Han~s Bourgeois,LLP. Certified Public Accountants Trem ontdrive,suite 200 Baton Rouge,LA Phone:(225) Fax:(225)

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3 Han~s Bourgeois,LLP C ertified Public A ccountants Randy J.Bonnecaze,CPA * Joseph D.Richard,Jr.,CPA* Ronnie E.Stam per,cpa * Fernand P.Genre,CPA * Stephen M.H uggins,cpa * M onica L.Zum o,cpa * Ronald L.G agnet,cpa * DouglasJ.Nelson,CPA * Celeste D.Viator,CPA * RussellJ.Resweber.CPA * Laura E.M onroe,cpa * R.David W ascom,cpa *A ProfessionalAccounting Corporation 2322 Trem ontdrive,suite 200 Baton Rouge,LA Phone:(225) Fax:(225) A ugust8,.2003 IndeoendentA uditor's R eoort MembersAmerican Instituteof Certified Public Accountants 1175 D eleste A venue,suite B D enham Springs,LA w w w.htbepa.eom To the B oard of D irectors Louisiana TravelProm otion A ssociation B aton R ouge,louisiana W e have audited the accom panying Statem ents of FinancialPosition of Louisiana TravelProm otion A ssociation as of June 30,2003 and 2002 and the related Statem ents of A ctivities,and C ash Flow s for the year s then ended. These finan cial statem ents are the responsibility of the A ssociation's m anagem ent.o ur responsibility is to express an opinion on these financialstatem ents based on our audits. W e conducted our audits in accordance w ith auditing standards generally accepted in the U nited States of A m erica and the standar ds applicable to financial audits contained in G overnm ent A uditin~ Standards,issued by the C om ptroller G eneralof the United States. Those standards require thatw e plan and perform the audits to obtain reasonable assurance aboutw hether the financialstatem ents are free of m aterialm isstatem ent. A n auditincludes exam ining,on a testbasis,evidence supporting the am ounts and disclosures in the finan cialstatem ents. A n auditalso includes assessing the accounting principles used and significant estim ates m ade by m an agem ent, as w ell as evaluating the overall financialstatem entpresentation. W e believe thatouraudits provide a reasonable basis for our opinion. In our opinion,the accom panying financialstatem ents referred to above presentfairly,in allm aterial respects,the finan cialposition of Louisiana TravelProm otion A ssociation as of June 30,2003 and 2002 and the changes in its netassets and its cash flow s for the years then ended in conform ity w ith accounting principles generally accepted in the U nited States of A m erica. In accordan ce w ith G overn m enta uditin~ Standar ds,w e have also issued our reportdated A ugust 8, 2003 on our consideration of Louisiana TravelProm otion A ssociation's intern alcontrolover financial reporting an d our tests of its com pliance w ith certain provisions of law s,regulations,contracts,and gran ts. Thatreportis an integr alpart of our auditperform ed in accordan ce w ith G overnm enta uditing Standardsand should be used in conjunction with thisreportin considering the resultsof ouraudit. R espectfully subm itted,

4 L O U ISIA N A T R A V E L PR O M O T IO N A SSO C IA T IO N STA TEM EN T S O F FIN A N C IA L PO SITIO N A S O F JU N E 30,2003 A N D 2002 A SSE T S 2002 C urrent A ssets: C ash and C ash Equivalents C ertificates of D eposit Investm ents $ 276,730 $ 205,802 81, , ,907 97,026 A ccountsreceivable (N etof Allowance of $1,839 for2003 and 2002) Prepaid Expenses 111, , TotalC urrenta ssets 700, ,712 Property and E quipm ent: V ehicles Furniture and Equipm ent B uilding and Landscape 37, , ,000 37, , ,000 Less A ccum ulated D epreciation 724,145 (181,042) 765,206 (179,044) L an d 543, , , ,162 TotalA ssets $ 1,443,912 $ 1,511,874 The accom panying notes are an integralpartof this statem ent. 2

5 L IA B IL IT IE C urrent L iabilities: A ccounts Payable A ccrued Expenses D eferred R evenue C ur entportion of C apitallease Payable C urrentport ion of Long-Term D ebt TotalC urrentliabilities L ong-t erm L iabilities: C apitallease Payable Long-Term D ebt TotalLong-Term Liabilities N et A ssets - U nrestricted: B oard D esignated U ndesign ated -G eneralo perations TotalN eta ssets TotalLiabilities and N eta ssets

6 L O U ISIA N A T R A V E L PR O M O T IO N A SSO C IA T IO N STA TEM EN TS O F A CTIV ITIES FO R TH E Y EA R S EN D ED JU N E 30,2003 A N D 2002 O perating R evenues: 2003 Tour G uide C O -O P A dvertising Printing and D istribution M em berships Trade Show s TravelSum m it In-K ind C ontributions G overnm entala ction Education Internet O ther $ 1, , $ 1,199, , , , , ,292 65,990 48,826 92, TotalR evenues 2,659,480 2,630,557 O perating E xpenses: Tour G uide and M aps C O -O P A dvertising Printing an d D istribution Trade Show s TravelSum m it G overnm entala ction Education Internet Salaries an d R elated Benefits U tilities O ffice Supplies/Printing Telephone Postage Travelan d R elated R epairs A ccounting an d Professional D epreciation O ther C om puter B ad D ebt 739, , , , ,258 54,298 36,567 51, ,555 9,818 31,842 21,253 10,321 36,061 24,678 8,584 66,732 26,087 13,186 8, , , , ,882 78,089 58,286 58,035 76, ,744 9,324 24,888 23,043 11,740 40,805 18,908 6,430 62,976 21,455 18, TotalExpenses 2,533,147 2,602,925 (CON TINU ED ) 3

8 L O U ISIA N A T R A V E L PR O M O T IO N A SSO C IA T IO N STA TEM EN T S O F C A SH FLO W S FO R TH E Y EA R S EN D ED JU N E 30,2003 A N D 2002 C ash Flow s From O perating A ctivities: C hange in N eta ssets $ 127,140 $ 32,039 Adjustm entsto Reconcile Changein NetCash Provided by O perating A ctivities: D epreciation ,976 (Gain)Losson Disposition of Fixed Assets (4,000) (Gain)Losson Sale of Investm ents U nrealized (G ain)losson In vestm ent 5 ( ,985 C hanges in C urrenta ssets and Liabilities: (In crease)decrease in AccountsReceivable (In crease)decrease in Prepaid Expense In crease (D ecrease)in AccountsPayable Increase (D ecrease)in Accrued Expenses In crease (Decrease)in Deferred Revenues 113,937 10,360 (168,630) 26,704 (52,074) (129,578) (4,529) (31,416) (10,716) N etc ash Provided by O perating A ctivities 130,961 15,949 C ash Flow s From Investing A ctivities: Purchase of C ertificates of D eposit Purchases of Property and Equipm ent Proceeds from Sale of A ssets Purchases of In vestm ents R einvestm entof D ividend M aturities of C ertificates of D eposit (40,974) 2,280 (99,320) (1,330) (82,083) (75,306) 4,000 (24,000) (934) N etc ash U sed in In vesting A ctivities (58,929) (98,323) C ash Flow s From Financing A ctivities: R epaym entof D ebt R epaym entof C apitallease Payable Proceeds from C apitallease Proceeds fr om Lo ng-term D ebt (10,335) (6,546) 15,777 (861) (5,318) N etcash Provided by (U sed in)finan cing Activities (1,104) 24,824 NetIncrease (Decrease)in Cash 70,928 (57,550) C ash -B eginning of Y ear C ash -E nd of Y ear 276, ,802 Supplem entald isclosure of C ash Flow Inform ation: C ash Paym ents for: Interest The accom pan ying notes are an integralpart of this statem ent. 5

9 L O U ISIA N A T R A V E L PR O M O T IO N A SSO C IA T IO N N O TE S TO FIN A N C IA L STA TEM EN T S JU N E 30,2003 A N D 2002 N ote 1 -Sum m ary of SignificantA ccounting Policies - N ature of Business The Louisiana TravelProm otion Association,Inc.(Association) is operated exclusively for the purpose and objective of assisting and encouraging the prosperity of the State of Louisiana and its people through a broad and intense prom otion of the touristindustry;to originate, and participate in, tourism program s and m ovem ents having as their aim the betterm entof the econom y of Louisiana and its people;and to this end,to bring together,an d coordinate the efforts of allforces of business, industry,politicalsubdivisions,civic and other groups an d individuals. B asis of A ccounting The A ssociation prepares its finan cialstat em ents on the accrualbasis of accounting. A ccordingly, revenues are recognized w hen earned and expenses are recogn ized w hen incurred. B asis of Present ation Financialstat em entpresent at ion follow s the recom m endation of the FinancialA ccount ing Stan dards Board on itsstatementof FinancialAccounting Standards(SFAS)No.117,FinancialStatements of Not-for-Profi t Organizations. Under SFAS No. 117, the Association is required to report inform ation regarding its finan cialposition and activities according to three classes of net assets; unrestricted net assets,tem porarily restricted net assets,an d perm anent ly restricted net assets, as applicable. A tjune 30,2003 an d 2002,allthe A ssociation's netassets are considered unrestricted. The A ssociat ion considers all highly liquid investm ents w ith a m aturity of thr ee m onths or less w hen purchased to be cash equivalents for purp oses of report ing cash flow s. Pronertv and Eauiom ent Expenditures for the acquisition of property and equipm entar e capitalized atcost. Expenditures for m aintenance an d repairs ar e char ged to expenses as incur ed. U pon sale or retirem entof assets,th e costand accum ulated depreciation ar e elim inated from the accoun ts and the resulting gain or loss is reflected in incom e. Depreciation isprovided overthe estim ated usefullivesof the assets(five to 30 years)using the straight-line m ethod. Am ortization of capitalleases is com puted using the straigh t-line m ethod overthe estimated usefu llife of those assets. Am ortization is included in depreciation expense in the incom e statem ent. 6

10 are reported athistoricalcostif purchased,or,if contributed,atfair value atthe date of contribution. R evenue R ecomaition The A ssociation recognizes m em bership dues in the applicable m em bership period. In addition,the A ssociation publishes a tour guide and sells advertising space in the tour guide. The A ssociation also prom otes Louisiana tourism through trade show s supported by m em ber involvem ent. D eferred R evenue Prepaym ents and revenues billed in advance for program s are deferred and recorded in incom e in the period in w hich the related services are rendered or the progr am is com pleted. A program is considered com plete w hen all costs,except insignificant item s, have been incur ed. In addition, expenses related to the progr am s or serv ices ar e deferred and recogn ized in the sam e period as the corresponding revenue. D efer ed incom e also consists of m em bership dues paid prior to the effective date of the m em bership. M ar ketable Securities and Investm ents In accordance with Statem entof Finan cialaccounting Stan dards(sfas)no.124,accounting for Certain Investments H eld by Not-for-Profit Organizations,investm ents in all debt and equity securities w ith readily determ inable fair values are reported attheir fair value. A llother investm ents Incom e T axes The A ssociation is a non-profitorganization,w hich is exem ptfrom incom e taxes under the Internal Revenue Code 501(c)(6);however,the tourguide,co-op advertising,certain travelshows,intern et brochure printing and the Louisiana TravelProm otion A ssociation Schoolof T our ism activities are notconsidered tax exem pt. The accrualbasis of accounting is used for tax purposes,w ith overhead being allocated to the tour guide an d co-op advert ising activities based upon a percentage of total rev en u es. The preparation of finan cialstatem ents in conform ity w ith accounting principles generally accepted in the U nited States of A m erica requires m an agem entto m ake estim ates and assum ptions thataffect certain reported am ounts and disclosures. A ccordingly, actual results could differ from those estim ates. C oncentrations of CreditR isk The A ssociation m aintains cash accounts w ith com m ercial banks an d investm ent com panies. Periodically,cash m ay exceed federally insured am ounts. C ontributed Services The O rganization recogn izes contribution revenue for certain goods and services received attheir fair value. These goods an d services are typically for lodging and m eals in connection w ith the var ioustrade show spresented by the O rganization.d ur ing the year ended June 30,2003,the value of contributed goods and serv ices m eeting the requirem ents for recognition in the finan cial statem entsw as$31,092. 7

12 N ote 5 -Incom e T axes - N ote 6 -F unctionale xpenses - The follow ing is a breakdow n by functionalexpense classification Program Services: M em bership D evelopm ent M arketing Program s M em bership Services G overnm entala ction $ 302,469 1,395, ,829 $ 289,615 1,472, ,217 58,286 G eneraland A dm inistrative 2,019,786 2,095, ,963 $ 2,533,147 $ 2,602,925 N ote 7 -B oard D esignated Funds - The Board designated fundsare to be reserv ed forfuture Association projectswhich m ightrequire capitalization. The m oney is invested in certificates of deposit and other short-term investm ents. D uring the year ended June 30,2003,none of the Board D esign ated funds w ere used. N ote 8 - C oncentrations - The A ssociation has an an nual contract w ith the State of Louisian a, D epartm ent of Tourism to produce the Louisian a "Tour G uide." U nder the term s of the contract the departm ent paid the A ssociation $473,304 an d $442,737 in 2003 and 2002,respectively to produce the guide. The D epartm ent then distributes the guide to an yone w ho requests it. The A ssociation also sells advertising in the guide. The contractis a cooperative venture with the state and is subjectto renew al annually. The A ssociation also has accounts receivable from m em bers w ho are m ostly located in the State of Louisian a. 9

15 /1/1/$ LLP C ertified Public A ccountants Randy J.Bonnecaze,CPA * Joseph D.Richard,Jr.,CPA * Ronnie E.Stam per,c PA * Fernand P.Genre,CPA * Stephen M.Huggins,CPA * M onica L.Zurno,CPA * Ronald L.Gagnet,CPA * D ouglasj.nelson,cpa * Celeste D.Viator,CPA * RussellJ.Resweber,CPA * Laura E.M onr oe.cpa * R.David W aseom,cpa *A Prot~ssionalAccounting Corporation 2322 Trem ontd rive,suite 200 Baton Rouge,LA Phone:(225) Fax:(225) A ugust8,2003 MembersAmerican Instituteof Certified PublicAccountants 1175 D eleste A venue,suite B D enham Springs,LA T o the B oard of D irectors Louisiana T ravelprom otion A ssociation B aton R ouge,louisiana W e have audited the financialstatem ents of Louisiana TravelProm otion A ssociation as of and for the year ended June 30,2003 and have issued our reportthereon dated A ugust8,2003. W e conducted our auditin accordance w ith auditing standar ds generally accepted in the U nited States of A m erica and the standards applicable to finan cialaudits contained in G overnm enta uditing Standards, issued by the C om ptroller G eneralof the U nited States. C om pliance A s part of obtaining reasonable assurance about w hether Louisian a TravelProm otion A ssociation's financial statem ents are Ii'ee of m aterial m isstatem ent,w e perform ed tests of its com plian ce w ith certain provisionsof laws,regulations,contractsand grants,noncompliancewith which could havea directand m aterialeffecton the determ ination of financialstatem entam ounts. H ow ever,providing an opinion on compliance with those provisionswasnotan objective of ourauditand,accordingly,we do notexpress such an opinion. The results of our testsdisclosed no instances of noncom plian ce thatare required to be reported under G overnm enta uditing Standards. InternalC ontrolo ver Finan cialr edort inz In planning an d perform ing our audit, w e considered Louisian a Travel Prom otion A ssociation's internalcontroloverfinancialreporting in orderto determineourauditing proceduresforthe purpose of expressing our opinion on the finan cialstatem ents and not to provide assurance on th e internal control over financial reporting. O ur consideration of the intern al control over financial reporting w ould notnecessar ily disclose allm atters in the internalcontrolover financialreporting thatm ightbe m aterial w eaknesses. A m aterial w eaknessisa condition in w hich the design or operation of one or

16 m ore of the internal control com ponents does not reduce to a relatively low level the risk that m isstatem ents in am ounts thatw ould be m aterialin relation to the financialstatem ents being audited m ay occur and notbe detected w ithin a tim ely period by em ployees in the norm alcourse of perform ing their assigned functions. W e noted no m atters involving the intern alcontrolover financialreporting and its operation thatw e consider to be m aterialw eaknesses.h ow ever,w e have noted another m atter w hich w e have reported to the m anagem entof Louisiana TravelProm otion A ssociation in a separate letter dated A ugust8,2003. This reportis intended for the B oard of D irectors,m anagem ent,the O fi ce of the Louisiana Legislative A uditor an d any cogn izan tagency and should notbe used for any oth er purpose. R espectfully subm itted, 11

18 Hannis Bourgeois,LLP C ertified Public A ccountants Randy J.Bonnecaze,CPA* Joseph D.Richard,Jr.,CPA * Ronnie E.Stam per,cpa * Fernand P.Genre,CPA * Stephen M.Huggins,CPA * M onica L.Zum o,cpa * Ronald L.Gagnet,CPA * D ouglas J.N elson,cpa * Celeste D.V iator,cpa * RussellJ.Resweber,CPA * Laura E.M onroe,cpa * R.D avid W ascom,cpa *. 4ProfessionalAccounting Corporation 2322 Trem ontd rive,suite 200 B aton R ouge,la Phone:(225) Fax:(225) A ugust8,2003 M embersamerican Institute of Certified Public A ccountants 1175 D eleste A venue,suite B D enham Springs,LA w ww.htbcpa.com To the B oard of D irectors Louisiana TravelProm otion A ssociation B aton R ouge,louisiana In planning and perform ing our audit of the financial statem ents of the Louisiana TravelProm otion A ssociation for the year ended June 30,2003,w e considered its internalcontrolstructure in order to determ ine our auditing procedures for the purpose of expressing our opinion on the financialstatem ents and notto provide assur ance on the intern alcontrol. H ow ever,during our auditw e becam e aw are of certain m atters,w hich are opportunities to strengthen intern alprocedures. This letter does notaffectour report dated A ugust8,2003 on the financialstatem ents of the Louisiana TravelProm otion A ssociation. Prior Y ear Finding: In the prior year,w e suggested th atin-kind goods an d servicesbe docum ented throughoutth e year in order to enhance the financialreporting. D uring the currentyear,itw as noted thatin-kind goods and serv ices w ere m onitored an d recorded if applicable throughoutthe year. A tthe annualtouri sm A w areness D ay held M ay 7,2003,the LieutenantG overnor w as invited to deliver rem arks on th e state of the tourism industry. In addition to her norm alrem arks,this year she announced her can didacy for govern or. A dvertising an d brochures for the event did notindicate thata political activity w ould occur atthe event. R ecom m endation: W e recom m end thatin th e future,allbrochuresand advertising for such eventsclearly indicate if political activities w illoccur so registrants and sponsors w illbe aw ar e of the circum stan ces in advan ce of th e event.

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