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956 Seward St.Los Angeles, California

956 Seward St.Los Angeles, California

Studio Management Services “Fire”

Studio Management Services “Fire”

(December 17, 2002)(December 17, 2002)

2956 Seward St., Los Angeles California956 Seward St., Los Angeles California

The “Studio Management Services” FireDecember 17, 2002

Second floor of the building (Looking West)

Exhibit # 052-026

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Studio Management ServicesDefinitions

Building 27

Seward BuildingsSet of 4 buildings acquired by Studio Management Services

@ 23,000 square feet of office spaceIn escrow prior to fireAcquired to provide additional office space for production

facilities

Business Interruption LossLost profits because of Fire from:

Office space and parkingAncillary services (e.g., electricians, film crew)Telecommunication servicesProduction Facilities (e.g. sound stages, lighting, grip, technical

equipment)

Building Destroyed By Fire on December 17, 2002@ 30,000 square feet of office space

SMS = Studio Management Services

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Studio Management Services Map

Building 27

Seward BuildingsSeward Buildings

Building 27Building 27

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Studio Management Services

Business Losses01/01/2003 – 06/30/2009

1. Pre-trial Business Interruption Losses- 01/01/2003 – 06/30/2007

2. Post-trial Business Interruption Losses- 07/01/2007 – 06/30/2009

3. Property Damage

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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 damageProperty damage includes

Clean up water damage to Building 27 Damage to equipment

Property damage to be addressed by SMS’ controller

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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

Office Space Must be Within Walking Distance of Production Facilities

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 servicesSeward Buildings acquired to provide additional office space for

production facilities, not to house Building 27 tenants

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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 dataBased on bottom of industry revenue cycle

Seward Buildings – Actual Revenues/ Expenses (2003-2006)

Building 27 Actual Revenues/ Expenses (2000-2002)

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Studio Management ServicesMethodology for Calculating Business 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

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Los Angeles Assessor Record

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Lost Production Income on Building 27

Lost Office Rent On

Building 27

Lost Office Rent On Seward

Property

Studio Management ServicesPre-Trial Business Interruption Losses

01/01/2003 – 06/30/2007

+ +

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Lost Office Rent On Seward

Property

Studio Management ServicesPre-Trial Business Interruption Losses

01/01/2003 – 06/30/2007

+ +

Lost Production Income on Building 27

Lost Office Rent On

Building 27

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Lost Office Rent On

Building 27

Lost Office Rent On Seward

Property

Studio Management ServicesPre-Trial Business Interruption Losses

01/01/2003 – 06/30/2007

+ +

Lost Production Income on Building 27

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Lost Office Rent On

Building 27

Studio Management ServicesPre-Trial Business Interruption Losses

01/01/2003 – 06/30/2007

+ +

Lost Production Income on Building 27

Lost Office Rent On Seward

Property

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Studio Management Services

Business Losses01/01/2003 – 06/30/2009

1. Pre-trial Business Interruption Losses- 01/01/2003 – 06/30/2007

2. Post-trial Business Interruption Losses- 07/01/2007 – 06/30/2009

3. Property Damage

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Lost Office Rent On

Building 27

Studio Management Services

+ +

Lost Production Income on Building 27

Lost Office Rent On Seward

Property

Post-trial Business Interruption LossesJuly 1, 2007 – June 30, 2009