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Studio Management Services “Fire”

Studio Management Services “Fire”. 956 Seward St. Los Angeles, California. (December 17, 2002). The “Studio Management Services” Fire December 17, 2002. Second floor of the building (Looking West). 956 Seward St., Los Angeles California. Exhibit # 052-026. Studio Management Services

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Studio Management Services “Fire”

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  1. Studio Management Services “Fire” 956 Seward St. Los Angeles, California (December 17, 2002)

  2. The “Studio Management Services” Fire December 17, 2002 Second floor of the building (Looking West) 956 Seward St., Los Angeles California Exhibit # 052-026

  3. Studio Management Services Definitions Building 27 • Building Destroyed By Fire on December 17, 2002 • @ 30,000 square feet of office space Seward Buildings • Set of 4 buildings acquired by Studio Management Services • @ 23,000 square feet of office space • In escrow prior to fire • Acquired to provide additional office space for production facilities Business Interruption Loss • Lost profits because of Fire from: • Office space and parking • Ancillary services (e.g., electricians, film crew) • Telecommunication services • Production Facilities (e.g. sound stages, lighting, grip, technical equipment) SMS = Studio Management Services

  4. Studio Management Services Map Seward Buildings Building 27 Building 27

  5. Studio Management Services Business Losses 01/01/2003 – 06/30/2009 • Pre-trial Business Interruption Losses • - 01/01/2003 – 06/30/2007 • Post-trial Business Interruption Losses • - 07/01/2007 – 06/30/2009 • Property Damage

  6. Studio Management Services (SMS)My Assignment – Calculate Business Interruption Losses • Calculate SMS’ business interruption losses from time of Fire to present • Calculate SMS’ future business interruption losses • Not tasked to calculate property damage • Property damage includes • Clean up water damage to Building 27 • Damage to equipment • Property damage to be addressed by SMS’ • controller

  7. Studio Management ServicesBusiness Model • SMS Offers Bundled Services to the Entertainment Industry • Not in the office rental business • Licenses Production facilities and related services, offices and parking • When SMS has more office space available, SMS generates more profit from production facilities and related services • Historical performance – SMS operated KTLA Studios until 2001 • After 2001 needed additional offices to increase revenue from production facilities and related services • Seward Buildings acquired to provide additional office space for production facilities, not to house Building 27 tenants Office Space Must be Within Walking Distance of Production Facilities

  8. Studio Management ServicesDamages Calculations of Business Interruption Losses • Based On: • SMS’ Audited Financial Statements (2000-2006) • Audited by Moss Adams (11th largest CPA firm in the USA) • Includes all SMS revenues and expenses • Seward Buildings – Pre Fire Budget (2002-2007) Revenues/Expenses • Prepared by SMS 2 months before Fire. • Based on independently verified historical data • Based on bottom of industry revenue cycle • Seward Buildings – Actual Revenues/ Expenses (2003-2006) • Building 27 Actual Revenues/ Expenses(2000-2002)

  9. Studio Management ServicesMethodology for CalculatingBusiness Interruption Losses • Calculated losses to June 30, 2009 • Another 5 year extension of lease for Building 27 through June 30, 2009 reasonably certain • Lease dates back to 1979 • SMS leased Building 27 from Benhar for approximately 20 years • Three (3) prior 5 year extensions of lease with Benhar • Any increases in rent passed through to tenants • SMS unable to acquire replacement property for Building 27 • Building 27 has not been rebuilt by Benhar • SMS unable to optimize use of Seward Buildings to meet budget • Improvements to Seward Buildings to optimize revenues could not be completed as planned due to occupancy of Seward Buildings by displaced Building 27 tenants

  10. Los Angeles Assessor Record

  11. Studio Management Services Pre-Trial Business Interruption Losses 01/01/2003 – 06/30/2007 Lost Office Rent On Building 27 Lost Office Rent On Seward Property Lost Production Income on Building 27 + +

  12. Studio Management Services Pre-Trial Business Interruption Losses 01/01/2003 – 06/30/2007 Lost Office Rent On Building 27 Lost Office Rent On Seward Property Lost Production Income on Building 27 + +

  13. Studio Management Services Pre-Trial Business Interruption Losses 01/01/2003 – 06/30/2007 Lost Office Rent On Building 27 Lost Office Rent On Seward Property Lost Production Income on Building 27 + +

  14. Studio Management Services Pre-Trial Business Interruption Losses 01/01/2003 – 06/30/2007 Lost Office Rent On Building 27 Lost Office Rent On Seward Property Lost Production Income on Building 27 + +

  15. Studio Management Services Business Losses 01/01/2003 – 06/30/2009 • Pre-trial Business Interruption Losses • - 01/01/2003 – 06/30/2007 • Post-trial Business Interruption Losses • - 07/01/2007 – 06/30/2009 • Property Damage

  16. Studio Management Services Lost Office Rent On Building 27 Lost Office Rent On Seward Property Lost Production Income on Building 27 Post-trial Business Interruption LossesJuly 1, 2007 – June 30, 2009 + +

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