INTERNAL AUDIT REPORT

GATE GOURMET, INC.
LEASE AND CONCESSION AGREEMENT

JANUARY 1, 2011  DECEMBER 31, 2013

ISSUE DATE: FEFBRUARY 10, 2015
REPORT NO. 2015-02

GATE GOURMET, INC.                                        INTERNAL AUDIT 
JANUARY 1, 2011  DECEMBER 31, 2013

TABLE OF CONTENTS 


TRANSMITTAL LETTER.................................................................................................................................................. 3
EXECUTIVE SUMMARY ................................................................................................................................................. 4
BACKGROUND............................................................................................................................................................... 5
FINANCIAL HIGHLIGHTS .............................................................................................................................................. 5
AUDIT SCOPE AND METHODOLOGY............................................................................................................................ 5
CONCLUSION ................................................................................................................................................................ 6












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GATE GOURMET, INC.                                        INTERNAL AUDIT 
JANUARY 1, 2011  DECEMBER 31, 2013

TRANSMITTAL LETTER 


Audit Committee
Port of Seattle
Seattle, Washington
We have completed an audit of Gate Gourmet, Inc. We reviewed information for the period January 1,
2011  December 31, 2013.
We conducted this performance 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 management and staff of the Aviation Business Development
Department and the Accounting and Financing Reporting Department for their assistance and
cooperation during the audit.



Joyce Kirangi, CPA, CGMA
Internal Audit, Director

AUDIT TEAM                    RESPONSIBLE MANAGEMENT TEAM
Margaret Songtantaruk, Senior Auditor     Jim Schone, Director, Aviation Business Development 
Jack Hutchinson, Audit Manager         James Jennings, Manager, Aviation Properties Group          Formatted Table
Rudy Caluza, Director, Accounting and Financial Reporting




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GATE GOURMET, INC.                                        INTERNAL AUDIT 
JANUARY 1, 2011  DECEMBER 31, 2013
EXECUTIVE SUMMARY 

AUDIT OBJECTIVES AND SCOPE 
The purpose of the audit was to determine whether:
1. The reported concession fees were complete, properly calculated, and remitted timely to the
Port.
2. The Port and lessee complied with significant provisions of the Lease and Concession
Agreement, as amended.
We reviewed information for the period January 1, 2011  December 31, 2013. Details of our audit's
scope and methodology are on page 5.

BACKGROUND 

Gate Gourmet, Inc. (GG) provides in-flight catering services including the preparation and distribution
of in-flight foods, beverages, and related services to domestic and overseas airlines at Seattle Tacoma
International Airport.
The terms of the agreement provide for a 7% concession on the gross sales for catering services to
airlines, and a 3.5% concession fee on the gross sales to non-airline customers. The gross sales include
sales by any licensee or other party authorized to make sales in connection with the business operated 
by GG.

AUDIT RESULT
The reported concession fees were materially complete, properly calculated, and remitted timely to
the Port. The lessee materially complied with the terms of the Lease and Concession Agreement, as
amended.





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GATE GOURMET, INC.                                        INTERNAL AUDIT 
JANUARY 1, 2011  DECEMBER 31, 2013

BACKGROUND BACKGROUND 
Gate Gourmet (GG) is the world's largest independent provider of airline catering and provisioning
services. It delivers daily, on a global basis, to more than 250 airline customers, and currently has more
than 100 in-flight kitchens in over 25 countries.
The terms of the agreement provide for a 7% concession fee on the gross sales for catering services to 
airlines, and a 3.5% concession fee on the gross sales to non-airline parties, with only the following 
offsets or deductions:
1. Returns and refunds
2. Taxes imposed and collected by lessee as agent for its taxing body
3. Meals furnished to employees of lessee

FINANCIAL HIGHLIGHTS 
FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS 
KEY FINANCIAL RESULTS FOR GATE GOURMET, INC 
AGREEMENT    REPORTED GROSS     CONCESSION PAID
YEAR        REVENUES
2011                   $ 13,246,935               $927,285 
2012                    17,430,858               1,220,160 
2013                    18,317,517               1,282,226 
TOTAL             $ 48,995,310           $ 3,429,671 
Data Source: PROPworks and PeopleSoft Financials

AUDIT SCOPE AND METHODOLOGY 
We reviewed information for the period January 1, 2011  December 31, 2013. We utilized a risk-based
audit approach from planning to testing. We gathered information through document reviews,
inquiries, observations, and data analyses, in order to obtain a complete understanding of the financial
requirements of the agreement between the Port of Seattle and Gate Gourmet, Inc.
We applied additional detailed audit procedures to areas with the highest likelihood of significant
negative impact as follows:
1. To determine whether the reported concession fees were complete, properly calculated, and
remitted timely to the Port.
Reviewed the lessee's chart of accounts to ensure all revenue accounts were included in the
reported revenues to the Port.


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GATE GOURMET, INC.                                        INTERNAL AUDIT 
JANUARY 1, 2011  DECEMBER 31, 2013

Reconciled the reported revenues to:
o  SAP general ledger by account, type and customer. Additionally, the revenues by customer
were reviewed to determine whether all customers subject to the concession were
included in the reported revenue.
o  Certified Audited Statement of Gross Revenues independently verified by a CPA.
Tested a risk-based sample of 46 transactions to determine whether:
o  All accrued transactions were legitimate, valid and properly reversed.
o  All credit invoices, such as returns and refunds, were legitimate and for valid purposes.
o  All volume discounts, a disallowed deduction, did not reduce gross sales.
Reviewed all payment records for the audit period for compliance with the required due date.
2. To determine whether the Port and Lessee complied with provisions of the Lease and Concession
Agreement, as amended. We reviewed the following:
The Certified Audited Statement of Gross Revenues for compliance with the timely and
complete submission requirements.
Insurance coverage in force for the audit period.
Security deposit and/or surety bond maintained at specified amount.

CONCLUSION 

The reported concession fees were materially complete, properly calculated, and remitted timely to
the Port. The lessee materially complied with the terms of the Lease and Concession Agreement.







AUDIT SCOPE AND METHODOLOGY 


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