,/2H=   d 1$&%*-'ARK RESTAURANTS CORP. AND SUBSIDIARIES"'CONSOLIDATED BALANCE SHEETS'(In Thousands)^September 29,^September 30, ^2001 ^2000 'ASSETS'CURRENT ASSETS: 'Cash and cash equivalents  "$ - "$ 697 'Accounts receivable  "3,049  "4,0458 'Current portion of long-term receivables (Note 3)  "203  "1,427 'Inventories  "2,110  "2,133& 'Deferred income taxes (Note 12)  "278  "1,6940'Prepaid expenses and other current assets "655 "347*'Refundable and prepaid income taxes "1,119 "1,308'Total current assets "7,414 "11,651%'LONG-TERM RECEIVABLES (Note 3) "1,082 "1,130'FIXED ASSETS - At cost:'Leasehold improvements "33,699 "38,099('Furniture, fixtures and equipment "27,972 "31,157)'Leasehold improvements in progress "93 "267 "61,764 "69,5235'Less accumulated depreciation and amortization "27,035 "22,325 "34,729 "47,198' 'INTANGIBLE ASSETS - Net (Note 4)  "4,175  "4,570&"'DEFERRED INCOME TAXES (Note 12) ""6,056 ""1,533"$'OTHER ASSETS - Net (Note 5) $"395 $"934&"$53,851&"$67,016+)'LIABILITIES AND SHAREHOLDERS' EQUITY+'CURRENT LIABILITIES:,'Accounts payable - trade,"$ 4,232,"$ 5,293>-'Accrued expenses and other current liabilities (Note 6)-" 6,744 -"6,2064.'Current maturities of long-term debt (Note 7) ."2,247 ."5,073 0'Total current liabilities 0"13,223 0"16,572:2'LONG-TERM DEBT - Net of current maturities (Note 7) 2"21,700 2"24,44764'OPERATING LEASE DEFERRED CREDIT (Notes 1 and 8) 4"995 4"1,213.6'COMMMITMENTS AND CONTINGENCIES (Note 8)6"-6"-08'SHAREHOLDERS' EQUITY (Notes 7, 9 and 10):;9'Common stock, par value $.01 per share - authorized, 9"10,000#:'shares; issued, 5,249 shares :"52 :"52!;'Additional paid-in capital ;"14,743 ;"14,743<'Retained earnings <"11,489 <"18,337 >"26,284 >"33,132(@'Less treasury stock, 2,068 shares @"8,351 @"8,348!B'Total shareholders' equity B"17,933 B"24,784D"$53,851D"$67,0165G'See notes to consolidated financial statements-I'ARK RESTAURANTS CORP. AND SUBSIDIARIES,J'CONSOLIDATED STATEMENTS OF OPERATIONS,K'(In Thousands, Except Per Share Data)M^Years EndedN^September 29,N^September 30,N^October 2, O^2001 O^2000 O^1999Q'NET SALESQ"$ 127,007Q"$ 119,212Q"$ 110,801S'COST OF SALES S"32,549 S"31,016 S"29,301U'GROSS RESTAURANT PROFIT U"94,458 U"88,196 U"81,500&W'MANAGEMENT FEE INCOME (Note 11) W"346 W"474 W"869Y'JOINT VENTURE LOSS Y"(150)Y"(4,988)Y"- ["94,654 ["83,682 ["82,369]'OPERATING EXPENSES:#^'Payroll and payroll benefits ^"45,085 ^"43,063 ^"39,254_'Occupancy _"18,320 _"15,310 _"13,493$`'Depreciation and amortization `"5,938 `"4,885 `"4,063a'Asset impairment a"10,045 a"811a"- b'Other b"16,499 b"16,545 b"12,655 d"95,887 d"80,614 d"69,465/f'INCOME (LOSS) FROM RESTAURANT OPERATIONSf"(1,233) f"3,068 f"12,904*h'GENERAL AND ADMINISTRATIVE EXPENSES h"7,005 h"7,111 h"6,070j'OPERATING INCOME (LOSS)j"(8,238)j"(4,043) j"6,834l'OTHER EXPENSE (INCOME): m'Interest expense (Note 7) m"2,446 m"2,007 m"425n'Interest income n"(150) n"(172) n"(226)o'Other income (Note 13) o"(344) o"(438) o"(436) q"1,952 q"1,397 q"(237)6s'INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXESs"(10,190)s"(5,440) s"7,0715u'PROVISION (BENEFIT) FOR INCOME TAXES (Note 12)u"(3,342)u"(1,906) u"2,576-w'INCOME (LOSS) BEFORE CUMULATIVE EFFECTx'OF ACCOUNTING CHANGEx"(6,848)x"(3,534) x"4,4952z'CUMULATIVE EFFECT OF ACCOUNTING CHANGE, Netz"- z"189z"-|'NET INCOME (LOSS)|"$ (6,848)|"$ (3,723)|"$ 4,495'~'INCOME (LOSS) PER SHARE - BASIC:-'INCOME (LOSS) BEFORE CUMULATIVE EFFECT'OF ACCOUNTING CHANGE"$ (2.15)"$ (1.11)"$ 1.30-'CUMULATIVE EFFECT OF ACCOUNTING CHANGE"- "(0.06)"-'NET INCOME (LOSS)"$ (2.15)"$ (1.17)"$ 1.30)'INCOME (LOSS) PER SHARE - DILUTED:-'INCOME (LOSS) BEFORE CUMULATIVE EFFECT'OF ACCOUNTING CHANGE"$ (2.15)"$ (1.11)"$ 1.29-'CUMULATIVE EFFECT OF ACCOUNTING CHANGE"- "(0.06)"-'NET INCOME (LOSS)"$ (2.15)"$ (1.17)"$ 1.290'WEIGHTED AVERAGE NUMBER OF SHARES - BASIC "3,181 "3,186 "3,4612'WEIGHTED AVERAGE NUMBER OF SHARES - DILUTED "3,181 "3,186 "3,4766'See notes to consolidated financial statements.,'ARK RESTAURANT CORP. AND SUBSIDIARIES,'CONSOLIDATED STATEMENTS OF CASH FLOWS'(In Thousands)^Years Ended^September 29,^September 30,^October 2, ^2001 ^2000 ^1999,'CASH FLOWS FROM OPERATING ACTIVITIES:0'Income (loss) before cumulative effect of'accounting change"$(6,848)"$ (3,534)"$ 4,495-'Cumulative effect of accounting change"- "(189)"-6'Adjustments to reconcile net income to net cash('provided by operating activities:4'Depreciation and amortization of fixed assets "5,479 "4,334 "3,331"'Amortization of intangibles "459 "551 "732"'Gain on sale of restaurants "(209) "(88) "(752):'Write-off of joint venture advances and investments "1,086 "4,988"-'Impairment of assets "10,045 "811"-1'Write-off of accounts and notes receivable "209 "280"-&'Operating lease deferred credit "(218) "(109) "(149)'Deferred income taxes"(3,107)"(1,670) "383)'Changes in assets and liabilities:1'Decrease (increase) in accounts receivable "996"(1,251) "377)'Decrease (increase) in inventories "23 "(217) "348'Decrease (increase) in prepaid expenses and other'current assets "(308) "(11) "1554'Decrease (increase) in refundable and prepaid'income taxes "189"(1,307)"-/'Decrease (increase) in other assets, net "(502) "(450)"(2,111)6'Increase (decrease) in accounts payable - trade"(1,061) "1,476 "2522'Increase (decrease) in accrued income taxes"- "(186) "(519).'Increase (decrease) in accrued expenses$'and other current liabilities "538 "1,469 "8110'Net cash provided by operating activities "6,771 "4,897 "7,039,'CASH FLOWS FROM INVESTING ACTIVITIES: 'Additions to fixed assets"(3,014)"(22,263)"(6,989)%'Additions to intangible assets"-"- "(385)%'Advances to joint venture, net"-"(3,297)"-9'Issuance of demand notes and long-term receivables "(98) "(94) "(96)6'Payments received on demand notes and long-term'receivables "1,221 "410 "399'Restaurant sales"-"- "975,'Net cash used in investing activities"(1,891)"(25,244)"(6,096),'CASH FLOWS FROM FINANCING ACTIVITIES:*'Principal payment on long-term debt"(9,974)"(3,155)"(5,659)!'Issuance of long-term debt "4,400 "25,020 "8,300 'Exercise of stock options"- "344 "1855'Principal payment on capital lease obligations"- "(149) "(230)!'Purchase of treasury stock "(3)"(1,350)"(4,228):'Net cash (used in) provided by financing activities"(5,577) "20,710"(1,632)+'(DECREASE) INCREASE IN CASH AND CASH'EQUIVALENTS "(697) "363 "(689)!'CASH AND CASH EQUIVALENTS,'BEGINNING OF YEAR "697 "334 "1,023-'CASH AND CASH EQUIVALENTS, END OF YEAR "$ -"$ 697"$ 334 'SUPPLEMENTAL INFORMATION:,'Cash payments for the following were:'Interest"$ 2,446"$ 2,245"$ 526'Income taxes"$ 852"$ 1,113"$ 2,6906'See notes to consolidated financial statements.-'ARK RESTAURANTS CORP. AND SUBSIDIARIES6'CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITYM'YEARS ENDED SEPTEMBER 29, 2001, SEPTEMBER 30, 2000 AND OCTOBER 2, 1999'(In Thousands)^Common Stock^Common Stock^Additional ^Total^-----------^---------^Paid-In^Retained^Treasury^Shareholders' ^Shares ^Amount^Capital^Earnings ^Stock ^Equity'BALANCE, OCTOBER 3, 1998 "5,187 "$ 52"$14,214"$17,565"$(2,770)"$29,061 'Exercise of stock options "21"- "164"-"- "164!'Purchase of treasury stock"-"-"-"-"(4,228)"(4,228))'Tax benefit on exercise of options"-"- "21"-"- "21'Net income"-"-"- "4,495"- "4,495'BALANCE, OCTOBER 2, 1999 "5,208 "52 "14,399 "22,060"(6,998) "29,513 'Exercise of stock options "41"- "328"-"- "328!'Purchase of treasury stock"-"-"-"-"(1,350)"(1,350))'Tax benefit on exercise of options"-"- "16"-"- "16'Net income"-"-"-"(3,723)"-"(3,723)"'BALANCE, SEPTEMBER 30, 2000 "5,249 "52 "14,743 "18,337"(8,348) "24,784 'Exercise of stock options"-"-"-"-"-"-!'Purchase of treasury stock"-"-"-"- "(3) "(3))'Tax benefit on exercise of options"-"-"-"-"-"-'Net income"-"-"-"(6,848)"-"(6,848)"'BALANCE, SEPTEMBER 29, 2001 "5,249 "$ 52"$14,743"$11,489"$(8,351)"$17,9336'See notes to consolidated financial statements.