state fair o - louisianaapp1.lla.la.gov/publicreports.nsf/1f2379f9abc3026d... · state fair o...

State Fair o

Financial StatementsYears Ended December 31, 2007 and 2006

Under provisions of state law, this report is a publicdocument. Acopy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

Release Date

RBMHCertified Pi,-blic Accountants

State Fair of Louisiana

Contents

Independent Auditors' Report 3-4

Financial Statements

Statements of Financial PositionStatements of ActivitiesStatements of Cash FlowsSummary of Accounting PoliciesNotes to Financial Statements

567

8-1011-17

Independent Auditors' Report on Compliance

and on Internal Control Over Financial

Reporting Based on an Audit of Financial

Statements Performed in Accordance with

Government Auditing Standards 18-19

Schedule of Prior Year Audit Findings 20

RBMBShrflveport Oftic«

666 Travis Street

Suite 800

Shreveport, LA7H01Certified Public Accountants Phone 318 ̂ 3615

Fax 3184252904

Dallas Office2425 N. Central Expy

Suite 200Richardson, TX 75080

Phone 9722385900Fax 972 238 5920

www.rtMn.com

Independent Auditors' Report

The Executive CommitteeState Fair of LouisianaShreveport, Louisiana

We have audited the accompanying statements of financial position of State Fair ofLouisiana for the years ended December 31,2007 and 2006, and the related statements ofactivities and cash flows for the years then ended. These financial statements are theresponsibility of the Fair's management. Our responsibility is to express an opinion onthese financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in theUnited States of America, and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the Organization's internalcontrol over financial reporting. Accordingly, we express no such opinion. An audit alsoincludes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements, assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all materialrespects, the financial position of State Fair of Louisiana as of December 31, 2007 and 2006,and the results of its activities and cash flows for the years then ended, in conformity withaccounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report datedApril 22, 2008, on our consideration of State Fair of Louisiana's internal control overfinancial reporting and our tests of its compliance with certain provisions of laws,regulations, contracts and grants.

^> M< l «-

Certified Public Accountants

Shreveport, LouisianaApril 22, 2008

2007 2006

December 33, Unrestricted

Assets

Current assets:Cash (Notes 1 and 9) $1,321,566Accounts receivable (Note 2) 105,988Prepaid expenses and other 49,752

Total current assets 1,477,306

Property and equipment, net (Note 3) 1,945,835

Long-term Investments (Note 6) 344,309

Reserve fund Investments(Notes 5 and 6)

Other assets (Notes 6 and 7) 12,639

$3,780.089

TemporarilyRestricted Total

$ - $1,321,566105,98849,752

1,477,306

1,945,835

344,309

700,000 700,000

12,639

$700.000 $4,480,089

TemporarilyUnrestricted Restricted Total

$1,055,975 $ - $1,055,975106,075 - 106,07555,287 - 55,287

1,217,337 - 1,217,337

2,085,820 - 2,085,820

270,250 - 270,250

700,000 700,000

16,528 - 16,528

$3,589,935 $700,000 54,289,935


Statements of

2007 2006

December 31,Temporarily

Unrestricted Restricted Total

TemporarilyUnrestricted Restricted Total

Liabilities and Net Assets

Currant liabilities:Accounts payable and accrued

expensesDeferred incomeAccrued pension liability-current

(Note 4)

Total current liabilities

Accrued pension liability (Note 4)

Total liabilities

$ 288,47410,000

40,000

338,474

70,000

408,474

$ - $ 288,47410,000

40,000

338,474

70,000

408,474

S 242,110 $ - $ 242,110

8,720 - 8,720

62,000 - 62,000

312,830 - 312,830

312,830 - 312,830

Commitments and contingencies(Note 7)

Net Assets:UnrestrictedTemporarily restricted (Note 5)

Total net assets

3,371,615

3,371,615

$3,780,089

3,371,615700,000 700,000

700,000 4,071,615

$700,000 $4,480,089

3,277,105 - 3,277,105

700,000 700,000

3,277,105 700,000 3,977,105

$3,589,935 $700,000 $4,289,935

See accompanying summary of accounting policies and notes to financial statements.


Statements o

2007 2006

Years Ended December 31,

Revenue:FairOff-seasonOther

Total revenue

Expenses:FairOff-seasonDepreciation and

amortization (Note 3)

Total expenses

Increse (decrease) In net asset*before effect of adoption ofFASB Statement No. 158

Effect of adoption of FASB No. 158

Increase (decrease) In net assets

Net assets, beginning of year

Net assets, end of year

Unrestricted

$2,163,805901,198107,726

3,172,729

1,471,8481,319;304

202,067

2,993,219

179,510

(85,000)

94,510

3,277,105

$3,371,615


$ - $2,163,805901,198107,726

3,172,729

1,471,8481,319,304

202,067

2,993,219

179,510

(85,000)

94,510

7OO.OOO 3,977,105

$700,000 $4,071,615

Unrestricted

$2,112,2451,189,711

81,509

3,383,465

1,603,7991,578,654

237,007

3,419^60

(35,995)

(35,995)

3,313,100

$3,277,105


$ - $2,112,245- 1,189,711

81,509

- 3^83,465

- 1,603,799- 1,578,654

237,007

- 3,419,460

(35,995)

(35,995)

700,000 4,013,100

$700,000 $3,977,105


•••••••Hi

Years Ended December 32,

Cash Flows From Operating Activities:Increase (decrease) in net assetsAdjustments to reconcile decrease

in net assets to net cash providedby operating activities:

Depreciation and amortization(Gain) on retirement of assetsDeferred compensationUnrealized (gain) loss on

investmentsEffect of adoption of FASB No. 158Change in operating assets and

liabilities:Accounts receivablePrepaid expenses and otherAccounts payable and accrued

expensesDeferred incomeAccrued pension liability

Net cash provided by operating activities

Cash Flows From Investing Activities:Expenditures for buildings.

equipment and improvementsProceeds from sale of assetsProceeds from redemption of

investmentsPurchase of investments

Net cash provided (used) by investingactivities

Net increase in cashCash, at beginning of year

Cash, at end of year

2007

TemporarilyUnrestricted Restricted

$ 94,510 $ -

202,067(17,133)

-

(24,059)85,000

875.535

46,3641,280

(37,000)

356,651

(74,060)33,000

-(50,000)

(91,060)

265,5911,055,975

$1,321,566 $ -

State Fair of

Statements

m^^mmi^m

Louisiana"" * / * *

nf f*s«sii;:;-i?friHrtkMfc: •••• :'Ui ^C^PIt-̂ tWw*?'-.

^ y^2006

TemporarilyTotal Unrestricted

$ 94,510 $ (35,995)

202,067 237,007(17,133) (7,081)

(308,099)

(24,059) (6,125)85,000

87 367,3905,535 5,629

46,364 95,6361,280 3,670

(37,000)

356,651 352,032

(74,060) (74,958)33,000 15,880

608,099(50,000) (300,000)

(91,060) 249,021

265,591 601,0531,055,975 454,922

$1,321,566 $1,055,975

Restricted Total

$ - $ (35,995)

237,007(7,081)

- (308,099)

(6,125)

-

367,3905,629

95,6363,670

-

352,032

(74,958)15,880

608,099(300,000)

249,021

601,053454,922

$ - $1,055,975



Summary of Accounting f̂ llcfes

Business

Use ofEstimates

Propertyand Equipment

Reserve Fund

The State Fair of Louisiana (the "Fair") is a nonprofit corporationorganized under the laws of the State of Louisiana on a nonstock basishaving one class of member. The objects and purposes for which thisnonprofit corporation is formed and exists are declared to be themaintenance in the Parish of Caddo, State of Louisiana, of public fairs,expositions and exhibitions of stock and farm products, and for theencouragement of agricultural and horticultural pursuits, and in allways to promote the various industries of the State of Louisiana andthe welfare of its citizens.

Substantially all of the Fair's revenue is from the sale of admissions toFair sponsored events and exhibitions as well as the rental of itsbuildings for events promoted by others. Accordingly, the Fair isheavily dependent on the local community and the health of the localeconomy in which it operates.

The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the reportingperiod. Actual results could differ from those estimates. Significantestimates made by management include the depreciable life of assetsand the pension liability.

Buildings and equipment are carried at cost and depreciated over theirestimated useful lives on the straight-line method. Major additionsare capitalized and depreciated; maintenance and repairs which do notimprove or extend the life of the respective assets are expensed asincurred.

As provided by contract with the City of Shreveport, one-half of thenet earnings of the State Fair of Louisiana shall be set asidepermanently in a Reserve Fund. This allocation is to continue until theReserve Fund shall equal $700,000. Any sums transferred, which raise

8


Summary of Accounting l̂ l|0i|$

Reserve Fund- (continued)

RevenueRecognition

Allowance forDoubtful Accounts

Income Taxes

the balance above this amount, shall be used for propertyimprovements.

Unrestricted contributions and grants are recognized as revenue in theperiod in which the donation is received or the grant is due andpayable to the Fair.

The Fair reports gifts of cash and other assets as restricted support ifthey are received with donor stipulations that limit the use of thedonated assets. When a donor restriction expires, that is, when astipulated time restriction ends, or purpose restriction is accomplished,temporarily restricted net assets are reclassified to unrestricted netassets and reported in the statement of activities as net assets releasedfrom restrictions. The net change in assets of other funds are reportedas offsetting revenue (expense) solely to simplify financial statementpresentation. Restricted donations on which the restriction expires inthe same period as the revenue is recognized are reported asunrestricted revenues.

The Fair records an allowance for doubtful accounts based onspecifically identified amounts believed to be uncollectible. The Fairhas a limited number of customers with individually large amountsdue at any given balance sheet date. Any unanticipated change in oneof those customers' credit worthiness or other matters affectingcollectibility of amounts due from such customers could have amaterial effect on the Fair's results of operations in the period in whichsuch changes or events occur. After all attempts to collect a receivablehave failed, the receivable is written off against the allowance.

The State Fair of Louisiana is exempt from federal income tax underprovisions of Section 501(c)(5) of the Internal Revenue Code of 1986and exempt from state income tax under appropriate provisions in thelaws of the State of Louisiana.


Summary of Accounting f̂ lJetes

Statements ofCash Flows

Advertising

Recently IssuedAccountingPronouncement

For purposes of the statements of cash flows, the Fair considers all cashin bank accounts and highly liquid debt instruments, not associatedwith the Reserve Fund, with an original or remaining maturity of threemonths or less, to be cash equivalents. Highly liquid debt instrumentswith remaining lives in excess of three months are classified as short-term investments.

The Fair expenses advertising as it is incurred. The Fair expendedapproximately $213,000 and $207,000 in the years ended December 31,2007 and 2006, respectively, for advertising.

In September 2006, the Financial Accounting Standards Board issuedSFAS No.158, Employers' Accounting for Defined Benefit Pension and OtherPostretirement Plans - an amendment ofFASB No. 87, 88,106 and 13200,which requires plan sponsors of defined benefit pension and otherpostretirement benefit plans (collectively, Benefit Plans) to recognizethe funded status of their Benefit Plans in the balance sheet, measurethe fair value of plan assets and benefit obligations as of the date of thefiscal year-end statement of financial position, and provide additionaldisclosures. On December 31, 2007, the Fair adopted the recognitionand disclosure provisions of SFAS No. 158. The effect of adoptingSFAS No. 158 at March 31, 2007, has been included in theaccompanying statement of financial position. SFAS No. 158'sprovisions regarding the change in the measurement date of BenefitPlans are not applicable as the Fair currently uses a measurement dateof December 31 for its pension plan. See Note 4 for further discussionof the effect of adopting SFAS No. 158 of the Fair's financial statement.

10


Notes to Financial S

1. Cash

2. Receivables

3. Propertyand Equipment

Included in cash at December 31, 2007 and 2006 are interest bearingdeposits totalling $1,325,775 and $1,010,485, respectively.

Receivables are summarized as follows:2007 2006

Accounts receivable, tradeLouisiana Youth Award Program

$105,988 $ 56,07550,000

$105,988 $106,075

Depreciation for financial reporting purposes is provided on thestraight-line method based upon the estimated useful lives of theassets as follows: buildings - 15 to 60 years; land improvements - 10to 75 years; equipment - 5 to 20 years.

The major classifications of property and equipment for the yearsended December 31, 2007 and 2006 were as follows:

2007 2006

BuildingsEquipmentLand improvementsIce rinkLand

$5,722,796

2,534,0491,390,992

14,500

$5,722,7962,483,7891,390,992

287,33314,500

Less accumulated depreciationand amortization

9,662,337 9,899,410

7,716,502 7,813390

Net property and equipment $1,945,835 $2,085,820

11


4. Pension Ran

Notes to Rnanclal Stat«jfle!*tf(C&ntinwd)

The Fair sponsors a defined benefit pension plan that covers allemployees who have reached the age of 21 and completed 1,000 hoursof employment during their initial 12 months of employment. Theplan calls for benefits to be paid to eligible employees at retirement,based primarily upon years of service with the Fair and compensationrates near retirement. Contributions to the plan reflect benefitsattributed to employees' services to date, as well as services expectedto be earned in the future. Plan assets consist primarily of mutualfunds and money market accounts.

Effective December 31, 2007, the Fair adopted SFAS No. 158, whichrequires that the funded status of defined benefit pension plans befully reflected on the balance sheet. The following provides asummary of the plan's funded status and amounts recognized in theFair's financial statements at December 31, 2007 and 2006:

2007 2006

Changes in benefit obligation:Benefit obligation at beginning of yearService costInterest costActuarial loss (gain)Benefits paid

Benefit obligation at end of year

Changes in plan assets:Fair value of plan assets at

beginning of yearActual return on plan assetsEmployer contributionsBenefits paid

Fair value of plan assets at end of year

Funded Status

$533,00022,00033,000(17,000)(25,000)

546,000

369,00028,00064,000

(25,000)

436,000

$(110,000)

$487,00046,00030,000

(19,000)(11,000)

533,000

305,00030,00045,000

(11,000)

369,000

$(164,000)

12


Notes to Financial

4. Pension Plan- (continued)

2007 2006

Unrecognized net lossUnrecognized prior service creditUnrecognized transition asset

$107,0004,000

(9,000)

Accrued pension benefits costs $(110,000) $(62,000)

Items not yet recognized as a component of net periodic benefits costwhich are reported as an effect of adoption of recognition provisions ofSFAS No. 158 in 2007 are as follows:

Net actuarial lossTransition assetPrior service cost

$88,000(5,000)2,000

Total cumulative effect of accounting change $85,000

The accumulated benefit obligation for the pension plan was $522,000and $406,000 as of December 31, 2007 and 2006 respectively.

Additional information:Weighted-average assumptions used

to determine benefit obligationsat December 31:

Discount rate 6.50%Expected long-term return on plan assets 7.50%Rate of compensation increase 3.00%

13

4. Pension Plan- (continued)


Notes to Rnanclal

Plan Assets2007 2006

Pension plan weighted-average assetallocations at December 31, 2007 and 2006,by asset category are as follows:

Equity securities 41.26% 45.52%Debt securities 42.44% 48.40%Cash & other 16.30% 6.08%

Total 100.00% 100.00%

Over time, the Plan's investment policy is to allocate 40% to stocks and60% to bonds. This strategy is expected to produce a reasonable rateof investment return over the long-term commensurate with anacceptable risk level.

Cash Flows

Contributions State Fair of Louisiana expects to contribute $50,000 to itspension plan in 2008.

Estimated Future Benefit Payments. The following benefit payments,which reflect future service, as appropriate, are expected to be paid:

YearPensionBenefits

200820092010201120122013 - 2017

$25,00058,00025,00025,00025,000422,000

14


Notes to Financial Statements

5. Reserve Fund

6. Investments

An agreement between State Fair of Louisiana and the City ofShreveport dated May 15, 1986, provides for the establishment of aReserve Fund or Contingency Fund to provide for possible futurelosses and to maintain permanently, a sound financial condition of theState Fair of Louisiana. Any expenditure which reduces the fundbelow $700,000 must be authorized by the Board of Directors and onlyfor the purpose of covering incurred losses or for other emergencypurposes.

Long-term investments and Reserve Fund are stated at fair marketvalue. Other assets represent the balance in the Rabbi Trust and arecomposed of money market investments. Investments are as follows atDecember 31, 2007 and 2006:

Cost

Gross Gross EstimatedUnrealized Unrealized Market

Gains Losses Value

December 31, 2007

Long-term investments:Certificate of deposit $ 50,000United States Treasury note

maturing March 15, 2009 296,721

$ -

2,412

$346,721 $ -

$ 50,000

294,309

$2,412 $344^09

Reserve fund investments:Certificates of depositU.S. Treasury note

maturing March 15, 2009

$300,000

403,279

$703,279

$ —

$ -

$ -

3279

$3,279

$300,000

400,000

$700,000

15

6. Investments- (continued)


Notes to Rnancfal Statements

Cost

Cross Cross EstimatedUnrealized Unrealized Market

Gains Losses Value

December 31, 2006

Long-term investments-United States Treasury note

maturing March 15, 2009 $282,245 $11,995 $270,250

Reserve fund investments:Certificates of depositU.S. Treasury note

maturing March 15, 2009

$300,000 $

417,755

$717,755 $

$ - $300,000

17,755 400,000

$17,755 $700,000

All investments in the Reserve Fund are invested in bank certificates ofdeposit and U.S. Treasury notes. Total coverage of these certificates ofdeposit and the U.S. Treasury notes is $700,000.

The following summarizes investment return and its classification inthe financial statements:

2007 2006

Interest and dividend incomeRealized gain (loss) on sale of securitiesUnrealized gain (loss) on securities

$62,218

24,059

$86,277

$66,374

(3,000)

6,125

$69,499

16

State Fair of Louisiana•X". v

Notes to Financial Statfineitte

7. CommitmentsandContingencies

8. MajorCustomersand Suppliers

9. SupplementalCash FlowsInformation

On December 1,1992, the Fair entered into an employment agreementwith its former president and general manager, which was effectivefrom December 1,1992 through December 1,2007. The agreement wasamended in 1995 to allow for the deferral of any discretionary bonuses.Through December 31,2006, the Fair deposited amounts to be deferredin a "Rabbi" trust, investing such amounts in mutual funds to assist infunding the benefits under the agreement. The investment balancewas $308,099 at December 31, 2005. Upon the death of the Fair'sformer president and general manager in 2006, all funds in the trustwere distributed to his beneficiary.

The Fair has an employment contract effective from January 1, 2006through December 31, 2012 with its current president and generalmanager.

From time to time, in the normal course of business, the Fair isinvolved in various matters of litigation. Management does not believethe ultimate outcome of any such matters will be material to thefinancial statements of the Fair.

The Fair had one supplier during the year ended December 31, 2007that accounted for 22% of total purchases.

At December 31, 2007, total cash includes $52,726 in demand depositsor short-term certificates of deposit that exceed Federal depositoryinsurance limits.

17

RBMBShwveport Olfict

566 Travis StreelSuite 800

Sfireveport. LA7I10ICertified Public Accountants Phone 316221 3615

Fax 318 425 2904

Dallas Office2425 N. Central Expy

Suite 200Richardson. TX 75080Phone 972 238 5900

Fax 972 2TH 5920REPORT ON COMPLIANCE AND ON INTERNAL CONTROLOVER FINANCIAL REPORTING BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWITH GOVERNMENT AUDITING STANDARDS

To the Executive CommitteeState Fair of Louisiana

We have audited the financial statements of the State Fair of Louisiana (the "Fair") as of and for the yearended December 31, 2007, and have issued our report thereon dated April 22, 2008. We conducted ouraudit in accordance with generally accepted auditing standards and the standards applicable to financialaudits contained in Government Auditing Standards, issued by the Comptroller General of the UnitedStates.

COMPLIANCE

As part of obtaining reasonable assurance about whether the Organization's financial statements are free ofmaterial misstatement, we performed tests of its compliance with certain provisions of laws, regulations,contracts, and grants, noncompliance with which could have a direct and material effect on thedetermination of financial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit and, accordingly, we do not express such an opinion. Theresults of our tests disclosed no instances of noncompliance that are required to be reported underGovernment Auditing Standards.

INTERNAL CONTROL OVER FINANCIAL REPORTING

In planning and performing our audit, we considered the Organization's internal control over financialreporting in order to determine our auditing procedures for the purpose of expressing our opinion on thefinancial statements and not to provide assurance on the internal control over financial reporting. Ourconsideration of the internal control over financial reporting would not necessarily disclose all matters inthe internal control over financial reporting that might be material weakness. A material weakness is acondition in which the design or operation of one or more of the internal control components does notreduce to a relatively low level the risk that misstatements in amounts that would be material in relation tothe financial statements being audited may occur and not be detected within a timely period by employeesin the normal course of performing their assigned functions.

We noted no matters involving the internal control over financial reporting and its operation that weconsider to be material weaknesses.

18

This report is intended solely for the information and use of the board of directors, management, otherswithin the organization, awarding agencies, and the Louisiana State Legislative Auditor and is not intendedto be and should not be used by anyone other than these specified parties.

Under Louisiana Revised Statutes 24:513, this report is distributed by the Legislative Auditor as a publicdocument.

Certified Public Accountants

Shreyeport, LouisianaApril 22, 2008

19

State Fair of LouisianaSchedule of Prior Years Audit Findings

For Year Ended December 31,2007

Fiscal Year CorrectiveFinding Description Corrective Action / Partial

Ref. Initially of Action CorrectiveNo. Occurred Finding Taken Action Taken

NONE

20

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