Internal Audit Report 

Lease and Concession Audit 
Project Horizon 
(dba InMotion Entertainment) 

June 1, 2010 – May 31, 2013 




Issue Date: December 03, 2013 
Report No. 2013-10

                                                      Internal Audit Report 
Project Horizon (dba InMotion Entertainment) 
June 1, 2010 – May 31, 2013 

Table of Contents 
Transmittal Letter ................................................................................................................................... 3 
Executive Summary ............................................................................................................................... 4 
Background ........................................................................................................................................... 5 
Audit Scope and Methodology ............................................................................................................... 5 
Conclusion ............................................................................................................................................. 6 














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                                                      Internal Audit Report 
Project Horizon (dba InMotion Entertainment) 
June 1, 2010 – May 31, 2013 

Transmittal Letter 

Audit Committee 
Port of Seattle 
Seattle, Washington 

We have completed an audit of the Project Horizon Lease and Concession Agreement. We reviewed
information relating to a three-year period from June 1, 2010 – May 31, 2013. 
We conducted the audit in accordance with Generally Accepted Government Auditing Standards and
the International Standards for the Professional Practice of Internal Auditing. Those standards require
that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. 
We extend our appreciation to the Aviation Business Development Office and Accounting and
Financial Reporting staff for their assistance and cooperation during the audit. 


Joyce Kirangi, CPA 
Internal Audit, Director 



Audit Team:                                    Responsible Management Team: 
Ruth Riddle, Sr. Internal Auditor                    Deanna Zachrisson, Mgr. Concessions Management 
Jack Hutchinson, Audit Manager                  James Schone, Dir. AV Business Development 



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                                                      Internal Audit Report 
Project Horizon (dba InMotion Entertainment) 
June 1, 2010 – May 31, 2013 
Executive Summary 

Audit Scope and Objective The purpose of the audit was to determine whether: 
1.  The reported concession is complete, properly calculated, and remitted timely. 
2.  The lessee complied with significant provisions of the lease and concession agreements. 
The scope of our audit covered the period from June 1, 2010 – May 31, 2013. 
Background The current lease and concession agreement began in June 2006 and runs through 
May 31, 2016. The agreement calls for a Minimum Annual Guarantee (MAG) of 85% of the prior
year’s reported concession fees or a concession payment of 14% of gross receipts, provided the
concession is higher than the MAG. 
The MAG is due on the first of the month. The percentage fee is due on the 15th of each month for
the preceding month. For untimely payments, the agreement provides for a one-time late fee of 5%
of the overdue amount and an accrued interest charge of 18% per year from the due date until
paid. 
Audit Result Summary  Project Horizon’s (dba InMotion Entertainment) reported concession was
complete, properly calculated, and remitted timely. Project Horizon materially complied with significant
provisions of the lease and concession agreement. 









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                                                      Internal Audit Report 
Project Horizon (dba InMotion Entertainment) 
June 1, 2010 – May 31, 2013 
Background 
Project Horizon operates the nation’s largest network of airport-focused electronics shops under 
various brands, including “InMotion Entertainment” (neé InMotion            Pictures). The InMotion retail
concept was originally launched in 1999, with a primary focus on renting portable DVD players and 
movies to travelers, who would rent in one airport location and return the rented goods to another 
InMotion location at their final destination. 
InMotion originally supplemented its DVD-rental business model with limited ancillary sales, including 
headphones and batteries. In the mid-2000s, Project Horizon shifted its business model away from
DVD-rental schemes, to consumer technologies such as laptops, tablets, and digital entertainment
stores. The company focused on growing sales of high-end technology accessories and electronics,
as well as DVD and Blu-Ray discs. 
The current lease and concession agreement between the Port and Project Horizon began in June
2006 and runs through May 31, 2016. The agreement calls for a Minimum Annual Guarantee (MAG)
of 85% of the prior year’s reported concession fees or a concession payment of 14% of gross
receipts, provided the concession is higher than the MAG. The following table provides key financials
for the agreement during the audit period: 
Key Financials for InMotion Enterntainment
Lease & Concession Agreement
Agreement years 2010-11, 2011-12, 2012-13 (June 1 - May 31)
2010-11 A.Y.   2011-12 A.Y.    2012-13 A.Y
Gross Reciepts1                $   1,194,030  $   1,959,301  $   2,141,671
Concession & Rent Payments2  $     163,968  $     270,099  $     298,293
Data Sources: 1InMotion's CFO-Certified Annual Financial Reports
2Port of Seattle PeopleSoft Financials.
Data Note:    The rent payment is exactly one-half of the monthly concession payment.

Audit Scope and Methodology 
We reviewed information for the period June 1, 2010 – May 31, 2013. We utilized a risk-based audit
approach  from  planning  to  testing. We   gathered  information  through  research,  interviews,
observations, and analytical reviews, in order to obtain a complete understanding of the lease and
concession agreement between the Port and Project Horizon. 
We applied additional detailed audit procedures to areas with the highest likelihood of significant
negative impact as follows: 
1.  The reported concession is complete, properly calculated, and remitted timely. 
(a) We reconciled point-of-sale records to the general ledger for five weeks: August 1, 2013 – 
September 8, 2013. 

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                                                      Internal Audit Report 
Project Horizon (dba InMotion Entertainment) 
June 1, 2010 – May 31, 2013 
(b) We reconciled the daily point-of-sale records to the lessee’s bank records for the same 
five-week period. 
(c) We reviewed all rent and concession payment dates to determine whether they were paid 
on-time 
(d) We reviewed prior billings to identify any prior late payment billings by the Port. 
2.  The lessee complied with significant provisions of the lease and concession agreements. 

(a) We reviewed corporate surety bonds (or other security) in place during the audit period. 
(b) We reviewed all of the required insurance policies to determine if the amounts and
coverage were in place and proper during the audit period. 
(c) We determined whether the lessee submitted its annual financial reports, as well as its
annual street pricing/market trend analysis reports as required by the agreement. 

Conclusion 
Project  Horizon’s  (dba  InMotion  Entertainment)  reported  concession  was  complete,  properly
calculated, and remitted timely. Project Horizon materially complied with significant provisions of the
lease and concession agreement. 










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