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parsed_sections/legal_matters/2002/CIK0000006260_anacomp_legal_matters.txt

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+LEGAL MATTERS The legality of the Class A Common Stock offered by this prospectus will be passed upon for Anacomp by Leagre Chandler & Millard LLP.

parsed_sections/legal_matters/2002/CIK0000020232_chyronhego_legal_matters.txt

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+legal matters incidental to our business. In the opinions of management, the ultimate resolution of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.
+
+Properties
+
+ The executive offices and principal office of our company and our graphics business are located in Melville, New York pursuant to a lease that expires on June 30, 2004. This facility consists of approximately 47,000 square feet and is used for manufacturing, research and development, marketing and the executive offices. We closed down sales offices in Dunwoody, GA, of 2,700 square feet, and in Cupertino, CA, of 4,000 square feet, but we remain liable pursuant to leases, which both expire on November 30, 2002.
+
+ In the United Kingdom, our executive office is located in Reading, U.K. where we own a facility of approximately 19,000 square feet. This facility is also used for research and development and marketing and sales. We occupy additional facilities in Reading U.K., used primarily for manufacturing, assembly and test, which total approximately 28,000 square feet pursuant to leases that expire from December 25, 2012 through September 29, 2020. We currently utilize 90% to 100% of the space of all of our facilities. Management believes that each facility is suitable for our existing operations and does not foresee the need for any significant expansion of our current U.K. facilities. Finally, we have a sales office in Paris, France of approximately 3,000 square feet from which we cover the French market and support adjacent territories.
+
+Management
+
+Executive Officers and Directors
+
+ Our executive officers and directors, and their ages and positions as of October 1, 2002 are as follows:
+
+ Name 
+
+Age
+
+ Position 
+
+Charles M. Diker
+
+67
+
+Director, Member of the Audit Committee, Member of the Compensation and Stock Option Committee
+
+Donald P. Greenberg
+
+68
+
+Director
+
+Roger Henderson
+
+46
+
+President and Chief Executive Officer, Director
+
+ 
+ 
+ 
+
+Christopher R. Kelly
+
+43
+
+Director
+
+Wesley W. Lang, Jr.
+
+45
+
+Chairman of the Board of Directors, Chairman of the Compensation and Stock Option Committee
+
+Eugene M. Weber
+
+51
+
+Director, Member of the Audit Committee
+
+Michael I. Wellesley-Wesley
+
+50
+
+Director, Chairman of the Executive Committee of the Board of Directors, Member of the Office of the Chairman, Member of the Compensation and Stock Option Committee 
+
+Jerry Kieliszak
+
+50
+
+Senior Vice President and Chief Financial Officer
+
+James M. Paul
+
+59
+
+Executive Vice President
+
+Graham Pitman
+
+52
+
+Senior Vice President and Managing Director of Chyron Pro-Bel
+
+ Charles M. Diker has been a director of our company since September, 1995. He was a non-managing principal with the investment management company of Weiss, Peck & Greer, L.L.C. from April 1995 through October 2001, and had previously been associated with such company since 1976. Mr. Diker has been the Chairman of the board of directors of Cantel Medical Corporation, a manufacturer of infection control equipment and distributor of diagnostic devices, since 1986. Mr. Diker is also a member of the board of directors of International Specialty Products Inc., a manufacturer of specialty chemicals. Mr. Diker was a member of the board of directors of AMF Bowling Inc., an operator of bowling centers, from April 1996 through March 2002. 
+
+ Donald P. Greenberg has been a director of our company since September, 1996. He is the Jacob Gould Schurman Professor of Computer Graphics and Founding Director, Program of Computer Graphics, at Cornell University. He has been a professor at Cornell University since 1968. He is also a member of the board of directors of Interactive Data Corporation, a provider of various financial data and proprietary information, and PCA International, an operator of portrait studios.
+
+ Roger Henderson is our President and Chief Executive Officer and has held such positions since June 1999. He has been a director of our company since February 1999. Prior to his current positions, he served as the Managing Director of Chyron Pro-Bel since April 1996. From 1987 to March 1996, he was Software Director of Pro-Bel and Managing Director of Pro-Bel Software Ltd.
+
+ Christopher R. Kelly has been a director of our company since August 1999. He has been the owner of Fortuna Investments since 1997, where he specializes in private investments and venture capital. From 1985 through 1997, he held various positions, including partner and director, at Kelly Television. During his last four years at Kelly Television, he was also Partner and Director of Kelly Broadcasting Company.
+
+ Wesley W. Lang, Jr. has been a director of our company since July 1995 and has served as Chairman of our board of directors since February 2002. He continues to serve as a Managing Director with the investment management company of Weiss, Peck & Greer, and has been associated with such company since 1985. Weiss, Peck & Greer manages, directly or indirectly, the following funds: WPG Corporate Development Associates IV, L.L.C.; WPG Enterprise Fund II, L.L.C., WPG Corporate Development Associates IV (Overseas), L.P., and Weiss, Peck & Greer Venture Associates III, L.L.C. (collectively, the "WPG Funds"). These funds are shareholders of our company. 
+
+ Eugene M. Weber has been a director of our company since July 1995. He is the Managing Partner of Weber Capital Management, L.L.C., an investment management firm that is the successor to Bluewater Capital Management, Inc., which Mr. Weber founded in 1995. From 1994 to 1995, Mr. Weber was an independent consultant to Westpool Investment Trust plc, a shareholder of our company, and from 1983 to 1994 he was with Weiss, Peck & Greer, L.L.C., becoming a partner in 1987. 
+
+ Michael I. Wellesley-Wesley is Chairman of the Executive Committee of the board of directors as of February 2002 and a Member of the Office of the Chairman. He formerly held the position of Executive Chairman of the board of directors from July 1995 through February 2002 and previously served as our Chief Executive Officer from July 1995 through June 1997. He is currently a Managing Director of WIT Soundview Ventures. From 1992 until 1995, he was a Director and Executive Vice President of DBC and from 1990 until 1992 he was a consultant to that corporation's predecessor. Mr. Wellesley-Wesley was an executive director of Stephen Rose & Partners Ltd., a London-based investment banking firm, from 1980 to 1990.
+
+Executive Officers
+
+ In addition to Mr. Henderson, our executive officers are as follows:
+
+ Jerry Kieliszak joined us in March 2002 as Senior Vice President and Chief Financial Officer. From 2000 to 2001 he served as Executive Vice President and Chief Financial Officer of CoreCommerce, a business-to-business e-commerce software developer. From 1989 to 2000, Mr. Kieliszak was Vice President and Chief Financial Officer of ABT Corporation, an international enterprise project management software development company. From 1977 to 1989 he was with Price Waterhouse where he was a Senior Audit Manager.
+
+ James M. Paul is General Manager of the Graphics Division and is a corporate Executive Vice President. Mr. Paul joined us as Senior Vice President, Human Resources in October 1997 and was promoted to General Manager, Graphics Division, in January 2001 and named a corporate Executive Vice President in mid-2001. From February 1995 through September 1997 he held the position of Senior Vice President, Human Resources with TELE-TV. From 1993 to 1995, Mr. Paul was Human Resource Director for Bell Atlantic Information and Video Services. From 1975 to 1993 he held several management positions at PRC Inc., a subsidiary of Black and Decker Corporation, including Vice President, Human Resource Policy and Programs and Vice President of Human Resources for the Commercial and International Group.
+
+ Graham Pitman is Senior Vice President, Worldwide Sales & Marketing. Mr. Pitman was appointed Senior Vice President, Worldwide Sales & Marketing in April 2001. From 1999 to 2001 he served as Senior Vice President and Managing Director of the Pro-Bel Division. He joined Pro-Bel Ltd. in 1977 as a Founding Director and, upon our acquisition of it in 1996, served as Operations Director and later General Manager of the Pro-Bel Hardware Division until 1999.
+
+Board of Directors
+
+ Our directors are elected annually to serve until the next annual meeting of shareholders or until their successors are duly elected and qualified.
+
+General
+
+ Our board of directors has created a Compensation and Stock Option Committee (the "Compensation Committee") and an Audit Committee. In addition, from time to time our board has created other sub-committees in order to address specific needs of our company. Recently, our board created an Office of the Chairman that consists of Messrs. Henderson, Lang and Wellesley-Wesley. This office is charged with enhancing shareholder value. 
+
+ The Compensation Committee is authorized to review and make recommendations to the board of directors on all matters regarding the remuneration of our executive officers, including the administration of our compensation plans. The current members of the Compensation Committee are Messrs. Diker, Lang and Wellesley-Wesley. 
+
+ The Audit Committee is responsible for making recommendations to the board of directors as to the selection of our independent auditor, maintaining communication between the board of directors and the independent auditor, reviewing the annual audit report submitted by the independent auditor and determining the nature and extent of problems, if any, presented by such audit warranting consideration by our board of directors. The current members of the Audit Committee are Messrs. Diker and Weber. Membership on the Audit Committee is restricted to directors who are independent of management and free from any relationship that, in the opinion of the board of directors, would interfere with the exercise of independent judgment as a committee member.
+
+Compensation Committee Interlocks and Insider Participation
+
+ Messrs. Diker, Lang and Wellesley-Wesley served as members of our Compensation Committee during 2001. No executive officer served as a director of another entity or as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a member of our board of directors or on our Compensation Committee. 
+
+ Mr. Wellesley-Wesley, a member of the Office of the Chairman, the Compensation Committee and Chairman of the Executive Committee of our board of directors, served as our Chief Executive Officer from July 1995 through June 1997. During 2001, Mr. Wellesley-Wesley was paid $15,000 on a monthly basis for a period of six months and an additional $26,000 in other forms of compensation for consulting and other services rendered in respect of transactions and potential transactions involving our company. Mr. Wellesley-Wesley will continue to receive the $15,000 monthly payment during fiscal 2002 for consulting and other services related to future transactions involving our company. Mr. Wellesley-Wesley may also receive a bonus upon the consummation of certain transactions constituting a sale of our company on or before December 31, 2002. The amount of the bonus varies between one-quarter of one percent (0.25%) and one-half of one percent (0.50%) of the gross sales price obtained in such transaction.
+
+Director Compensation 
+
+ Our directors who are also salaried officers or employees of our company do not receive special or additional compensation for serving on our board of directors or any of its committees. Each director who is not a salaried officer or employee of our company receives an annual fee of $5,000 (except for the Chairman who receives an annual fee of $10,000), plus $1,000 for attending each meeting of the board of directors and $500 for attending each committee meeting. In addition, each non-employee director receives options to purchase 5,000 shares of Common Stock at an exercise price equal to the market value on the last trading day of each July.
+
+Executive Compensation
+
+ The following table sets forth certain information with respect to compensation for the year ended December 31, 2001 earned by our Chief Executive Officer and our two other most highly compensated executive officers serving as such at December 31, 2001, whose compensation exceeded $100,000 for the years indicated. No other executive officer of our company earned a salary and bonus for the fiscal year ended December 31, 2001, in excess of $100,000. In this prospectus, we refer to these individuals as our named executive officers.
+
+Summary Compensation Table
+
+ 
+ 
+
+Annual Compensation(1)
+
+Long Term Compensation
+ 
+
+ 
+ 
+ 
+ 
+
+Restricted
+
+Securities
+
+All Other
+
+Name and Principal
+ 
+ 
+ 
+
+Stock
+
+Underlying
+
+Compensation
+
+Position
+
+Year
+
+Salary
+
+Bonus(2)
+
+Awards(2)
+
+Options
+
+ (3)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Roger Henderson
+
+2001
+
+$293,089
+
+$ 0
+
+$ 0
+
+150,000
+ 
+
+President, CEO and
+
+2000
+
+297,139
+
+37,500
+
+37,500
+
+90,000
+ 
+
+Director
+
+1999
+
+228,773
+
+83,000
+
+0
+
+300,000
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+James M. Paul
+
+2001
+
+192,000
+
+0
+
+0
+
+60,000
+
+12,300
+
+Executive Vice President 
+
+2000
+
+ 164,904
+
+15,050
+
+15,050
+
+45,000
+
+ 10,400
+
+and General Manager, 
+
+1999
+
+157,672
+
+32,500
+
+0
+
+30,000
+
+ 10,400
+
+Graphics Division
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Graham Pitman
+
+2001
+
+156,832
+
+0
+
+0
+
+60,000
+ 
+
+Senior Vice President,
+
+2000
+
+152,661
+
+4,875
+
+4,651
+
+35,000
+ 
+
+Worldwide Sales 
+
+1999
+
+137,819
+
+21,000
+
+0
+
+55,000
+ 
+
+& Marketing
+ 
+ 
+ 
+ 
+ 
+ 
+
+(1) Other Annual Compensation has been excluded since such amounts do not exceed the lesser of $50,000 or 10% of the total annual base salary and bonus disclosed in this table for any of the named executive officers.
+
+(2) The 2000 bonus amount was payable partly in cash and partly in restricted stock which cannot be sold for a period of one year from May 2001, when the shares were issued. Messrs. Henderson, Paul and Pitman were awarded 32,895, 13,202 and 4,079 shares, worth $37,500, $15,050 and $4,651, respectively, based on the closing price of our common stock on the OTC Bulletin Board on the date of issuance of $1.14 per share. At December 31, 2001, these shares were valued at $8,882, $3,565, and $1,101, respectively, based on the closing price of our common stock $0.27 per share on the OTC Bulletin Board.
+
+(3) All other compensation for James Paul includes company contributions under the U.S. 401(k) plan of $2,100, $2,000 and $2,000 and automobile allowance of $10,200, $8,400 and $8.400 for 2001, 2000 and 1999, respectively. 
+
+Stock Option Grants 
+
+ The following table sets forth the stock options we granted during the fiscal year ended December 31, 2001 under our 1999 Incentive Compensation Plan to each of the named executive officers.
+
+ 
+
+Option Grants in Last Fiscal Year
+ 
+ 
+
+ 
+
+Individual Grants
+ 
+ 
+
+ 
+
+Number of
+
+Percent of
+ 
+ 
+ 
+
+ 
+
+Securities
+
+Total Options
+ 
+ 
+ 
+
+ 
+
+Underlying
+
+Granted to
+
+Exercise
+ 
+
+Grant Date
+
+Present Value
+
+ 
+
+Options
+
+Employees in
+
+Price
+
+Expiration
+
+ 
+
+Granted
+
+Fiscal Year
+
+Per Share
+
+Date
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+Roger Henderson
+
+150,000
+
+8.8%
+
+$0.55
+
+7/25/11
+
+$61,500
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+James M. Paul
+
+60,000
+
+3.5%
+
+$0.55
+
+7/25/11
+
+$24,600
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+Graham Pitman
+
+60,000
+
+3.5%
+
+$0.55
+
+7/25/11
+
+$24,600
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ All options reported above were awarded under the 1999 Incentive Compensation Plan. We have not granted any stock appreciation rights. Pursuant to the terms of the Plan, the exercise price per share for all options is the closing price of the Common Stock as quoted on the OTC Bulletin Board on the date of grant. The options reported above for Roger Henderson vested as follows: 25,000 became exercisable on the 25th day of each of the months August 2001 through January 2002. The options reported above for James M. Paul and Graham Pitman became exercisable on January 25, 2002.
+
+ "Grant Date Present Value" is determined under the Black-Scholes pricing model, a widely recognized method of determining the present value of options. The factors used in this model are as follows: dividend yield = 0.0%, volatility =110.9%, risk-free rate of return = 4.25% and option terms of 4 years. The actual value, if any, an executive officer may realize will depend on the extent to which conditions as to exercisability of the option are satisfied and the excess of the stock price over the exercise price on the date the option is exercised. There is no assurance that the value realized by an executive officer will be consistent with the value estimated by the Black-Scholes model. The estimated values under the model are based on assumptions regarding interest rates, stock price volatility and future dividend yield. The model is used for valuing market traded options and is not directly applicable to valuing stock options granted under our 1999 Incentive Compensation Plan that cannot be transferred.
+
+Fiscal Year End Option Values 
+
+ Our named executive officers did not exercise any options during the fiscal year ended December 31, 2001. The following table sets forth information concerning the number of options owned by the named executive officers and the value of any in-the-money unexercised options held by the named executive officers at December 31, 2001.
+
+Aggregated Option Exercises in Last Fiscal Year
+
+and Fiscal Year-End Option Values
+
+Name
+
+Shares
+
+Acquired
+
+On
+
+Exercise
+
+Value
+
+Realized
+
+Number of
+
+Securities Underlying
+
+Unexercised Options At
+
+ Fiscal Year-End 
+
+Value of
+
+Unexercised
+
+In-the-Money Options
+
+ at Fiscal Year-End 
+
+Exercisable
+
+Unexercisable
+
+Exercisable(1)
+
+Unexercisable(1)
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Roger Henderson
+
+-
+
+-
+
+527,499
+
+122,501
+
+$0
+
+$0
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+James M. Paul
+
+-
+
+-
+
+77,499
+
+107,501
+
+$0
+
+$0
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Graham Pitman
+
+-
+
+-
+
+80,332
+
+119,668
+
+$0
+
+$0
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+(1) As of December 31, 2001, none of the unexercised options held by the named executive officers were in-the-money.
+
+ 
+
+Employment Agreements and Change-in-Control Arrangements
+
+ We have an employment agreement with Mr. Henderson, our President and Chief Executive Officer, which is in effect until June 30, 2003 and can be renewed on an annual basis thereafter. Under the agreement, Mr. Henderson is entitled to receive a base salary of $325,000, subject to adjustment based on the Consumer Price Index. In addition, Mr. Henderson is eligible to receive an annual bonus of up to 50% of his base salary based upon the achievement of performance goals determined by the Compensation Committee. If the agreement is terminated for cause, Mr. Henderson is entitled only to receive that portion of his base salary owed through date of termination. If the agreement is terminated without cause, Mr. Henderson is entitled to receive the greater of his base salary for a twelve-month period or the remainder of his employment term. In addition, all options which have not vested at the date of termination shall immediately vest. The agreement also contains certain restrictions on competition. Mr. Henderson voluntarily reduced his base salary to $280,000 per annum for the period commencing April 1, 2001 through December 31, 2002. In addition, we have entered into an agreement with Mr. Henderson whereby he may receive a bonus upon the consummation, on or before December 31, 2002, of certain transactions constituting a sale of our company. The amount of the bonus varies between one-quarter of one percent (0.25%) and one-half of one percent (0.50%) of the gross sales price obtained in such transaction. 
+
+ We have an employment agreement with Mr. Paul, Executive Vice President, which is in effect until October 30, 2003. Mr. Paul is entitled to receive an annual base salary of $215,000 and is eligible for a bonus of up to 30% of his base salary, subject to the achievement of certain annual performance criteria set by the Compensation Committee. If the agreement is terminated for cause, Mr. Paul is entitled only to receive that portion of his base salary owed through the date of termination. If the agreement is terminated without cause, Mr. Paul will be entitled to his base salary and bonus for the lesser of eighteen months or the balance of his employment term. In addition, all options granted which have not vested at the date of termination shall immediately vest. The agreement also contains certain restrictions on competition. Mr. Paul voluntarily reduced his base salary to $185,000 per annum for the period commencing April 1, 2001 and continuing through October 30, 2003. 
+
+ We have an employment agreement with Mr. Pitman, Senior Vice President and Managing Director of Chyron Pro-Bel. The agreement is indefinite until Mr. Pitman is provided written notification by our company. The required notice period is one year. Under the agreement, Mr. Pitman is entitled to receive a base salary of 100,000 British pounds sterling ($145,000 at March 1, 2002). Mr. Pitman shall be entitled to additional remuneration and bonuses as determined by the Compensation Committee. The agreement also contains restrictions on competition. 
+
+ Mr. Paul and Mr. Pitman are participants in our Executive Retention Program implemented in July 2001, and in effect through December 31, 2003. The program is intended to encourage executives to actively support the sales process in the event of a sale of our company. Under the program, each of Messrs. Paul and Pitman were granted 60,000 loyalty options in July 2001, which vested 6 months from the date of grant, and is eligible to receive a loyalty bonus equal to 3 months' base salary ($53,750 and $40,560, respectively) upon a sale of our company. Although the program contemplates payment of a prorated annual bonus, based upon the participant's bonus received in the prior year, to participants who transfer to a successor company or who are involuntarily terminated upon a sale of our company, no such bonus would be payable under the program because neither Mr. Paul nor Mr. Pitman received a bonus for 2001. The program recognizes Mr. Pitman's right to receive severance payments for a period of one year under his employment agreement. In addition, Mr. Paul is eligible to receive payment of COBRA premiums and a minimum of 9 months' severance payments under his employment contract.
+
+Pension Plans
+
+ We maintain a domestic, qualified non-contributory defined benefit pension plan (the "U.S. Pension Plan") for all of our employees. Under the U.S. Pension Plan, a participant retiring at normal retirement age receives a pension benefit equal to the sum of: (i) 25% of his or her average monthly total compensation up to the level of social security covered compensation plus 38% of such earnings in excess of social security covered earnings for years of service prior to July 1, 1998 and (ii) 32% of his or her average monthly base compensation up to the level of social security covered compensation plus 48% of such earnings in excess of social security covered earnings for years of service subsequent to July 1, 1998. A participant's average monthly compensation is his or her monthly compensation averaged during the five consecutive years during the ten-year period prior to his or her termination that produces the highest average monthly compensation.
+
+ Participants in the U.S. Pension Plan vest according to the following schedule:
+
+Employees Hired Prior to July 1, 1998
+ 
+
+Employees Hired on or After July 1, 1998
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Years of Service
+ 
+
+Amount Vested
+ 
+
+Years of Service
+ 
+
+Amount Vested
+
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Less than 2
+ 
+
+0%
+ 
+
+Less than 5
+ 
+
+0%
+
+2
+ 
+
+20%
+ 
+
+5 or more
+ 
+
+100%
+
+3
+ 
+
+40%
+ 
+ 
+ 
+ 
+
+4
+ 
+
+60%
+ 
+ 
+ 
+ 
+
+5 or more
+ 
+
+100%
+ 
+ 
+ 
+ 
+
+ As of December 31, 2001, the number of years of service for the named executive officers is as follows: Mr. Paul, 4 years, entitling him to 60% vesting.
+
+ The following table shows the aggregate annual benefits under the U.S. Pension Plan as now in effect that would be currently payable to participants retiring at age sixty-five on a single-life basis under various assumptions as to salary and years of service. Benefits under the U.S. Pension Plan are payable in the form of a monthly, lifetime annuity commencing on the later of normal retirement age or the participant's date of retirement, or, at the participant's election, in a lump sum or installment payments. The amounts shown reflect the level of social security covered compensation for a participant reaching age 65 in 2001. In addition, the participant is entitled to receive social security benefits. The Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986, as amended, limit the annual retirement benefit that may be paid out of funds accumulated under a qualified pension plan. The current maximum annual benefit payable under the U.S. Pension Plan is $130,000. This maximum is proportionately reduced for years of plan participation less than ten. Compensation in excess of $200,000 may not be taken into account in the determination of benefits under the U.S. Pension Plan.
+
+U.S. Pension Plan Table
+
+ 
+
+Highest Consecutive Five-Year Average
+
+Years of Credited Service at Retirement at Age 65
+
+Compensation During the Last Ten Years
+ 
+ 
+ 
+ 
+
+of Employment
+
+10
+
+20
+
+30
+
+35
+
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+
+$ 50,000
+
+$ 5,200
+
+$10,300
+
+$15,500
+
+$18,000
+
+ 
+
+100,000
+
+12,000
+
+24,000
+
+36,000
+
+42,000
+
+ 
+
+150,000
+
+18,900
+
+37,700
+
+56,600
+
+66,000
+
+ 
+
+160,000
+
+20,200
+
+40,500
+
+60,700
+
+70,800
+
+ 
+
+170,000
+
+21,600
+
+43,200
+
+64,800
+
+75,600
+
+ 
+
+200,000
+
+25,700
+
+51,500
+
+77,200
+
+90,000
+
+ Our U.K. subsidiary, Pro-Bel, has a non-contributory defined benefit pension plan (the "U.K. Pension Plan") covering all permanent employees of Pro-Bel who were hired prior to 1999. Under the U.K. Pension Plan, a participant retiring after working 40 years with Pro-Bel will receive 66.66% of his or her basic earnings averaged over the last 36 months of employment in addition to the U.K.'s basic and earnings related pension. Under U.K. legislation, benefits vest on a pro rata basis following completion of 2 years of membership. Spouses' pension of 50% of the members pension are payable on the death of the plan member whether in service or following retirement. As of December 31, 2001, Mr. Henderson and Mr. Pitman, participants in the U.K. Pension Plan, have 17 years and 22 years of credited service, respectively.
+
+401(k) Plan 
+
+ We adopted a 401(k) Plan exclusively for the benefit of participants and their beneficiaries. All of our U.S. employees are eligible to participate in the 401(k) Plan. Effective July 1, 1998, we amended our 401(k) Plan by increasing our matching contribution to one-fifth of up to the first 10% of the compensation contributed by a participant and changing our matching contributions from cash to our common stock and the vesting period for the matching contribution to three years. An employee may elect to contribute a percentage of his or her current compensation to the 401(k) Plan, subject to a maximum of 20% of compensation or the Internal Revenue Service annual contribution limit ($10,500 in 2001 and 2000), whichever is less. Total compensation that can be considered for contribution purposes is limited to $170,000.
+
+ We can elect to make a contribution to the 401(k) Plan on behalf of those participants who have made salary deferral contributions. During 2001, 2000 and 1999, we contributed $0.09 million, $0.06 million and $0.1 million, respectively, to the 401(k) Plan.
+
+Stock Option and Other Employee Incentive Plans 
+
+ On May 12, 1999 our shareholders adopted our 1999 Incentive Compensation Plan (the "1999 Plan"). On February 28, 2002, our board of directors unanimously adopted, subject to approval by our shareholders, an amendment to the 1999 Plan to increase the maximum number of shares available for grant thereunder by 1,000,000 shares. The amendment to the 1999 Plan was approved by our shareholders on May 23, 2002. The following general summary of our 1999 Plan is qualified in its entirety by reference to the text of the 1999 Plan, a copy of which is on file with the SEC. See "Where You Can Find More Information" for a description of the documents incorporated by reference.
+
+ The purpose of the 1999 Plan is to assist us in attracting, retaining and rewarding high-quality executives, employees, directors and other persons who provide services to us, enabling these persons to acquire or increase a proprietary interest in us and to strengthen the mutuality of interests between us and such persons, and to provide annual and long-term incentives to expend their maximum efforts in the creation of shareholder value. The 1999 Plan is administered by the Compensation Committee, consisting of two or more members of the board of directors appointed by the board. The 1999 Plan does not limit the availability of awards to any particular class or classes of eligible employees. If an award were to lapse or rights to an award otherwise were to terminate, the shares subject to the award would be available for future awards to the extent permitted by applicable federal securities laws. Awards granted under the 1999 Plan are not transferable, except in the event of the participant's death. In the event of a change in control, a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested at the time of change in control. 
+
+ The total number of shares authorized for issuance in connection with awards under the 1999 Plan is 2,500,000 plus the number of shares remaining available under our 1995 Long-Term Incentive Plan (the "1995 Plan") immediately prior to the date on which our shareholders approved adoption of the 1999 Plan, plus the number of shares of our common stock subject to awards under the 1995 Plan which become available in accordance with the 1999 Plan, for an aggregate of 5,500,000 shares authorized for issuance under the 1999 Plan. As of October 1, 2002, 375,614 options granted under the 1999 Plan had been exercised and 3,875,610 options granted under the 1999 Plan were outstanding, leaving 1,248,776 shares remaining available for future option grants. 
+
+ Awards to Eligible Employees under the 1999 Plan are made in the form of stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs") and annual incentive and performance awards. A non-employee director will automatically be granted options at the close of business on the last trading day of each July. The Compensation Committee, in its sole discretion, designates whom is eligible to receive awards, determines the form of each award, determines the number of shares of stock subject to each award, establishes the exercise price of each award and such other terms and conditions applicable to the award as the Compensation Committee deems appropriate. 
+
+ Stock option awards can be either incentive or non-incentive. In either case, the exercise price of the option would not be less than the fair market value of the underlying shares as of the date the award is granted. Options would become exercisable at such times as may be established by the Compensation Committee when granting the award. No stock option could be exercised more than ten years after the date the option is granted. 
+
+ A SAR allows the holder, upon exercise, to receive the excess of the fair market value of one share of our common stock on the date of exercise over the grant price of the SAR. The Compensation Committee determines the circumstances under which a SAR may be exercised, the month of exercise and method of settlement. SARs may be awarded independently or in tandem with other awards. 
+
+ Restricted stock awards are awards of shares subject to such restrictions as to transferability and risk of forfeiture as imposed by the Compensation Committee, which restrictions may lapse separately under such circumstances such as achievement of performance goals and/or future service requirements. Except to the extent restricted under the terms of the 1999 Plan, any employee granted restricted stock shall have all the rights of a shareholder including the right to vote and receive dividends. 
+
+ The Compensation Committee is authorized to grant RSUs to participants which are rights to receive stock, cash, or a combination thereof at the end of a specified deferral period. The Compensation Committee is also authorized to grant stock as a bonus or to grant stock in lieu of obligations to pay cash under the 1999 Plan or under other compensatory arrangements. 
+
+ Our board of directors may amend or terminate the 1999 Plan at any time without the consent of shareholders, except that any amendment or alteration to the 1999 Plan shall be subject to the approval of our shareholders not later than the annual meeting next following such board action if shareholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the common stock may then be listed or quoted, provided that, without the consent of an affected participant, no such board action may materially and adversely affect the rights of such participant under any previously granted and outstanding award.

parsed_sections/legal_matters/2002/CIK0000021239_coastal_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS Murtha Cullina LLP, Hartford, Connecticut, has passed upon legal matters relating to U. S. law in connection with this offering. Mr. Timothy L. Largay, a director and officer of the Company, is a partner of Murtha Cullina LLP. Mr. Largay owns shares of our common stock, has options to purchase shares of our common stock (See Security Ownership of Management) and Murtha Cullina has a contingency fee in the Florida Litigation (See Legal Proceedings). All matters relating to Bermuda law affecting Coastal Caribbean and its common stock have been passed upon by the firm of Conyers Dill & Pearman, Hamilton, Bermuda, of which firm Mr. Collis, a director and Secretary of Coastal Caribbean, is a partner. Mr. Dill, a director, is a consultant to the firm of Conyers Dill & Pearman. Both Messrs. Dill and Collis own shares of our common stock and have options to purchase shares of our common stock (See Security Ownership of Management). The firm of Angerer & Angerer, Tallahassee, Florida, has passed upon all matters relating to litigation in which Coastal Petroleum has been involved until December 31, 2000. Mr. Angerer has a contingency fee in the Florida Litigation (See Legal Proceedings). The firm of Gaylord Merlin Ludovici Diaz & Bain, Tampa, Florida, has passed upon all matters relating to litigation filed in Florida Circuit Court pertaining to the taking case in which Coastal Petroleum has been involved since January 1, 2001. Gaylord Merlin Ludovici Diaz & Bain has a contingency fee in the Florida Litigation (See Legal Proceedings). Murtha Cullina LLP may rely, insofar as Bermuda law is concerned, on the opinion of Bermuda counsel, and insofar as litigation is involved, on the opinions of Angerer & Angerer and Gaylord Merlin Ludovici Diaz & Bain.

parsed_sections/legal_matters/2002/CIK0000029806_constar_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the securities offered hereby will be passed upon for us and for Crown by Dechert, Philadelphia, Pennsylvania and for the underwriters by Cleary, Gottlieb, Steen & Hamilton, New York, New York.

parsed_sections/legal_matters/2002/CIK0000353827_pharmaceut_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS Stroock & Stroock & Lavan LLP, New York, New York, our counsel, will issue an opinion with respect to the validity of the shares of common stock offered in this prospectus.

parsed_sections/legal_matters/2002/CIK0000704328_somanetics_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the issuance of the common shares offered by this Prospectus will be passed upon for Somanetics by Honigman Miller Schwartz and Cohn LLP, Detroit, Michigan. Certain legal matters will be passed upon for the Placement Agent by Piper Marbury Rudnick & Wolfe LLP, New York, New York.

parsed_sections/legal_matters/2002/CIK0000797313_chell_legal_matters.txt

@@ -0,0 +1 @@
+Legal matters Certain legal matters with respect to the validity of the shares of common stock offered hereby are being passed upon for us by Mintz & Fraade, P.C., 488 Madison Avenue, New York, New York 10022.

parsed_sections/legal_matters/2002/CIK0000880285_enbridge_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the shares and the i-units offered by this prospectus will be passed upon for us by Vinson & Elkins L.L.P., Houston, Texas. Various legal matters relating to the offering will be passed upon for the underwriters by Andrews & Kurth L.L.P., Houston, Texas.

parsed_sections/legal_matters/2002/CIK0000886239_graphic_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the issuance of the shares of common stock offered by this prospectus will be passed upon for us by Debevoise & Plimpton, New York, New York, and for the underwriters by Cravath, Swaine & Moore, New York, New York. Franci J. Blassberg, Esq., a member of Debevoise & Plimpton, is married to Joseph L. Rice, III, who is a shareholder of the general partner of the general partner of Clayton, Dubilier & Rice Fund V Limited Partnership.

parsed_sections/legal_matters/2002/CIK0000890924_data-race_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the shares of common stock offered hereby will be passed upon for us by Feldman Weinstein LLP, New York, New York.

parsed_sections/legal_matters/2002/CIK0000891456_plains_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS Akin Gump Strauss Hauer & Feld LLP will pass on certain legal matters with respect to the validity of the common stock offered hereby. Certain legal matters in connection with this offering will be passed upon for the underwriters by Simpson Thacher & Bartlett, New York, New York.

parsed_sections/legal_matters/2002/CIK0000891533_arg_legal_matters.txt

@@ -0,0 +1,5087 @@
+LEGAL MATTERS 
+ 
+
+ The validity of the Notes and certain legal matters in connection with this offering will be passed upon for the Company by Milbank, Tweed, Hadley & McCloy
+LLP, Los Angeles, California. 
+
+ 
+ 
+
+EXPERTS 
+ 
+
+ The financial statements included in this Prospectus and elsewhere in the Registration Statement to the extent and for the periods indicated in their report have
+been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts
+in accounting in giving said report. 
+
+65
+
+ 
+
+ 
+ 
+
+INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 
+ 
+
+ 
+
+ 
+Page
+
+Report of Independent Public Accountants
+ 
+F-2
+
+Consolidated Balance Sheets as of December 27, 1999, December 25, 2000, and September 24, 2001
+
+ 
+
+F-3
+
+Consolidated Statements of Operations for the Years Ended December 28, 1998, December 27, 1999, and December 25, 2000, and the Thirty-nine Weeks Ended September 25, 2000 and September 24, 2001
+
+ 
+
+F-4
+
+Consolidated Statements of Common Stockholders' Equity (Deficit) for the Years Ended December 28, 1998, December 27, 1999 and December 25, 2000
+
+ 
+
+F-5
+
+Consolidated Statements of Cash Flows for the Years Ended December 28, 1998, December 27, 1999, and December 25, 2000, and the Thirty-nine Weeks Ended September 25, 2000 and September 24, 2001
+
+ 
+
+F-6
+
+Notes to Consolidated Financial Statements
+
+ 
+
+F-7
+
+F-1
+
+ 
+
+ 
+ 
+
+REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 
+ 
+
+To
+the Board of Directors of
+
+American Restaurant Group, Inc.: 
+
+ We
+have audited the accompanying consolidated balance sheets of AMERICAN RESTAURANT GROUP, INC. (a Delaware corporation) AND SUBSIDIARIES as of December 27, 1999 and
+December 25, 2000, and the related consolidated statements of operations, common stockholders' equity (deficit), and cash flows for the years ended December 28, 1998, December 27,
+1999, and December 25, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on
+our audits. 
+
+ We
+conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable
+assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
+statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
+that our audits provide a reasonable basis for our opinion. 
+
+ In
+our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Restaurant Group, Inc. and subsidiaries as
+of December 27, 1999 and December 25, 2000, and the results of their operations and their cash flows for the years ended December 28, 1998, December 27, 1999, and
+December 25, 2000, in conformity with accounting principles generally accepted in the United States. 
+
+/s/
+ARTHUR ANDERSEN LLP 
+
+San
+Francisco, California
+
+March 2, 2001 
+
+F-2
+
+ 
+
+ 
+ 
+
+AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES
+ CONSOLIDATED BALANCE SHEETS
+ DECEMBER 27, 1999, DECEMBER 25, 2000 AND SEPTEMBER 24, 2001
+ (dollars in thousands) 
+ 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+September 24,
+
+2001
+ 
+
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+(unaudited)
+ 
+
+ 
+
+ASSETS
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+CURRENT ASSETS:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Cash
+ 
+$
+8,316
+ 
+$
+8,532
+ 
+$
+3,850
+ 
+
+ 
+Accounts receivable
+ 
+ 
+2,655
+ 
+ 
+2,938
+ 
+ 
+3,690
+ 
+
+ 
+Inventories
+ 
+ 
+2,755
+ 
+ 
+2,853
+ 
+ 
+2,916
+ 
+
+ 
+Prepaid expenses
+ 
+ 
+2,873
+ 
+ 
+2,803
+ 
+ 
+4,521
+ 
+
+ 
+ 
+Net current assets of discontinued operations
+ 
+ 
+6,068
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total current assets
+ 
+ 
+22,667
+ 
+ 
+17,126
+ 
+ 
+14,977
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+PROPERTY AND EQUIPMENT:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Land and land improvements
+ 
+ 
+2,629
+ 
+ 
+2,629
+ 
+ 
+2,598
+ 
+
+ 
+Buildings and leasehold improvements
+ 
+ 
+65,418
+ 
+ 
+67,631
+ 
+ 
+69,409
+ 
+
+ 
+Fixtures and equipment
+ 
+ 
+48,977
+ 
+ 
+48,629
+ 
+ 
+48,953
+ 
+
+ 
+Property held under capital leases
+ 
+ 
+7,480
+ 
+ 
+7,480
+ 
+ 
+7,293
+ 
+
+ 
+Construction in progress
+ 
+ 
+521
+ 
+ 
+2,816
+ 
+ 
+1,345
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+125,025
+ 
+ 
+129,185
+ 
+ 
+129,598
+ 
+
+ 
+Less Accumulated depreciation
+ 
+ 
+73,557
+ 
+ 
+75,815
+ 
+ 
+78,851
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+51,468
+ 
+ 
+53,370
+ 
+ 
+50,747
+ 
+
+ 
+ 
+Net property and equipment of discontinued operations
+ 
+ 
+36,032
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Net Property and equipment
+ 
+ 
+87,500
+ 
+ 
+53,370
+ 
+ 
+50,747
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+OTHER ASSETS:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Intangible assets
+ 
+ 
+7,668
+ 
+ 
+7,445
+ 
+ 
+7,445
+ 
+
+ 
+Deferred debt costs
+ 
+ 
+11,061
+ 
+ 
+9,970
+ 
+ 
+9,970
+ 
+
+ 
+Leasehold interests
+ 
+ 
+6,577
+ 
+ 
+6,577
+ 
+ 
+6,577
+ 
+
+ 
+Liquor licenses and other
+ 
+ 
+4,758
+ 
+ 
+4,156
+ 
+ 
+4,136
+ 
+
+ 
+Cost in excess of net assets acquired
+ 
+ 
+7,537
+ 
+ 
+7,536
+ 
+ 
+7,536
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+37,601
+ 
+ 
+35,684
+ 
+ 
+35,664
+ 
+
+ 
+Less Accumulated amortization
+ 
+ 
+14,083
+ 
+ 
+16,605
+ 
+ 
+18,603
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+Net other assets from discontinued operations
+ 
+ 
+9,044
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Net other assets
+ 
+ 
+32,562
+ 
+ 
+19,079
+ 
+ 
+17,061
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total assets
+ 
+$
+142,729
+ 
+$
+89,575
+ 
+$
+82,785
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+LIABILITIES AND COMMON STOCKHOLDERS' (DEFICIT)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+CURRENT LIABILITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Accounts payable
+ 
+$
+13,627
+ 
+$
+15,193
+ 
+$
+13,615
+ 
+
+ 
+Accrued liabilities
+ 
+ 
+9,486
+ 
+ 
+11,521
+ 
+ 
+6,320
+ 
+
+ 
+Accrued insurance
+ 
+ 
+2,509
+ 
+ 
+2,373
+ 
+ 
+2,695
+ 
+
+ 
+Accrued interest
+ 
+ 
+7,010
+ 
+ 
+6,251
+ 
+ 
+2,116
+ 
+
+ 
+Accrued payroll costs
+ 
+ 
+4,148
+ 
+ 
+7,069
+ 
+ 
+4,115
+ 
+
+ 
+Current portion of obligations under capital leases
+ 
+ 
+638
+ 
+ 
+713
+ 
+ 
+776
+ 
+
+ 
+Current portion of long-term debt
+ 
+ 
+477
+ 
+ 
+432
+ 
+ 
+4,416
+ 
+
+ 
+ 
+Current liabilities of discontinued operations
+ 
+ 
+22,586
+ 
+ 
+2,945
+ 
+ 
+1,059
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total current liabilities
+ 
+ 
+60,481
+ 
+ 
+46,497
+ 
+ 
+35,112
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+LONG-TERM LIABILITIES, net of current portion:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Obligations under capital leases
+ 
+ 
+3,300
+ 
+ 
+2,588
+ 
+ 
+2,005
+ 
+
+ 
+Long-term debt
+ 
+ 
+160,297
+ 
+ 
+144,066
+ 
+ 
+143,787
+ 
+
+ 
+ 
+Long-term debt from discontinued operations
+ 
+ 
+2,299
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total long-term liabilities
+ 
+ 
+165,896
+ 
+ 
+146,654
+ 
+ 
+145,792
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+DEFERRED GAIN
+ 
+ 
+4,395
+ 
+ 
+4,192
+ 
+ 
+4,037
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+COMMITMENTS AND CONTINGENCIES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+CUMULATIVE PREFERRED STOCK, MANDATORILY REDEEMABLE
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Senior pay-in-kind exchangeable preferred stock, $0.01 par value; 160,000 shares authorized; 41,584 shares accrued and outstanding at December 27, 1999, 50,953 shares accrued and outstanding at December 25, 2000,
+and 56,792 shares accrued and outstanding at September 24, 2001
+ 
+ 
+41,914
+ 
+ 
+49,891
+ 
+ 
+56,029
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+COMMON STOCKHOLDERS' (DEFICIT):
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Common stock, $0.01 par value; 1,000,000 shares authorized; 128,081 shares issued and outstanding at December 27, 1999, December 25, 2000, and September 24, 2001
+ 
+ 
+1
+ 
+ 
+1
+ 
+ 
+1
+ 
+
+ 
+Paid-in capital
+ 
+ 
+50,552
+ 
+ 
+15,788
+ 
+ 
+9,469
+ 
+
+ 
+Accumulated (deficit)
+ 
+ 
+(180,510
+)
+ 
+(173,448
+)
+ 
+(167,655
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total common stockholders' (deficit)
+ 
+ 
+(129,957
+)
+ 
+(157,659
+)
+ 
+(158,185
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total liabilities and common stockholders' (deficit)
+ 
+$
+142,729
+ 
+$
+89,575
+ 
+$
+82,785
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+The accompanying notes are an integral part of these consolidated statements. 
+
+F-3
+
+ 
+
+ 
+ AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES 
+ 
+ CONSOLIDATED STATEMENTS OF OPERATIONS
+ FOR THE YEARS ENDED DECEMBER 28, 1998, DECEMBER 27, 1999,
+ DECEMBER 25, 2000,
+AND THE THIRTY-NINE
+ WEEKS ENDED SEPTEMBER 25, 2000 AND SEPTEMBER 24, 2001
+ (dollars in thousands) 
+
+ 
+
+ 
+Year ended
+ 
+Nine Months Ended
+
+ 
+
+ 
+December 28,
+
+1998
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+September 25,
+
+2000
+ 
+September 24,
+
+2001
+
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+(unaudited)
+ 
+
+REVENUES
+ 
+$
+265,536
+ 
+$
+263,561
+ 
+$
+299,822
+ 
+$
+226,567
+ 
+$
+226,808
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+RESTAURANT COSTS:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Food and beverage
+ 
+ 
+89,521
+ 
+ 
+88,110
+ 
+ 
+103,339
+ 
+ 
+77,675
+ 
+ 
+75,602
+
+ 
+Payroll
+ 
+ 
+74,912
+ 
+ 
+75,114
+ 
+ 
+82,818
+ 
+ 
+60,715
+ 
+ 
+64,923
+
+ 
+Direct operating
+ 
+ 
+63,260
+ 
+ 
+63,033
+ 
+ 
+69,721
+ 
+ 
+52,852
+ 
+ 
+53,830
+
+ 
+Depreciation and amortization
+ 
+ 
+10,115
+ 
+ 
+9,396
+ 
+ 
+9,554
+ 
+ 
+7,352
+ 
+ 
+6,478
+
+GENERAL AND ADMINISTRATIVE EXPENSES
+ 
+ 
+11,780
+ 
+ 
+11,975
+ 
+ 
+11,108
+ 
+ 
+7,660
+ 
+ 
+7,198
+
+NON-CASH CHARGE FOR IMPAIRMENT OF LONG-LIVED ASSETS
+ 
+ 
+149
+ 
+ 
+459
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Operating profit from continuing operations
+ 
+ 
+15,799
+ 
+ 
+15,474
+ 
+ 
+23,282
+ 
+ 
+20,313
+ 
+ 
+18,777
+
+INTEREST EXPENSE, net
+ 
+ 
+20,269
+ 
+ 
+19,450
+ 
+ 
+19,036
+ 
+ 
+14,322
+ 
+ 
+12,801
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Net income /(loss) before provision for income taxes
+ 
+ 
+(4,470
+)
+ 
+(3,976
+)
+ 
+4,246
+ 
+ 
+5,991
+ 
+ 
+5,976
+
+PROVISION FOR INCOME TAXES
+ 
+ 
+67
+ 
+ 
+70
+ 
+ 
+185
+ 
+ 
+211
+ 
+ 
+183
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Income/(Loss) from continuing operations
+ 
+ 
+(4,537
+)
+ 
+(4,046
+)
+ 
+4,061
+ 
+ 
+5,780
+ 
+ 
+5,793
+
+ 
+Income (Loss) from discontinued operations
+ 
+ 
+(4,879
+)
+ 
+(1,622
+)
+ 
+3,474
+ 
+ 
+3,474
+ 
+ 
+ 
+
+EXTRAORDINARY GAIN/(LOSS) ON EXTINGUISHMENT OF DEBT FROM CONTINUING OPERATIONS
+ 
+ 
+9,559
+ 
+ 
+ 
+ 
+ 
+(473
+)
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Net Income/(Loss)
+ 
+$
+143
+ 
+$
+(5,668
+)
+$
+7,062
+ 
+$
+9,254
+ 
+$
+5,793
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+The
+accompanying notes are an integral part of these consolidated statements. 
+
+F-4
+
+ 
+
+ 
+ AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES 
+ 
+ CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (DEFICIT)
+ FOR THE YEARS ENDED DECEMBER 28, 1998,
+ DECEMBER 27,
+ 1999 AND DECEMBER 25, 2000
+ (dollars in thousands) 
+ 
+
+ 
+
+ 
+Common
+
+Stock
+ 
+Paid-in
+
+Capital
+ 
+Accumulated
+
+Debt
+ 
+Total
+ 
+
+BALANCE, December 29, 1997
+ 
+$
+1
+ 
+$
+63,246
+ 
+$
+(174,985
+)
+$
+(111,738
+)
+
+ 
+Net Income
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+143
+ 
+ 
+143
+ 
+
+ 
+ 
+Amortization of cost related to the issuance of preferred stock
+ 
+ 
+ 
+ 
+ 
+(332
+)
+ 
+ 
+ 
+ 
+(332
+)
+
+ 
+ 
+Dividends payable, preferred stock
+ 
+ 
+ 
+ 
+ 
+(3,648
+)
+ 
+ 
+ 
+ 
+(3,648
+)
+
+ 
+ 
+Non-cash distribution to parent
+ 
+ 
+ 
+ 
+ 
+(3,600
+)
+ 
+ 
+ 
+ 
+(3,600
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+BALANCE, December 28, 1998
+ 
+$
+1
+ 
+$
+55,666
+ 
+$
+(174,842
+)
+$
+(119,175
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Net (Loss)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+(5,668
+)
+ 
+(5,668
+)
+
+ 
+ 
+Amortization of cost related to the issuance of preferred stock
+ 
+ 
+ 
+ 
+ 
+(399
+)
+ 
+ 
+ 
+ 
+(399
+)
+
+ 
+ 
+Dividends payable, preferred stock
+ 
+ 
+ 
+ 
+ 
+(4,715
+)
+ 
+ 
+ 
+ 
+(4,715
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+BALANCE, December 27, 1999
+ 
+$
+1
+ 
+$
+50,552
+ 
+$
+(180,510
+)
+$
+(129,957
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Net Income
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+7,062
+ 
+ 
+7,062
+ 
+
+ 
+Net book value of assets and liabilities transferred in conjunction with Stock Sale
+ 
+ 
+ 
+ 
+ 
+(26,788
+)
+ 
+ 
+ 
+ 
+(26,788
+)
+
+ 
+Amortization of cost related to the issuance of preferred stock
+ 
+ 
+ 
+ 
+ 
+(399
+)
+ 
+ 
+ 
+ 
+(399
+)
+
+ 
+Dividends payable, preferred stock
+ 
+ 
+ 
+ 
+ 
+(7,577
+)
+ 
+ 
+ 
+ 
+(7,577
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+BALANCE, December 25, 2000
+ 
+$
+1
+ 
+$
+15,788
+ 
+$
+(173,448
+)
+$
+(157,659
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+The
+accompanying notes are an integral part of these consolidated statements. 
+
+F-5
+
+ 
+
+ 
+ 
+
+AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES
+ CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
+ DECEMBER 28, 1998, DECEMBER 27, 1999, DECEMBER 25, 2000,
+ AND THE THIRTY-NINE WEEKS ENDED
+SEPTEMBER 25, 2000 AND SEPTEMBER 24, 2001
+ (dollars in thousands) 
+ 
+
+ 
+
+ 
+Year Ended
+ 
+Nine Months Ended
+ 
+
+ 
+
+ 
+December 28,
+
+1998
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+September 25,
+
+2000
+ 
+September 24,
+
+2001
+ 
+
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+(unaudited)
+ 
+
+ 
+
+CASH FLOWS FROM OPERATING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Cash received from customers
+ 
+$
+264,195
+ 
+$
+263,562
+ 
+$
+299,539
+ 
+$
+226,054
+ 
+$
+226,056
+ 
+
+ 
+Cash paid to suppliers and employees
+ 
+ 
+(271,512
+)
+ 
+(229,650
+)
+ 
+(260,096
+)
+ 
+(204,032
+)
+ 
+(212,900
+)
+
+ 
+Interest paid, net
+ 
+ 
+(20,729
+)
+ 
+(19,473
+)
+ 
+(19,823
+)
+ 
+(19,020
+)
+ 
+(16,936
+)
+
+ 
+Income taxes, net
+ 
+ 
+(67
+)
+ 
+(71
+)
+ 
+(312
+)
+ 
+(211
+)
+ 
+(183
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+Net cash provided by/(used in) continuing operating activities
+ 
+ 
+(28,113
+)
+ 
+14,368
+ 
+ 
+19,308
+ 
+ 
+2,791
+ 
+ 
+(3,963
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH FLOWS FROM INVESTING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Capital expenditures
+ 
+ 
+(7,896
+)
+ 
+(6,248
+)
+ 
+(7,872
+)
+ 
+(6,438
+)
+ 
+(1,876
+)
+
+ 
+Net (increase) decrease in other assets
+ 
+ 
+3,734
+ 
+ 
+(2,619
+)
+ 
+(1,221
+)
+ 
+(606
+)
+ 
+14
+ 
+
+ 
+Proceeds(Loss) from disposition of assets
+ 
+ 
+9
+ 
+ 
+471
+ 
+ 
+12
+ 
+ 
+(12
+)
+ 
+25
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+Net cash (used in) investing activities
+ 
+ 
+(4,153
+)
+ 
+(8,396
+)
+ 
+(9,081
+)
+ 
+(7,056
+)
+ 
+(1,837
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH FLOWS FROM FINANCING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Proceeds received from Stock Sale
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+17,000
+ 
+ 
+17,000
+ 
+ 
+ 
+ 
+
+ 
+Payments on indebtedness
+ 
+ 
+(163,116
+)
+ 
+(15,376
+)
+ 
+(16,275
+)
+ 
+(264
+)
+ 
+ 
+ 
+
+ 
+Borrowings on indebtedness
+ 
+ 
+163,226
+ 
+ 
+16,229
+ 
+ 
+ 
+ 
+ 
+119
+ 
+ 
+3,705
+ 
+
+ 
+Net increase in deferred debt costs
+ 
+ 
+(10,818
+)
+ 
+(243
+)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Cost included in extraordinary gain on extinguishment of debt
+ 
+ 
+(1,686
+)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Issuance of cumulative preferred stock
+ 
+ 
+35,000
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Cost related to issuance of cumulative preferred stock
+ 
+ 
+(2,179
+)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Payment on insurance related financing
+ 
+ 
+(7,450
+)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Payments on capital lease obligations
+ 
+ 
+(682
+)
+ 
+(637
+)
+ 
+(637
+)
+ 
+(472
+)
+ 
+(520
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+Net cash provided by/(used in) financing activities
+ 
+ 
+12,295
+ 
+ 
+(27
+)
+ 
+88
+ 
+ 
+16,383
+ 
+ 
+3,185
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+NET INCREASE/(DECREASE) IN CASH FROM CONTINUING OPERATIONS
+ 
+ 
+(19,971
+)
+ 
+5,945
+ 
+ 
+10,315
+ 
+ 
+12,118
+ 
+ 
+(2,615
+)
+
+NET INCREASE/(DECREASE) IN CASH FROM DISCONTINUED OPERATIONS
+ 
+ 
+23,163
+ 
+ 
+(5,617
+)
+ 
+(10,099
+)
+ 
+(6,167
+)
+ 
+(2,067
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH, at beginning of period
+ 
+ 
+4,796
+ 
+ 
+7,988
+ 
+ 
+8,316
+ 
+ 
+8,316
+ 
+ 
+8,532
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH, at end of period
+ 
+$
+7,988
+ 
+$
+8,316
+ 
+$
+8,532
+ 
+$
+14,267
+ 
+$
+3,850
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Net income (loss)from continuing operations after extraordinary items
+ 
+$
+5,022
+ 
+$
+(4,046
+)
+$
+3,588
+ 
+$
+5,780
+ 
+$
+5,793
+ 
+
+ 
+Adjustments to reconcile net income (loss) to net cash provided by operating activities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+Extraordinary (gain) loss on extinguishment of debt
+ 
+ 
+(9,559
+)
+ 
+ 
+ 
+ 
+473
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Depreciation and amortization
+ 
+ 
+10,115
+ 
+ 
+9,396
+ 
+ 
+9,554
+ 
+ 
+7,352
+ 
+ 
+6,478
+ 
+
+ 
+ 
+ 
+Loss on disposition of assets
+ 
+ 
+1,529
+ 
+ 
+3,317
+ 
+ 
+581
+ 
+ 
+581
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Impairment of assets
+ 
+ 
+149
+ 
+ 
+459
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Amortization of deferred gain
+ 
+ 
+(599
+)
+ 
+(289
+)
+ 
+(203
+)
+ 
+(152
+)
+ 
+(155
+)
+
+ 
+ 
+ 
+Accretion on indebtedness
+ 
+ 
+21
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+(Increase) decrease in current assets:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Accounts receivable, net
+ 
+ 
+1,341
+ 
+ 
+1
+ 
+ 
+(283
+)
+ 
+(173
+)
+ 
+(752
+)
+
+ 
+ 
+ 
+Inventories
+ 
+ 
+25
+ 
+ 
+89
+ 
+ 
+(98
+)
+ 
+(310
+)
+ 
+(63
+)
+
+ 
+ 
+ 
+Prepaid expenses
+ 
+ 
+102
+ 
+ 
+(834
+)
+ 
+70
+ 
+ 
+1,244
+ 
+ 
+(1,718
+)
+
+ 
+ 
+Increase (decrease) in current liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Accounts payable
+ 
+ 
+(10,764
+)
+ 
+2,193
+ 
+ 
+1,566
+ 
+ 
+(3,697
+)
+ 
+(1,578
+)
+
+ 
+ 
+ 
+Accrued liabilities
+ 
+ 
+(16,929
+)
+ 
+2,479
+ 
+ 
+2,034
+ 
+ 
+(2,783
+)
+ 
+(5,201
+)
+
+ 
+ 
+ 
+Accrued insurance
+ 
+ 
+(1,528
+)
+ 
+(513
+)
+ 
+(136
+)
+ 
+323
+ 
+ 
+322
+ 
+
+ 
+ 
+ 
+Accrued interest
+ 
+ 
+(481
+)
+ 
+(23
+)
+ 
+(759
+)
+ 
+(4,698
+)
+ 
+(4,135
+)
+
+ 
+ 
+ 
+Accrued payroll costs
+ 
+ 
+(6,557
+)
+ 
+2,139
+ 
+ 
+2,921
+ 
+ 
+(676
+)
+ 
+(2,954
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+Net cash provided by/(used in) continuing operating activities
+ 
+$
+(28,113
+)
+$
+14,368
+ 
+$
+19,308
+ 
+$
+2,791
+ 
+$
+(3,963
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+The accompanying notes are an integral part of these consolidated statements. 
+
+F-6
+
+ 
+
+ 
+ AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES 
+ 
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
+ 
+ DECEMBER 28, 1998, DECEMBER 27, 1999, AND DECEMBER 25, 2000
+
+ 
+
+1. Background and Summary of Significant Accounting Policies 
+
+a.Company 
+
+ American Restaurant Group, Inc. (the "Company"), a Delaware corporation, through its subsidiaries, operates middle-price full-service
+restaurants, primarily in California, the Pacific Northwest, and Arizona. The Company is a subsidiary of American Restaurant Group Holdings, Inc. ("Holdings"), also a Delaware corporation. At
+year-end 1998, 1999, and 2000, the Company and its subsidiaries, collectively referred to herein as the Company, operated 101, 102, and 105 restaurants, respectively, in its continuing
+segment. 
+
+b.Operations 
+
+ The Company's operations are affected by local and regional economic conditions, including competition in the restaurant industry. Prior to the year ended
+December 25, 2000, the Company experienced recurring operating losses (before extraordinary gain (loss) on extinguishment of debt) after debt service. A recapitalization plan was consummated
+during 1998 (see Note 3, "Long-Term Debt"). This plan substantially eliminated debt principal payments until the year 2003. 
+
+ Management
+believes the recapitalization will also allow it to effect changes in its operations and has already implemented measures to reduce overhead costs. However, the Company does
+not expect to generate sufficient cash flows from operations in the future to fully pay the principal on long-term debt upon maturity in the year 2003 and, accordingly, it expects to
+refinance all or a portion of such debt, obtain new financing, or possibly sell assets. 
+
+c.Sale of Stock to Spectrum Restaurant Group, Inc. 
+
+ The Company sold all of the outstanding stock of four wholly owned subsidiaries (Non-Black Angus Subsidiaries) to Spectrum Restaurant
+Group, Inc. (formerly known as NBACo, Inc.). There was no gain or loss recorded because of the related-party nature of the Stock Sale. The Company received $17.0 million in cash
+on June 28, 2000, and transferred certain assets and liabilities to Spectrum Restaurant Group, Inc. Concurrent with the sale, advances between the Company and the Non-Black
+Angus Subsidiaries were eliminated. Paid-in capital of $26.8 million was charged as a result of the sale. The Company retained the assets and liabilities associated with certain
+closed restaurants as well as certain liabilities, estimated on June 26, 2000 at $12.6 million, associated with the operating restaurants that were sold. The amount of estimated
+liabilities remaining at December 25, 2000 was approximately $2.9 million. 
+
+ The
+Company is currently working to settle these liabilities. Any adjustments to the recorded balance will be recognized when the amount becomes known, however management does not
+believe that such amounts, is any, will be material to the Company's financial position or results of operations. 
+
+d.Principles of Consolidation 
+
+ The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and
+transactions have been eliminated. 
+
+e.Use of Estimates in the Preparation of Financial Statements 
+
+ The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and
+assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could
+differ from those estimates. 
+
+F-7
+
+ 
+
+f.Inventories and Prepaid Expenses 
+
+ Inventories consist primarily of food, beverages, and supplies and are valued at the lower of cost (first-in, first-out method) or market
+value. 
+
+g.Advertising Costs 
+
+ Advertising costs are accrued as a percentage of sales and expensed during the year. At year end, production costs for advertisements, which have not been aired,
+are included in prepaid expenses. Prepaid advertising costs of $1,196,000 and $1,022,000 were included in prepaid expenses at December 27, 1999 and December 25, 2000, respectively.
+Advertising expenses included in net income (loss) were $13,983,000, $13,515,000, and $16,134,000 in fiscal years 1998, 1999, and 2000, respectively. 
+
+h.Property and Equipment 
+
+ Property and equipment is carried at the lower of cost or, if impaired, at the estimated fair value of the assets. The Company provides for depreciation and
+amortization based upon the estimated useful lives of depreciable assets using the straight-line method. Estimated useful lives are as follows: 
+
+Land improvements
+ 
+20 years
+
+Buildings
+ 
+30 to 35 years
+
+Leasehold improvements
+ 
+Life of lease
+
+Fixtures and equipment
+ 
+3 to 10 years
+
+Property held under capital leases
+ 
+Life of lease
+
+ When
+a restaurant is opened, the initial purchase of expendable equipment, such as china, glassware, and silverware, is recorded as an asset and is not depreciated;
+however, all replacements are expensed. 
+
+ Substantially
+all of the Company's assets, including property and equipment, are pledged as collateral on the senior debt of the Company. 
+
+i.Interest Costs 
+
+ Interest costs incurred during the construction period of restaurants are capitalized. The Company capitalized approximately $68,000 and $44,000 for the years
+ended 1998 and 1999, respectively. There were no interest costs capitalized in 2000. 
+
+j.Other Assets 
+
+ Other assets include intangible assets, leasehold interests, franchise rights, liquor licenses, and cost in excess of net assets acquired. These costs are
+amortized using the straight-line method over the periods estimated to be benefited, not greater than 40 years. 
+
+ Deferred
+debt costs are amortized using the effective interest method over the related debt term. 
+
+F-8
+
+ 
+
+ Estimated
+useful lives are as follows: 
+
+Intangible assets
+ 
+3 to 40 years
+
+Deferred debt costs
+ 
+Term of debt
+
+Leasehold interests
+ 
+Life of lease
+
+Franchise rights
+ 
+35 years
+
+Liquor licenses
+ 
+40 years
+
+Cost in excess of net assets acquired
+ 
+40 years
+
+ The
+following table details the components of intangible assets included in the accompanying consolidated balance sheets (in thousands): 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+
+Assembled workforce
+ 
+$
+2,986
+ 
+$
+2,986
+
+Going Concern
+ 
+ 
+1,928
+ 
+ 
+1,928
+
+Trademarks/service marks
+ 
+ 
+1,794
+ 
+ 
+1,794
+
+Acquisition costs
+ 
+ 
+696
+ 
+ 
+696
+
+Other
+ 
+ 
+264
+ 
+ 
+41
+
+ 
+ 
+
+ 
+
+Total
+ 
+$
+7,668
+ 
+$
+7,445
+
+ 
+ 
+
+ 
+
+ As
+of December 27, 1999 and December 25, 2000, no indicators of impairment exist. 
+
+k.Insurance 
+
+ The Company self-insures certain risks up to varying limits including medical, workers' compensation, property and general liability. Deductible and
+self-insured limits have varied historically, ranging from $0 to $350,000 per incident depending on the type of risk. The policy deductibles are $100,000 for its annual medical and dental
+benefits per person. Reserves for losses are established based upon currently estimated obligations for the claim over time and the deductible or self-insured retention in place at the
+time of the loss. 
+
+l.Fair Value of Financial Instruments 
+
+ The Company's financial instruments consist primarily of cash, accounts receivable and payable, and debt instruments. The carrying values of all financial
+instruments, other than debt instruments, are representative of their fair value due to their short-term maturity. The fair value of the Company's long-term debt instruments is
+estimated based on the current rates offered to the Company. 
+
+m.Accounting Period 
+
+ The Company's fiscal year ends on the last Monday in December. 
+
+n.Earnings per Share 
+
+ Earnings per share information has not been presented because there is no market for the Company's common stock. 
+
+o.Reclassifications 
+
+ Certain prior year accounts have been reclassified to conform with the current year presentation. 
+
+F-9
+
+ 
+
+p.New Accounting Pronouncements 
+
+ In June, 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations and SFAS
+No. 142, Goodwill and Other Intangible Assets. These new standards are effective for fiscal years beginning after December 15, 2001. Under the new standards, goodwill will no longer be
+amortized, but will be subject to an annual impairment test. The standards also promulgate, among other things, new requirements for accounting for other intangible assets. The impact of these new
+standards on the Company's financial position and results of operations has not yet been determined, but is not believed to be material. 
+
+ In
+August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or
+Disposal of Long-Lived Assets. FASB Statement No. 144 retains FASB Statement No. 121's Accounting for the Impairment of Long-Lived Assets
+and for Long-Lived Assets to Be Disposed Of, fundamental provisions for the: (1) recognition and measurement of impairment of long-lived assets to be held and used; and (2)
+measurement of long-lived assets to be disposed of by sale. The Company does not believe that FASB Statement No. 144 will have a material impact on its financial position or results of
+operations. Statement No. 144 is effective for fiscal years beginning after December 15, 2001. 
+
+2. Lease Obligations 
+
+ The Company leases certain of its operating facilities under terms ranging up to 40 years. These leases are classified as both operating and capital
+leases. Certain of the leases contain provisions calling for rentals based on sales or other provisions obligating the Company to pay related property taxes and certain other expenses. 
+
+ The
+following is a summary of property held under capital leases and included in the accompanying consolidated balance sheets (in thousands): 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+
+Property
+ 
+$
+7,480
+ 
+$
+7,480
+
+Less Accumulated depreciation
+ 
+ 
+5,720
+ 
+ 
+6,071
+
+ 
+ 
+
+ 
+
+ 
+ 
+$
+1,760
+ 
+$
+1,409
+
+ 
+ 
+
+ 
+
+F-10
+
+ 
+
+ The
+following represents the minimum lease payments remaining under noncancelable operating leases and capitalized leases as of December 25, 2000 (in thousands): 
+
+Fiscal Years Ending
+ 
+ 
+Operating
+
+Leases
+ 
+Capitalized
+
+Leases
+
+2001
+ 
+$
+16,504
+ 
+$
+1,070
+
+2002
+ 
+ 
+15,107
+ 
+ 
+1,070
+
+2003
+ 
+ 
+14,757
+ 
+ 
+830
+
+2004
+ 
+ 
+13,778
+ 
+ 
+263
+
+2005
+ 
+ 
+12,168
+ 
+ 
+232
+
+Thereafter
+ 
+ 
+168,018
+ 
+ 
+1,347
+
+ 
+ 
+
+ 
+
+Total minimum lease payments
+ 
+$
+240,332
+ 
+ 
+4,812
+
+ 
+ 
+
+ 
+
+Less Imputed interest (8.75% to 15.5%)
+ 
+ 
+ 
+ 
+ 
+1,511
+
+Present value of minimum lease payments
+ 
+ 
+ 
+ 
+ 
+3,301
+
+ 
+ 
+ 
+ 
+ 
+
+Less Current portion
+ 
+ 
+ 
+ 
+ 
+713
+
+ 
+ 
+ 
+ 
+ 
+
+Long-term portion
+ 
+ 
+ 
+ 
+$
+2,588
+
+ 
+ 
+ 
+ 
+ 
+
+ Rental
+expense was $15,216,000, $15,460,000, and $16,650,000 during 1998, 1999, and 2000, respectively. 
+
+3. Long-Term Debt 
+
+ Long-term debt is summarized as follows (in thousands): 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+
+Senior secured notes, interest only due semi-annually beginning August 15, 1998 at 11.5%, principal due February 15, 2003
+ 
+$
+158,600
+ 
+$
+142,600
+
+Other
+ 
+ 
+2,174
+ 
+ 
+1,898
+
+ 
+ 
+
+ 
+
+ 
+ 
+ 
+160,774
+ 
+ 
+144,498
+
+Less Current portion
+ 
+ 
+477
+ 
+ 
+432
+
+ 
+ 
+
+ 
+
+Long-term portion
+ 
+$
+160,297
+ 
+$
+144,066
+
+ 
+ 
+
+ 
+
+ Maturities
+of the remaining long-term debt during each of the five fiscal years subsequent to year end 2000 are $432,000, $335,000, $142,627,000, $30,000, and
+$1,074,000 thereafter. 
+
+ In
+February 1998, the Company completed a recapitalization plan (the "Recapitalization Plan") that included, among other things, the issuance by the Company of $155,000,000 of
+Notes due 2003. 
+
+ In
+conjunction with the Recapitalization Plan, the Company issued an additional $3,600,000 principal amount of Notes to holders of certain Holdings debt and recorded such issuance as a
+non-cash distribution. There was an extraordinary gain recorded in 1998 of 9,559,000 as a result of this transaction. 
+
+ As
+part of the Recapitalization Plan, the Company concurrently (a) redeemed at par senior secured notes of $126,381,000 together with interest thereon and repaid certain other
+interest-bearing 
+
+F-11
+
+ 
+
+short-term liabilities, (b) repurchased its existing 10.25% subordinated notes at 65% of the par amount of $45,000,000 together with interest thereon, and canceled the related
+warrants to purchase common stock of Holdings, and (c) established a $15,000,000 revolving credit facility to include letters of credit. A quarterly fee of 0.5% per annum is payable on the
+unused portion of the letter of credit facility and a quarterly fee of 2.5% per annum is payable on outstanding letters of credit. 
+
+ On
+June 28, 2000, the Company amended the terms of the Credit Facility to reduce the aggregate commitment of the lenders from $15,000,000 to $12,000,000, to reduce the amount
+available for issuance of letters of credit from $10,000,000 to $7,000,000, and to extend the maturity date from February 25, 2001 to June 30, 2002. 
+
+ At
+year end 1999 and 2000, the Company had outstanding letters of credit primarily related to its self-insurance programs of approximately $3,597,000 and $5,500,000,
+respectively. 
+
+ The
+revolving credit facility contains certain covenants, the most restrictive of which requires the Company to maintain a certain ratio of cash flows to total debt. As of
+December 25, 2000, the Company was in compliance with all financial covenants. The Company made a prepayment of principal of $16 million in December 2000, and recorded an
+extraordinary loss of $473,000 to write-off the related unamortized deferred financing costs. 
+
+ Substantially
+all assets of the Company are pledged to its senior lenders. In addition, the direct subsidiaries guaranteed the indebtedness owed by the Company and such guarantees are
+secured by substantially all of the assets of the subsidiaries. In connection with such indebtedness, contingent and mandatory prepayments may be required under certain specified conditions and
+events. There are no compensating balance requirements. 
+
+ Management
+believes the fair value of the debt approximates its carrying value. 
+
+F-12
+
+ AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES 
+
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 
+
+ DECEMBER 28, 1998, DECEMBER 27, 1999, AND DECEMBER 25, 2000 
+
+4. Income Taxes 
+
+ The Company's state income-tax provision, all of which was current, was $67,000, $70,000, and $185,000 in 1998, 1999, and 2000, respectively. No
+provision for federal income taxes was required in any year. 
+
+ The
+income tax effects of temporary differences that give rise to significant portions of the Company's deferred income tax assets and liabilities are as follows (in thousands): 
+
+ 
+
+ 
+Year Ended
+ 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+
+Deferred income tax asset:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Reserves and other accrued expenses not currently deductible for tax purposes
+ 
+$
+4,221
+ 
+$
+3,358
+ 
+
+ 
+Long-lived asset impairment not recognized on tax return
+ 
+ 
+2,813
+ 
+ 
+2,813
+ 
+
+ 
+Tax gain on sale/leaseback transactions, net
+ 
+ 
+3,097
+ 
+ 
+2,978
+ 
+
+Discontinued Operations
+ 
+ 
+2,514
+ 
+ 
+ 
+ 
+
+Net operating loss carryforward
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+From continuing operations
+ 
+ 
+38,756
+ 
+ 
+39,043
+ 
+
+ 
+From discontinued operations
+ 
+ 
+14,991
+ 
+ 
+0
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ 
+Deferred income-tax asset
+ 
+ 
+66,392
+ 
+ 
+48,192
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+Deferred income tax liability:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Tax depreciation greater than depreciation for financial reporting purposes
+ 
+ 
+(6,927
+)
+ 
+(6,789
+)
+
+ 
+Costs capitalized for financial reporting purposes and expensed on tax return
+ 
+ 
+(4,172
+)
+ 
+(4,087
+)
+
+ 
+Other, net
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+From continuing operations
+ 
+ 
+(597
+)
+ 
+(350
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ 
+Deferred income-tax liability
+ 
+ 
+(11,696
+)
+ 
+(11,226
+)
+
+ 
+ 
+
+ 
+
+ 
+
+Deferred asset, net of deferred liability
+ 
+ 
+54,696
+ 
+ 
+36,966
+ 
+
+Valuation allowance
+ 
+ 
+(54,696
+)
+ 
+(36,966
+)
+
+ 
+ 
+
+ 
+
+ 
+
+Net deferred income-tax asset
+ 
+$
+ 
+ 
+$
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ The
+Company fully reserves its net deferred tax assets because of its history of operating losses. 
+
+F-13
+
+ 
+
+ The
+effective tax rate differs from the federal statutory rate of 34 percent as a result of the following items (in thousands): 
+
+ 
+
+ 
+Year Ended
+ 
+
+ 
+
+ 
+December 28,
+
+1998
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+
+Federal income-tax provision (benefit) at statutory rates
+ 
+$
+49
+ 
+$
+(1,903
+)
+$
+2,655
+ 
+
+State income-tax provision for which no federal benefit was recorded
+ 
+ 
+44
+ 
+ 
+1
+ 
+ 
+464
+ 
+
+Losses for which no federal benefit was recorded
+ 
+ 
+3,792
+ 
+ 
+1,195
+ 
+ 
+ 
+ 
+
+Nondeductible items, principally intangible amortization
+ 
+ 
+964
+ 
+ 
+777
+ 
+ 
+159
+ 
+
+Benefit of net operating loss carryforward
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+(3,093
+)
+
+Cancellation of debt income
+ 
+ 
+(4,782
+)
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+Provision for income taxes
+ 
+$
+67
+ 
+$
+70
+ 
+$
+185
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+Provision for income taxes attributable to discontinued operations
+ 
+$
+21
+ 
+$
+20
+ 
+$
+59
+ 
+
+ At
+December 25, 2000, the Company had available net operating loss carryforwards for federal income-tax purposes of $96,619,000 expiring in 2003 to 2020, and federal
+general business credit carryforwards of $6,192,000, expiring in 2009 to 2019. 
+
+5. Commitments and Contingencies 
+
+ The Company is obligated under an employment agreement with an officer. The obligation under the agreement is $500,000, provides for periodic increases, and
+expires in 2001 unless extended. 
+
+ The
+Company has been named as defendant in various lawsuits. Management's opinion is that the outcome of such litigation will not materially affect the Company's financial position or
+results of operations. 
+
+6. Cumulative Preferred Stock, Mandatorily Redeemable 
+
+ As part of the Recapitalization Plan in February, 1998, the Company issued 35,000 preferred stock units (the "Units") of the Company. Each Unit consists of $1,000
+initial liquidation preference of 12% senior pay-in-kind exchangeable preferred stock and one common-stock purchase warrant initially to purchase 2.66143 shares of the common
+stock at an initial exercise price of one cent per share. The Company's cumulative preferred stock is mandatorily redeemable on August 15, 2003, for cash at a price per share equal to 110% of
+the then applicable liquidation preference. 
+
+ A
+stock dividend of 2,499 shares was paid on February 15, 2000. In the second quarter of 2000, the Company agreed to an interpretation of the financial covenants used to determine
+the dividend rate. The result was an increase in the dividend rate from 12% to 15% and additional dividends issued on August 15th of 2,503 shares (relating to holders at August 1999 and
+February 2000). Stock dividends of 5,872 (including the adjustment) and 3,618 shares were made on August 15, 2000 and February 15, 2001, respectively. There were 50,953 shares
+outstanding at December 25, 2000. 
+
+F-14
+
+ 
+
+7. Common Stock 
+
+ As of December 29, 1997, all of the Company's common stock was owned by American Restaurant Group Holdings, Inc., Anwar S. Soliman, and Management
+Shareholders. They also own all outstanding shares of Holdings common stock other than shares of Holdings common stock issued to holders of the debenture units and rights to acquire shares of Holdings
+common stock issuable upon exercise of options and warrants. 
+
+ In
+conjunction with the Recapitalization Plan, the Company issued shares of common stock to certain members of the Company's management (the "Management Stockholders") in an aggregate
+amount equal to 15% of the common stock on a fully diluted basis. Such Management Stockholders have entered into a voting trust agreement with Anwar Soliman to exercise all voting and substantially
+all other rights to which such Management Shareholders would otherwise be entitled until August 15, 2005, or the earlier termination of the agreement. The Management Shareholders also entered
+into a shareholders' agreement with the remaining Company shareholders, which provides that the parties will agree to vote all of their shares of the Company's equity securities so that the Board of
+Directors of the Company consists of five directors, with two directors designated by TCW Investors, two by the Management Shareholders, with the remaining director being an independent director
+initially designated by the initial purchaser of the Notes. 
+
+8. Savings Plan 
+
+ The American Restaurant Group Savings and Investment Plan (the "Savings Plan") is a 401(k) plan established for the benefit of employees who satisfy certain
+requirements. These requirements include completion of one year of service with a minimum of 1,000 hours worked. Subject to applicable limits imposed on tax-qualified plans,
+eligible employees may elect pre-tax contributions up to 20.0% of a participant's total earnings for a calendar year (but not in excess of $10,500 for 2000). The Company makes matching
+contributions to the Savings Plan equal to 25% of the participant's contributions up to 6% of the participant's earnings. During fiscal 1998, 1999, and 2000, the Company contributed approximately
+$174,000, $225,000, and $206,000 to the Savings Plan, respectively. At December 25, 2000, there were approximately 3,900 employees eligible, 1,100 participants, and 600 contributors to the
+plan. 
+
+9. Subsequent Event (unaudited) 
+
+ The Company will recognize a charge of approximately $5.5 million in its results of operations for the fourteen weeks ended December 31, 2001. Under
+GAAP the Company must immediately expense a portion of its transaction costs deemed to be associated with an exchange of debt instruments that are substantially the same. The exchange of
+Series B Notes for Series C Notes is deemed to be such a transaction. The Company incurred additional costs associated with the issuance of the New Notes which have been capitalized and
+will be amortized over the term of the New Notes. 
+
+F-15
+
+AMERICAN RESTAURANT GROUP, INC. 
+
+ 
+
+PROSPECTUS January 24, 2002
+
+ 
+
+ 
+
+ 
+ 
+
+PART II 
+ 
+ INFORMATION NOT REQUIRED IN PROSPECTUS 
+ 
+
+ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. 
+
+ The estimated expenses payable by the Company in connection with the issuance and distribution of the Notes and in connection with the offering described in this
+Registration Statement are as follows: 
+
+Registration Fee
+ 
+$
+8,100
+
+Legal fees and expenses
+ 
+ 
+111,161
+
+Accounting fees and expenses
+ 
+ 
+35,571
+
+Printing and duplicating expenses
+ 
+ 
+57,140
+
+Miscellaneous expenses
+ 
+ 
+1,824,595
+
+ 
+ 
+
+ 
+Total
+ 
+$
+2,036,567
+
+ 
+ 
+
+ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS 
+
+ Section 145 of the General Corporation Law of the State of Delaware (the "GCL") provides in relevant part that a Delaware corporation may
+indemnify any persons, including officers and directors, who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil,
+criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer or director of such corporation, or
+is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees),
+judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such officer or director acted in good
+faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, for criminal proceedings, had no reasonable cause to believe that his conduct was illegal.
+A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial
+approval if the officer or director is adjudged to be liable to the corporation in the performance of his duty. Where an officer or director is successful on the merits or otherwise in the defense of
+any action referred to above, the corporation must indemnify him against the expenses which such officer or director actually and reasonably incurred. 
+
+ Article IV
+of the by-laws of the Company provides for indemnification of its officers and directors to the fullest extent permitted by Section 145 of the GCL. 
+
+ Section 102(b)(7)
+of the GCL provides that a Delaware corporation may eliminate or limit the personal liability of a director to a Delaware corporation or its stockholders for
+monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of
+loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under
+Section 174 of the GCL relating to the unlawful payment of a dividend or an unlawful stock purchase or redemption or (iv) for any transaction from which the director derived an improper
+personal benefit. 
+
+ Article 7
+of the Certificate of Incorporation of the Company provides for the elimination of personal liability of its directors for monetary damages for breach of fiduciary duty
+as a director, except as otherwise provided by the GCL. 
+
+II-1
+
+ 
+
+ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES 
+
+ On October 31, 2001, we privately placed, under Rule 144A and Regulation S of the Securities Act, $30 million aggregate principal
+amount of 111/2% Senior Secured Notes due 2006, yielding net proceeds to the Company of approximately $3.1 million, after deducting estimated expenses and commissions. The
+proceeds were used to refinance existing indebtedness, to pay the accrued and unpaid interest with respect to the Existing Notes and for general corporate purposes. Jefferies &
+Company, Inc. was the initial purchaser of these securities. On October 1, 2001, we commenced an offer to exchange all of our outstanding Old Notes for up to $131.7 million
+aggregate principal amount of 111/2% Senior Secured Notes due 2006. The notes include registration rights such that the registrant is required to exchange the notes for a new issue of
+notes registered under the Securities Act of 1933 and are to be declared effective no later than 150 days after the issue date. 
+
+ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 
+
+Exhibit No.
+ 
+ 
+Description
+ 
+
+1.1
+ 
+Purchase Agreement dated as of September 28, 2001 by and between the Company and Jefferies & Company, Inc.*******
+
+2.1
+
+ 
+
+Purchase Agreement dated as of September 11, 1996 by and between ARG Property Management Corporation and ARG Enterprises, Inc. and ARG Properties I, LLC.***
+
+2.2
+
+ 
+
+Master lease dated September 11, 1996 between ARG Properties I, LLC, as Landlord and ARG Enterprises, Inc. as Tenant.***
+
+2.3
+
+ 
+
+Lease #06152 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Bloomington, Minnesota.***
+
+2.4
+
+ 
+
+Lease #06153 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Fridley, Minnesota.***
+
+2.5
+
+ 
+
+Lease #06154 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Minnetonka, Minnesota.***
+
+2.6
+
+ 
+
+Lease #06155 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Roseville, Minnesota.***
+
+2.7
+
+ 
+
+Not Applicable.
+
+2.8
+
+ 
+
+Guaranty of Lease dated September 11, 1996 by ARG Enterprises, Inc. as Tenant to ARG Properties I, LLC as Landlord.***
+
+2.9
+
+ 
+
+A Guaranty of Lease dated September 11, 1996 by ARG Enterprises, Inc. as Tenant to Captec Net Lease Realty, Inc. as Landlord for each of four Minnesota restaurants.***
+
+2.10
+
+ 
+
+Not Applicable.
+
+2.11
+
+ 
+
+Stock Purchase Agreement, dated as of May 9, 2000 between the Company and NBACo, Inc.******
+
+2.12
+
+ 
+
+Amendment No. 1, dated as of June 26, 2000, to Stock Purchase Agreement, dated as of May 9, 2000, between the Company and NBACo, Inc.******
+
+3.1
+
+ 
+
+Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on July 23, 1991.*
+
+3.2
+
+ 
+
+Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on March 21, 1992.* 
+
+II-2
+
+ 
+
+3.3
+
+ 
+
+Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on February 23, 1998.****
+
+3.3A
+
+ 
+
+Amendment to Certificate of the Designation of the Powers, Preferences and relative, Participating, Optional and Other Special Rights of the 12% Series A Senior Pay-In-Kind Exchangeable Preferred stock and the 12% Series B Senior Pay-In-Kind
+Exchangeable Preferred Stock and Qualifications, Limitations or Restrictions Thereof of the Company filed with the Secretary of State of Delaware on October 31, 2001.*******
+
+3.4
+
+ 
+
+By-Laws of the Company.*
+
+3.5
+
+ 
+
+Restated Articles of Incorporation of ARG Enterprises, Inc. filed with the Secretary of State of California on May 3, 1988.*******
+
+3.6
+
+ 
+
+Bylaws of ARG Enterprises, Inc.*******
+
+3.7
+
+ 
+
+Restated Articles of Incorporation of ARG Property Management Corporation filed with the Secretary of State of California on May 3, 1988.*******
+
+3.8
+
+ 
+
+Bylaws of ARG Property Management Corporation.*******
+
+3.9
+
+ 
+
+Certificate of Incorporation of ARG Terra, Inc. filed with the Secretary of State of Delaware on June 20, 2000.*******
+
+3.10
+
+ 
+
+Bylaws of ARG Terra, Inc.*******
+
+4.1
+
+ 
+
+Indenture dated as of February 25, 1998 between the Company and U.S. Trust Company of California, N.A., as Trustee (including specimen certificate of 11.5% Senior Secured Note due 2003).****
+
+4.2
+
+ 
+
+Warrant Agreement dated as of February 25, 1998 between the Company and U.S. Trust Company of California, N.A., as warrant agent (including specimen certificate of warrant).****
+
+4.3
+
+ 
+
+Registration Rights Agreement dated as of February 25, 1998 between the Company and Jefferies & Company, Inc.****
+
+4.4
+
+ 
+
+Securityholders' and Registration Right Agreement dated as of February 25, 1998 between the Company and Jefferies & Company, Inc., as purchaser.****
+
+4.5
+
+ 
+
+Management Registration Right Agreement dated as of February 28, 1998 between the Company and the Management Stockholders.****
+
+4.6
+
+ 
+
+Certificate of Designation filed with the Secretary of State of Delaware on February 24, 1998.****
+
+4.7
+
+ 
+
+Certificate of Correction to the Certificate of Designation filed with the Secretary of State of Delaware on February 25, 1998.****
+
+4.8
+
+ 
+
+Not Applicable.
+
+4.9
+
+ 
+
+First Supplemental Indenture, dated as June 28, 2000, to Indenture, dated as of February 25, 1998, between the Company and U.S. Trust Company, National Association (formerly known as U.S. Trust Company of California,
+N.A.).******
+
+4.10
+
+ 
+
+Second Supplemental Indenture, dated as of October 31, 2001, to Indenture, dated as of February 25, 1998, between the Company and BNY Western Trust Company (successor in interest to U.S. Trust Company, National Association, formerly known as
+U.S. Trust Company of California, N.A.).******* 
+
+II-3
+
+ 
+
+4.11
+
+ 
+
+Registration Rights Agreement dated as of October 31, 2001 between the Company and Jefferies & Company, Inc.*******
+
+5
+
+ 
+
+Opinion of Milbank, Tweed, Hadley & McCloy LLP.********
+
+10.1
+
+ 
+
+Amended and Restated Employment Agreement dated as of December 14, 1993 between the Company and Ralph S. Roberts.**
+
+10.2
+
+ 
+
+Loan Agreement dated as of December 17, 2001 between Foothill Capital Corporation, as lender and the Company, ARG Enterprises, Inc., ARG Property Management Corporation and ARG Terra, Inc., as borrowers.*******
+
+10.3
+
+ 
+
+Second Amended and Restated Intercreditor and Collateral Agency Agreement dated as of December 17, 2001 between BNY Western Trust Company, as collateral agent and as trustee, the Company, ARG Enterprises, Inc., ARG Property Management
+Corporation and ARG Terra, Inc., as borrowers, and Foothill Capital Corporation, as lender.*******
+
+12
+
+ 
+
+Statement setting forth Computation of Ratio of Earnings to Fixed Charges.*******
+
+21
+
+ 
+
+Subsidiaries of the Company.**
+
+23.1
+
+ 
+
+Consent of Milbank, Tweed, Hadley & McCloy LLP (included in Exhibit 5 hereto).
+
+23.2
+
+ 
+
+Consent of Independent Public Accountants.********
+
+24.1
+
+ 
+
+Power of Attorney (American Restaurant Group, Inc.)*******
+
+24.2
+
+ 
+
+Power of Attorney (ARG Enterprises, Inc., ARG Property Management Corporation, ARG Terra, Inc.) (contained on the signature page to this registration statement).
+
+25
+
+ 
+
+Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of United States Trust Company of New York.*******
+
+ 
+
+ 
+ 
+
+*
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 33-48183 on Form S-4 filed with the Securities and Exchange Commission on May 28, 1992 as amended with Amendment No. 1 filed on
+September 11, 1992.
+
+**
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 33-74010 on Form S-4 filed with the Securities and Exchange Commission on January 12, 1994.
+
+***
+ 
+Incorporated by reference to the Registrant's Current Report on Form 8-K dated September 13, 1996 filed with the Securities and Exchange Commission on September 30, 1996.
+
+****
+ 
+Incorporated by reference to the Registrant's Annual Report on Form 10-K dated December 29, 1997 filed with the Securities and Exchange Commission on March 30, 1998.
+
+*****
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 333-55861 on Amendment No. 1 to Form S-4 filed with the Securities and Exchange Commission on July 29, 1998.
+
+******
+ 
+Incorporated by reference to the Registrant's Current Report on Form 8-K dated June 28, 2000 and filed with the Securities and Exchange Commission on July 12, 2000.
+
+*******
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 333-76442 to Form S-4 filed with the Securities and Exchange Commission on January , 2002.
+
+********
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 333-76434 to Form S-1 filed with the Securities and Exchange Commission on January 8, 2002.
+
+II-4
+
+ 
+
+ITEM 17. UNDERTAKINGS 
+
+ A. Insofar
+as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the
+foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act
+and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
+of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
+controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
+of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 
+
+B.The
+undersigned registrant hereby undertakes: 
+
+ (1) To
+file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: 
+
+ (i) To
+include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; 
+
+ (ii) To
+reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment
+thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in
+volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
+range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change
+in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. 
+
+ (iii) To
+include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such
+information in the registration statement. 
+
+ (2) That,
+for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new
+registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona
+fide offering thereof. 
+
+ (3) To
+remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the
+offering. 
+
+II-5
+
+ 
+
+ 
+ 
+
+SIGNATURES 
+ 
+
+ Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the
+requirements to file Amendment No. 1 to Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in
+the City of Los Altos, State of California on the 17th day of January 2002.
+
+ 
+
+ 
+
+ 
+
+AMERICAN RESTAURANT GROUP, INC.
+
+ 
+
+ 
+
+By:
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Vice President, Treasurer, Secretary and
+
+General Counsel
+
+ 
+
+ 
+
+ARG ENTERPRISES, INC.
+
+ 
+
+ 
+
+By:
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Vice President, Treasurer and Secretary
+
+ 
+
+ 
+
+ARG PROPERTY MANAGEMENT CORPORATION
+
+ 
+
+ 
+
+By:
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Vice President, Treasurer and Secretary
+
+ 
+
+ 
+
+ARG TERRA, INC.
+
+ 
+
+ 
+
+By:
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Vice President, Treasurer and Secretary
+
+ Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the
+capacities and on the dates indicated.
+
+ 
+
+AMERICAN RESTAURANT GROUP, INC.
+
+ 
+
+Signature
+ 
+Title
+ 
+Date
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+/s/ GEORGE G. GOLLEHER* George G. Golleher
+ 
+Chairman of the Board and Director
+ 
+January 17, 2002
+
+/s/ RALPH S. ROBERTS* Ralph S. Roberts
+
+ 
+
+Chief Executive Officer, President and Director (principal executive officer and director)
+
+ 
+
+January 17, 2002 
+
+II-6
+
+ 
+
+/s/ PATRICK J. KELVIE* Patrick J. Kelvie
+
+ 
+
+Vice President, Treasurer, Secretary and General Counsel (principal financial officer)
+
+ 
+
+January 17, 2002
+
+/s/ SHERRI A. CARROLL* Sherri A. Carroll
+
+ 
+
+Controller
+
+ 
+
+January 17, 2002
+
+/s/ ANWAR S. SOLIMAN* Anwar S. Soliman
+
+ 
+
+Director
+
+ 
+
+January 17, 2002
+
+/s/ ROBERT D. BEYER* Robert D. Beyer
+
+ 
+
+Director
+
+ 
+
+January 17, 2002
+
+/s/ M. BRENT STEVENS* M. Brent Stevens
+
+ 
+
+Director
+
+ 
+
+January 17, 2002
+
+*By:/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Attorney-in-fact
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+POWER OF ATTORNEY 
+ 
+
+ Each person whose signature appears below constitutes and appoints Patrick J. Kelvie his or her true and lawful
+attorney-in-fact and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and
+all amendments (including post-effective amendments) to this Registration Statement, and any registration statement of the Company to be filed after the date hereof pursuant to
+Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and to
+take such actions in, and file with the appropriate authorities in, whatever states said attorneys-in-fact and agents, and each of them, shall determine, such applications,
+statements, consents, and other documents, as may be necessary or expedient to register securities of the Company for sale, granting unto said attorneys-in-fact and agents full
+power and authority to do so and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in
+person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done
+by virtue hereof and the registrant hereby confers like authority on its behalf.
+
+ This Registration Statement and Power of Attorney, pursuant to the requirement of the Securities Act of 1933, as amended, have been signed below by the following
+persons in the capacities and on the dates indicated.
+
+ Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the
+capacities and on the dates indicated.
+
+II-7
+
+ 
+
+ARG ENTERPRISES, INC.
+
+ 
+
+Signature
+ 
+Title
+ 
+Date
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+/s/ RALPH S. ROBERTS Ralph S. Roberts
+ 
+Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer (principal executive officer and director)
+ 
+January 17, 2002
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+
+ 
+
+Vice President, Treasurer and Secretary (principal financial officer and director)
+
+ 
+
+January 17, 2002
+
+ARG PROPERTY MANAGEMENT CORPORATION
+
+ 
+
+Signature
+ 
+Title
+ 
+Date
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+/s/ RALPH S. ROBERTS Ralph S. Roberts
+ 
+Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer (principal executive officer and director)
+ 
+January 17, 2002
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+
+ 
+
+Vice President, Treasurer and Secretary (principal financial officer and director)
+
+ 
+
+January 17, 2002
+
+ARG TERRA, INC.
+
+ 
+
+Signature
+ 
+Title
+ 
+Date
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+/s/ RALPH S. ROBERTS Ralph S. Roberts
+ 
+Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer (principal executive officer and director)
+ 
+January 17, 2002
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+
+ 
+
+Vice President, Treasurer and Secretary (principal financial officer and director)
+
+ 
+
+January 17, 2002
+
+II-8
+
+ 
+ 
+
+EXHIBIT INDEX 
+ 
+
+Exhibit No.
+ 
+ 
+Description
+ 
+
+ 1.1
+ 
+Purchase Agreement dated as of September 28, 2001 by and between the Company and Jefferies & Company, Inc.*******
+
+ 2.1
+
+ 
+
+Purchase Agreement dated as of September 11, 1996 by and between ARG Property Management Corporation and ARG Enterprises, Inc. and ARG Properties I, LLC.***
+
+ 2.2
+
+ 
+
+Master lease dated September 11, 1996 between ARG Properties I, LLC, as Landlord and ARG Enterprises, Inc. as Tenant.***
+
+ 2.3
+
+ 
+
+Lease #06152 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Bloomington, Minnesota.***
+
+ 2.4
+
+ 
+
+Lease #06153 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Fridley, Minnesota.***
+
+ 2.5
+
+ 
+
+Lease #06154 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Minnetonka, Minnesota.***
+
+ 2.6
+
+ 
+
+Lease #06155 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Roseville, Minnesota.***
+
+ 2.7
+
+ 
+
+Not Applicable.
+
+ 2.8
+
+ 
+
+Guaranty of Lease dated September 11, 1996 by ARG Enterprises, Inc. as Tenant to ARG Properties I, LLC as Landlord.***
+
+ 2.9
+
+ 
+
+A Guaranty of Lease dated September 11, 1996 by ARG Enterprises, Inc. as Tenant to Captec Net Lease Realty, Inc. as Landlord for each of four Minnesota restaurants.***
+
+ 2.10
+
+ 
+
+Not Applicable.
+
+ 2.11
+
+ 
+
+Stock Purchase Agreement, dated as of May 9, 2000 between the Company and NBACo, Inc.******
+
+ 2.12
+
+ 
+
+Amendment No. 1, dated as of June 26, 2000, to Stock Purchase Agreement, dated as of May 9, 2000, between the Company and NBACo, Inc.******
+
+ 3.1
+
+ 
+
+Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on July 23, 1991.*
+
+ 3.2
+
+ 
+
+Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on March 21, 1992.*
+
+ 3.3
+
+ 
+
+Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on February 23, 1998.****
+
+ 3.3A
+
+ 
+
+Amendment to Certificate of the Designation of the Powers, Preferences and relative, Participating, Optional and Other Special Rights of the 12% Series A Senior Pay-In-Kind Exchangeable Preferred stock and the 12% Series B Senior Pay-In-Kind
+Exchangeable Preferred Stock and Qualifications, Limitations or Restrictions Thereof of the Company filed with the Secretary of State of Delaware on October 31, 2001.*******
+
+ 3.4
+
+ 
+
+By-Laws of the Company.*
+
+ 3.5
+
+ 
+
+Restated Articles of Incorporation of ARG Enterprises, Inc. filed with the Secretary of State of California on May 3, 1988.*******
+
+ 3.6
+
+ 
+
+Bylaws of ARG Enterprises, Inc.******* 
+
+ 3.7
+
+ 
+
+Restated Articles of Incorporation of ARG Property Management Corporation filed with the Secretary of State of California on May 3, 1988.*******
+
+ 3.8
+
+ 
+
+Bylaws of ARG Property Management Corporation.*******
+
+ 3.9
+
+ 
+
+Certificate of Incorporation of ARG Terra, Inc. filed with the Secretary of State of Delaware on June 20, 2000.*******
+
+ 3.10
+
+ 
+
+Bylaws of ARG Terra, Inc.*******
+
+ 4.1
+
+ 
+
+Indenture dated as of February 25, 1998 between the Company and U.S. Trust Company of California, N.A., as Trustee (including specimen certificate of 11.5% Senior Secured Note due 2003).****
+
+ 4.2
+
+ 
+
+Warrant Agreement dated as of February 25, 1998 between the Company and U.S. Trust Company of California, N.A., as warrant agent (including specimen certificate of warrant).****
+
+ 4.3
+
+ 
+
+Registration Rights Agreement dated as of February 25, 1998 between the Company and Jefferies & Company, Inc.****
+
+ 4.4
+
+ 
+
+Securityholders' and Registration Right Agreement dated as of February 25, 1998 between the Company and Jefferies & Company, Inc., as purchaser.****
+
+ 4.5
+
+ 
+
+Management Registration Right Agreement dated as of February 28, 1998 between the Company and the Management Stockholders.****
+
+ 4.6
+
+ 
+
+Certificate of Designation filed with the Secretary of State of Delaware on February 24, 1998.****
+
+ 4.7
+
+ 
+
+Certificate of Correction to the Certificate of Designation filed with the Secretary of State of Delaware on February 25, 1998.****
+
+ 4.8
+
+ 
+
+Not Applicable.
+
+ 4.9
+
+ 
+
+First Supplemental Indenture, dated as June 28, 2000, to Indenture, dated as of February 25, 1998, between the Company and U.S. Trust Company, National Association (formerly known as U.S. Trust Company of California,
+ N.A.).******
+
+ 4.10
+
+ 
+
+Second Supplemental Indenture, dated as of October 31, 2001, to Indenture, dated as of February 25, 1998, between the Company and BNY Western Trust Company (successor in interest to U.S. Trust Company, National Association, formerly known as
+U.S. Trust Company of California, N.A.).*******
+
+ 4.11
+
+ 
+
+Registration Rights Agreement dated as of October 31, 2001 between the Company and Jefferies & Company, Inc.*******
+
+ 5
+
+ 
+
+Opinion of Milbank, Tweed, Hadley & McCloy LLP.********
+
+10.1
+
+ 
+
+Amended and Restated Employment Agreement dated as of December 14, 1993 between the Company and Ralph S. Roberts.**
+
+10.2
+
+ 
+
+Loan Agreement dated as of December 17, 2001 between Foothill Capital Corporation, as lender and the Company, ARG Enterprises, Inc., ARG Property Management Corporation and ARG Terra, Inc., as borrowers.*******
+
+10.3
+
+ 
+
+Second Amended and Restated Intercreditor and Collateral Agency Agreement dated as of December 17, 2001 between BNY Western Trust Company, as collateral agent and as trustee, the Company, ARG Enterprises, Inc., ARG Property Management
+Corporation and ARG Terra, Inc., as borrowers, and Foothill Capital Corporation, as lender.*******
+
+12
+
+ 
+
+Statement setting forth Computation of Ratio of Earnings to Fixed Charges.******* 
+
+21
+
+ 
+
+Subsidiaries of the Company.**
+
+23.1
+
+ 
+
+Consent of Milbank, Tweed, Hadley & McCloy LLP (included in Exhibit 5 hereto).
+
+23.2
+
+ 
+
+Consent of Independent Public Accountants.********
+
+24.1
+
+ 
+
+Power of Attorney (American Restaurant Group, Inc.)*******
+
+24.2
+
+ 
+
+Power of Attorney (ARG Enterprises, Inc., ARG Property Management Corporation, ARG Terra, Inc.) (contained on the signature page to this registration statement).
+
+25
+
+ 
+
+Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of United States Trust Company of New York.*******
+
+ 
+
+ 
+ 
+
+*
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 33-48183 on Form S-4 filed with the Securities and Exchange Commission on May 28, 1992 as amended with Amendment No. 1 filed on
+September 11, 1992.
+
+**
+
+ 
+
+Incorporated by reference to the Registrant's Registration Statement No. 33-74010 on Form S-4 filed with the Securities and Exchange Commission on January 12, 1994.
+
+***
+
+ 
+
+Incorporated by reference to the Registrant's Current Report on Form 8-K dated September 13, 1996 filed with the Securities and Exchange Commission on September 30, 1996.
+
+****
+
+ 
+
+Incorporated by reference to the Registrant's Annual Report on Form 10-K dated December 29, 1997 filed with the Securities and Exchange Commission on March 30, 1998.
+
+*****
+
+ 
+
+Incorporated by reference to the Registrant's Registration Statement No. 333-55861 on Amendment No. 1 to Form S-4 filed with the Securities and Exchange Commission on July 29, 1998.
+
+******
+
+ 
+
+Incorporated by reference to the Registrant's Current Report on Form 8-K dated June 28, 2000 and filed with the Securities and Exchange Commission on July 12, 2000.
+
+*******
+
+ 
+
+Incorporated by reference to the Registrant's Registration Statement No. 333-76442 to Form S-4 filed with the Securities and Exchange Commission on January 8, 2002.
+
+********
+
+ 
+
+Incorporated by reference to the Registrant's Registration Statement No. 333-76434 to Form S-1 filed with the Securities and Exchange Commission on January 8, 2002.
+
+QuickLinks
+
+TABLE OF CONTENTS

parsed_sections/legal_matters/2002/CIK0000891537_arg_legal_matters.txt

@@ -0,0 +1,5087 @@
+LEGAL MATTERS 
+ 
+
+ The validity of the Notes and certain legal matters in connection with this offering will be passed upon for the Company by Milbank, Tweed, Hadley & McCloy
+LLP, Los Angeles, California. 
+
+ 
+ 
+
+EXPERTS 
+ 
+
+ The financial statements included in this Prospectus and elsewhere in the Registration Statement to the extent and for the periods indicated in their report have
+been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are included herein in reliance upon the authority of said firm as experts
+in accounting in giving said report. 
+
+65
+
+ 
+
+ 
+ 
+
+INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 
+ 
+
+ 
+
+ 
+Page
+
+Report of Independent Public Accountants
+ 
+F-2
+
+Consolidated Balance Sheets as of December 27, 1999, December 25, 2000, and September 24, 2001
+
+ 
+
+F-3
+
+Consolidated Statements of Operations for the Years Ended December 28, 1998, December 27, 1999, and December 25, 2000, and the Thirty-nine Weeks Ended September 25, 2000 and September 24, 2001
+
+ 
+
+F-4
+
+Consolidated Statements of Common Stockholders' Equity (Deficit) for the Years Ended December 28, 1998, December 27, 1999 and December 25, 2000
+
+ 
+
+F-5
+
+Consolidated Statements of Cash Flows for the Years Ended December 28, 1998, December 27, 1999, and December 25, 2000, and the Thirty-nine Weeks Ended September 25, 2000 and September 24, 2001
+
+ 
+
+F-6
+
+Notes to Consolidated Financial Statements
+
+ 
+
+F-7
+
+F-1
+
+ 
+
+ 
+ 
+
+REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 
+ 
+
+To
+the Board of Directors of
+
+American Restaurant Group, Inc.: 
+
+ We
+have audited the accompanying consolidated balance sheets of AMERICAN RESTAURANT GROUP, INC. (a Delaware corporation) AND SUBSIDIARIES as of December 27, 1999 and
+December 25, 2000, and the related consolidated statements of operations, common stockholders' equity (deficit), and cash flows for the years ended December 28, 1998, December 27,
+1999, and December 25, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on
+our audits. 
+
+ We
+conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable
+assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
+statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
+that our audits provide a reasonable basis for our opinion. 
+
+ In
+our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Restaurant Group, Inc. and subsidiaries as
+of December 27, 1999 and December 25, 2000, and the results of their operations and their cash flows for the years ended December 28, 1998, December 27, 1999, and
+December 25, 2000, in conformity with accounting principles generally accepted in the United States. 
+
+/s/
+ARTHUR ANDERSEN LLP 
+
+San
+Francisco, California
+
+March 2, 2001 
+
+F-2
+
+ 
+
+ 
+ 
+
+AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES
+ CONSOLIDATED BALANCE SHEETS
+ DECEMBER 27, 1999, DECEMBER 25, 2000 AND SEPTEMBER 24, 2001
+ (dollars in thousands) 
+ 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+September 24,
+
+2001
+ 
+
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+(unaudited)
+ 
+
+ 
+
+ASSETS
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+CURRENT ASSETS:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Cash
+ 
+$
+8,316
+ 
+$
+8,532
+ 
+$
+3,850
+ 
+
+ 
+Accounts receivable
+ 
+ 
+2,655
+ 
+ 
+2,938
+ 
+ 
+3,690
+ 
+
+ 
+Inventories
+ 
+ 
+2,755
+ 
+ 
+2,853
+ 
+ 
+2,916
+ 
+
+ 
+Prepaid expenses
+ 
+ 
+2,873
+ 
+ 
+2,803
+ 
+ 
+4,521
+ 
+
+ 
+ 
+Net current assets of discontinued operations
+ 
+ 
+6,068
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total current assets
+ 
+ 
+22,667
+ 
+ 
+17,126
+ 
+ 
+14,977
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+PROPERTY AND EQUIPMENT:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Land and land improvements
+ 
+ 
+2,629
+ 
+ 
+2,629
+ 
+ 
+2,598
+ 
+
+ 
+Buildings and leasehold improvements
+ 
+ 
+65,418
+ 
+ 
+67,631
+ 
+ 
+69,409
+ 
+
+ 
+Fixtures and equipment
+ 
+ 
+48,977
+ 
+ 
+48,629
+ 
+ 
+48,953
+ 
+
+ 
+Property held under capital leases
+ 
+ 
+7,480
+ 
+ 
+7,480
+ 
+ 
+7,293
+ 
+
+ 
+Construction in progress
+ 
+ 
+521
+ 
+ 
+2,816
+ 
+ 
+1,345
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+125,025
+ 
+ 
+129,185
+ 
+ 
+129,598
+ 
+
+ 
+Less Accumulated depreciation
+ 
+ 
+73,557
+ 
+ 
+75,815
+ 
+ 
+78,851
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+51,468
+ 
+ 
+53,370
+ 
+ 
+50,747
+ 
+
+ 
+ 
+Net property and equipment of discontinued operations
+ 
+ 
+36,032
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Net Property and equipment
+ 
+ 
+87,500
+ 
+ 
+53,370
+ 
+ 
+50,747
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+OTHER ASSETS:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Intangible assets
+ 
+ 
+7,668
+ 
+ 
+7,445
+ 
+ 
+7,445
+ 
+
+ 
+Deferred debt costs
+ 
+ 
+11,061
+ 
+ 
+9,970
+ 
+ 
+9,970
+ 
+
+ 
+Leasehold interests
+ 
+ 
+6,577
+ 
+ 
+6,577
+ 
+ 
+6,577
+ 
+
+ 
+Liquor licenses and other
+ 
+ 
+4,758
+ 
+ 
+4,156
+ 
+ 
+4,136
+ 
+
+ 
+Cost in excess of net assets acquired
+ 
+ 
+7,537
+ 
+ 
+7,536
+ 
+ 
+7,536
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+37,601
+ 
+ 
+35,684
+ 
+ 
+35,664
+ 
+
+ 
+Less Accumulated amortization
+ 
+ 
+14,083
+ 
+ 
+16,605
+ 
+ 
+18,603
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+Net other assets from discontinued operations
+ 
+ 
+9,044
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Net other assets
+ 
+ 
+32,562
+ 
+ 
+19,079
+ 
+ 
+17,061
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total assets
+ 
+$
+142,729
+ 
+$
+89,575
+ 
+$
+82,785
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+LIABILITIES AND COMMON STOCKHOLDERS' (DEFICIT)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+CURRENT LIABILITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Accounts payable
+ 
+$
+13,627
+ 
+$
+15,193
+ 
+$
+13,615
+ 
+
+ 
+Accrued liabilities
+ 
+ 
+9,486
+ 
+ 
+11,521
+ 
+ 
+6,320
+ 
+
+ 
+Accrued insurance
+ 
+ 
+2,509
+ 
+ 
+2,373
+ 
+ 
+2,695
+ 
+
+ 
+Accrued interest
+ 
+ 
+7,010
+ 
+ 
+6,251
+ 
+ 
+2,116
+ 
+
+ 
+Accrued payroll costs
+ 
+ 
+4,148
+ 
+ 
+7,069
+ 
+ 
+4,115
+ 
+
+ 
+Current portion of obligations under capital leases
+ 
+ 
+638
+ 
+ 
+713
+ 
+ 
+776
+ 
+
+ 
+Current portion of long-term debt
+ 
+ 
+477
+ 
+ 
+432
+ 
+ 
+4,416
+ 
+
+ 
+ 
+Current liabilities of discontinued operations
+ 
+ 
+22,586
+ 
+ 
+2,945
+ 
+ 
+1,059
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total current liabilities
+ 
+ 
+60,481
+ 
+ 
+46,497
+ 
+ 
+35,112
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+LONG-TERM LIABILITIES, net of current portion:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Obligations under capital leases
+ 
+ 
+3,300
+ 
+ 
+2,588
+ 
+ 
+2,005
+ 
+
+ 
+Long-term debt
+ 
+ 
+160,297
+ 
+ 
+144,066
+ 
+ 
+143,787
+ 
+
+ 
+ 
+Long-term debt from discontinued operations
+ 
+ 
+2,299
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total long-term liabilities
+ 
+ 
+165,896
+ 
+ 
+146,654
+ 
+ 
+145,792
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+DEFERRED GAIN
+ 
+ 
+4,395
+ 
+ 
+4,192
+ 
+ 
+4,037
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+COMMITMENTS AND CONTINGENCIES
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+CUMULATIVE PREFERRED STOCK, MANDATORILY REDEEMABLE
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Senior pay-in-kind exchangeable preferred stock, $0.01 par value; 160,000 shares authorized; 41,584 shares accrued and outstanding at December 27, 1999, 50,953 shares accrued and outstanding at December 25, 2000,
+and 56,792 shares accrued and outstanding at September 24, 2001
+ 
+ 
+41,914
+ 
+ 
+49,891
+ 
+ 
+56,029
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+COMMON STOCKHOLDERS' (DEFICIT):
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+Common stock, $0.01 par value; 1,000,000 shares authorized; 128,081 shares issued and outstanding at December 27, 1999, December 25, 2000, and September 24, 2001
+ 
+ 
+1
+ 
+ 
+1
+ 
+ 
+1
+ 
+
+ 
+Paid-in capital
+ 
+ 
+50,552
+ 
+ 
+15,788
+ 
+ 
+9,469
+ 
+
+ 
+Accumulated (deficit)
+ 
+ 
+(180,510
+)
+ 
+(173,448
+)
+ 
+(167,655
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total common stockholders' (deficit)
+ 
+ 
+(129,957
+)
+ 
+(157,659
+)
+ 
+(158,185
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+Total liabilities and common stockholders' (deficit)
+ 
+$
+142,729
+ 
+$
+89,575
+ 
+$
+82,785
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+The accompanying notes are an integral part of these consolidated statements. 
+
+F-3
+
+ 
+
+ 
+ AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES 
+ 
+ CONSOLIDATED STATEMENTS OF OPERATIONS
+ FOR THE YEARS ENDED DECEMBER 28, 1998, DECEMBER 27, 1999,
+ DECEMBER 25, 2000,
+AND THE THIRTY-NINE
+ WEEKS ENDED SEPTEMBER 25, 2000 AND SEPTEMBER 24, 2001
+ (dollars in thousands) 
+
+ 
+
+ 
+Year ended
+ 
+Nine Months Ended
+
+ 
+
+ 
+December 28,
+
+1998
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+September 25,
+
+2000
+ 
+September 24,
+
+2001
+
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+(unaudited)
+ 
+
+REVENUES
+ 
+$
+265,536
+ 
+$
+263,561
+ 
+$
+299,822
+ 
+$
+226,567
+ 
+$
+226,808
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+RESTAURANT COSTS:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Food and beverage
+ 
+ 
+89,521
+ 
+ 
+88,110
+ 
+ 
+103,339
+ 
+ 
+77,675
+ 
+ 
+75,602
+
+ 
+Payroll
+ 
+ 
+74,912
+ 
+ 
+75,114
+ 
+ 
+82,818
+ 
+ 
+60,715
+ 
+ 
+64,923
+
+ 
+Direct operating
+ 
+ 
+63,260
+ 
+ 
+63,033
+ 
+ 
+69,721
+ 
+ 
+52,852
+ 
+ 
+53,830
+
+ 
+Depreciation and amortization
+ 
+ 
+10,115
+ 
+ 
+9,396
+ 
+ 
+9,554
+ 
+ 
+7,352
+ 
+ 
+6,478
+
+GENERAL AND ADMINISTRATIVE EXPENSES
+ 
+ 
+11,780
+ 
+ 
+11,975
+ 
+ 
+11,108
+ 
+ 
+7,660
+ 
+ 
+7,198
+
+NON-CASH CHARGE FOR IMPAIRMENT OF LONG-LIVED ASSETS
+ 
+ 
+149
+ 
+ 
+459
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Operating profit from continuing operations
+ 
+ 
+15,799
+ 
+ 
+15,474
+ 
+ 
+23,282
+ 
+ 
+20,313
+ 
+ 
+18,777
+
+INTEREST EXPENSE, net
+ 
+ 
+20,269
+ 
+ 
+19,450
+ 
+ 
+19,036
+ 
+ 
+14,322
+ 
+ 
+12,801
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Net income /(loss) before provision for income taxes
+ 
+ 
+(4,470
+)
+ 
+(3,976
+)
+ 
+4,246
+ 
+ 
+5,991
+ 
+ 
+5,976
+
+PROVISION FOR INCOME TAXES
+ 
+ 
+67
+ 
+ 
+70
+ 
+ 
+185
+ 
+ 
+211
+ 
+ 
+183
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Income/(Loss) from continuing operations
+ 
+ 
+(4,537
+)
+ 
+(4,046
+)
+ 
+4,061
+ 
+ 
+5,780
+ 
+ 
+5,793
+
+ 
+Income (Loss) from discontinued operations
+ 
+ 
+(4,879
+)
+ 
+(1,622
+)
+ 
+3,474
+ 
+ 
+3,474
+ 
+ 
+ 
+
+EXTRAORDINARY GAIN/(LOSS) ON EXTINGUISHMENT OF DEBT FROM CONTINUING OPERATIONS
+ 
+ 
+9,559
+ 
+ 
+ 
+ 
+ 
+(473
+)
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Net Income/(Loss)
+ 
+$
+143
+ 
+$
+(5,668
+)
+$
+7,062
+ 
+$
+9,254
+ 
+$
+5,793
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+The
+accompanying notes are an integral part of these consolidated statements. 
+
+F-4
+
+ 
+
+ 
+ AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES 
+ 
+ CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (DEFICIT)
+ FOR THE YEARS ENDED DECEMBER 28, 1998,
+ DECEMBER 27,
+ 1999 AND DECEMBER 25, 2000
+ (dollars in thousands) 
+ 
+
+ 
+
+ 
+Common
+
+Stock
+ 
+Paid-in
+
+Capital
+ 
+Accumulated
+
+Debt
+ 
+Total
+ 
+
+BALANCE, December 29, 1997
+ 
+$
+1
+ 
+$
+63,246
+ 
+$
+(174,985
+)
+$
+(111,738
+)
+
+ 
+Net Income
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+143
+ 
+ 
+143
+ 
+
+ 
+ 
+Amortization of cost related to the issuance of preferred stock
+ 
+ 
+ 
+ 
+ 
+(332
+)
+ 
+ 
+ 
+ 
+(332
+)
+
+ 
+ 
+Dividends payable, preferred stock
+ 
+ 
+ 
+ 
+ 
+(3,648
+)
+ 
+ 
+ 
+ 
+(3,648
+)
+
+ 
+ 
+Non-cash distribution to parent
+ 
+ 
+ 
+ 
+ 
+(3,600
+)
+ 
+ 
+ 
+ 
+(3,600
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+BALANCE, December 28, 1998
+ 
+$
+1
+ 
+$
+55,666
+ 
+$
+(174,842
+)
+$
+(119,175
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Net (Loss)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+(5,668
+)
+ 
+(5,668
+)
+
+ 
+ 
+Amortization of cost related to the issuance of preferred stock
+ 
+ 
+ 
+ 
+ 
+(399
+)
+ 
+ 
+ 
+ 
+(399
+)
+
+ 
+ 
+Dividends payable, preferred stock
+ 
+ 
+ 
+ 
+ 
+(4,715
+)
+ 
+ 
+ 
+ 
+(4,715
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+BALANCE, December 27, 1999
+ 
+$
+1
+ 
+$
+50,552
+ 
+$
+(180,510
+)
+$
+(129,957
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+Net Income
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+7,062
+ 
+ 
+7,062
+ 
+
+ 
+Net book value of assets and liabilities transferred in conjunction with Stock Sale
+ 
+ 
+ 
+ 
+ 
+(26,788
+)
+ 
+ 
+ 
+ 
+(26,788
+)
+
+ 
+Amortization of cost related to the issuance of preferred stock
+ 
+ 
+ 
+ 
+ 
+(399
+)
+ 
+ 
+ 
+ 
+(399
+)
+
+ 
+Dividends payable, preferred stock
+ 
+ 
+ 
+ 
+ 
+(7,577
+)
+ 
+ 
+ 
+ 
+(7,577
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+BALANCE, December 25, 2000
+ 
+$
+1
+ 
+$
+15,788
+ 
+$
+(173,448
+)
+$
+(157,659
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+The
+accompanying notes are an integral part of these consolidated statements. 
+
+F-5
+
+ 
+
+ 
+ 
+
+AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES
+ CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
+ DECEMBER 28, 1998, DECEMBER 27, 1999, DECEMBER 25, 2000,
+ AND THE THIRTY-NINE WEEKS ENDED
+SEPTEMBER 25, 2000 AND SEPTEMBER 24, 2001
+ (dollars in thousands) 
+ 
+
+ 
+
+ 
+Year Ended
+ 
+Nine Months Ended
+ 
+
+ 
+
+ 
+December 28,
+
+1998
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+September 25,
+
+2000
+ 
+September 24,
+
+2001
+ 
+
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+ 
+
+ 
+(unaudited)
+ 
+
+ 
+
+CASH FLOWS FROM OPERATING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Cash received from customers
+ 
+$
+264,195
+ 
+$
+263,562
+ 
+$
+299,539
+ 
+$
+226,054
+ 
+$
+226,056
+ 
+
+ 
+Cash paid to suppliers and employees
+ 
+ 
+(271,512
+)
+ 
+(229,650
+)
+ 
+(260,096
+)
+ 
+(204,032
+)
+ 
+(212,900
+)
+
+ 
+Interest paid, net
+ 
+ 
+(20,729
+)
+ 
+(19,473
+)
+ 
+(19,823
+)
+ 
+(19,020
+)
+ 
+(16,936
+)
+
+ 
+Income taxes, net
+ 
+ 
+(67
+)
+ 
+(71
+)
+ 
+(312
+)
+ 
+(211
+)
+ 
+(183
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+Net cash provided by/(used in) continuing operating activities
+ 
+ 
+(28,113
+)
+ 
+14,368
+ 
+ 
+19,308
+ 
+ 
+2,791
+ 
+ 
+(3,963
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH FLOWS FROM INVESTING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Capital expenditures
+ 
+ 
+(7,896
+)
+ 
+(6,248
+)
+ 
+(7,872
+)
+ 
+(6,438
+)
+ 
+(1,876
+)
+
+ 
+Net (increase) decrease in other assets
+ 
+ 
+3,734
+ 
+ 
+(2,619
+)
+ 
+(1,221
+)
+ 
+(606
+)
+ 
+14
+ 
+
+ 
+Proceeds(Loss) from disposition of assets
+ 
+ 
+9
+ 
+ 
+471
+ 
+ 
+12
+ 
+ 
+(12
+)
+ 
+25
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+Net cash (used in) investing activities
+ 
+ 
+(4,153
+)
+ 
+(8,396
+)
+ 
+(9,081
+)
+ 
+(7,056
+)
+ 
+(1,837
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH FLOWS FROM FINANCING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Proceeds received from Stock Sale
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+17,000
+ 
+ 
+17,000
+ 
+ 
+ 
+ 
+
+ 
+Payments on indebtedness
+ 
+ 
+(163,116
+)
+ 
+(15,376
+)
+ 
+(16,275
+)
+ 
+(264
+)
+ 
+ 
+ 
+
+ 
+Borrowings on indebtedness
+ 
+ 
+163,226
+ 
+ 
+16,229
+ 
+ 
+ 
+ 
+ 
+119
+ 
+ 
+3,705
+ 
+
+ 
+Net increase in deferred debt costs
+ 
+ 
+(10,818
+)
+ 
+(243
+)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Cost included in extraordinary gain on extinguishment of debt
+ 
+ 
+(1,686
+)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Issuance of cumulative preferred stock
+ 
+ 
+35,000
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Cost related to issuance of cumulative preferred stock
+ 
+ 
+(2,179
+)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Payment on insurance related financing
+ 
+ 
+(7,450
+)
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Payments on capital lease obligations
+ 
+ 
+(682
+)
+ 
+(637
+)
+ 
+(637
+)
+ 
+(472
+)
+ 
+(520
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+Net cash provided by/(used in) financing activities
+ 
+ 
+12,295
+ 
+ 
+(27
+)
+ 
+88
+ 
+ 
+16,383
+ 
+ 
+3,185
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+NET INCREASE/(DECREASE) IN CASH FROM CONTINUING OPERATIONS
+ 
+ 
+(19,971
+)
+ 
+5,945
+ 
+ 
+10,315
+ 
+ 
+12,118
+ 
+ 
+(2,615
+)
+
+NET INCREASE/(DECREASE) IN CASH FROM DISCONTINUED OPERATIONS
+ 
+ 
+23,163
+ 
+ 
+(5,617
+)
+ 
+(10,099
+)
+ 
+(6,167
+)
+ 
+(2,067
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH, at beginning of period
+ 
+ 
+4,796
+ 
+ 
+7,988
+ 
+ 
+8,316
+ 
+ 
+8,316
+ 
+ 
+8,532
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+CASH, at end of period
+ 
+$
+7,988
+ 
+$
+8,316
+ 
+$
+8,532
+ 
+$
+14,267
+ 
+$
+3,850
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Net income (loss)from continuing operations after extraordinary items
+ 
+$
+5,022
+ 
+$
+(4,046
+)
+$
+3,588
+ 
+$
+5,780
+ 
+$
+5,793
+ 
+
+ 
+Adjustments to reconcile net income (loss) to net cash provided by operating activities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+Extraordinary (gain) loss on extinguishment of debt
+ 
+ 
+(9,559
+)
+ 
+ 
+ 
+ 
+473
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Depreciation and amortization
+ 
+ 
+10,115
+ 
+ 
+9,396
+ 
+ 
+9,554
+ 
+ 
+7,352
+ 
+ 
+6,478
+ 
+
+ 
+ 
+ 
+Loss on disposition of assets
+ 
+ 
+1,529
+ 
+ 
+3,317
+ 
+ 
+581
+ 
+ 
+581
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Impairment of assets
+ 
+ 
+149
+ 
+ 
+459
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Amortization of deferred gain
+ 
+ 
+(599
+)
+ 
+(289
+)
+ 
+(203
+)
+ 
+(152
+)
+ 
+(155
+)
+
+ 
+ 
+ 
+Accretion on indebtedness
+ 
+ 
+21
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+(Increase) decrease in current assets:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Accounts receivable, net
+ 
+ 
+1,341
+ 
+ 
+1
+ 
+ 
+(283
+)
+ 
+(173
+)
+ 
+(752
+)
+
+ 
+ 
+ 
+Inventories
+ 
+ 
+25
+ 
+ 
+89
+ 
+ 
+(98
+)
+ 
+(310
+)
+ 
+(63
+)
+
+ 
+ 
+ 
+Prepaid expenses
+ 
+ 
+102
+ 
+ 
+(834
+)
+ 
+70
+ 
+ 
+1,244
+ 
+ 
+(1,718
+)
+
+ 
+ 
+Increase (decrease) in current liabilities:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+ 
+Accounts payable
+ 
+ 
+(10,764
+)
+ 
+2,193
+ 
+ 
+1,566
+ 
+ 
+(3,697
+)
+ 
+(1,578
+)
+
+ 
+ 
+ 
+Accrued liabilities
+ 
+ 
+(16,929
+)
+ 
+2,479
+ 
+ 
+2,034
+ 
+ 
+(2,783
+)
+ 
+(5,201
+)
+
+ 
+ 
+ 
+Accrued insurance
+ 
+ 
+(1,528
+)
+ 
+(513
+)
+ 
+(136
+)
+ 
+323
+ 
+ 
+322
+ 
+
+ 
+ 
+ 
+Accrued interest
+ 
+ 
+(481
+)
+ 
+(23
+)
+ 
+(759
+)
+ 
+(4,698
+)
+ 
+(4,135
+)
+
+ 
+ 
+ 
+Accrued payroll costs
+ 
+ 
+(6,557
+)
+ 
+2,139
+ 
+ 
+2,921
+ 
+ 
+(676
+)
+ 
+(2,954
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+ 
+ 
+Net cash provided by/(used in) continuing operating activities
+ 
+$
+(28,113
+)
+$
+14,368
+ 
+$
+19,308
+ 
+$
+2,791
+ 
+$
+(3,963
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+The accompanying notes are an integral part of these consolidated statements. 
+
+F-6
+
+ 
+
+ 
+ AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES 
+ 
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
+ 
+ DECEMBER 28, 1998, DECEMBER 27, 1999, AND DECEMBER 25, 2000
+
+ 
+
+1. Background and Summary of Significant Accounting Policies 
+
+a.Company 
+
+ American Restaurant Group, Inc. (the "Company"), a Delaware corporation, through its subsidiaries, operates middle-price full-service
+restaurants, primarily in California, the Pacific Northwest, and Arizona. The Company is a subsidiary of American Restaurant Group Holdings, Inc. ("Holdings"), also a Delaware corporation. At
+year-end 1998, 1999, and 2000, the Company and its subsidiaries, collectively referred to herein as the Company, operated 101, 102, and 105 restaurants, respectively, in its continuing
+segment. 
+
+b.Operations 
+
+ The Company's operations are affected by local and regional economic conditions, including competition in the restaurant industry. Prior to the year ended
+December 25, 2000, the Company experienced recurring operating losses (before extraordinary gain (loss) on extinguishment of debt) after debt service. A recapitalization plan was consummated
+during 1998 (see Note 3, "Long-Term Debt"). This plan substantially eliminated debt principal payments until the year 2003. 
+
+ Management
+believes the recapitalization will also allow it to effect changes in its operations and has already implemented measures to reduce overhead costs. However, the Company does
+not expect to generate sufficient cash flows from operations in the future to fully pay the principal on long-term debt upon maturity in the year 2003 and, accordingly, it expects to
+refinance all or a portion of such debt, obtain new financing, or possibly sell assets. 
+
+c.Sale of Stock to Spectrum Restaurant Group, Inc. 
+
+ The Company sold all of the outstanding stock of four wholly owned subsidiaries (Non-Black Angus Subsidiaries) to Spectrum Restaurant
+Group, Inc. (formerly known as NBACo, Inc.). There was no gain or loss recorded because of the related-party nature of the Stock Sale. The Company received $17.0 million in cash
+on June 28, 2000, and transferred certain assets and liabilities to Spectrum Restaurant Group, Inc. Concurrent with the sale, advances between the Company and the Non-Black
+Angus Subsidiaries were eliminated. Paid-in capital of $26.8 million was charged as a result of the sale. The Company retained the assets and liabilities associated with certain
+closed restaurants as well as certain liabilities, estimated on June 26, 2000 at $12.6 million, associated with the operating restaurants that were sold. The amount of estimated
+liabilities remaining at December 25, 2000 was approximately $2.9 million. 
+
+ The
+Company is currently working to settle these liabilities. Any adjustments to the recorded balance will be recognized when the amount becomes known, however management does not
+believe that such amounts, is any, will be material to the Company's financial position or results of operations. 
+
+d.Principles of Consolidation 
+
+ The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and
+transactions have been eliminated. 
+
+e.Use of Estimates in the Preparation of Financial Statements 
+
+ The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and
+assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could
+differ from those estimates. 
+
+F-7
+
+ 
+
+f.Inventories and Prepaid Expenses 
+
+ Inventories consist primarily of food, beverages, and supplies and are valued at the lower of cost (first-in, first-out method) or market
+value. 
+
+g.Advertising Costs 
+
+ Advertising costs are accrued as a percentage of sales and expensed during the year. At year end, production costs for advertisements, which have not been aired,
+are included in prepaid expenses. Prepaid advertising costs of $1,196,000 and $1,022,000 were included in prepaid expenses at December 27, 1999 and December 25, 2000, respectively.
+Advertising expenses included in net income (loss) were $13,983,000, $13,515,000, and $16,134,000 in fiscal years 1998, 1999, and 2000, respectively. 
+
+h.Property and Equipment 
+
+ Property and equipment is carried at the lower of cost or, if impaired, at the estimated fair value of the assets. The Company provides for depreciation and
+amortization based upon the estimated useful lives of depreciable assets using the straight-line method. Estimated useful lives are as follows: 
+
+Land improvements
+ 
+20 years
+
+Buildings
+ 
+30 to 35 years
+
+Leasehold improvements
+ 
+Life of lease
+
+Fixtures and equipment
+ 
+3 to 10 years
+
+Property held under capital leases
+ 
+Life of lease
+
+ When
+a restaurant is opened, the initial purchase of expendable equipment, such as china, glassware, and silverware, is recorded as an asset and is not depreciated;
+however, all replacements are expensed. 
+
+ Substantially
+all of the Company's assets, including property and equipment, are pledged as collateral on the senior debt of the Company. 
+
+i.Interest Costs 
+
+ Interest costs incurred during the construction period of restaurants are capitalized. The Company capitalized approximately $68,000 and $44,000 for the years
+ended 1998 and 1999, respectively. There were no interest costs capitalized in 2000. 
+
+j.Other Assets 
+
+ Other assets include intangible assets, leasehold interests, franchise rights, liquor licenses, and cost in excess of net assets acquired. These costs are
+amortized using the straight-line method over the periods estimated to be benefited, not greater than 40 years. 
+
+ Deferred
+debt costs are amortized using the effective interest method over the related debt term. 
+
+F-8
+
+ 
+
+ Estimated
+useful lives are as follows: 
+
+Intangible assets
+ 
+3 to 40 years
+
+Deferred debt costs
+ 
+Term of debt
+
+Leasehold interests
+ 
+Life of lease
+
+Franchise rights
+ 
+35 years
+
+Liquor licenses
+ 
+40 years
+
+Cost in excess of net assets acquired
+ 
+40 years
+
+ The
+following table details the components of intangible assets included in the accompanying consolidated balance sheets (in thousands): 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+
+Assembled workforce
+ 
+$
+2,986
+ 
+$
+2,986
+
+Going Concern
+ 
+ 
+1,928
+ 
+ 
+1,928
+
+Trademarks/service marks
+ 
+ 
+1,794
+ 
+ 
+1,794
+
+Acquisition costs
+ 
+ 
+696
+ 
+ 
+696
+
+Other
+ 
+ 
+264
+ 
+ 
+41
+
+ 
+ 
+
+ 
+
+Total
+ 
+$
+7,668
+ 
+$
+7,445
+
+ 
+ 
+
+ 
+
+ As
+of December 27, 1999 and December 25, 2000, no indicators of impairment exist. 
+
+k.Insurance 
+
+ The Company self-insures certain risks up to varying limits including medical, workers' compensation, property and general liability. Deductible and
+self-insured limits have varied historically, ranging from $0 to $350,000 per incident depending on the type of risk. The policy deductibles are $100,000 for its annual medical and dental
+benefits per person. Reserves for losses are established based upon currently estimated obligations for the claim over time and the deductible or self-insured retention in place at the
+time of the loss. 
+
+l.Fair Value of Financial Instruments 
+
+ The Company's financial instruments consist primarily of cash, accounts receivable and payable, and debt instruments. The carrying values of all financial
+instruments, other than debt instruments, are representative of their fair value due to their short-term maturity. The fair value of the Company's long-term debt instruments is
+estimated based on the current rates offered to the Company. 
+
+m.Accounting Period 
+
+ The Company's fiscal year ends on the last Monday in December. 
+
+n.Earnings per Share 
+
+ Earnings per share information has not been presented because there is no market for the Company's common stock. 
+
+o.Reclassifications 
+
+ Certain prior year accounts have been reclassified to conform with the current year presentation. 
+
+F-9
+
+ 
+
+p.New Accounting Pronouncements 
+
+ In June, 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations and SFAS
+No. 142, Goodwill and Other Intangible Assets. These new standards are effective for fiscal years beginning after December 15, 2001. Under the new standards, goodwill will no longer be
+amortized, but will be subject to an annual impairment test. The standards also promulgate, among other things, new requirements for accounting for other intangible assets. The impact of these new
+standards on the Company's financial position and results of operations has not yet been determined, but is not believed to be material. 
+
+ In
+August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or
+Disposal of Long-Lived Assets. FASB Statement No. 144 retains FASB Statement No. 121's Accounting for the Impairment of Long-Lived Assets
+and for Long-Lived Assets to Be Disposed Of, fundamental provisions for the: (1) recognition and measurement of impairment of long-lived assets to be held and used; and (2)
+measurement of long-lived assets to be disposed of by sale. The Company does not believe that FASB Statement No. 144 will have a material impact on its financial position or results of
+operations. Statement No. 144 is effective for fiscal years beginning after December 15, 2001. 
+
+2. Lease Obligations 
+
+ The Company leases certain of its operating facilities under terms ranging up to 40 years. These leases are classified as both operating and capital
+leases. Certain of the leases contain provisions calling for rentals based on sales or other provisions obligating the Company to pay related property taxes and certain other expenses. 
+
+ The
+following is a summary of property held under capital leases and included in the accompanying consolidated balance sheets (in thousands): 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+
+Property
+ 
+$
+7,480
+ 
+$
+7,480
+
+Less Accumulated depreciation
+ 
+ 
+5,720
+ 
+ 
+6,071
+
+ 
+ 
+
+ 
+
+ 
+ 
+$
+1,760
+ 
+$
+1,409
+
+ 
+ 
+
+ 
+
+F-10
+
+ 
+
+ The
+following represents the minimum lease payments remaining under noncancelable operating leases and capitalized leases as of December 25, 2000 (in thousands): 
+
+Fiscal Years Ending
+ 
+ 
+Operating
+
+Leases
+ 
+Capitalized
+
+Leases
+
+2001
+ 
+$
+16,504
+ 
+$
+1,070
+
+2002
+ 
+ 
+15,107
+ 
+ 
+1,070
+
+2003
+ 
+ 
+14,757
+ 
+ 
+830
+
+2004
+ 
+ 
+13,778
+ 
+ 
+263
+
+2005
+ 
+ 
+12,168
+ 
+ 
+232
+
+Thereafter
+ 
+ 
+168,018
+ 
+ 
+1,347
+
+ 
+ 
+
+ 
+
+Total minimum lease payments
+ 
+$
+240,332
+ 
+ 
+4,812
+
+ 
+ 
+
+ 
+
+Less Imputed interest (8.75% to 15.5%)
+ 
+ 
+ 
+ 
+ 
+1,511
+
+Present value of minimum lease payments
+ 
+ 
+ 
+ 
+ 
+3,301
+
+ 
+ 
+ 
+ 
+ 
+
+Less Current portion
+ 
+ 
+ 
+ 
+ 
+713
+
+ 
+ 
+ 
+ 
+ 
+
+Long-term portion
+ 
+ 
+ 
+ 
+$
+2,588
+
+ 
+ 
+ 
+ 
+ 
+
+ Rental
+expense was $15,216,000, $15,460,000, and $16,650,000 during 1998, 1999, and 2000, respectively. 
+
+3. Long-Term Debt 
+
+ Long-term debt is summarized as follows (in thousands): 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+
+Senior secured notes, interest only due semi-annually beginning August 15, 1998 at 11.5%, principal due February 15, 2003
+ 
+$
+158,600
+ 
+$
+142,600
+
+Other
+ 
+ 
+2,174
+ 
+ 
+1,898
+
+ 
+ 
+
+ 
+
+ 
+ 
+ 
+160,774
+ 
+ 
+144,498
+
+Less Current portion
+ 
+ 
+477
+ 
+ 
+432
+
+ 
+ 
+
+ 
+
+Long-term portion
+ 
+$
+160,297
+ 
+$
+144,066
+
+ 
+ 
+
+ 
+
+ Maturities
+of the remaining long-term debt during each of the five fiscal years subsequent to year end 2000 are $432,000, $335,000, $142,627,000, $30,000, and
+$1,074,000 thereafter. 
+
+ In
+February 1998, the Company completed a recapitalization plan (the "Recapitalization Plan") that included, among other things, the issuance by the Company of $155,000,000 of
+Notes due 2003. 
+
+ In
+conjunction with the Recapitalization Plan, the Company issued an additional $3,600,000 principal amount of Notes to holders of certain Holdings debt and recorded such issuance as a
+non-cash distribution. There was an extraordinary gain recorded in 1998 of 9,559,000 as a result of this transaction. 
+
+ As
+part of the Recapitalization Plan, the Company concurrently (a) redeemed at par senior secured notes of $126,381,000 together with interest thereon and repaid certain other
+interest-bearing 
+
+F-11
+
+ 
+
+short-term liabilities, (b) repurchased its existing 10.25% subordinated notes at 65% of the par amount of $45,000,000 together with interest thereon, and canceled the related
+warrants to purchase common stock of Holdings, and (c) established a $15,000,000 revolving credit facility to include letters of credit. A quarterly fee of 0.5% per annum is payable on the
+unused portion of the letter of credit facility and a quarterly fee of 2.5% per annum is payable on outstanding letters of credit. 
+
+ On
+June 28, 2000, the Company amended the terms of the Credit Facility to reduce the aggregate commitment of the lenders from $15,000,000 to $12,000,000, to reduce the amount
+available for issuance of letters of credit from $10,000,000 to $7,000,000, and to extend the maturity date from February 25, 2001 to June 30, 2002. 
+
+ At
+year end 1999 and 2000, the Company had outstanding letters of credit primarily related to its self-insurance programs of approximately $3,597,000 and $5,500,000,
+respectively. 
+
+ The
+revolving credit facility contains certain covenants, the most restrictive of which requires the Company to maintain a certain ratio of cash flows to total debt. As of
+December 25, 2000, the Company was in compliance with all financial covenants. The Company made a prepayment of principal of $16 million in December 2000, and recorded an
+extraordinary loss of $473,000 to write-off the related unamortized deferred financing costs. 
+
+ Substantially
+all assets of the Company are pledged to its senior lenders. In addition, the direct subsidiaries guaranteed the indebtedness owed by the Company and such guarantees are
+secured by substantially all of the assets of the subsidiaries. In connection with such indebtedness, contingent and mandatory prepayments may be required under certain specified conditions and
+events. There are no compensating balance requirements. 
+
+ Management
+believes the fair value of the debt approximates its carrying value. 
+
+F-12
+
+ AMERICAN RESTAURANT GROUP, INC. AND SUBSIDIARIES 
+
+ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 
+
+ DECEMBER 28, 1998, DECEMBER 27, 1999, AND DECEMBER 25, 2000 
+
+4. Income Taxes 
+
+ The Company's state income-tax provision, all of which was current, was $67,000, $70,000, and $185,000 in 1998, 1999, and 2000, respectively. No
+provision for federal income taxes was required in any year. 
+
+ The
+income tax effects of temporary differences that give rise to significant portions of the Company's deferred income tax assets and liabilities are as follows (in thousands): 
+
+ 
+
+ 
+Year Ended
+ 
+
+ 
+
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+
+Deferred income tax asset:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Reserves and other accrued expenses not currently deductible for tax purposes
+ 
+$
+4,221
+ 
+$
+3,358
+ 
+
+ 
+Long-lived asset impairment not recognized on tax return
+ 
+ 
+2,813
+ 
+ 
+2,813
+ 
+
+ 
+Tax gain on sale/leaseback transactions, net
+ 
+ 
+3,097
+ 
+ 
+2,978
+ 
+
+Discontinued Operations
+ 
+ 
+2,514
+ 
+ 
+ 
+ 
+
+Net operating loss carryforward
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+From continuing operations
+ 
+ 
+38,756
+ 
+ 
+39,043
+ 
+
+ 
+From discontinued operations
+ 
+ 
+14,991
+ 
+ 
+0
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ 
+Deferred income-tax asset
+ 
+ 
+66,392
+ 
+ 
+48,192
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+Deferred income tax liability:
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+Tax depreciation greater than depreciation for financial reporting purposes
+ 
+ 
+(6,927
+)
+ 
+(6,789
+)
+
+ 
+Costs capitalized for financial reporting purposes and expensed on tax return
+ 
+ 
+(4,172
+)
+ 
+(4,087
+)
+
+ 
+Other, net
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+From continuing operations
+ 
+ 
+(597
+)
+ 
+(350
+)
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+ 
+Deferred income-tax liability
+ 
+ 
+(11,696
+)
+ 
+(11,226
+)
+
+ 
+ 
+
+ 
+
+ 
+
+Deferred asset, net of deferred liability
+ 
+ 
+54,696
+ 
+ 
+36,966
+ 
+
+Valuation allowance
+ 
+ 
+(54,696
+)
+ 
+(36,966
+)
+
+ 
+ 
+
+ 
+
+ 
+
+Net deferred income-tax asset
+ 
+$
+ 
+ 
+$
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ The
+Company fully reserves its net deferred tax assets because of its history of operating losses. 
+
+F-13
+
+ 
+
+ The
+effective tax rate differs from the federal statutory rate of 34 percent as a result of the following items (in thousands): 
+
+ 
+
+ 
+Year Ended
+ 
+
+ 
+
+ 
+December 28,
+
+1998
+ 
+December 27,
+
+1999
+ 
+December 25,
+
+2000
+ 
+
+Federal income-tax provision (benefit) at statutory rates
+ 
+$
+49
+ 
+$
+(1,903
+)
+$
+2,655
+ 
+
+State income-tax provision for which no federal benefit was recorded
+ 
+ 
+44
+ 
+ 
+1
+ 
+ 
+464
+ 
+
+Losses for which no federal benefit was recorded
+ 
+ 
+3,792
+ 
+ 
+1,195
+ 
+ 
+ 
+ 
+
+Nondeductible items, principally intangible amortization
+ 
+ 
+964
+ 
+ 
+777
+ 
+ 
+159
+ 
+
+Benefit of net operating loss carryforward
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+ 
+(3,093
+)
+
+Cancellation of debt income
+ 
+ 
+(4,782
+)
+ 
+ 
+ 
+ 
+ 
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+Provision for income taxes
+ 
+$
+67
+ 
+$
+70
+ 
+$
+185
+ 
+
+ 
+ 
+
+ 
+
+ 
+
+ 
+
+Provision for income taxes attributable to discontinued operations
+ 
+$
+21
+ 
+$
+20
+ 
+$
+59
+ 
+
+ At
+December 25, 2000, the Company had available net operating loss carryforwards for federal income-tax purposes of $96,619,000 expiring in 2003 to 2020, and federal
+general business credit carryforwards of $6,192,000, expiring in 2009 to 2019. 
+
+5. Commitments and Contingencies 
+
+ The Company is obligated under an employment agreement with an officer. The obligation under the agreement is $500,000, provides for periodic increases, and
+expires in 2001 unless extended. 
+
+ The
+Company has been named as defendant in various lawsuits. Management's opinion is that the outcome of such litigation will not materially affect the Company's financial position or
+results of operations. 
+
+6. Cumulative Preferred Stock, Mandatorily Redeemable 
+
+ As part of the Recapitalization Plan in February, 1998, the Company issued 35,000 preferred stock units (the "Units") of the Company. Each Unit consists of $1,000
+initial liquidation preference of 12% senior pay-in-kind exchangeable preferred stock and one common-stock purchase warrant initially to purchase 2.66143 shares of the common
+stock at an initial exercise price of one cent per share. The Company's cumulative preferred stock is mandatorily redeemable on August 15, 2003, for cash at a price per share equal to 110% of
+the then applicable liquidation preference. 
+
+ A
+stock dividend of 2,499 shares was paid on February 15, 2000. In the second quarter of 2000, the Company agreed to an interpretation of the financial covenants used to determine
+the dividend rate. The result was an increase in the dividend rate from 12% to 15% and additional dividends issued on August 15th of 2,503 shares (relating to holders at August 1999 and
+February 2000). Stock dividends of 5,872 (including the adjustment) and 3,618 shares were made on August 15, 2000 and February 15, 2001, respectively. There were 50,953 shares
+outstanding at December 25, 2000. 
+
+F-14
+
+ 
+
+7. Common Stock 
+
+ As of December 29, 1997, all of the Company's common stock was owned by American Restaurant Group Holdings, Inc., Anwar S. Soliman, and Management
+Shareholders. They also own all outstanding shares of Holdings common stock other than shares of Holdings common stock issued to holders of the debenture units and rights to acquire shares of Holdings
+common stock issuable upon exercise of options and warrants. 
+
+ In
+conjunction with the Recapitalization Plan, the Company issued shares of common stock to certain members of the Company's management (the "Management Stockholders") in an aggregate
+amount equal to 15% of the common stock on a fully diluted basis. Such Management Stockholders have entered into a voting trust agreement with Anwar Soliman to exercise all voting and substantially
+all other rights to which such Management Shareholders would otherwise be entitled until August 15, 2005, or the earlier termination of the agreement. The Management Shareholders also entered
+into a shareholders' agreement with the remaining Company shareholders, which provides that the parties will agree to vote all of their shares of the Company's equity securities so that the Board of
+Directors of the Company consists of five directors, with two directors designated by TCW Investors, two by the Management Shareholders, with the remaining director being an independent director
+initially designated by the initial purchaser of the Notes. 
+
+8. Savings Plan 
+
+ The American Restaurant Group Savings and Investment Plan (the "Savings Plan") is a 401(k) plan established for the benefit of employees who satisfy certain
+requirements. These requirements include completion of one year of service with a minimum of 1,000 hours worked. Subject to applicable limits imposed on tax-qualified plans,
+eligible employees may elect pre-tax contributions up to 20.0% of a participant's total earnings for a calendar year (but not in excess of $10,500 for 2000). The Company makes matching
+contributions to the Savings Plan equal to 25% of the participant's contributions up to 6% of the participant's earnings. During fiscal 1998, 1999, and 2000, the Company contributed approximately
+$174,000, $225,000, and $206,000 to the Savings Plan, respectively. At December 25, 2000, there were approximately 3,900 employees eligible, 1,100 participants, and 600 contributors to the
+plan. 
+
+9. Subsequent Event (unaudited) 
+
+ The Company will recognize a charge of approximately $5.5 million in its results of operations for the fourteen weeks ended December 31, 2001. Under
+GAAP the Company must immediately expense a portion of its transaction costs deemed to be associated with an exchange of debt instruments that are substantially the same. The exchange of
+Series B Notes for Series C Notes is deemed to be such a transaction. The Company incurred additional costs associated with the issuance of the New Notes which have been capitalized and
+will be amortized over the term of the New Notes. 
+
+F-15
+
+AMERICAN RESTAURANT GROUP, INC. 
+
+ 
+
+PROSPECTUS January 24, 2002
+
+ 
+
+ 
+
+ 
+ 
+
+PART II 
+ 
+ INFORMATION NOT REQUIRED IN PROSPECTUS 
+ 
+
+ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. 
+
+ The estimated expenses payable by the Company in connection with the issuance and distribution of the Notes and in connection with the offering described in this
+Registration Statement are as follows: 
+
+Registration Fee
+ 
+$
+8,100
+
+Legal fees and expenses
+ 
+ 
+111,161
+
+Accounting fees and expenses
+ 
+ 
+35,571
+
+Printing and duplicating expenses
+ 
+ 
+57,140
+
+Miscellaneous expenses
+ 
+ 
+1,824,595
+
+ 
+ 
+
+ 
+Total
+ 
+$
+2,036,567
+
+ 
+ 
+
+ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS 
+
+ Section 145 of the General Corporation Law of the State of Delaware (the "GCL") provides in relevant part that a Delaware corporation may
+indemnify any persons, including officers and directors, who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceeding, whether civil,
+criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer or director of such corporation, or
+is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees),
+judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such officer or director acted in good
+faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, for criminal proceedings, had no reasonable cause to believe that his conduct was illegal.
+A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial
+approval if the officer or director is adjudged to be liable to the corporation in the performance of his duty. Where an officer or director is successful on the merits or otherwise in the defense of
+any action referred to above, the corporation must indemnify him against the expenses which such officer or director actually and reasonably incurred. 
+
+ Article IV
+of the by-laws of the Company provides for indemnification of its officers and directors to the fullest extent permitted by Section 145 of the GCL. 
+
+ Section 102(b)(7)
+of the GCL provides that a Delaware corporation may eliminate or limit the personal liability of a director to a Delaware corporation or its stockholders for
+monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of
+loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under
+Section 174 of the GCL relating to the unlawful payment of a dividend or an unlawful stock purchase or redemption or (iv) for any transaction from which the director derived an improper
+personal benefit. 
+
+ Article 7
+of the Certificate of Incorporation of the Company provides for the elimination of personal liability of its directors for monetary damages for breach of fiduciary duty
+as a director, except as otherwise provided by the GCL. 
+
+II-1
+
+ 
+
+ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES 
+
+ On October 31, 2001, we privately placed, under Rule 144A and Regulation S of the Securities Act, $30 million aggregate principal
+amount of 111/2% Senior Secured Notes due 2006, yielding net proceeds to the Company of approximately $3.1 million, after deducting estimated expenses and commissions. The
+proceeds were used to refinance existing indebtedness, to pay the accrued and unpaid interest with respect to the Existing Notes and for general corporate purposes. Jefferies &
+Company, Inc. was the initial purchaser of these securities. On October 1, 2001, we commenced an offer to exchange all of our outstanding Old Notes for up to $131.7 million
+aggregate principal amount of 111/2% Senior Secured Notes due 2006. The notes include registration rights such that the registrant is required to exchange the notes for a new issue of
+notes registered under the Securities Act of 1933 and are to be declared effective no later than 150 days after the issue date. 
+
+ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 
+
+Exhibit No.
+ 
+ 
+Description
+ 
+
+1.1
+ 
+Purchase Agreement dated as of September 28, 2001 by and between the Company and Jefferies & Company, Inc.*******
+
+2.1
+
+ 
+
+Purchase Agreement dated as of September 11, 1996 by and between ARG Property Management Corporation and ARG Enterprises, Inc. and ARG Properties I, LLC.***
+
+2.2
+
+ 
+
+Master lease dated September 11, 1996 between ARG Properties I, LLC, as Landlord and ARG Enterprises, Inc. as Tenant.***
+
+2.3
+
+ 
+
+Lease #06152 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Bloomington, Minnesota.***
+
+2.4
+
+ 
+
+Lease #06153 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Fridley, Minnesota.***
+
+2.5
+
+ 
+
+Lease #06154 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Minnetonka, Minnesota.***
+
+2.6
+
+ 
+
+Lease #06155 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Roseville, Minnesota.***
+
+2.7
+
+ 
+
+Not Applicable.
+
+2.8
+
+ 
+
+Guaranty of Lease dated September 11, 1996 by ARG Enterprises, Inc. as Tenant to ARG Properties I, LLC as Landlord.***
+
+2.9
+
+ 
+
+A Guaranty of Lease dated September 11, 1996 by ARG Enterprises, Inc. as Tenant to Captec Net Lease Realty, Inc. as Landlord for each of four Minnesota restaurants.***
+
+2.10
+
+ 
+
+Not Applicable.
+
+2.11
+
+ 
+
+Stock Purchase Agreement, dated as of May 9, 2000 between the Company and NBACo, Inc.******
+
+2.12
+
+ 
+
+Amendment No. 1, dated as of June 26, 2000, to Stock Purchase Agreement, dated as of May 9, 2000, between the Company and NBACo, Inc.******
+
+3.1
+
+ 
+
+Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on July 23, 1991.*
+
+3.2
+
+ 
+
+Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on March 21, 1992.* 
+
+II-2
+
+ 
+
+3.3
+
+ 
+
+Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on February 23, 1998.****
+
+3.3A
+
+ 
+
+Amendment to Certificate of the Designation of the Powers, Preferences and relative, Participating, Optional and Other Special Rights of the 12% Series A Senior Pay-In-Kind Exchangeable Preferred stock and the 12% Series B Senior Pay-In-Kind
+Exchangeable Preferred Stock and Qualifications, Limitations or Restrictions Thereof of the Company filed with the Secretary of State of Delaware on October 31, 2001.*******
+
+3.4
+
+ 
+
+By-Laws of the Company.*
+
+3.5
+
+ 
+
+Restated Articles of Incorporation of ARG Enterprises, Inc. filed with the Secretary of State of California on May 3, 1988.*******
+
+3.6
+
+ 
+
+Bylaws of ARG Enterprises, Inc.*******
+
+3.7
+
+ 
+
+Restated Articles of Incorporation of ARG Property Management Corporation filed with the Secretary of State of California on May 3, 1988.*******
+
+3.8
+
+ 
+
+Bylaws of ARG Property Management Corporation.*******
+
+3.9
+
+ 
+
+Certificate of Incorporation of ARG Terra, Inc. filed with the Secretary of State of Delaware on June 20, 2000.*******
+
+3.10
+
+ 
+
+Bylaws of ARG Terra, Inc.*******
+
+4.1
+
+ 
+
+Indenture dated as of February 25, 1998 between the Company and U.S. Trust Company of California, N.A., as Trustee (including specimen certificate of 11.5% Senior Secured Note due 2003).****
+
+4.2
+
+ 
+
+Warrant Agreement dated as of February 25, 1998 between the Company and U.S. Trust Company of California, N.A., as warrant agent (including specimen certificate of warrant).****
+
+4.3
+
+ 
+
+Registration Rights Agreement dated as of February 25, 1998 between the Company and Jefferies & Company, Inc.****
+
+4.4
+
+ 
+
+Securityholders' and Registration Right Agreement dated as of February 25, 1998 between the Company and Jefferies & Company, Inc., as purchaser.****
+
+4.5
+
+ 
+
+Management Registration Right Agreement dated as of February 28, 1998 between the Company and the Management Stockholders.****
+
+4.6
+
+ 
+
+Certificate of Designation filed with the Secretary of State of Delaware on February 24, 1998.****
+
+4.7
+
+ 
+
+Certificate of Correction to the Certificate of Designation filed with the Secretary of State of Delaware on February 25, 1998.****
+
+4.8
+
+ 
+
+Not Applicable.
+
+4.9
+
+ 
+
+First Supplemental Indenture, dated as June 28, 2000, to Indenture, dated as of February 25, 1998, between the Company and U.S. Trust Company, National Association (formerly known as U.S. Trust Company of California,
+N.A.).******
+
+4.10
+
+ 
+
+Second Supplemental Indenture, dated as of October 31, 2001, to Indenture, dated as of February 25, 1998, between the Company and BNY Western Trust Company (successor in interest to U.S. Trust Company, National Association, formerly known as
+U.S. Trust Company of California, N.A.).******* 
+
+II-3
+
+ 
+
+4.11
+
+ 
+
+Registration Rights Agreement dated as of October 31, 2001 between the Company and Jefferies & Company, Inc.*******
+
+5
+
+ 
+
+Opinion of Milbank, Tweed, Hadley & McCloy LLP.********
+
+10.1
+
+ 
+
+Amended and Restated Employment Agreement dated as of December 14, 1993 between the Company and Ralph S. Roberts.**
+
+10.2
+
+ 
+
+Loan Agreement dated as of December 17, 2001 between Foothill Capital Corporation, as lender and the Company, ARG Enterprises, Inc., ARG Property Management Corporation and ARG Terra, Inc., as borrowers.*******
+
+10.3
+
+ 
+
+Second Amended and Restated Intercreditor and Collateral Agency Agreement dated as of December 17, 2001 between BNY Western Trust Company, as collateral agent and as trustee, the Company, ARG Enterprises, Inc., ARG Property Management
+Corporation and ARG Terra, Inc., as borrowers, and Foothill Capital Corporation, as lender.*******
+
+12
+
+ 
+
+Statement setting forth Computation of Ratio of Earnings to Fixed Charges.*******
+
+21
+
+ 
+
+Subsidiaries of the Company.**
+
+23.1
+
+ 
+
+Consent of Milbank, Tweed, Hadley & McCloy LLP (included in Exhibit 5 hereto).
+
+23.2
+
+ 
+
+Consent of Independent Public Accountants.********
+
+24.1
+
+ 
+
+Power of Attorney (American Restaurant Group, Inc.)*******
+
+24.2
+
+ 
+
+Power of Attorney (ARG Enterprises, Inc., ARG Property Management Corporation, ARG Terra, Inc.) (contained on the signature page to this registration statement).
+
+25
+
+ 
+
+Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of United States Trust Company of New York.*******
+
+ 
+
+ 
+ 
+
+*
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 33-48183 on Form S-4 filed with the Securities and Exchange Commission on May 28, 1992 as amended with Amendment No. 1 filed on
+September 11, 1992.
+
+**
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 33-74010 on Form S-4 filed with the Securities and Exchange Commission on January 12, 1994.
+
+***
+ 
+Incorporated by reference to the Registrant's Current Report on Form 8-K dated September 13, 1996 filed with the Securities and Exchange Commission on September 30, 1996.
+
+****
+ 
+Incorporated by reference to the Registrant's Annual Report on Form 10-K dated December 29, 1997 filed with the Securities and Exchange Commission on March 30, 1998.
+
+*****
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 333-55861 on Amendment No. 1 to Form S-4 filed with the Securities and Exchange Commission on July 29, 1998.
+
+******
+ 
+Incorporated by reference to the Registrant's Current Report on Form 8-K dated June 28, 2000 and filed with the Securities and Exchange Commission on July 12, 2000.
+
+*******
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 333-76442 to Form S-4 filed with the Securities and Exchange Commission on January , 2002.
+
+********
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 333-76434 to Form S-1 filed with the Securities and Exchange Commission on January 8, 2002.
+
+II-4
+
+ 
+
+ITEM 17. UNDERTAKINGS 
+
+ A. Insofar
+as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the
+foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act
+and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
+of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
+controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
+of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 
+
+B.The
+undersigned registrant hereby undertakes: 
+
+ (1) To
+file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: 
+
+ (i) To
+include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; 
+
+ (ii) To
+reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment
+thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in
+volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
+range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change
+in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. 
+
+ (iii) To
+include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such
+information in the registration statement. 
+
+ (2) That,
+for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new
+registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona
+fide offering thereof. 
+
+ (3) To
+remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the
+offering. 
+
+II-5
+
+ 
+
+ 
+ 
+
+SIGNATURES 
+ 
+
+ Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the
+requirements to file Amendment No. 1 to Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in
+the City of Los Altos, State of California on the 17th day of January 2002.
+
+ 
+
+ 
+
+ 
+
+AMERICAN RESTAURANT GROUP, INC.
+
+ 
+
+ 
+
+By:
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Vice President, Treasurer, Secretary and
+
+General Counsel
+
+ 
+
+ 
+
+ARG ENTERPRISES, INC.
+
+ 
+
+ 
+
+By:
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Vice President, Treasurer and Secretary
+
+ 
+
+ 
+
+ARG PROPERTY MANAGEMENT CORPORATION
+
+ 
+
+ 
+
+By:
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Vice President, Treasurer and Secretary
+
+ 
+
+ 
+
+ARG TERRA, INC.
+
+ 
+
+ 
+
+By:
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Vice President, Treasurer and Secretary
+
+ Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the
+capacities and on the dates indicated.
+
+ 
+
+AMERICAN RESTAURANT GROUP, INC.
+
+ 
+
+Signature
+ 
+Title
+ 
+Date
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+/s/ GEORGE G. GOLLEHER* George G. Golleher
+ 
+Chairman of the Board and Director
+ 
+January 17, 2002
+
+/s/ RALPH S. ROBERTS* Ralph S. Roberts
+
+ 
+
+Chief Executive Officer, President and Director (principal executive officer and director)
+
+ 
+
+January 17, 2002 
+
+II-6
+
+ 
+
+/s/ PATRICK J. KELVIE* Patrick J. Kelvie
+
+ 
+
+Vice President, Treasurer, Secretary and General Counsel (principal financial officer)
+
+ 
+
+January 17, 2002
+
+/s/ SHERRI A. CARROLL* Sherri A. Carroll
+
+ 
+
+Controller
+
+ 
+
+January 17, 2002
+
+/s/ ANWAR S. SOLIMAN* Anwar S. Soliman
+
+ 
+
+Director
+
+ 
+
+January 17, 2002
+
+/s/ ROBERT D. BEYER* Robert D. Beyer
+
+ 
+
+Director
+
+ 
+
+January 17, 2002
+
+/s/ M. BRENT STEVENS* M. Brent Stevens
+
+ 
+
+Director
+
+ 
+
+January 17, 2002
+
+*By:/s/ PATRICK J. KELVIE Patrick J. Kelvie
+ Attorney-in-fact
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+ 
+
+POWER OF ATTORNEY 
+ 
+
+ Each person whose signature appears below constitutes and appoints Patrick J. Kelvie his or her true and lawful
+attorney-in-fact and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and
+all amendments (including post-effective amendments) to this Registration Statement, and any registration statement of the Company to be filed after the date hereof pursuant to
+Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and to
+take such actions in, and file with the appropriate authorities in, whatever states said attorneys-in-fact and agents, and each of them, shall determine, such applications,
+statements, consents, and other documents, as may be necessary or expedient to register securities of the Company for sale, granting unto said attorneys-in-fact and agents full
+power and authority to do so and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in
+person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done
+by virtue hereof and the registrant hereby confers like authority on its behalf.
+
+ This Registration Statement and Power of Attorney, pursuant to the requirement of the Securities Act of 1933, as amended, have been signed below by the following
+persons in the capacities and on the dates indicated.
+
+ Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the
+capacities and on the dates indicated.
+
+II-7
+
+ 
+
+ARG ENTERPRISES, INC.
+
+ 
+
+Signature
+ 
+Title
+ 
+Date
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+/s/ RALPH S. ROBERTS Ralph S. Roberts
+ 
+Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer (principal executive officer and director)
+ 
+January 17, 2002
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+
+ 
+
+Vice President, Treasurer and Secretary (principal financial officer and director)
+
+ 
+
+January 17, 2002
+
+ARG PROPERTY MANAGEMENT CORPORATION
+
+ 
+
+Signature
+ 
+Title
+ 
+Date
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+/s/ RALPH S. ROBERTS Ralph S. Roberts
+ 
+Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer (principal executive officer and director)
+ 
+January 17, 2002
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+
+ 
+
+Vice President, Treasurer and Secretary (principal financial officer and director)
+
+ 
+
+January 17, 2002
+
+ARG TERRA, INC.
+
+ 
+
+Signature
+ 
+Title
+ 
+Date
+
+ 
+
+ 
+
+ 
+
+ 
+
+ 
+
+/s/ RALPH S. ROBERTS Ralph S. Roberts
+ 
+Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer (principal executive officer and director)
+ 
+January 17, 2002
+
+/s/ PATRICK J. KELVIE Patrick J. Kelvie
+
+ 
+
+Vice President, Treasurer and Secretary (principal financial officer and director)
+
+ 
+
+January 17, 2002
+
+II-8
+
+ 
+ 
+
+EXHIBIT INDEX 
+ 
+
+Exhibit No.
+ 
+ 
+Description
+ 
+
+ 1.1
+ 
+Purchase Agreement dated as of September 28, 2001 by and between the Company and Jefferies & Company, Inc.*******
+
+ 2.1
+
+ 
+
+Purchase Agreement dated as of September 11, 1996 by and between ARG Property Management Corporation and ARG Enterprises, Inc. and ARG Properties I, LLC.***
+
+ 2.2
+
+ 
+
+Master lease dated September 11, 1996 between ARG Properties I, LLC, as Landlord and ARG Enterprises, Inc. as Tenant.***
+
+ 2.3
+
+ 
+
+Lease #06152 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Bloomington, Minnesota.***
+
+ 2.4
+
+ 
+
+Lease #06153 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Fridley, Minnesota.***
+
+ 2.5
+
+ 
+
+Lease #06154 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Minnetonka, Minnesota.***
+
+ 2.6
+
+ 
+
+Lease #06155 dated September 11, 1996 between Captec Net Lease Realty, Inc. and ARG Enterprises, Inc. as Tenant for Roseville, Minnesota.***
+
+ 2.7
+
+ 
+
+Not Applicable.
+
+ 2.8
+
+ 
+
+Guaranty of Lease dated September 11, 1996 by ARG Enterprises, Inc. as Tenant to ARG Properties I, LLC as Landlord.***
+
+ 2.9
+
+ 
+
+A Guaranty of Lease dated September 11, 1996 by ARG Enterprises, Inc. as Tenant to Captec Net Lease Realty, Inc. as Landlord for each of four Minnesota restaurants.***
+
+ 2.10
+
+ 
+
+Not Applicable.
+
+ 2.11
+
+ 
+
+Stock Purchase Agreement, dated as of May 9, 2000 between the Company and NBACo, Inc.******
+
+ 2.12
+
+ 
+
+Amendment No. 1, dated as of June 26, 2000, to Stock Purchase Agreement, dated as of May 9, 2000, between the Company and NBACo, Inc.******
+
+ 3.1
+
+ 
+
+Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on July 23, 1991.*
+
+ 3.2
+
+ 
+
+Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on March 21, 1992.*
+
+ 3.3
+
+ 
+
+Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on February 23, 1998.****
+
+ 3.3A
+
+ 
+
+Amendment to Certificate of the Designation of the Powers, Preferences and relative, Participating, Optional and Other Special Rights of the 12% Series A Senior Pay-In-Kind Exchangeable Preferred stock and the 12% Series B Senior Pay-In-Kind
+Exchangeable Preferred Stock and Qualifications, Limitations or Restrictions Thereof of the Company filed with the Secretary of State of Delaware on October 31, 2001.*******
+
+ 3.4
+
+ 
+
+By-Laws of the Company.*
+
+ 3.5
+
+ 
+
+Restated Articles of Incorporation of ARG Enterprises, Inc. filed with the Secretary of State of California on May 3, 1988.*******
+
+ 3.6
+
+ 
+
+Bylaws of ARG Enterprises, Inc.******* 
+
+ 3.7
+
+ 
+
+Restated Articles of Incorporation of ARG Property Management Corporation filed with the Secretary of State of California on May 3, 1988.*******
+
+ 3.8
+
+ 
+
+Bylaws of ARG Property Management Corporation.*******
+
+ 3.9
+
+ 
+
+Certificate of Incorporation of ARG Terra, Inc. filed with the Secretary of State of Delaware on June 20, 2000.*******
+
+ 3.10
+
+ 
+
+Bylaws of ARG Terra, Inc.*******
+
+ 4.1
+
+ 
+
+Indenture dated as of February 25, 1998 between the Company and U.S. Trust Company of California, N.A., as Trustee (including specimen certificate of 11.5% Senior Secured Note due 2003).****
+
+ 4.2
+
+ 
+
+Warrant Agreement dated as of February 25, 1998 between the Company and U.S. Trust Company of California, N.A., as warrant agent (including specimen certificate of warrant).****
+
+ 4.3
+
+ 
+
+Registration Rights Agreement dated as of February 25, 1998 between the Company and Jefferies & Company, Inc.****
+
+ 4.4
+
+ 
+
+Securityholders' and Registration Right Agreement dated as of February 25, 1998 between the Company and Jefferies & Company, Inc., as purchaser.****
+
+ 4.5
+
+ 
+
+Management Registration Right Agreement dated as of February 28, 1998 between the Company and the Management Stockholders.****
+
+ 4.6
+
+ 
+
+Certificate of Designation filed with the Secretary of State of Delaware on February 24, 1998.****
+
+ 4.7
+
+ 
+
+Certificate of Correction to the Certificate of Designation filed with the Secretary of State of Delaware on February 25, 1998.****
+
+ 4.8
+
+ 
+
+Not Applicable.
+
+ 4.9
+
+ 
+
+First Supplemental Indenture, dated as June 28, 2000, to Indenture, dated as of February 25, 1998, between the Company and U.S. Trust Company, National Association (formerly known as U.S. Trust Company of California,
+ N.A.).******
+
+ 4.10
+
+ 
+
+Second Supplemental Indenture, dated as of October 31, 2001, to Indenture, dated as of February 25, 1998, between the Company and BNY Western Trust Company (successor in interest to U.S. Trust Company, National Association, formerly known as
+U.S. Trust Company of California, N.A.).*******
+
+ 4.11
+
+ 
+
+Registration Rights Agreement dated as of October 31, 2001 between the Company and Jefferies & Company, Inc.*******
+
+ 5
+
+ 
+
+Opinion of Milbank, Tweed, Hadley & McCloy LLP.********
+
+10.1
+
+ 
+
+Amended and Restated Employment Agreement dated as of December 14, 1993 between the Company and Ralph S. Roberts.**
+
+10.2
+
+ 
+
+Loan Agreement dated as of December 17, 2001 between Foothill Capital Corporation, as lender and the Company, ARG Enterprises, Inc., ARG Property Management Corporation and ARG Terra, Inc., as borrowers.*******
+
+10.3
+
+ 
+
+Second Amended and Restated Intercreditor and Collateral Agency Agreement dated as of December 17, 2001 between BNY Western Trust Company, as collateral agent and as trustee, the Company, ARG Enterprises, Inc., ARG Property Management
+Corporation and ARG Terra, Inc., as borrowers, and Foothill Capital Corporation, as lender.*******
+
+12
+
+ 
+
+Statement setting forth Computation of Ratio of Earnings to Fixed Charges.******* 
+
+21
+
+ 
+
+Subsidiaries of the Company.**
+
+23.1
+
+ 
+
+Consent of Milbank, Tweed, Hadley & McCloy LLP (included in Exhibit 5 hereto).
+
+23.2
+
+ 
+
+Consent of Independent Public Accountants.********
+
+24.1
+
+ 
+
+Power of Attorney (American Restaurant Group, Inc.)*******
+
+24.2
+
+ 
+
+Power of Attorney (ARG Enterprises, Inc., ARG Property Management Corporation, ARG Terra, Inc.) (contained on the signature page to this registration statement).
+
+25
+
+ 
+
+Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of United States Trust Company of New York.*******
+
+ 
+
+ 
+ 
+
+*
+ 
+Incorporated by reference to the Registrant's Registration Statement No. 33-48183 on Form S-4 filed with the Securities and Exchange Commission on May 28, 1992 as amended with Amendment No. 1 filed on
+September 11, 1992.
+
+**
+
+ 
+
+Incorporated by reference to the Registrant's Registration Statement No. 33-74010 on Form S-4 filed with the Securities and Exchange Commission on January 12, 1994.
+
+***
+
+ 
+
+Incorporated by reference to the Registrant's Current Report on Form 8-K dated September 13, 1996 filed with the Securities and Exchange Commission on September 30, 1996.
+
+****
+
+ 
+
+Incorporated by reference to the Registrant's Annual Report on Form 10-K dated December 29, 1997 filed with the Securities and Exchange Commission on March 30, 1998.
+
+*****
+
+ 
+
+Incorporated by reference to the Registrant's Registration Statement No. 333-55861 on Amendment No. 1 to Form S-4 filed with the Securities and Exchange Commission on July 29, 1998.
+
+******
+
+ 
+
+Incorporated by reference to the Registrant's Current Report on Form 8-K dated June 28, 2000 and filed with the Securities and Exchange Commission on July 12, 2000.
+
+*******
+
+ 
+
+Incorporated by reference to the Registrant's Registration Statement No. 333-76442 to Form S-4 filed with the Securities and Exchange Commission on January 8, 2002.
+
+********
+
+ 
+
+Incorporated by reference to the Registrant's Registration Statement No. 333-76434 to Form S-1 filed with the Securities and Exchange Commission on January 8, 2002.
+
+QuickLinks
+
+TABLE OF CONTENTS

parsed_sections/legal_matters/2002/CIK0000895040_gulfterra_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the shares and i-units offered by this prospectus will be passed upon for us by Akin, Gump, Strauss, Hauer & Feld, L.L.P., Houston, Texas. Various legal matters relating to the offering will be passed upon for the underwriters by Vinson & Elkins L.L.P., Houston, Texas.

parsed_sections/legal_matters/2002/CIK0000927914_alderwoods_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the securities being offered by this prospectus were passed upon for us by Jones, Day, Reavis & Pogue.

parsed_sections/legal_matters/2002/CIK0001001865_coast_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the common stock offered hereby will be passed upon for us by Gibson, Dunn & Crutcher LLP, Los Angeles, California, and by McDonald Carano Wilson McCune Bergin Frankovich & Hicks LLP, Reno, Nevada. Certain legal matters will be passed upon for the underwriters by Latham & Watkins, Los Angeles, California.

parsed_sections/legal_matters/2002/CIK0001003264_aps_legal_matters.txt

@@ -0,0 +1 @@
+Legal matters The validity of the shares of common stock offered hereby will be passed upon for us by Epstein Becker & Green, P.C., New York, New York. Steven B. Epstein, one of our directors, is a member of Epstein Becker & Green, P.C. and holds 125,000 shares of our common stock and options to purchase 150,000 shares of our common stock. Dewey Ballantine LLP, New York, New York, is acting as counsel for the underwriters in connection with this offering.

parsed_sections/legal_matters/2002/CIK0001013243_aaipharma_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the common stock offered for sale by this prospectus will be passed upon for us by Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina. Certain legal matters in connection with this offering will be passed upon for the underwriters by Shearman & Sterling, New York, New York.

parsed_sections/legal_matters/2002/CIK0001040736_mmi_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the resale notes will be passed upon by Weil, Gotshal & Manges LLP.

parsed_sections/legal_matters/2002/CIK0001049782_brookline_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The legality of the common stock has been opined upon for Brookline Bancorp, Inc. by Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., special counsel to Brookline Bancorp, Inc. Certain legal matters will be passed upon for Ryan, Beck & Co., LLC by Foley, Hoag & Eliot LLP, Boston, Massachusetts.

parsed_sections/legal_matters/2002/CIK0001050959_viacell_legal_matters.txt

@@ -0,0 +1 @@
+Legal matters Our counsel, Palmer & Dodge LLP, Boston, Massachusetts, will pass on the validity of the shares of common stock offered by this prospectus. Paul Kinsella, a partner of Palmer & Dodge LLP, is our Secretary. Dewey Ballantine LLP, New York, is counsel to the underwriters in connection with this offering.

parsed_sections/legal_matters/2002/CIK0001061505_gpc_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the notes offered hereby and other legal matters relating to this offering will be passed upon for us by Simpson Thacher & Bartlett, New York, New York. The validity of the notes offered hereby and other legal matters relating to this offering will be passed upon for the underwriters by Cahill Gordon & Reindel, New York, New York.

parsed_sections/legal_matters/2002/CIK0001061506_graham_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the notes offered hereby and other legal matters relating to this offering will be passed upon for us by Simpson Thacher & Bartlett, New York, New York. The validity of the notes offered hereby and other legal matters relating to this offering will be passed upon for the underwriters by Cahill Gordon & Reindel, New York, New York.

parsed_sections/legal_matters/2002/CIK0001068084_private_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the common stock offered by this prospectus will be passed upon for Private Media Group, Inc. by Guzik & Associates, Los Angeles, California. Shearman & Sterling, Frankfurt, Germany, and London, England, will pass upon certain legal matters for the underwriters. Samuel S. Guzik, a principal of Guzik & Associates, beneficially owns 43,955 shares of common stock and holds options to acquire an additional 21,045 shares of common stock at $ 4.17 per share.

parsed_sections/legal_matters/2002/CIK0001070110_pharmacy_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS Kutak Rock LLP, Kansas City, Missouri, will render an opinion regarding the validity of our common stock.

parsed_sections/legal_matters/2002/CIK0001089558_completel_legal_matters.txt

@@ -0,0 +1 @@
+LEGAL MATTERS The validity of the Ordinary shares underlying the Warrants will be passed upon for us by Stibbe, Amsterdam.