CONSOLIDATION OF VARIABLE INTEREST ENTITIES

12 Months Ended

Sep. 28, 2013

Variable Interest Entity, Similar Entity Aggregation, Description [Abstract]

Variable Interest Entity, Similar Entity Aggregation, Description

2. CONSOLIDATION OF VARIABLE INTEREST ENTITIES

Upon adoption of the accounting guidance for VIEs on October 3, 2010, the Company determined that it was the primary beneficiary of two VIEs which had not been previously consolidated, Ark Hollywood/Tampa Investment, LLC and Ark Connecticut Investment, LLC, as the 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.

During the year ended September 28, 2013, the Company purchased an additional 14.39% of the membership interests of Ark Hollywood/Tampa Investment, LLC, directly from the individuals that held such interests, for an aggregate consideration of $2,964,512. In connection with this transaction, the Company recorded a reduction to additional paid-in capital of $2,684,896 representing the excess of the amount paid over the carrying value ($279,616) of the non-controlling interests acquired as the acquisition of an additional interest in a less than wholly-owned subsidiary where control is maintained is treated as an equity transaction. In addition, the Company also recorded an increase to additional paid-in capital in the amount of $1,079,591 representing the related deferred tax benefit of the transaction.

As a result of the above, Ark Hollywood/Tampa Investment, LLC is no longer considered a VIE as the Company now owns 64.39% of the voting membership interests. However, the Company continues to consolidate this entity as a result of its majority ownership. Accordingly, the following disclosures associated with the Company’s VIEs do not include Ark Hollywood/Tampa Investment, LLC as of September 28, 2013:

	September 28, 2013		September 29, 2012
	(in thousands)
Cash and cash equivalents	$	637	$	714
Accounts receivable		317		1,776
Inventories		16		28
Prepaid income taxes		163		235
Prepaid expenses and other current assets		13		13
Due from Ark Restaurants Corp. and affiliates (1)		157		288
Fixed assets, net		89		3,189
Other long-term assets		71		71
Total assets	$	1,463	$	6,314
Accounts payable	$	70	$	153
Accrued expenses and other liabilities		140		1,950
Total liabilities		210		2,103
Equity of variable interest entities		1,253		4,211
Total liabilities and equity	$	1,463	$	6,314

(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 the Company’s 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 the Company’s general assets.