HomeMy WebLinkAboutSMG - 11/1/2014 Amendment to the 2014 Amended and Restated Management Agreement for Fresno Convention Center and Chukchansi Park-G.c
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FIRST AMENDMENT TO
MANAGEMENT AGREEMENT
THIS FIRST AMENDMENT TO MANAGEMENT AGREEMENT (this "First
Amendment") is dated as of this V¿uV of Novemb er,2074 (the "Effective Date"), by and between the
CITY OF FRESNO, a municipal corporation organizedand,existing under the laws of the State of
California ("owner" or "City"), and sMG, a pennsylvania general partnership (,,SMG,,).
RECITALS
A' The Owner is the owner or lessee of facilities comprising the Fresno Convention
& Entertainment Center (Saroyan Theatre, Selland Arena, Fresno Convention Center, and Ernie
Yaldez Exhibit Hall (formerly known as Exhibit Hall South)), located downtown in the City of Fresno
(individually and collectively, the "Facility"). The Facility no longer includes the Robert A. Schoettler
Conference Center and the parking garage attached to the Robert A. Schoettler Conference Center.
SMG is engaged, among other things, in the business of providing management services, including
operations and marketing services for public assembly facilities.
B' The Owner and SMG originally entered into that certain Management
Agreement dated as of January 1,2004, pertaining to SMG's management and operation of the Facility
(the "Original Management Agreement"). The parties thereafter entered into that certain Management
Agreement dated as of December 17,2008, which superseded the Original Management Agreement
(the "Management Agreement"). On or about December 18,2013,the parties entered into that certain
Amended and Restated Management Agreement (the "Amended Management Agreement"), whereby
City and SMG agreed to certain revisions to increase the number of revenue producing .,r.ltr, and to
reduce the City's Contribution from its General Fund to the operation of the Èacility.
C' By this First Amendment, the parties agree that SMG shall conduct certain
promotional activities related to the parking structure located at the southwest corner of rro" and Inyo
Streets (the "City Lot").
D. This First Amendment hereby incorporates those definitions used in the
Amended Management Agreement.
NOW' THEREFORE, in consideration of the foregoing Recitals, which are hereby
incorporated by reference, and of the mutual promises, covenants and agreements herein containeá, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Parking Promotion. Exhibit "4" Section 1(i) is hereby amended to provide for
the following:
Operate or cause to be operated the Parking Area for use as a pay parking lot for
automobiles and for no other use unless approved by the Owner. Parking Area shall be
operated and maintained as first class parking facilities open to public use, and with
established rates approved by the Owner and staffed by suffrcient personnel to ensure
the prompt and efhcient movement ingress and egress of traffrc. Overnight parking
shall not be permitted by SMG, except as specifically required to accommodãte an
event on a temporary basis in the course of operations at the Facility. Additionally,
SMG shall implement various programs in consultation with the City and the City Lot
1549653v1 / 18621.0001
third-party parking operator, if any, to package events with parking at the City Lot and
implement other programs in an effort to increase revenues for the Facility and the City
Lot. The City shall reasonably cooperate with SMG regarding such efforts. Any
revenues directly attributable to SMG's marketing of the City Lot shall be factored in as
Operating Revenues for the pu{poses of calculating the Facility's operating budget.
2. Effect of Amendment. Except as otherwise specifically set forth in this First
Amendment, each and every provision of the Amended Management Agreement, shall remain in full
force and effect.
3. Counterparts. This First Amendment (either a duplicate copy or a copy of a
facsimile thereof) may be executed in any number of counterparts and each such counterpart shall be
deemed to be an original instrument, all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the day and year first above written.
CITY OF FRESNO ("Owner")
Title:
SMG
APPROVED AS TO FORM:
By:
Name:
Title:
ATTEST:
Ir.u 'r.l
WONNE SPENCE, CMCNu-t' V Jehn F- BurnsTitle: Ghief F¡naneial officer
1549653v1 / 18621.0001
R I CEIV ED
¡'ìiT i'ii.Ü ô fin 8 V.
CITY CLERK, FRESHO CA
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED
JUNE 30,2014
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
JUNE 30,2014
TABLE OF CONTENTS
Paqe
lndependent Auditor's Report........ ......... 1
Financial Statements:
Statement of Net Position ................. 3
Statement of Revenues, Expenses and Changes in Net Position ............4
Statement of Cash F1ows........., ........ 5
Notes to the Financial Statements ....................... 6
PRICE PAIGE &! COMPANY
Acco u nto ncy Co rþ o roti o n
The Place to Be
INDEPENDENT AUDITOR'S REPORT
To the Management of
Fresno Convention & Entertainment Center
848 M Street, 2nd Floor
Fresno, California 93721
We have audited the accompanying financial statements of Fresno Convention & Entertainment Center,
operations as managed by SMG (the "Center"), as of and for the year ended June 30, 2014, and the
related notes to the financial statements, as listed in the table of contents.
Management's Responsibility for the Financial Statements
SMG Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. ln making those risk assessments, the auditor considers internal control relevant to the Center's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Cente/s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
677 Scott Avenue
Clovis, CA 9361 2
tel 559.299.9540
www.PPcPas.com
fox 559.299.2344
Opinion
ln our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Fresno Convention & Entertainment Center, operations as managed by SMG, as of
June 30, 2014, and the changes in financial position and cash flows thereof for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
These financial statements do not purport to present the financial position of the Fresno Convention &
Entertainment Center as a whole. These statements only reflect those transactions and activities under
the management of SMG. Accordingly, certain assets and liabilities associated with the Center, such as
capital assets, long-term debt and other activities are not presented.
Clovis, California
October 31,2014
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
srArE M ENI
ffr)ãt,| los
rr r o N
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts recelvable
Due from the City of Fresno
lnventories
Prepaid expenses
Total current assets
Totalassets
LIABILITIES
Current liabilities:
Accounts payable
Due to the City of Fresno
Accrued payroll
Compensated absences
Advance ticket sales and deposits
Event liability
Other accrued expenses
Other unearned revenue
Total current liabilities
NET POSITION
Unrestricted
$ 688,252
1,217,913
107,504
1,988
55,208
54,244
125,109
109125
363,660
25,803
114,445
58,1 96
1,242,026
1 31,1 90
99,538
15,178
2,050,036
75,073
$ 75,073Total net position
The accompanying notes are an integral part of this statement.
3
FRESNO CONVENT¡ON & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEAR ENDED JUNE 30,2014
Operating Revenue
Direct event income:
Rental income
Net services event income (loss), net of
service event expense of $1 ,744,301
Total direct event income
Ancillary income:
Food and beverage, net
Catering, net
Facility fees
Parking
Other ancillary
Totalancillary income
Other revenue
Total operating revenue
Operating Expenses
Employee wages and benefits
Contracted services
General and administrative expenses
Advertising
lnsurance
Operations expense
Repairs and maintenance
Supplies
Utilities
Special events
SMG management fee
Total operating expenses
Operating loss before contributions
Contributions from City of Fresno
Change ín net position
Total net position, July I , 2013
Prior period adjustment
Theatre assets transferred to the City of Fresno
Net position, July 1, 2013, as restated
Total net position, June 30, 2014
3,610,408
(984,e88)
2,194,389
1,209,401
(748,2ee)
(236,053)
(149,976)
(1,134,328)
$ zs,ozs
part of this statement.
$ 1 ,362,159
(111,471).
1,250,688
275,158
228,592
400,928
242,998
184,450
1,332,126
42,606
2,625,420
1,640,065
23,360
141,240
26,510
103,754
15,581
307,846
1 19,846
1,038,696
25,500
168,010
The accompanying notes are an integral
4
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30,2014
Cash flows from operating activities:
Cash receipts from customers
Other operating cash receipts
Payments to suppliers of goods or services
Payments to employees for services
Net cash provided by (used in) operating activities
Cash flows from non-capital financing activities:
Contributions from the Ci$ of Fresno
Net cash provided by (used in) non-capitalfinancing activities
Net increase in cash
Cash, beginning of year
Cash, end ofyear
Reconciliation of operating income (loss) to net cash
provided by (used in) operating activities:
Operating loss before contributions
Adjustments to reconcile operating income (loss) to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
Decrease in accounts receivable
(lncrease) in due from City of Fresno
(lncrease) in inventories
(lncrease) in prepaid expenses
(Decrease) in accounts payable
(Decrease) in due to City of Fresno
lncrease in accrued payroll
lncrease in compensated absences
lncrease in advance ticket sales
lncrease in event liability
(Decrease) in other accrued expenses
(Decrease) in other unearned revenue
Net cash provided by (used in) operating activities
Cash and cash equivalents
Restricted cash
Totalcash and cash equivalents
The accompanying notes are an integral part of this statement.
5
$ 5,147,736
42,606
(5,077,270)
(1,540,474\
(1,427,402\
2,194,389
2,194,389
766,987
1,139,178
$ 1,906,165
(e84,e88)
160,403
(1,e88)
(2,207)
(21,382)
(627,748)
(495,206)
99,013
578
373,076
84,798
(7,210)
(4,541\
$ (1,427,402\
$ 688,252
1,217 ,913
$ t,906,165
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
NOTES TO THE FINANC¡AL STATEMENTS
JUNE 30,2014
NOTE 1 - ORGANIZATION AND OPERATIONS
The Fresno Convention & Entertainment Center (the "Center") is the premier performing arts and convention
center site in California's Central Valley. Located in downtown Fresno, the Fresno Convention Center,
Saroyan Theatre, Selland Arena and Valdez Hall are owned and subsidized by the City of Fresno (the
"City"), a municipal corporation organized and existing under the laws of the State of Califoinia. Activitieò at
the Center include a wide variety of events including concerts, weddings, conventions, shows, professional
sporting events, and various community events.
The City entered into _a- management agreement (the "Agreement") with SMG, a pennsylvania general
partnership in January 2004, lo provide business management services, including operations, management
and promotion for the Center. The Agreement was subsequently amended first in December 2008 añd thenagain in December 2013, taking effect January 1,2014. The Agreement provides for an annual
management fee with potential increases if SMG meets certain performance criteria. The Agreement expires
June 30, 2019, unless otherwise mutually agreed-to by extension in writing prior to expiratioñ.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Center is part of a proprietary entity; it uses an enterprise fund format to report its activities for financial
statement purposes. Proprietary Fund Financial Statements include a Statement of Net position, a
Statement of Revenues, Expenses and Changes in Fund Net Position, and a Statement of Cash Flows.
Enterprise funds are used to account for operations that are financed and operated in a manner similar toprivate business enterprises, where the intent of the governing body is that the cost and expenses ofproviding goods or services to its customers be financed or recovered primarily through users charges; or
where the governing body has decided that periodic determination of revenue earned, expenses inıurred,
and net income is appropriate for capital maintenance, public policy, management control, accountability, or
other purposes.
Enterprise funds are accounted for using the "economic resources" measurement focus and the accrual basisof accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the
Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net position
presents increases (revenues) and decreases (expenses) in total net position. Ùnder the accrual basis of
accounting, revenues are recognized in the period in which they are earned while expenses are recognized in
the period in which the liability is incurred.
Operating revenues in the proprietary funds are those revenues that are generated from the primary
operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses ará
those expenses that are essential to the primary operations of the fund. All other expenses ãre reported as
non-operating expenses.
Cash and Cash Equivalents
Cash and cash equivalents consist of various demand and interest bearing accounts on deposit with insured
financial institutions. The Center considers all investments with an original maturity of three months or less
to be cash equivalents; however, the Center did not have any cash equivalents for the year ended June 30,
2014.
Cash from ticket sales and contract deposits held in escrow are designated as restricted (see Note 3).
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2014
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLIGIES (Continued)
Accounts Receivable
Accounts receivable are stated at the amount SMG management expects to collect from outstanding
balances. Accounts receivable are written-off when deemed uncollectible. Recoveries of accounts
receivables previously written-off are recognized as income when received. SMG management believes that
all accounts receivable are collectible and therefore an allowance for doubtful accounts is not deemed
necessary.
lnventories
lnventories consist of food and beverage items for the Center's concession stands and are stated at the
lower-of-cost (determined on the first-in, first out basis) or, when appropriate, market (net realizable value).
Property and Equioment
The City provides SMG with certain funding for capital expenditures on an annual basis. All assets
purchased by SMG with a cost below $5,000 are expensed when incurred. The City retains all ownership
and title of all assets purchased that are capitalized. SMG utilizes the City's funds to purchase these assets
and transfers title to the City for inclusion in its financial statements. As such, no depreciation is recorded for
the operating activities of SMG - Fresno Convention & Entertainment Center. Routine repairs and
maintenance, including planned major maintenance activities are expensed when incurred.
Compensated Absences
The Center provides its employees with vacation, sick and other benefits in accordance with its policies. The
Center's costs for these benefits are expensed as they are vested in the employees.
Advanced Ticket Sales and Deoosits
Event tickets sold prior to an event date are recorded and recognized as a liability under advanced ticket
sales until the event takes place. The Center does not recognize ticket sales revenue for events since these
funds are held on behalf of the event promoters. Advanced deposits are funds received from customers for
deposit on facility rentals for events that have not yet occurred.
Net Position
Net position is reported in three categories as follows:
Net investment in capital assefs - This amount consists of capital assets, including infrastructure, net of
accumulated depreciation. The Center did not have net position in this category.
Resfricfed - This amount consists of net position restricted by external creditors, grantors, contributors,
or laws or regulations of other governments and restrictions imposed by law through constitutional
provisions or enabled legislature. The Center did not have restricted net position.
Unrestricted - This amount consists of all net position that does not meet the definition of "net investment
in capital assets" or "restricted net position."
When both restricted and unrestricted net position are available, restricted resources are depleted first before
unrestricted resources are used.
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
NOTES TO THE FINANC¡AL STATEMENTS
JUNE 30,2014
NorE 2 - SUMMARY oF slGNlFlcANT ACCOUNT|NG poltctES (continued)
Fair Value of Financial lnstruments
The Center considers its cash, accounts receivables, prepaid expenses, accounts payable, and accrued
expenses to be short{erm in nature and, therefore, fair values approximate carrying values.
Revenue Recoqnition
Revenues from the Center's events such as facilities rental, direct event expense reimbursement
concession commissions, and merchandise are recognized at the time the event occurs.
Contributions from the Citv of Fresno
Each year, the City of Fresno makes budgeted cash transfers to the Fresno Convention & Entertainment
Center to supplement operations. ln Fiscal Year 2014 these transfers totaled $2,194,389. Much of these
funds are used to provide funding for repairs and maintenance on the various Convention facilities, most of
which were built in the early 1960's. Some of the moneys are derived from the Arts, Parks, Entertainment
and Sports (APES) surcharge. This surcharge is applied to all City-owned entertainment facilities with the
purpose of providing a revenue stream for the facilities collecting the fee to fund much needed repairs,
capital improvements and upgrades. SMG collects the fees on all tickets sold for attendance at Convention
Center facilities. The current fee is $1.00 and relates to all tickets sold regardless of the ticket price. The
City has the discretion to determine when and how much of these fees will be returned to the facility and to
which repairs and maintenance expenditures they may be applied.
Advertising and Promotion
The Center expenses all advertising and promotion costs as incurred. Total advertising and promotion
expense for the year ended June 30, 2014was $26,510.
lncome Taxes
A provision for income taxes is not reflected in the accompanying financial statements. The operations
under the management of SMG - Fresno Convention & Entertainment Center are reported to the City, a
municipal corporation organized and existing under the laws of the State of California and exempt from
income taxes.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
SMG management to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2014
NOTE 3 - CASH AND CASH EQUIVALENTS
SMG is required to maintain separate bank accounts for various purposes. Cash consists of the following at
June 30, 2014:
Unrestricted Restricted
Cash in bank, City of Fresno - operations
Cash in bank, City of Fresno - ticket sales escrow
Cash in bank, City of Fresno - contract deposit escrow
Cash in bank - concessions
Cash in bank - concessions credit card
Cash in bank - payroll account
Cash - box office vault
Cash - parking vault
Petty cash - admin
Petty cash - operations
Petty cash - concessions
Petty cash - event services
Change fund - box office
Change fund - concessions
$ 490,205 $- 1,057,326- 160,587
105,082
34,631
11,863
10,000
6,000
250
500
300
300
9,121
20,000
$ 688,252 $ 1,217 ,913
CustodialCredit Risk
Custodial credit risk for deposifs is the risk that, in the event of failure of a depository financial institution, an
entity will not be abfe to recover its deposits. The California Government Code does not contain legal or
policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other
than the following provision for deposits: The California Government Code requires that a financial institution
secure deposits made by state or local governmental units by pledging securities in an undivided collateral
pool held by a depository regulated under state law (unless so waived by the governmental unit). The
market value of the pledged securities in the collateral pool must equal at least 110o/o of the total amount
deposited by the public agencies.
As of June 30, 2014, the Center's cash deposits held by the City that were in excess of federal depository
insurance limits were held in accounts collateralized in accordance with State law as described above.
The Center's payroll and concessions cash deposits are held by SMG in a financial banking institution
insured by the Federal Depository lnsurance Corporation (FDIC). At June 30, 2014, these cash balances
held in the financial banking institution did not exceed FDIC insurance amounts.
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2014
NOTE 4 - CONTRACTUAL AGREEMENTS
Manaqement Aqreement
SMG and the City entered into an amended and restated Management Agreement (the "Agreement")
effective on January 1,2014, which will terminate June 30, 2019, unless mutually agreed to extension in
writing prior to expiration. Provisions of the Agreement allow for the City to terminate the Agreement prior to
the expiration date for various reasons, including default of payments or failure to achieve target budget
goals. Under the Agreement, SMG agreed to reduce the annual management fee payable by the City to
SMG for the operation of the Center from $195,656 to $145,656. The management fee may be adjusted
annually if SMG meets certain qualitative and quantitative performance criteria.
For the year ended June 30, 2014, total management fee expense consists of the following:
Management fee, July I - December 31,2013
Management fee, January 1 - June 30,2014
Total management fee expense
$ 95,192
72,818
$ 168,010
Ticket Sales
The Center has entered into an amended licensed user agreement with Ticketmaster to be the exclusive
provider for ticket sales for events held by the Center. Under the agreement, Ticketmaster has the authority
to act as an agent for the Center for ticket sales to the general public by any and all means including, but not
limited to, direct box office sales, telephone, internet, and secondary outlet locations. Ticketmaster earns
fees from the ticket sales, which also include ticket charges, customer convenience charges and handling
fees. Ticketmaster collects these fees as tickets are sold and the net amount is remitted to the Center. The
amended licensed user agreement remains in effect until December 31 ,2018.
Concession
The Center entered into an amended and restated agreement with Pardini's Catering, lnc. (the
"Concessioner") in February 2009 for the continued exclusive rights to provide catering and beverage sales
for all events at the Center. Terms of the agreement provide for the Concessioner to remit payment to SMG
in accordance with the agreement. The agreement was effective as of January 1,2009 and terminates
December 31,2019.
Staoehands
During 2008, the Centerentered into an agreementwith Local 158, lnternationalAlliance of Theatrical Stage
Employees and Moving Picture Technicians, Artists and Allied Crafts of the United States, its Territories and
Canada (Local 158) to be the sole and exclusive bargaining agent for all stagehands at the Center's facilities.
Rates for services are charged as outlined by the contract. Total costs per event can vary dependíng on the
amount of employees needed and the type of services to be provided. This agreement expired on
November 30, 2013. The Center is currently functioning under terms of the expired agreement. The Center
is actively negotiating with Local 158 in good faith to enter into a new contract.
10
FRESNO CONVENTION & ENTERTAINMENT CENTER,
OPERATIONS AS MANAGED BY SMG
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30,2014
NOTE 4 - CONTRACTUAL AGREEMENTS (Continued)
Equipment Maintenance
The Center has entered into various equipment long-term service agreements with Trane for all buildings.
The agreements call for Trane to provide scheduled inspections and maintenance on air conditioning units
and certain other equipment as outlined by the individual agreements. The Center is required to make
quarterly payments for all service agreements.
Amounts due by the Center for service agreements for the years ending June 30 are as follows:
2015
2016
2017
2018
2019
$ 63,084
40,362
28,232
29,455
23,569
$ 184,702
NOTE5-401(KIPLAN
All employees of SMG - Fresno Convention & Entertainment Center who have completed more than three
months of service (full{ime) or one year and at least 1,000 hours during a 12-month period (part{ime), are
over 21 years of age, are not leased employees, and are not part of a facility subject to a collective
bargaining agreement or union contract which does not require the employer to allow participation in the
plan, are eligible for participation in the plan. Employees can elect to contribute between 1o/o and 60% of
eligible pay, up to the annual IRS dollar limit. Employer contributions are on a discretionary basis and equal
to a percentage determined annually by SMG Board of Director's Resolution. SMG has indefinitely
suspended all matching contributions for the plan until the Center's revenues support the increased
expenses.
NOTE 6 - PRIOR PERIOD ADJUSTMENT
The Fresno Convention & Entertainment Center, as managed by SMC, had in previous years reflected
various expenditures on its internal Balance Sheet as Other Assets. Upon analysis of these transactions
under audit, it was determined that these expenditures were more appropriately reflected as repairs and
maintenance expenditures incurred in years prior to Fiscal Year 2014. As a result, a prior period adjustment
of $236,053 has been made to the beginning balance of net position to properly reflect these expenditures.
NOTE 7 - TRANSFER OF THEATRE ASSETS TO THE CITY OF FRESNO
ln addition to various repair and maintenance expenses incurred in prior years being reflected as other
assets on its internal Balance Sheet, major renovations and improvements to the Saroyan Theatre in a prior
year were not properly transferred to the City of Fresno upon completion. These costs were also noted as
being captured in Other Assets. An adjustment in the amount of $149,976 has been made to the beginning
balance of net position to properly reflect the transfer of these assets to the City.
NOTE 8 _ SUBSEQUENT EVENTS
Management of SMG has evaluated and concluded that there are no subsequent events that have occurred
since June 30, 2014, through the date the financial statements were available to be issued on October 31
2014, that would require disclosure or adjustment.
11