CONSOLIDATION OF VARIABLE INTEREST ENTITIES

9 Months Ended

Jul. 02, 2011

Variable Interest Entity, Similar Entity Aggregation, Description

2. CONSOLIDATION OF VARIABLE INTEREST ENTITIES

Upon adoption of the new accounting guidance for VIEs on October 3, 2010, the Company determined that it is the primary beneficiary of two VIEs which had not been previously consolidated, Ark Hollywood/Tampa Investment, LLC and Ark Connecticut Investment, LLC as the new guidance requires that a single party (including its related parties and de facto agents) be able to exercise their rights to remove the decision maker in order for the “kick-out” rights to be considered substantive. Previously, a simple majority of owners that could exercise kick-out rights was considered a substantive right. This change resulted in the need for consolidation.

The assets and liabilities associated with the Company’s consolidation of VIEs are as follows:

	July 2, 2011
	(in thousands)
Cash and cash equivalents	$	424
Accounts receivable		1,738
Inventories		22
Prepaid income taxes		124
Due from Ark Restaurants Corp. and affiliates (1)		284
Other current assets		11
Fixed assets, net		3,749
Other long-term assets		141
Total assets	$	6,493
Accounts payable	$	198
Accrued expenses and other current liabilities		2,141
Total liabilities		2,339
Equity of variable interest entities		4,154
Total liabilities and equity	$	6,493

(1) Amounts Due from Ark Restaurants Corp. and affiliates are eliminated upon consolidation.

The liabilities recognized as a result of consolidating these VIEs do not represent additional claims on our general assets; rather, they represent claims against the specific assets of the consolidated VIEs. Conversely, assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against our general assets.

For the 13-week and 39-week periods ended July 2, 2011, aggregate revenue and operating expenses relating to these VIEs were $5,895,000 and $16,595,000, and $4,665,000 and $13,188,000, respectively, and are included in the accompanying Consolidated Condensed Statements of Operations.