/2H0      d 1$&%*-'ARK RESTAURANTS CORP. AND SUBSIDIARIES"'CONSOLIDATED BALANCE SHEETS^SEPTEMBER 30,^OCTOBER 2, ^2000 ^1999 'ASSETS'CURRENT ASSETS: 'Cash and cash equivalents"$ 697,385"$ 333,621 'Accounts receivable "4,045,215 "3,073,6158 'Current portion of long-term receivables (Note 2) "1,427,243 "446,043 'Inventories "2,132,983 "1,916,436& 'Deferred income taxes (Note 12) "1,694,016 "710,0950 'Prepaid expenses and other current assets "347,174 "336,041*'Refundable and prepaid income taxes"1,307,524 "--"-----------"-----------'Total current assets"11,651,540"6,815,851"-----------"-----------%'LONG-TERM RECEIVABLES (Note 2)"1,129,638"1,184,331$'ASSETS HELD FOR SALE (Note 3) "--"988,004'FIXED ASSETS - At cost:'Leasehold improvements"38,099,297"23,500,280('Furniture, fixtures and equipment"31,156,691"19,352,078)'Leasehold improvements in progress"266,950"4,408,071"-----------"-----------"69,522,938"47,260,4295 'Less accumulated depreciation and amortization "22,324,552 "18,162,614!"-----------!"-----------#"47,198,386#"29,097,815$"-----------$"-----------'&'INTANGIBLE ASSETS - Net (Note 4)&"4,569,569&"5,294,531&('DEFERRED INCOME TAXES (Note 12)("1,532,758("846,657*'OTHER ASSETS (Note 5)*"933,946*"3,151,914+"-----------+"------------"$67,015,837-"$47,379,103."===========."===========+/'LIABILITIES AND SHAREHOLDERS' EQUITY1'CURRENT LIABILITIES:2'Accounts payable - trade2"$ 5,291,8852"$ 3,815,760>3'Accrued expenses and other current liabilities (Note 6)3"6,205,9153"4,736,897?4'Current maturities of capital lease obligations (Note 8) 4"--4"148,65745'Current maturities of long-term debt (Note 7)5"5,073,5925"972,330%6'Accrued income taxes (Note 12) 6"--6"186,4117"-----------7"----------- 9'Total current liabilities9"16,571,3929"9,860,055:"-----------:"-----------0<'OBLIGATIONS UNDER CAPITAL LEASES (Note 8) <"-- <"--A>'LONG-TERM DEBT - Net of current maturities (Notes 4 and 7)>"24,447,268>"6,683,0766@'OPERATING LEASE DEFERRED CREDIT (Notes 1 and 8)@"1,213,000@"1,322,0007B'COMMITMENTS AND CONTINGENCIES (Notes 5, 7 and 8) B"-- B"--0D'SHAREHOLDERS' EQUITY (Notes 7, 9 and 10):FE'Common stock, par value $.01 per share - authorized, 10,000,000CF'shares; issued, 5,249,336 and 5,208,336 shares, respectively F"52,494 F"52,084!G'Additional paid-in capitalG"14,743,118G"14,399,956H'Retained earningsH"18,336,859H"22,059,989I"-----------I"-----------K"33,132,471K"36,512,029:M'Less treasury stock, 2,067,637 and 1,927,037 sharesM"8,348,294M"6,998,057N"-----------N"-----------P"24,784,177P"29,513,972Q"-----------Q"-----------S"$67,015,837S"$47,379,103T"===========T"===========6V'See notes to consolidated financial statements.-X'ARK RESTAURANTS CORP. AND SUBSIDIARIES,Y'CONSOLIDATED STATEMENTS OF OPERATIONS[^YEARS ENDED[^YEARS ENDED[^YEARS ENDED\^SEPTEMBER 30,\^OCTOBER 2,\^OCTOBER 3, ]^2000 ]^1999 ]^1998_'NET SALES_"$119,212,486_"$110,800,913_"$117,398,453a'COST OF SALESa"31,016,104a"29,301,303a"31,265,702b"------------b"------------b"------------d'Gross restaurant profitd"88,196,382d"81,499,610d"86,132,751&f'MANAGEMENT FEE INCOME (Note 11)f"473,895f"869,254f"1,139,799"h'JOINT VENTURE LOSS (Note 5)h"(4,988,000) h"-- h"--i"------------i"------------i"------------k"83,682,277k"82,368,864k"87,272,550l"------------l"------------l"------------%n'RESTAURANT OPERATING EXPENSES:#o'Payroll and payroll benefitso"43,063,142o"39,254,439o"41,171,865p'Occupancyp"15,309,525p"13,492,931p"13,788,992$q'Depreciation and amortizationq"4,885,286q"4,062,849q"3,998,272 r'Otherr"17,356,386r"12,654,868r"14,671,521s"------------s"------------s"------------u"80,614,339u"69,465,087u"73,630,650v"------------v"------------v"------------(x'INCOME FROM RESTAURANT OPERATIONSx"3,067,938x"12,903,777x"13,641,900*z'GENERAL AND ADMINISTRATIVE EXPENSESz"7,110,899z"6,069,903z"6,052,435{"------------{"------------{"------------}'OPERATING INCOME (LOSS)}"(4,042,961)}"6,833,874}"7,589,465~"------------~"------------~"------------'OTHER EXPENSE (INCOME): 'Interest expense (Note 7)"2,007,013"425,141"608,278'Interest income"(171,977)"(225,996)"(209,577)'Other income (Note 13)"(438,278)"(435,610)"(490,118)"------------"------------"------------"1,396,758"(236,465)"(91,417)"------------"------------"------------6'INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES"(5,439,719)"7,070,339"7,680,8825'PROVISION (BENEFIT) FOR INCOME TAXES (Note 12)"(1,906,102)"2,575,608"3,068,741"------------"------------"------------4'NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF'ACCOUNTING CHANGE"$ (3,533,617)"$ 4,494,731"$ 4,612,1412'CUMULATIVE EFFECT OF ACCOUNTING CHANGE, Net"$ (189,513)"$ --"$ --"------------"------------"------------'NET INCOME (LOSS)"$ (3,723,130)"$ 4,494,731"$ 4,612,141"============"============"============#'NET INCOME PER SHARE - BASIC4'NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF'ACCOUNTING CHANGE"$ (1.11)"$ 1.30"$ 1.21-'CUMULATIVE EFFECT OF ACCOUNTING CHANGE"$ (0.06)"$ --"$ --"------------"------------"------------'NET INCOME (LOSS)"$ (1.17)"$ 1.30"$ 1.21"============"============"============%'NET INCOME PER SHARE - DILUTED4'NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF'ACCOUNTING CHANGE"$ (1.11)"$ 1.29"$ 1.20-'CUMULATIVE EFFECT OF ACCOUNTING CHANGE "(0.06) "-- "--"------------"------------"------------'NET (LOSS) INCOME"$ (1.17)"$ 1.29"$ 1.20"============"============"============0'WEIGHTED AVERAGE NUMBER OF SHARES - BASIC"3,186,496"3,460,865"3,826,255"============"============"============2'WEIGHTED AVERAGE NUMBER OF SHARES - DILUTED"3,186,496"3,475,980"3,852,019"============"============"============5'See notes to consolidated financial statements,'ARK RESTAURANT CORP. AND SUBSIDIARIES,'CONSOLIDATED STATEMENTS OF CASH FLOWS^YEARS ENDED^YEARS ENDED^YEARS ENDED^SEPTEMBER 30,^OCTOBER 2,^OCTOBER 3, ^2000 ^1999 ^1998,'CASH FLOWS FROM OPERATING ACTIVITIES:F'Net income (loss) before cumulative effect of accounting change"$ (3,533,617)"$ 4,494,731"$ 4,612,141-'Cumulative effect of accounting change"(189,513) "-- "--?'Adjustments to reconcile net income to net cash provided'by operating activities:4'Depreciation and amortization of fixed assets"4,334,092"3,330,568"3,432,104"'Amortization of intangibles"551,194"732,281"566,168"'Gain on sale of restaurants"(87,586)"(752,274)"(258,684)*'Write-off of joint venture advances"4,988,000 "-- "--)'Impairment of assets held for sale"810,769 "-- "--('Write-off of accounts receivables"279,394 "-- "--&'Operating lease deferred credit"(109,000)"(149,000)"(57,000)'Deferred income taxes"(1,670,022)"382,624 "57,164)'Changes in assets and liabilities:1'(Increase) decrease in accounts receivable"(1,250,994)"376,692"(663,873))'(Increase) decrease in inventories"(216,547) "33,710"(17,020)G'(Increase) decrease in prepaid expenses and other current assets" (11,133)"155,088"(58,313)8'(Increase) in refundable and prepaid income taxes"(1,307,524) "-- "--&'(Increase) in other assets, net"(449,295)"(2,111,012)"(543,820)+'Increase in accounts payable - trade"1,476,125"252,692 "2,8182'Increase (Decrease) in accrued income taxes"(186,411)"(518,722)"291,263@'Increase (decrease) in accrued expenses and other current'liabilities"1,469,018"811,130"(58,590)"------------"-----------"-----------0'Net cash provided by operating activities"4,896,950"7,038,508"7,304,358"------------"-----------"-----------,'CASH FLOWS FROM INVESTING ACTIVITIES: 'Additions to fixed assets"(22,262,509)"(6,989,405)"(1,713,847)%'Additions to intangible assets "--"(384,880)"(229,524)%'Advances to joint venture, net"(3,297,000) "-- "--9'Issuance of demand notes and long-term receivables"(93,530)"(95,611)"(81,580)B'Payments received on demand notes and long-term receivables"409,559"398,869"315,908'Restaurant sales "--"975,000"265,000'Restaurant acquisitions "-- "--"(2,735,000)"------------"-----------"-----------,'Net cash used in investing activities"(25,243,480)"(6,096,027)"(4,179,043)"------------"-----------"-----------,'CASH FLOWS FROM FINANCING ACTIVITIES:*'Principal payment on long-term debt"(3,154,580)"(5,659,226)"(8,012,164)!'Issuance of long-term debt"25,020,034"8,300,000"6,900,000 'Exercise of stock options"343,572"185,263 "83,6155'Principal payment on capital lease obligations"(148,495)"(229,781)"(273,507)!'Purchase of treasury stock"(1,350,237)"(4,228,162)"(1,522,496)"------------"-----------"-----------:'Net cash provided by (used in) financing activities"20,710,294"(1,631,906)"(2,824,552)"------------"-----------"-----------7'INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS"363,764"(689,425)"300,7633'CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR"333,621"1,023,046"722,283"------------"-----------"------------'CASH AND CASH EQUIVALENTS, END OF YEAR"$ 697,385"$ 333,621"$ 1,023,046"------------"-----------"-----------"------------"-----------"----------- 'SUPPLEMENTAL INFORMATION:,'Cash payments for the following were:'Interest"$ 2,245,013"$ 526,382"$ 608,278"------------"-----------"-----------"------------"-----------"-----------'Income taxes"$ 1,113,395"$ 2,690,443"$ 2,699,651"------------"-----------"-----------"------------"-----------"-----------6'See notes to consolidated financial statements.-'ARK RESTAURANTS CORP. AND SUBSIDIARIES6'CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY''YEARS ENDED SEPTEMBER 30, 2000, *'OCTOBER 2, 1999 AND OCTOBER 3, 1998^Common Stock^Common Stock^Additional ^Total^-------------^----------^Paid-In^Retained^Treasury^Shareholders' ^Shares ^Amount^Capital^Earnings ^Stock ^Equity"'BALANCE, SEPTEMBER 27, 1997"5,177,836"$ 51,779"$14,131,383"$12,953,117"$(1,247,399)"$25,888,880 'Exercise of stock options "10,000 "100 "64,900 "-- "-- "65,000!'Purchase of treasury stock "-- "-- "-- "--"(1,522,496)"(1,522,496)) 'Tax benefit on exercise of options  "--  "--  "18,615  "--  "--  "18,615 'Net income  "--  "--  "-- "4,612,141  "-- "4,612,141 "--------- "--------- "----------- "----------- "----------- "------------ 'BALANCE, OCTOBER 3, 1998 "5,187,836  "51,879 "14,214,898 "17,565,258 "(2,769,895) "29,062,140 'Exercise of stock options "20,500 "205"163,795 "-- "--"164,000!'Purchase of treasury stock "-- "-- "-- "--"(4,228,162)"(4,228,162))'Tax benefit on exercise of options "-- "-- "21,263 "-- "-- "21,263'Net income "-- "-- "--"4,494,731 "--"4,494,731"---------"---------"-----------"-----------"-----------"------------'BALANCE, OCTOBER 2, 1999"5,208,336 "52,084"14,399,956"22,059,989"(6,998,057)"29,513,972 'Exercise of stock options "41,000 "410"327,590 "-- "--"328,000!'Purchase of treasury stock "-- "-- "-- "--"(1,350,237)"(1,350,237))'Tax benefit on exercise of options "-- "-- "15,572 "-- "-- "15,572'Net Loss "-- "-- "--"(3,723,130) "--"(3,723,130)"---------"---------"-----------"-----------"-----------"------------"'BALANCE, SEPTEMBER 30, 2000"5,249,336"$ 52,494"$14,743,118"$18,336,859"$(8,348,294)"$24,784,177"---------"---------"-----------"-----------"-----------"------------"---------"---------"-----------"-----------"-----------"------------6 'See notes to consolidated financial statements.