*/2ÿñH0      d 1$&%*ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ-ñ'ARK RESTAURANTS CORP. AND SUBSIDIARIES"ñ'CONSOLIDATED BALANCE SHEETSñ^October 2,ñ^October 3, ñ'ASSETS ñ^1999 ñ^1998ñ'CURRENT ASSETS: ñ'Cash and cash equivalentsñ"$ 333,621ñ"$ 1,023,046ñ 'Accounts receivableñ "3,073,615ñ "3,450,3078ñ 'Current portion of long-term receivables (Note 2)ñ "446,043ñ "415,755ñ 'Inventoriesñ "1,916,436ñ "1,950,146&ñ 'Deferred income taxes (Note 12)ñ "710,095ñ "908,4680ñ 'Prepaid expenses and other current assetsñ "336,041ñ "491,129ñ"-----------ñ"-----------ñ'Total current assetsñ"6,815,851ñ"8,238,851ñ"-----------ñ"-----------%ñ'LONG-TERM RECEIVABLES (Note 2)ñ"1,184,331ñ"1,119,110$ñ'ASSETS HELD FOR SALE (Note 3)ñ"988,004ñ"1,767,782ñ'FIXED ASSETS - At costñ'Leasehold improvementsñ"23,500,280ñ"22,464,922(ñ'Furniture, fixtures and equipmentñ"19,352,078ñ"18,591,938)ñ'Leasehold improvements in progressñ"4,408,071 ñ"18,906ñ"-----------ñ"-----------ñ"47,260,429ñ"41,075,7665ñ 'Less accumulated depreciation and amortizationñ "18,162,614ñ "15,833,403ñ!"-----------ñ!"-----------ñ#"29,097,815ñ#"25,242,363ñ$"-----------ñ$"-----------'ñ&'INTANGIBLE ASSETS - Net (Note 4)ñ&"5,294,531ñ&"5,514,932&ñ('DEFERRED INCOME TAXES (Note 12)ñ("846,657ñ("1,030,908ñ*'OTHER ASSETS (Note 5)ñ*"3,151,914ñ*"1,131,233ñ+"-----------ñ+"-----------ñ-"$47,379,103ñ-"$44,045,179ñ."===========ñ."===========+ñ1'LIABILITIES AND SHAREHOLDERS' EQUITYñ3'CURRENT LIABILITIES:ñ5'Accounts payable - tradeñ5"$ 3,815,760ñ5"$ 3,563,068>ñ6'Accrued expenses and other current liabilities (Note 6)ñ6"4,736,897ñ6"3,850,766?ñ7'Current maturities of capital lease obligations (Note 8)ñ7"148,657ñ7"229,9444ñ8'Current maturities of long-term debt (Note 7)ñ8"972,330ñ8"609,283%ñ9'Accrued income taxes (Note 12)ñ9"186,411ñ9"705,133ñ:"-----------ñ:"----------- ñ<'Total current liabilitiesñ<"9,860,055ñ<"8,958,194ñ="-----------ñ="-----------0ñ?'OBLIGATIONS UNDER CAPITAL LEASES (Note 8) ñ?"--ñ?"148,494AñA'LONG-TERM DEBT - Net of current maturities (Notes 4 and 7)ñA"6,683,076ñA"4,405,3516ñC'OPERATING LEASE DEFERRED CREDIT (Notes 1 and 8)ñC"1,322,000ñC"1,471,0007ñE'COMMITMENTS AND CONTINGENCIES (Notes 5, 7 and 8) ñE"-- ñE"--0ñG'SHAREHOLDERS' EQUITY (Notes 7, 9 and 10):FñH'Common stock, par value $.01 per share - authorized, 10,000,000DñI'shares; issued, 5,208,336 and 5,187,836 shares, respectively ñI"52,084 ñI"51,879!ñJ'Additional paid-in capitalñJ"14,399,956ñJ"14,214,898ñK'Retained earningsñK"22,059,989ñK"17,565,258ñL"-----------ñL"-----------ñN"36,512,029ñN"31,832,035:ñP'Less treasury stock, 1,927,037 and 1,504,337 sharesñP"6,998,057ñP"2,769,895ñQ"-----------ñQ"-----------ñS"29,513,972ñS"29,062,140ñT"-----------ñT"-----------ñV"$47,379,103ñV"$44,045,179ñW"===========ñW"===========5ñY'See notes to consolidated financial statements,ñ\'ARK RESTAURANT CORP. AND SUBSIDIARIES,ñ]'CONSOLIDATED STATEMENTS OF OPERATIONSñ_^YEAR ENDEDñ`^OCTOBER 2,ñ`^OCTOBER 3,ñ`^SEPTEMBER 27, ña^1999 ña^1998 ña^1997ñc'NET SALESñc"$110,800,913ñc"$117,398,453ñc"$104,326,386ñe'COST OF SALESñe"29,301,303ñe"31,265,702ñe"28,451,887ñf"------------ñf"------------ñf"------------ñh'Gross restaurant profitñh"81,499,610ñh"86,132,751ñh"75,874,499&ñj'MANAGEMENT FEE INCOME (Note 11)ñj"869,254ñj"1,139,799ñj"1,153,264ñk"------------ñk"------------ñk"------------ñl"82,368,864ñl"87,272,550ñl"77,027,763ñn'OPERATING EXPENSES:#ño'Payroll and payroll benefitsño"39,254,439ño"41,171,865ño"38,520,986ñp'Occupancyñp"13,492,931ñp"13,788,992ñp"13,031,811$ñq'Depreciation and amortizationñq"4,062,849ñq"3,998,272ñq"3,320,739 ñr'Otherñr"12,654,868ñr"14,671,521ñr"13,922,524ñs"------------ñs"------------ñs"------------ñt"69,465,087ñt"73,630,650ñt"68,796,060*ñv'GENERAL AND ADMINISTRATIVE EXPENSESñv"6,069,903ñv"6,052,435ñv"5,445,990ñw"------------ñw"------------ñw"------------ñx"75,534,990ñx"79,683,085ñx"74,242,050ñy"------------ñy"------------ñy"------------ñz'OPERATING INCOMEñz"6,833,874ñz"7,589,465ñz"2,785,713ñ{"------------ñ{"------------ñ{"------------ñ}'OTHER EXPENSE (INCOME): ñ~'Interest expense (Note 7)ñ~"425,141ñ~"608,278ñ~"755,383ñ'Interest incomeñ"(225,996)ñ"(209,577)ñ"(71,652)ñ€'Other income (Note 13)ñ€"(435,610)ñ€"(490,118)ñ€"(780,281)ñ"------------ñ"------------ñ"------------ñ‚"(236,465)ñ‚"(91,417)ñ‚"(96,550)ñƒ"------------ñƒ"------------ñƒ"------------/ñ…'INCOME BEFORE PROVISION FOR INCOME TAXESñ…"7,070,339ñ…"7,680,882ñ…"2,882,263+ñ‡'PROVISION FOR INCOME TAXES (Note 12)ñ‡"2,575,608ñ‡"3,068,741ñ‡"1,144,608ñˆ"------------ñˆ"------------ñˆ"------------ñŠ'NET INCOMEñŠ"$ 4,494,731ñŠ"$ 4,612,141ñŠ"$ 1,737,655ñ‹"============ñ‹"============ñ‹"============#ñ'NET INCOME PER SHARE - BASICñ"$ 1.30ñ"$ 1.21ñ"$ .47ñŽ"============ñŽ"============ñŽ"============%ñ'NET INCOME PER SHARE - DILUTEDñ"$ 1.29ñ"$ 1.20ñ"$ .46ñ‘"============ñ‘"============ñ‘"============0ñ“'WEIGHTED AVERAGE NUMBER OF SHARES - BASICñ“"3,460,865ñ“"3,826,255ñ“"3,714,116ñ”"============ñ”"============ñ”"============2ñ–'WEIGHTED AVERAGE NUMBER OF SHARES - DILUTEDñ–"3,475,980ñ–"3,852,019ñ–"3,742,811ñ—"============ñ—"============ñ—"============6ñ™'See notes to consolidated financial statements.-ñ›'ARK RESTAURANTS CORP. AND SUBSIDIARIES6ñœ'CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY$ñ'YEARS ENDED OCTOBER 2, 1999, -ñž'OCTOBER 3, 1998 AND SEPTEMBER 27, 1997 ñŸ^COMMON ñŸ^STOCKñŸ^ADDITIONAL ñŸ^TOTALñ ^----------ñ ^-----------ñ ^PAID-INñ ^RETAINEDñ ^TREASURYñ ^SHAREHOLDERS' ñ¡^SHARES ñ¡^AMOUNTñ¡^CAPITALñ¡^EARNINGS ñ¡^STOCK ñ¡^EQUITY"ñ¤'BALANCE, SEPTEMBER 28, 1996ñ¤"4,608,882ñ¤"$ 46,089ñ¤"$ 7,790,242ñ¤"$11,215,462ñ¤"$(1,247,399)ñ¤"$17,804,394%ñ¦'Common stock private placementñ¦"551,454 ñ¦"5,515ñ¦"6,023,111 ñ¦"-- ñ¦"--ñ¦"6,028,626ñ¨'Issuance of warrants ñ¨"-- ñ¨"--ñ¨"175,000 ñ¨"-- ñ¨"--ñ¨"175,000 ñª'Exercise of stock options ñª"17,500 ñª"175 ñª"85,450 ñª"-- ñª"-- ñª"85,625)ñ¬'Tax benefit on exercise of options ñ¬"-- ñ¬"-- ñ¬"57,580 ñ¬"-- ñ¬"-- ñ¬"57,580ñ®'Net income ñ®"-- ñ®"-- ñ®"--ñ®"1,737,655 ñ®"--ñ®"1,737,655ñ¯"---------ñ¯"--------ñ¯"------------ñ¯"------------ñ¯"-----------ñ¯"------------"ñ±'BALANCE, SEPTEMBER 27, 1997ñ±"5,177,836 ñ±"51,779ñ±"14,131,383ñ±"12,953,117ñ±"(1,247,399)ñ±"25,888,880 ñ³'Exercise of stock options ñ³"10,000 ñ³"100 ñ³"64,900 ñ³"-- ñ³"-- ñ³"65,000!ñµ'Purchase of treasury stock ñµ"-- ñµ"-- ñµ"-- ñµ"--ñµ"(1,522,496)ñµ"(1,522,496))ñ·'Tax benefit on exercise of options ñ·"-- ñ·"-- ñ·"18,615 ñ·"-- ñ·"-- ñ·"18,615ñ¹'Net income ñ¹"-- ñ¹"-- ñ¹"--ñ¹"4,612,141 ñ¹"--ñ¹"4,612,141ñ»"---------ñ»"--------ñ»"------------ñ»"------------ñ»"-----------ñ»"------------ñ½'BALANCE, OCTOBER 3, 1998ñ½"5,187,836 ñ½"51,879ñ½"14,214,898ñ½"17,565,258ñ½"(2,769,895)ñ½"29,062,140 ñ¿'Exercise of stock options ñ¿"20,500 ñ¿"205ñ¿"163,795 ñ¿"-- ñ¿"--ñ¿"164,000!ñÁ'Purchase of treasury stock ñÁ"-- ñÁ"-- ñÁ"-- ñÁ"--ñÁ"(4,228,162)ñÁ"(4,228,162))ñÃ'Tax benefit on exercise of options ñÃ"-- ñÃ"-- ñÃ"21,263 ñÃ"-- ñÃ"-- ñÃ"21,263ñÅ'Net income ñÅ"-- ñÅ"-- ñÅ"--ñÅ"4,494,731 ñÅ"--ñÅ"4,494,731ñÆ"---------ñÆ"--------ñÆ"------------ñÆ"------------ñÆ"-----------ñÆ"------------ñÈ'BALANCE, OCTOBER 2, 1999ñÈ"5,208,336ñÈ"$ 52,084ñÈ"$ 14,399,956ñÈ"$ 22,059,989ñÈ"$(6,998,057)ñÈ"$ 29,513,972ñÉ"=========ñÉ"========ñÉ"============ñÉ"============ñÉ"===========ñÉ"============5ñË'See notes to consolidated financial statements,ñÍ'ARK RESTAURANT CORP. AND SUBSIDIARIES,ñÎ'CONSOLIDATED STATEMENTS OF CASH FLOWSñÐ^YEAR ENDEDñÑ^OCTOBER 2,ñÑ^OCTOBER 3,ñÑ^SEPTEMBER 27, ñÒ^1999 ñÒ^1998 ñÒ^1997,ñÕ'CASH FLOWS FROM OPERATING ACTIVITIES:ñÖ'Net incomeñÖ"$ 4,494,731ñÖ"$ 4,612,141ñÖ"$ 1,737,655?ñ×'Adjustments to reconcile net income to net cash providedñØ'by operating activities:4ñÙ'Depreciation and amortization of fixed assetsñÙ"3,330,568ñÙ"3,432,104ñÙ"3,047,422"ñÚ'Amortization of intangiblesñÚ"732,281ñÚ"566,168ñÚ"445,123"ñÛ'Gain on sale of restaurantsñÛ"(752,274)ñÛ"(258,684)ñÛ"(229,000)&ñÜ'Operating lease deferred creditñÜ"(149,000)ñÜ"(57,000)ñÜ"(19,000)ñÝ'Deferred income taxesñÝ"382,624 ñÝ"57,164ñÝ"(431,966))ñÞ'Changes in assets and liabilities:1ñß'Decrease (increase) in accounts receivableñß"376,692ñß"(663,873)ñß"(682,935))ñà'Decrease (increase) in inventories ñà"33,710ñà"(17,020)ñà"(890,567)Gñá'Increase (decrease) in prepaid expenses and other current assetsñá"155,088ñá"(58,313)ñá"112,961/ñâ'(Increase) decrease in other assets, netñâ"(2,111,012)ñâ"(543,820) ñâ"60,008+ñã'Increase in accounts payable - tradeñã"252,692 ñã"2,818ñã"1,194,3112ñä'Decrease (increase) in accrued income taxesñä"(518,722)ñä"291,263 ñä"89,476Lñå'Increase (decrease) in accrued expenses and other current liabilitiesñå"811,130ñå"(58,590)ñå"183,672ñæ"-----------ñæ"-----------ñæ"------------0ñç'Net cash provided by operating activitiesñç"7,038,508ñç"7,304,358ñç"4,617,160ñè"-----------ñè"-----------ñè"------------,ñê'CASH FLOWS FROM INVESTING ACTIVITIES: ñë'Additions to fixed assetsñë"(6,989,405)ñë"(1,713,847)ñë"(11,006,116)%ñì'Additions to intangible assetsñì"(384,880)ñì"(229,524)ñì"(11,639)9ñí'Issuance of demand notes and long-term receivablesñí"(95,611)ñí"(81,580)ñí"-Bñî'Payments received on demand notes and long-term receivablesñî"398,869ñî"315,908ñî"264,370ñï'Restaurant salesñï"975,000ñï"265,000ñï"308,000ñð'Restaurant acquisitionsñð"-ñð"(2,735,000)ñð"-ññ"-----------ññ"-----------ññ"------------,ñò'Net cash used in investing activitiesñò"(6,096,027)ñò"(4,179,043)ñò"(10,445,385)ñó"-----------ñó"-----------ñó"------------,ñõ'CASH FLOWS FROM FINANCING ACTIVITIES:*ñö'Principal payment on long-term debtñö"(5,659,226)ñö"(8,012,164)ñö"(10,277,900)!ñ÷'Issuance of long-term debtñ÷"8,300,000ñ÷"6,900,000ñ÷"10,000,831 ñø'Exercise of stock optionsñø"185,263 ñø"83,615ñø"143,2055ñù'Principal payment on capital lease obligationsñù"(229,781)ñù"(273,507)ñù"(251,257)!ñú'Purchase of treasury stockñú"(4,228,162)ñú"(1,522,496)ñú"-3ñû'Proceeds from common stock private placementñû"-ñû"-ñû"6,028,626ñü"-----------ñü"-----------ñü"------------:ñý'Net cash provided by (used in) financing activitiesñý"(1,631,906)ñý"(2,824,552)ñý"5,643,505ñþ"-----------ñþ"-----------ñþ"------------7ñ'(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTSñ"(689,425)ñ"300,763ñ"(184,720)3ñ'CASH AND CASH EQUIVALENTS, BEGINNING OF YEARñ"1,023,046ñ"722,283ñ"907,003ñ"-----------ñ"-----------ñ"-------------ñ'CASH AND CASH EQUIVALENTS, END OF YEARñ"$ 333,621ñ"$ 1,023,046ñ"$ 722,283ñ"===========ñ"===========ñ"============ ñ'SUPPLEMENTAL INFORMATION:,ñ 'Cash payments for the following were:ñ 'Interestñ "$ 526,382ñ "$ 608,278ñ "$ 931,383ñ "===========ñ "===========ñ "============ñ 'Income taxesñ "$ 2,690,443ñ "$ 2,699,651ñ "$ 1,502,643ñ "===========ñ "===========ñ "============6ñ'See notes to consolidated financial statements.