<PAGE>
Exhibit 99.2
Report of Independent Certified Public Accountants
To the Shareholders of
Hall Enterprises, Inc.
In our opinion, the accompanying balance sheet and the related statements of
operations, of shareholders' deficit and of cash flows present fairly, in all
material respects, the financial position of Hall Enterprises, Inc. at December
31, 1999, and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As discussed in Note 9, on October 31, 2000, the Company was acquired by Holiday
RV Superstores, Inc.
PricewaterhouseCoopers LLP
October 31, 2000
<PAGE>
HALL ENTERPRISES, INC.
BALANCE SHEET
AS OF DECEMBER 31 1999
<TABLE>
<CAPTION>
Assets 1999
<S> <C>
Current assets:
Cash and cash equivalents $ 111,086
Accounts receivable, net of allowances of $8,947 199,832
Inventories, net 3,913,143
Prepaid expenses 14,701
----------
Total current assets 4,238,762
Property and equipment, net 597,208
Long-term notes receivable 17,100
----------
Total assets $ 4,853,070
==========
Liabilities and Shareholders' Deficit
Current liabilities:
Floor plan notes payable $ 4,933,555
Accounts payable 61,986
Accrued liabilities and other 189,526
----------
Total liabilities 5,185,067
----------
Commitments and contingencies (NOTES 6 and 9)
Shareholders' deficit:
Common stock, no par, 1,250 shares authorized,
issued and outstanding 331,000
Accumulated deficit (662,997)
----------
Total shareholders' deficit (331,997)
----------
Total liabilities and shareholders' deficit $ 4,853,070
----------
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE>
HALL ENTERPRISES, INC.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31 1999
1999
Revenue:
Vehicles $ 10,719,563
Parts and service 909,828
Other, net 169,736
------------
11,799,127
------------
Cost of sales:
Vehicles 8,991,742
Parts and service 581,472
------------
9,573,214
------------
Gross profit 2,225,913
------------
Selling, general and administrative expenses 1,775,400
------------
Other income (expense):
Interest expense (351,832)
Other, net 61,259
------------
Total other income (expense) (290,573)
------------
Net income $ 159,940
============
The accompanying notes are an integral part of these statements financial
3
<PAGE>
HALL ENTERPRISES, INC.
STATEMENT OF SHAREHOLDERS' DEFICIT
YEAR ENDED DECEMBER 31, 1999
Common Accumulated
Stock Deficit Total
Balance at December 31, 1998 $ 331,000 $ (806,853) $ (475,853)
Distributions - (16,084) (16,084)
Net income - 159,940 159,940
---------- ----------- -----------
Balance at December 31, 1999 $ 331,000 $ (662,997) $ (331,997)
========== =========== ===========
The accompanying notes are an integral part of these financial statements
4
<PAGE>
HALL ENTERPRISES, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
1999
Cash Flows from Operating Activities:
Net income $ 159,940
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 111,392
Gain on sale of property and equipment (51,309)
Changes in operating assets and liabilities:
Accounts receivable (90,966)
Inventories (905,260)
Prepaid expenses and other 10,488
Long-term notes receivable 42,594
Floor plan notes payable 826,312
Accounts payable and accrued liabilities 5,382
----------
Net cash provided by operating activities 108,573
----------
Cash Flows from Investing Activities:
Purchases of property and equipment (493,888)
Proceeds from sales of property and equipment 211,315
----------
Net cash used in investing activities (282,573)
----------
Cash Flows from Financing Activities:
Payments on debt (57,695)
Distributions to shareholder (16,084)
----------
Net cash used in financing activities (73,779)
----------
Net Decrease in Cash and Cash Equivalents (247,779)
Cash and Cash Equivalents at Beginning of Year 358,865
----------
Cash and Cash Equivalents at End of Year $ 111,086
==========
Supplemental Non-Cash Investing and Financing Information:
In July 1999, the Company sold land and improvements with a carrying value of
approximately $755,000 in exchange for cash of $67,000 and assumption of debt
of approximately $715,000.
The accompanying notes are an integral part of these financial statements
5
<PAGE>
HALL ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
1. Organization and Business:
Hall Enterprises, Inc. (the "Company") was formed in 1965 and operated
three recreational vehicle ("RV") dealerships in the Lexington, Kentucky
area until near the end of 1997, when the operations were consolidated
into two sites. In addition to new and used RV sales, the Company offers
complementary products and services including parts, repair and
maintenance services, body shop services, and financing and insurance
contracts.
2. Summary of Significant Accounting Policies:
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include
cash, contracts in transit, and all highly liquid investments with a
maturity of three months or less when purchased.
Inventories
Inventories of new and used vehicles and parts inventory are stated at the
lower of cost or market. Cost is determined using the last-in, first-out
("LIFO") method. New vehicle cost includes the invoice price, delivery,
and the cost of any special features added to the vehicles. Used vehicle
cost includes the purchase price plus reconditioning and make-ready costs.
Property and Equipment
The cost of property is depreciated over the estimated useful lives of the
related assets. Depreciation is computed using the straight-line method
for financial reporting purposes.
Estimated useful lives of the assets are as follows:
Buildings and improvements 7 years
Furniture and fixtures 5 years
Machinery, vehicles and equipment 7 years
Rental units 5-7 years
The carrying amount and accumulated depreciation of assets, which are sold
or retired are removed from the accounts in the year of disposal and any
resulting gain or loss is included in the results of operations. Property
and equipment are reviewed for impairment whenever events or changes in
business circumstances indicate the carrying value of the assets may not
be recoverable. Impairment losses are recognized if expected future cash
flows of the related assets are less than carrying values.
6
<PAGE>
HALL ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
2. Summary of Significant Accounting Policies - Continued:
Revenue Recognition
Revenue is recognized when vehicles are delivered, service is performed,
and parts are sold. Finance, insurance and warranty revenues are
recognized at the time the contracts are sold.
Other Revenue
Other revenue consists primarily of finance fees, insurance commissions,
extended warranty contract and rental fees income.
Finance fees represent revenues earned by the Company for notes placed
with financial institutions in connection with customer vehicle financing.
The Company is charged back for a portion of these finance fees should the
customer terminate the finance contract prior to its scheduled maturity.
The Company has recorded an estimated allowance for these chargebacks
based upon its historical experience for prepayments or defaults on the
finance contracts. The allowance for chargebacks for December 31, 1999 was
$114,690. Insurance income represents commissions earned on credit life,
accident, and disability insurance sold in connection with the vehicle on
behalf of third-party insurance companies. Warranty income represents
revenues earned on extended warranty contracts sold on behalf of a third
party.
Income Taxes
The Company is an S corporation, and as such, no provision for income
taxes has been included in the accompanying financial statements as the
Company's taxable income is reported directly by the shareholders for tax
purposes.
Advertising
The Company expenses the cost of advertising as incurred. Advertising
expenses totaled $168,862 for 1999.
Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to
various market data and other valuation techniques, as appropriate. Unless
otherwise disclosed, the fair value of financial instruments approximates
their recorded values due to the short-term nature of the maturities.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
7
<PAGE>
HALL ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
3. Inventories:
Inventories consist of the following at December 31, 1999:
New vehicles $4,235,701
Used vehicles 1,577,467
Parts and accessories 191,843
----------
6,005,011
Excess of first-in, first-out costs over LIFO costs (2,091,868)
----------
$3,913,143
==========
4. Property and Equipment:
Property and equipment consists of the following at December 31, 1999:
Buildings and improvements $ 28,440
Furniture and fixtures 110,250
Machinery, vehicles and equipment 128,632
Rental units 509,452
----------
776,774
Less accumulated depreciation (179,566)
----------
$ 597,208
==========
5. Floor Plan Notes Payable:
Floor plan notes payable consist of the following at December 31, 1999:
Floor plan notes payable to finance companies,
collateralized by new and used vehicle inventory
and contracts in transit $4,933,555
==========
8
<PAGE>
HALL ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
5. Floor Plan Notes Payable - Continued:
Interest rates on floor plan notes vary by product line and product age.
Interest rates on the floor plan notes are variable and range from 7.5% to
12% during the period presented. The average interest rate on floor plan
notes was 8.75% for the year ended December 31, 1999. The notes are due
upon the sale of the related vehicle.
Interest paid for floor plan notes and all other debt was $376,906 for the
year ended December 31, 1999.
6. Commitments and Contingencies:
Operating Leases
The Company leases its facilities under operating leases. Rent expense
related to operating leases was $157,032 for 1999. These leases were
canceled in 2000 in connection with the Company's relocation (NOTE 9) to a
facility under a month-to-month lease.
Litigation
In the normal course of business, the Company is subject to involvement in
legal actions. However, in the opinion of management, there are no
outstanding matters that will result in a significant liability.
Government Regulation
The Company is subject to federal, state and local provisions regulating
the discharge of materials into the environment. Compliance with these
provisions has not had, nor does management expect such compliance to have,
any material effect upon the capital expenditures, net income, financial
condition, or competitive position of the Company. Management believes that
its current practices and procedures for the control and disposition of
such wastes comply with applicable federal and state requirements.
Third-Party Financing
The Company uses third-party banks and/or finance companies to assist its
customers in locating financing for vehicle purchases. The Company refers
customers to one or more of these third-party financing sources and earns a
referral fee if the third-party lender consummates a loan contract with the
customer. These contracts represent third-party financing, and the Company
provides no underwriting or credit approval services for the lender. The
Company's referral fees are in fact a commission and are typically based
upon the difference between the interest rate the customer pays under the
contract with the lender and an interest rate designated by the lender. At
no time does the Company service or guarantee the collection of these loans
or receivables. The Company could be charged back the commission by the
lender if the loan is paid off or foreclosed in a specified period of time,
usually limited to the first six months of the term, and if the chargeback
exceeds reserves retained by the lender.
9
<PAGE>
HALL ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEAR ENDED DECEMBER 31, 1999
6. Commitments and Contingencies - Continued:
Third-Party Financing - Continued
The Company records this commission income based upon the amount earned
less allowances for chargebacks. In determining the allowances for
chargebacks, the Company takes into consideration past experience with
chargebacks. The chargeback allowance at December 31, 1999 was
approximately $115,000. Finance chargebacks were approximately $82,000 in
1999.
7. Related-Party Transactions:
In 1993, the Company borrowed $81,138 from a family member of the primary
shareholder which was payable on demand. In 1997, the Company borrowed
$140,000 from the primary shareholder with principal to be paid before
September 10, 1999. In July 1999, these related-party notes were removed as
part of a land sale transaction.
8. Retirement Plan:
The Company maintains a 401(k) retirement plan, which became effective
January 1, 1992. Employees are eligible to participate in the plan if they
have been employed by the Company for one year and are at least 21 years of
age. Participants are allowed to make elective income deferrals to the plan
per the plan specifications. The Company can make discretionary
contributions as authorized by the Board of Directors. The Company made
discretionary contributions of approximately $3,800 during 1999.
9. Subsequent Event:
Litigation
On October 13, 2000, the Company was ordered to deliver 20% of the shares
of the Company's common stock in connection with a lawsuit brought by a
former employee of the Company.
Consolidation of Operations
During fiscal 2000, the Company consolidated its operations of two
locations into one new location located in Lexington, Kentucky.
Sale of Company to Holiday RV Superstores, Inc.
On October 31, 2000, the Company was acquired by Holiday RV Superstores,
Inc. ("Holiday"). The consideration paid by Holiday consisted of the
issuance of 300,000 shares of Holiday common stock. This includes the
exchange of shares deposited with the court in connection with the October
13, 2000 court order. Holiday may be required to pay additional contingent
consideration of up to 100,000 shares of Holiday common stock if certain
pretax earnings levels are achieved in fiscal 2001 and 2002.
S-Corporation
Status In January 2000, the Company elected to terminate its S-corporation
status.
10
