<PAGE>
EXHIBIT 99.2
OFF BROADWAY INVESTMENTS, INC.
(A Sub Chapter S Corporation)
Interim Financial Statements
For the Six Months Ended June 29, 2000 and July 1, 1999
(Unaudited)
These statements include
Off Broadway Investments, Inc. (A Sub Chapter S Corporation)
<PAGE>
OFF BROADWAY INVESTMENTS, INC.
(A Subchapter S Corporation)
Balance Sheets
June 30, 2000 and December 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
June 30 December 30,
Assets 2000 1999
------------------------ -----------------------
<S> <C> <C>
Current Assets:
Cash $ 677,000 $ 1,071,000
Trade and other receivables - 1,000
Due from affiliates 167,000 52,000
Income tax receivable 50,000 40,000
Prepaid expenses and other current assets 98,000 42,000
------------------------ -----------------------
Total current assets 992,000 1,206,000
------------------------ -----------------------
Property, equipment and improvements, net 2,448,000 2,493,000
Other assets and deferred charges 4,000 4,000
------------------------ -----------------------
Total assets $ 3,444,000 $ 3,703,000
======================== =======================
Liabilities and Stockholders Equity
Current liabilites:
Accounts payable and accrued liabilities $ 418,000 $ 573,000
Deferred revenue 291,000 399,000
Due to affiliates - 47,000
------------------------ -----------------------
Total current liabilities 709,000 1,019,000
Deferred income and other obligations 53,000 -
Deferred rental obligations 45,000 35,000
------------------------ -----------------------
Total liabilities 807,000 1,054,000
------------------------ -----------------------
Shareholder's equity:
Capital stock, $1,000 par value. Authorized 100 shares;
issued and outstanding 20 shares 20,000 20,000
Contributed capital 349,000 349,000
Retained earnings 2,268,000 2,280,000
------------------------ -----------------------
Total shareholders' equity 2,637,000 2,649,000
------------------------ -----------------------
Total liabilities and stockholder's equity $ 3,444,000 $ 3,703,000
======================== =======================
</TABLE>
See accompanying notes to financial statements
<PAGE>
OFF BROADWAY INVESTMENTS, INC.
(A Subchapter S Corporation)
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
--------------------------------- ------------------------------
June 29 July 1 June 29 July 1
2000 1999 2000 1999
-------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Operating income:
Theatre revenues and other income $ 784,000 - $ 1,706,000 -
Operating income - net revenues from management company $ 548,000 $ 1,186,000
-------------- -------------- ------------- ------------
Total operating income 784,000 548,000 1,706,000 1,186,000
-------------- -------------- ------------- ------------
Operating costs and expenses:
Operating costs, including onsite management fees 437,000 63,000 925,000 121,000
Rent expense 58,000 57,000 117,000 113,000
General and administrative expenses 39,000 8,000 74,000 236,000
General and administrative expenses provided by an
affiliated company 322,000 300,000 550,000 600,000
Depreciation and amortization 28,000 22,000 52,000 47,000
-------------- -------------- ------------- -----------
Total operating costs and expenses 884,000 450,000 1,718,000 1,117,000
-------------- -------------- ------------- -----------
Income before income taxes (100,000) 98,000 (12,000) 69,000
State income taxes (8,000) 10,000 - 11,000
-------------- -------------- ------------- -----------
Net (loss) income $ (92,000) $ 88,000 $ (12,000) $ 58,000
============== ============== ============= ============
</TABLE>
See accompanying notes to financial statements
<PAGE>
OFF BROADWAY INVESTMENTS, INC.
(A Sub Chapter S Corporation)
Statement of Cash Flows
<TABLE>
<CAPTION>
6 Months Ended
-----------------------------------------------------------
June 29 July 1
2000 1999
------------------- -------------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (12,000) 58,000
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization 52,000 47,000
Deferred rent expense 9,000 13,000
Changes in assets and liabilities associated with
operating activities:
Trade and other receivables 1,000 43,000
Income tax receivable (10,000) (50,000)
Prepaid expenses and other current assets (56,000) (2,000)
Due from affiliates (115,000)
Accounts payable and accrued liabilities (155,000) (391,000)
Deferred revenue (108,000)
Due to affiliates (47,000) 600,000
-------------- ------------
Net cash (used in) provided by operating activities (441,000) 318,000
-------------- ------------
Cash flows from investing activities
Purchases of property, equipment and improvements (6,000) (158,000)
Increase in deferred income and obligations 53,000
-------------- ------------
Net cash provided by (used in) investing activities 47,000 (158,000)
-------------- ------------
Cash flows from financing activities:
Net distributions to shareholders - 36,000
-------------- ------------
Net cash provided by (used in) financing activities - 36,000
-------------- ------------
Net (decrease) increase in cash (394,000) 196,000
Cash at beginning of year 1,071,000 86,000
-------------- ------------
Cash at end of six months $ 677,000 $ 282,000
============== ============
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes $ 10,000 $ 55,000
============== ============
</TABLE>
<PAGE>
(1) Interim Financial Statements
In the opinion of management the accompanying unaudited financial
statements contain all adjustments of a recurring nature considered
necessary for a fair presentation of its financial position as of June 29,
2000 and December 30, 1999, the results of operations and its cash flows
for the three and six-month periods ended June 29, 2000 and July 1, 1999.
The results of operations and its cash flows for the three and six month
period ended June 29, 2000 are not necessarily indicative of the results of
operations to be expected for the entire year. The accompanying unaudited
financial statements do not include all information and footnotes required
to be in conformity with generally accepted accounting principles. The
financial information provided here in, including the information under the
heading, "Management's Discussion and Analysis of Financial Condition and
Results of Operations," is written with the presumption that the users of
the interim financial statements have read, or have access to, the most
recent Annual Report which contains the latest audited financial statements
and notes thereto, together with the Management's Discussion and Analysis
of Financial Condition and Results of Operations as of December 30, 1999
and December 31, 1998.
(2) Organization
Off Broadway Investments, Inc. (the Company), formerly Amsovinvest
Incorporated, is a Subchapter S Corporation, which was incorporated on
March 10, 1989. The Company's name was changed April 29, 1998. The Company
is owned 50% each by two individuals. The Company invests in live stage
performance theatre properties in the City of New York.
The Company owns the fee interest in the Orpheum and Minetta Lane Theatre
and the leasehold interest in the Union Square Theatre.
(3) Summary of Significant Accounting Policies
(a) General Practices
The Company operates on a fiscal year ending on the Thursday closest
to December 31. Fiscal quarters ended June 29, 2000 and July 1, 1999
each include 13 weeks and the fiscal six months ended June 29, 2000
and July 1, 1999 each include 26 weeks. During November 1999, the
Company started transferring accounting responsibilities formally
conducted by the management company to an affiliated company.
Specifically, the affiliated company began paying the production
companies' licensing fees and paying direct operating expenses. Up
until November 1999, the Company had engaged a management company,
which was responsible for booking the theaters, entering into
contracts with and paying the production companies' licensing fees,
collecting the cash from ticket sales and paying the direct operating
expenses. Due to this change, the company no longer recorded the net
revenue received from its management company for the theatres but
showed revenues and expenses as separate line items in the Statement
of Operations.
(b) Property, Equipment and Improvements
Property, equipment and improvements are recorded at cost.
Depreciation and amortization is computed principally by use of the
straight-line method based upon the estimated useful lives of the
various classes of assets as follows:
<TABLE>
<CAPTION>
Description Useful life
------------------------------------------ -------------------
<S> <C>
Buildings 25 to 31 years
Furniture, fixtures and equipment 7 years
</TABLE>
<PAGE>
Leasehold improvements are amortized over the estimated useful life or
the remaining lease term, whichever is less.
(c) Income Taxes
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes
(SFAS 109). Off Broadway Investments, Inc. is a Subchapter S
Corporation and does not pay any federal income taxes; however, it is
subject to state and local income taxes and alternative minimum taxes.
Any liability or benefit from the Company's Subchapter S income or
losses is the responsibility of or benefit to the individual
shareholders.
(d) Financial Instruments
The Statement of Financial Accounting Standards No. 107, Disclosures
about Fair Value of Financial Instruments, defines fair value of a
financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties. The
Company's carrying value of cash, accounts receivable, accounts
payable, accrued expenses and notes payable approximates fair value.
(e) Long-Lived Assets
The Company accounts for long-lived assets in accordance with
Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of (SFAS No. 121). This statement requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of
an asset to the estimated fair value, which is generally determined by
estimating future undiscounted cash flows without interest costs
expected to be generated by the asset. If the carrying value of the
assets exceeds the estimated fair market value, an impairment exists
and is measured by the amount by which the carrying amount of the
assets exceeds the estimated fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying amount or the
fair value, less costs to sell. No impairment was recorded during the
quarters ended June 29, 2000 and July 1, 1999 and the six months ended
June 29, 2000 and July 1, 1999.
(f) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
contingent liabilities at the balance sheet date and revenue and
expenses during the reporting periods, in conformity with generally
accepted accounting principles. Actual results could differ from these
estimates.
(4) Property, Equipment and Improvements
At June 29, 2000 and December 30, 1999, a summary of property, equipment
and improvements is as follows
<TABLE>
<CAPTION>
2000 1999
------------------- -------------------
<S> <C> <C>
Land $ 777,000 777,000
Buildings and leasehold improvements 2,531,000 2,533,000
Furniture, fixtures and equipment 177,000 168,000
------------------- -------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
3,485,000 3,478,000
Less accumulated depreciation and amortization 1,037,000 985,000
------------ -----------
Property, equipment and improvements, net $ 2,448,000 2,493,000
============ ===========
</TABLE>
(5) Senior Bank Facility
The Company and a related partnership have a revolving credit agreement
(the Agreement) with a bank group. The related partnership received all
amounts borrowed from the bank group and recorded the liability to the Bank
group. No portion of the debt has been recorded by the Company. However,
all Group members, including the Company, are jointly and severally liable
for the total debt outstanding under the Agreement. In addition, the
Company's stock serves as collateral for the debt. The debt in the amount
of $15,500,000 and $16,700,000 at June 29, 2000 and July 1, 1999, and
related interest expense of $286,000 and $265,000 for the quarters ended
June 29, 2000 and July 1, 1999 and the related interest expense of $575,000
and $538,000 for the six months ended June 29, 2000 and July 1, 1999,
respectively, is recorded on the related partnership's financial
statements.
The Agreement provides the Company and the related partnership with a
$21,000,000 revolving note maturing October 1, 2001. The Agreement
contains, among other matters, certain financial covenants and provisions
pertaining to limitations on investments, restrictive payments, limitations
on sale of assets, limitations on capital expenditures and ability to incur
debt. The Company and related partnership is in compliance with all terms
of the Agreement. In addition, the Agreement provides, at the election of
the related partnership, for various rates of interest, which include the
alternative base rate (prime rate) and Eurodollar rate. Such applicable
rates are adjusted each quarter based upon the attainment of certain
financial ratios. The interest rate was 7.49% at June 29, 2000. Amounts
outstanding under the Agreement are secured by a first priority security
interest in the personal property located in or on real estate subject to
the deeds of trust, and certain other tangible and intangible assets of the
Company and related partnership. This security interest is senior to the
interests of the affiliate lenders. The partnership is required to pay a
commitment fee based on certain financial ratios, ranging from .3% to .5%.
(6) Commitments and Contingent Liabilities
For the past several years, the Company has been involved in litigation as
a plaintiff (Caveman litigation). The matter was resolved in 1999. The
Company is in a dispute regarding certain legal bills with its former
counsel. The Company has expensed and a related party has paid to date
approximately $375,000 to such counsel. In 1999, the Company paid the
remaining amount owed to a related party. The Company believes that it does
not have any further obligation. The total amount sought by counsel is
approximately $545,000, including the amounts paid to date.
The Company is involved in various other lawsuits. The ultimate outcome of
these lawsuits is not presently determinable; however, in the opinion of
management, based in part upon advice of counsel, the amount of losses that
might be sustained, if any, would not materially affect the financial
position, results of operations or liquidity of the Company.
(7) Related Party Balances and Transactions
Onsite management fee and profit participation for the quarter ended June
29, 2000 and July 1, 1999 of $112,000 and $89,000, respectively, are
included in operating costs. Onsite management
<PAGE>
fee and profit participation for the six months ended June 29, 2000 and
July 1, 1999 of $175,000 and $126,000, respectively, are included in
operating costs.
General and administrative expenses provided by an affiliated company for
the quarter ended June 29, 2000 and July 1, 1999 include management fees of
$322,000 and $300,000 respectively, and for the six months ended June 29,
2000 and July 1, 1999 included management fees of $550,000 and $600,000,
respectively.
An affiliate of the Company acts as a cash disbursement agent.
Substantially all cash disbursements are transacted through the affiliate's
bank account.
(8) General and Administrative Expenses
General and administrative expenses consist of the following at June 29,
2000 and July 1, 1999:
<TABLE>
<CAPTION>
6/29/2000 7/1/1999
------------- --------------
<S> <C> <C>
Auditing fees $ 39,000 35,000
Caveman litigation fees 196,000
Other 35,000 5,000
--------------- --------------
$ 74,000 236,000
=============== ==============
</TABLE>
(9) Gross Theatre Box Office Revenues (unaudited)
The unaudited gross theatre box office revenues were $2,271,000 and
$2,498,000 for the quarters ended June 29, 2000 and July 1, 1999,
respectively. The unaudited gross theatre box office revenues were
$5,121,000 and $7,333,000 for the six months ended June 29, 2000 and July
1, 1999, respectively.
(10) Pending Transaction
The Company has entered into a letter of intent whereby the Company will be
acquired by a related party in exchange for stock of the related party.
