.41 $ -1,629,602.41 $ 1,198,111.70 $
22,348,716.34

$ 1,629,602.41 $

$ 1,629,602.41 $

-3,008,566.94 $ -1,548,493.85 $

-16197 571.83

70.428,501.41

TOTAL
24,111,679.05 3,021,588.17 6,521.98 -8,308,818.76 3,099,618.00 36,689.72 1,292,258.60 -867,492.35 62,796.31 -62 796.31
22,392,044.41 -3,358,949.09
1,629,602.41 -1 ,629,602.41
0.00 -3,358,949.09 76,579,645.92

TOTAL NET ASSETS -JUNE 30

$ 23,546,828.04 $ -19206138.77$ 68 188o,oo7 .56 s

73,220,696.83

The notes to the financial statements are an integral part of this statement.
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GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
STATEMENT OF CASH FLOWS PROPRIETARY FUNDS-ENTERPRISE FUNDS
YEAR ENDED JUNE 30. 2008

EXHIBIT "C"

CASH FLOWS FROM OPERATNG ACTIVITIES

GWCC FUND

MAJOR FUNDS

CENTENNIAL

GEORGIA

OLYMPIC

DOME FUND

PARK FUND

TOTAL

Cash Receiwd from Customers Customer Seat and Suite Deposits- Georgia Dome Customer Seat and Suite License Fees- Georgia Dome Cash Paid to Vendors Cash Paid to Employees Anrv.Jal Payment (Conlractual- Falcons)

$ 39,390,552.15 $
-25,158,553.31 -10,726,878.56

18,711,048.18 $ -1,311,247.50 20,357,488.90 -34,689,074.83 -4,598,351.14 -4,000,000.00

965,274.58 $
-3,589,971.08 -545,487.22

59,066,874.91 -1,311,247.50 20,357,488.90 -63,437,599.22 -15,870,716.92 -4,000,000.00

Net Cash Provided By (Used n) Operating Activities

$

3,505,120.28 $ -5,530,136.39 $ -3,170,183.72 $ -5,195,199.83

CASH FLOWS FROM NONCAPrTAL FINANCING ACTIVITIES

Hotel and Motel Tax Receiwd Hotel and Motel Tax Distributed Operating Transfer- Centennial Olympic Par1< Operations Georgia State Financing and nwstment Commission Vendo~s Compensation on Sales Tax Collections

$ 14,583,962.28 -10,207,706.61 -1,629,602.41 250,745.00 2 875.94 $

$ 3,596.47

$ 1,629,602.41
49.57

14,583,962.28 -10,207,706.61
0.00 250,745.00
6,521.98

Net Cash Provided By (Used n) Noncap~al Financing Activities

$

3,000,274.20 $

3,596.47 $ 1,629,651.98 $

4,633,522.65

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

nteresi/Fees Paid on Refunding Rewnue Bonds Principal Payment on Refunding Revenue Bonds Hotel and Motel Tax Received - Dedicated to Georgia Dome Damage Caused by Tornado nsurance Recovery Acquisition and Construction of Capital Assets

$
$ -24,642,290.87 25,000,000.00 -413,746.49

-8,525,118.76 -7,210,000.00 19,735,423.38 -1,840,390.70 $
-236,753.99

$
-434,250.97 2,836,808.00

-8,525,118.76 -7,210,000.00 19,735,423.38 -26,916,932.54 25,000,000.00 2,186,307.52

Net Cash Provided By (Used n) Capital and Related Financing Activities

$

-56,037.36 $

1,923,159.93 $ 2,402,557.03 $

4,269,679.60

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of nwstment Securities Proceeds from Sale and Maturity of nwstments nterest on nvestments

$ -7,000,000.00 $ -472,113,397.77

479,307,034.55

1,115,158.77

1,855,229.14 $

$ -479,113,397.77

479,307,034.55

51,200.26

3,021,588.17

Net Cash Provided By (Used n) nwsting Activities

$ -5,884,641.23 $

9,048,865.92 $

51,200.26 $

3,215,224.95

Net ncrease (Decrease) in Cash and Cash Equivalents

$

564,515.89 $

5,445,485.93 $

913,225.55 $

6,923,227.37

CASH AND CASH EQUIVALENTS-JULY 1

20,982,424.39

18,253,957.73

516163.11

39,752,545.23

CASH AND CASH EQUIVALENTS- JUNE 30

$ 21,546,940.28 $ 23,699,443.66 $ 1,429,388.66 $ 46,675,772.60

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

GEORGE L. SMITH. II
GEORGIA WORLD CONGRESS CENTER AUTHORITY STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS-ENTERPRISE FUNDS YEAR ENDED JUNE 30. 2008

EXHIBIT "C"

GWCC FUND

MAJOR FUNDS

CENTENNIAL

GEORGIA

OLYMP~

DOME FUND

PARK FUND

TOTAL

RECONCILIAllON OF OPERATING PROFIT !LOSS) TO NET CASH PROVIDED BY !USED IN) OPERATING ACTNITES
Operating Profit (Loss)
Adjustments to Reconcile Operating Profit (Loss) to Net Cash Provided By (Used 11) Operating Activities: Depreciation Contract with Levy Restaurants for Equipment Purchases Changes in Assets and Liabilities: (l'lcrease) Decrease in Accounts Receivable (l'lcrease) Decrease in Prepaid lems (l'lcrease) in 111/entories Increase (Decrease) in Liabilities (Other than Customer Deposits) (Decrease) in Customer Deposits Payable l'lcrease in Deferred Revenues
Total Adjustments

$ -5,077,987.99 $ -16,910,602.17 $ -3,762,403.34 $ -25,750,993.50

$

242,691.48 $

-45,911.14

6,138,127.69 -12,698.48 -2,684.25

1,880,747.24

382,835.73

$ ---"'8=,5"8-3",1"0=8!.2..7. $

8,967,934.90 $ -8,532.00
1,319,610.77 351,139.53
1,446,706.76 -1,311,247.50
614,853.32
11,380,465.78 $

1,544,797.25 $
-256,247.61 70,497.94
-839,577.96 72,750.00
592,219.62 $

10,755,423.63 -54,443.14
7,201 ,490.85 408,938.99 -2,684.25
2,487,876.04 -1,311,247.50 1 ,070,439.05
20,555,793.67

Net Cash Provided By (Used 11) Operating Activities

$ 3,505,120.28 $ -5,530,136.39 $ -3,170,183.72 $ -5,195,199.83

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

GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

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 Georgia Annotated (OCGA) Section 10-9-6 provides that the Board of Governors consist of fifteen (15) members appointed by the Governor. 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 of the Governmental 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 (component unit 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.
GWCC Fund - Used to report activity associated with operations of the Georgia World Congress Center and certain administrative responsibilities related to the Georgia Dome and Centennial Olympic Park.
Georgia Dome Fund- Used to report activity associated with operations of the Georgia Dome.
Centennial Olympic Park Fund- Used to report activity associated with operations of the Centennial Olympic Park.
lnterfund Eliminations In accordance with the License Agreement (See Note 12), the GWCC Fund of the Authority collects an administrative overhead fee from the Georgia Dome Fund. The effect of this interfund activity has been eliminated from the GWCC Fund's operating revenues and expenses.

- 18-

GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

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 (GASB) 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 space rent, utility services, catering and parking services. Operating expenses include personal services, regular operating expenses, equipment, contractual expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.
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 external 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 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.

- 19-

GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

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 States of America require that investments be reported at fair value, however, the variance in cost/amortized 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, 2008, 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.
RESTRICTED ASSETS Certain refunding revenue bond resources recorded in the Dome Fund are reflected as restricted assets on the Statement of Net Assets 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.
- 20-

GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

CAPITAL ASSETS Capital assets, which include property, plant and equipment, are recorded in the Statement of Net Assets 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 Economic Development, 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.

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.

- 21-

GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

Restricted Net Assets result when constraints placed on net assets 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:
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.
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, the City of Sandy Springs, the City of Johns Creek, 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. Pursuant to the Stadium Funding Agreement between the Authority and the City of Sandy Springs and the City of Johns Creek, 39.3% of such collections are to be paid to the Authority dedicated to the purposes of the Domed Stadium Project. 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.

GEORGE L. SMITH. II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT "D"

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 of the 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 to 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 revenues from the GWCC Fund to the Centennial Olympic Park Fund for operations of Centennial Olympic Park.
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.
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 Series 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 any one 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.

- 23-

GEORGE L. SMITH, II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2008

EXHIBIT"D"

(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, or the 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.

NOTE 4: DEPOSITS AND INVESTMENTS

A. Deposits The custodial credit risk for deposits is the risk that in the event of a bank failure, the Authority's deposits may not be recovered. At June 30, 2008, the balance of the Authority's deposits were fully collateralized by a combination of depository insurance and securities held by the financial institution's agent in the Authority's name.

Cash and Cash Equivalents

Investments

Per Statement of Net Assets

$ 46,675,772.60 $ 45,718,253.69

Reclassification from Investments for Risk Assessment Disclosure Certificates of Deposit Bank of New York Cash

710001000 00 12,099,716.40

-7,000,000.00 -12,099,716.40

Reclassification to Investments for Risk Assessment Disclosure State investment pool

-582,626.06

582,626.06

Per notes to the financial statements

$

65,192,862.94 $ 27,201,163.35

GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

B. Investments The Authority's investments as of June 30, 2008 are presented below. presented by investment type by maturity.

All investments are

Investment

Maturities

Fair Value

U. S. Treasury Bill U. S. Treasury Bill

24 Days 339 Days

$ 20,790,280.00 5,978,589.28

Georgia Fund 1 Investment Pool

WAM

582,626.06

$ 27,351,495.34

Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. The Authority's policy is to not invest in instruments over 12 months.
Credit Qualitv Risk Credit quality risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The credit quality risk of the Authority is managed by restricting investments to those authorized in Note 1.
The U.S. Agency Obligations and the Georgia Fund 1 were rated AAA by Standard and Poor's.
Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of the Authority's investment in a single issuer.

- 25-

GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

NOTE 5: TRANSFERS Transfers during the year ended June 30, 2008, consist of the following:

Transfers In lnterfund

$ 1,629,602.41

Transfers Out lnterfund

-1,629,602.41

Total Transfers

$

0.00

NOTE 6: CAPITAL ASSETS Capital asset activity for the year ended June 30, 2008, was as follows:

Balance July 1, 2007

Additions

capital Assets Not Being Depreciated:

Land

$

Total capital Assets Not Being Depreciated $

37,282,885.56 37,282,885.56

capital Assets Being Depreciated: Buildings ll'll>rovements Other Than Buildings Equipment
Total capital Assets Being Depreciated

$ 209,402,736.05 35,797,674.53 23,013,354.11 $
$ 268,213,764.69 $

1p165,914,56 $ 1p165,914,56 $

Less Accumulated Depreciation For: Buildings Improvements Other Than Buildings Equipment
Total Accumulated Depreciation

$ -108,579,213.11 $ -7,755,655.61

-7,159,534.92

-1 p 193,255,82

-13,625,045.23

-1,806,512.17 $

$ -129,363,793.26 $ -10,755,423.60 $

Total capital Assets Being Depreciated, Net $ 138,849,971.43 $ -9,589,509.04 $

Total capital Assets, Net

$ 176,132,856.99 $ -9,589,509.04 $

Deletions

Balance June 30, 2008

$

37,282,885.56

$

37,282,885.56

$
-164,600.66 -164,600.66 $

209,402,736.05 35,797,674.53 24,014,668.01
269,215,078.59

$
164,600.66 164,600.66 $

-116,334,868.72 -8,352,790.7 4
-15,266,956.74 -139,954,616.20

0.00 $ 129,260,462.39

0.00 $ 166,543,347.95

- 26-

GEORGE L. SMITH. II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

NOTE 7: LONG-TERM DEBT

Long-term obligations at June 30, 2008, and changes for the fiscal year then ended are as follows:

July 1, 2007

Increases

Decreases

June 30, 2008

Amounts Due Within One Year

Refunding Revenue Bonds Compensated Abesences Key Employee Incentive
Compensation

$ 153,495,000.00 1,497,462.61 $
794,667.99

$ 322,805.35

-7,210,000.00 $ -164,045.96

146,285,000.00 $ 1 ,656,222.00

7,665,000.00 231,871.08

486,380.00

-248,809.21

1,032,238.78

340,638.80

$ 155,787,130.60 $ 809,185.35 $ -7,622,855.17 $ 148,973,460.78 $ 8,237,509.88

REVENUE BONDS PAYABLE The Authority has issued Refunding Revenue Bonds (Domed Stadium Project), Series 2000, which are backed by a Hotel and Motel Tax imposed by the City of Atlanta, the City of Sandy Springs, the City of Johns Creek, 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, 2008, are as follows:

Purpose

Interest Rates

Amount

Domed Stadium Project

5.50%- 6.00% $ 146,285,000.00

Revenue bond debt service requirements to maturity are as follows:

Fiscal Year Ended June 30

2009

$

2010

2011

2012

2013

2014-2018

2019-2021

Princi~al

Interest

7,665,000.00 $ 3,921,959.38 $

8,150,000.00

7,599,418.76

8,660,000.00

7,095,118.76

9,210,000.00

6,559,018. 76

9,795,000.00

6,007,234.38

58,590,000.00

20,719,137.58

44,215,000.00

3,740,962.50

$ 146,285,000.00 $ 55,642,850.12 $

Total
11,586,959.38 15,749,418.76 15,755,118.76 15,769,018.76 15,802,234.38 79,309,137.58 47,955,962.50
201,927,850.12

Interest due on July 1, 2008, in the amount of $4,151,909.38 was recorded as a liability of the Georgia Dome Fund at June 30, 2008.

GEORGE L. SMITH. II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

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.
FINANCIAL GUARANTY INSURANCE POLICY The Authority maintains a Financial Guaranty Insurance Policy issued by the MBIA Insurance Corporation and dated Apri14, 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, 2008, no monies have been paid by the Insurer on this policy.
NOTE 8: 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 Health 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 of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30, 2008.
Other Risk Management The Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omission; and injuries to employees. The State of Georgia utilizes selfinsurance programs established by individual agreement, statute or administrative action, to provide property insurance covering fire and extended coverage and automobile insurance and to pay losses that might occur from such causes; liability insurance for employees against personal liability for damages arising out of performance of their duties; survivors benefits for eligible members of the Employees' Retirement System; consolidating processing of unemployment compensation claims against State agencies and the payment of sums due to the Department of Labor; and workers' compensation insurance coverage for employees of the State and for the receipt of benefits as prescribed by the workers' compensation statutes of the State of Georgia. These self-insurance funds are accounted for as internal service funds of the State of Georgia where assets are set aside for claim settlements. The majority of the risk management programs are funded by assessments charged to participating organizations. A limited amount of commercial insurance is purchased by the self-insurance funds applicable to property, employee and automobile liability, fidelity and certain other risks to limit the exposure to catastrophic losses. Otherwise, the risk management programs service all claims against the State for injuries and property damage. Financial information relative to the self-insurance funds will be presented in the State of Georgia Comprehensive Annual Financial Report for the year ended June 30, 2008.

- 28-

GEORGE L. SMITH. II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2008

EXHIBIT"D"

NOTE 9: RETIREMENT PLANS
Employees' Retirement System of Georgia
Plan Description The Georgia World Congress Center Authority participates in the Employees' Retirement System of Georgia (ERS), a cost-sharing multiple employer, defined benefit pension plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for employees of the State of Georgia. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. ERS acts pursuant to statutory direction and guidelines, which may be amended prospectively for new hires but for existing members and beneficiaries may be amended in some aspects only subject to potential application of certain constitutional restraints against impairment of contract. ERS issues a publicly available financial report that includes the applicable financial statements and required supplementary information. The report may be obtained from Employees' Retirement System of Georgia, Two Northside 75, Suite 300, Atlanta, Georgia 30318-7778 and is available online at www.ersga.org.
Benefits The benefit structure of ERS is established by the Board of Trustees under statutory guidelines, which were 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. (A different plan for new hires and electing members will take effect January 1, 2009, with defined benefit and defined contribution aspects.)
Under both the old and new plans now existing, a member may "vest" after completion of ten 10 years of creditable service and retire after attainment of age 60, or 30 years of creditable service regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon a formula adopted by the Board of Trustees for such purpose. The formula considers the monthly average of the member's highest twenty-four (24) consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Post-retirement cost-of-living adjustments may be made to members' 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. ERS with the State Employees' Assurance Department administers a separate Group Term Life Insurance program for retirees and employees.
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 the SRBP is to provide retirement benefits to employees covered byERS whose benefits are otherwise limited by IRC Section 415.

- 29-

GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

Funding Policy and Actual Contributions Employee contribution rates are set by law. In order to assure actuarial soundness, the minimum annual employer contribution is determined, appropriated and paid by employers under minimum funding standards as required by law. Member contributions under the old plan are 4% of annual compensation up to $4,200, plus 6% of annual compensation in excess of $4,200. 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 the employee. The Authority also is required to contribute at a specified percentage of active member payroll established by the Board of Trustees determined annually in accordance with actuarial valuation and minimum funding standards as provided by law. For the year ended June 30, 2008, the ERS contribution rate for the Authority was 10.41% for new plan employees and 5.66% for old plan employees (exclusive of the contributions on behalf of old plan employees as described above). The required contribution for 2008 was determined as part of the June 30, 2005, actuarial valuation. Employer contributions are also made on amounts paid for accumulated leave to retiring employees. Contributions for the benefit of the employees of the Georgia World Congress Center Authority to ERS made during fiscal year 2008 totaled $1 ,949,366.05 of which $1 ,686,132.32 was made by the Georgia World Congress Center Authority and $263,233.73 was made by employees.
Georgia Defined Contribution Plan
Plan Description Certain employees of the Authority participate in the Georgia Defined Contribution Plan (GDCP), which is a single-employer defined contribution plan established by the General Assembly of Georgia for the purpose of providing retirement allowances for public employees who are not members of a public retirement or pension system. GDCP is administered by the ERS 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 of GDCP are established and may be amended byState statute.
Contributions Required and Contributions Made Member contributions are 7.5% of gross salary. There are no employer contributions. Contribution rates are established and may be amended 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. Total contributions by employees during the fiscal year ended June 30, 2008, were $172,036.15, which represents 7.5% of covered payroll. These contributions met the requirements of the plan.

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GEORGE L. SMITH. II
GEORGIA WORLD CONGRESS CENTER AUTHORITY NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

NOTE 10: OTHER POSTEMPLOYMENT BENEFITS
Georgia Retiree Health Benefit Fund
Plan Description The Georgia World Congress Center Authority contributes to the Georgia Retiree Health Benefit Fund (GRHBF). GRHBF funds health insurance benefits to eligible retirees and their qualified beneficiaries provided by the health insurance plan for state employees. Pursuant to Title 45, Chapter 18 of the Official Code of Georgia Annotated, the authority to establish and amend the benefit provisions of the employees health insurance plan is assigned to the Board of Community Health, which also is required to provide for health insurance for retiring state employees and their spouses and dependent children, as defined by the regulations of the board, on such terms as the board may deem appropriate. As to retiree participants, that part of the plan funded by GRHBF is a cost-sharing multiple-employer defined benefit postemployment healthcare plan. The Department of Community Health issues a publicly available financial report that includes financial statements and required supplementary information for GRHBF. That report may be obtained from the Department of Community Health, 2 Peachtree Street, Atlanta, Georgia 30303.
Funding Policy The contribution requirements of plan members and participating employers are established by the Board of Community Health in accordance with current appropriations and may be amended by the Board. Contributions of plan members or beneficiaries receiving benefits vary based on plan election, dependent coverage, and Medicare eligibility and election. On average, plan members pay approximately twenty-five percent (25%) of the cost of health insurance coverage.
Participating State employers are statutorily required to contribute in accordance with the employer contribution rate established by the Board. This contribution rate is established to fund both the active and retired employee health insurance plans based on projected pay-as-you-go financing requirements. The combined rate for the active and retiree plans (pay-as-you go basis) for the fiscal year ended June 30, 2008, was 18.534% of covered payroll. An additional contribution of 4.309% of covered payroll was required by the Board for fiscal year 2008; eleven months of this additional contribution will be deposited into GRHBF (an "OPEB fund") to prefund retiree benefits; such additional contribution amounts are determined annually by the Board in accordance with the state plan for other post-employment benefits and subject to appropriation. The Authority's contribution for the health insurance plan for the fiscal year ended June 30, 2008, was $4,296,203.19, which equaled the required contribution.
State Employees' Assurance Department- OPES
Plan Description The State Employees' Assurance Department ("SEAD") contracts with the Employees' Retirement System of Georgia ("ERS") to provide group term life insurance for the survivors benefit program provided by ERS (separately from retirement plans). The program is for active members, retired members and certain vested inactive members of ERS (and by contract for those of the Georgia Legislative Retirement System, and the Georgia Judicial Retirement System). Authority to establish and amend the survivors benefit plan is with the Board of Trustees of ERS, and authority to establish and amend the group term life insurance is with Trustees and the directors of SEAD,
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GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

subject in each case to potential application of restraints against impairment of contract. Subject to certain age based reductions and payment of contribution, the benefits for retiring members or vested members withdrawing from service after 18 years service become fixed as of the day before retirement.
ERS administers a survivors benefit fund. Two separate trust funds under the control and management of the directors of SEAD are maintained for the provision of group term life insurance, a fund for active members and a fund for retired and vested inactive members. That part of the survivors benefit plan consisting of SEAD group term life insurance funded by the trust fund for retired and vested inactive members is a single-employer defined benefit postemployment plan ("SEAD/OPEB Plan"). The Employees' Retirement System of Georgia (ERS) issues a publicly available financial report that includes financial statements and required supplementary information for SEAD-OPEB. That report may be obtained from the Employees' Retirement System of Georgia, Two Northside 75, Suite 300, Atlanta, Georgia 30318-7778.
Funding Policy Contributions by plan members are established by the Boards of Trustees, up to the maximum allowed by statute (not to exceed 0.5% of earnable compensation). The Boards of Trustees of the Systems establish employer contribution rates which, when added to members' contributions, may not exceed one percent (1 %) of earnable compensation. For the fiscal year ended June 30, 2008, contributions of ERS "old plan" members were one-half of one percent (0.5%) of earnable compensation, one-quarter of one percent (0.25%) of which was paid by the employer. Contributions of ERS "new plan" members and of members of the Judicial and Legislative Retirement Systems were one-quarter of one percent (0.25%) of earnable compensation. For the fiscal year ended June 30, 2008 there was no employer contribution required.
Annual OPEB Cost For the fiscal year ended June 30, 2008, the Authority had no annual OPEB cost for SEAD-OPEB (the ARC was zero).
Funded Status and Funding Progress The funded status of SEAD-OPEB as of June 30, 2007, was as follows:

Actuarial accrued liability (AAL) Actuarial value ofplan assets Unfunded actuarial accrual liability (UAAL) (funding excess)
Funded ratio (actuarial value of plan assets I AAL) Covered payroll (active plan members) UAAL(funding excess) as a percentage ofcovered payroll

$ 642,530,433
ns,04s,ooo
$ (135,517,567)
121.09% $ 2,720,771,905
(4.98%)

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual revision as actual results are compared with past

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GEORGE L. SMITH. II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30. 2008

EXHIBIT"D"

expectations and new estimates are made about the future. Historical trend information presented in the financial report of ERS includes multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations. In the June 30, 2007, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 7.5% investment rate of return, which includes a 3.75% inflation assumption. The actuarial value of SEAD-OPEB assets was determined using market value. SEAD-OPEB's funding excess is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at June 30, 2007, was thirty-six years.
NOTE 11: 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.
The Authority has adopted a policy where employees may request that a portion of their unused accrued annual leave balance be paid in lump sum. There are eligibility requirements and minimum balances that must be maintained in addition to a maximum of 40 hours per year that can be converted through this process.

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GEORGE L. SMITH, II GEORGIA WORLD CONGRESS CENTER AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2008

EXHIBIT"D"

NOTE 12: 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 (1 0%) 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 13: 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, 2008.

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SECTION II INTERNAL CONTROL AND COMPLIANCE REPORT
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DEPARTMENT oF AuDITS AND AccouNTS
270 Washington St. S.W. Suite 1-156 Atlanta, Georgia 30334
RussELL W. HINTON
STATE AUDITOR (404) 656-2174
October 28, 2008
Honorable Sonny Perdue, Governor of Georgia Members of the General Assembly of the State of Georgia Members of the George L. Smith, II Georgia World Congress Center Authority
and Honorable Daniel A Graveline, Executive Director
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Ladies and Gentlemen:
We have audited the 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, 2008, and have issued our report thereon dated October 28, 2008. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the George L. Smith, II Georgia World Congress Center Authority's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the George L. Smith, II Georgia World Congress Center Authority's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the George L. Smith, II Georgia World Congress Center Authority's internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability
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to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more that a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control.
Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the George L. Smith, II 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 grant agreements, 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 or other matters that are required to be reported under Governmental Auditing Standards.
This report is intended solely for the information and use of management, members of the George L. Smith II Georgia World Congress Center Authority Board and others within the entity and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
::::::>~~~ 1 Rrell W. Hinton, CPA, CGFM State Auditor
RWH:wlt
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