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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 0-14030
ARK RESTAURANTS CORP.
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(Exact name of registrant as specified in its charter)
New York 13-3156768
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
85 Fifth Avenue, New York, New York 10003
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (212) 206-8800
------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
_____ _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding shares at May 11, 1998
- - ----------------------------- ----------------------------------
(Common stock, $.01 par value) 3,842,499
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ARK RESTAURANTS CORP. AND SUBSIDIARIES
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INDEX
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Consolidated Financial Statements:
Consolidated Condensed Balance Sheets - March 28, 1998
(Unaudited) and September 27, 1997 (Unaudited) 1
Consolidated Condensed Statements of Operations and Retained Earnings -
13-week periods ended March 28, 1998 (Unaudited) and March 29, 1997
(Unaudited) and 26-week periods ended March 28, 1998 (Unaudited) and March
29, 1997 (Unaudited) 2
Consolidated Condensed Statements of Cash Flows - 26-week periods
ended March 28, 1998 (Unaudited) and March 29, 1997 (Unaudited) 3
Notes to Consolidated Condensed Financial
Statements (Unaudited) 4-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in Thousands)
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<TABLE>
<CAPTION>
March 28, September 27,
1998 1997
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 695 $ 722
Accounts receivable 2,487 1,975
Inventories 2,042 2,045
Current portion of long-term receivables 320 278
Prepaid expenses and other current assets 570 433
Refundable and prepaid income taxes 218 -
Deferred income taxes 915 915
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Total current assets 7,247 6,368
LONG-TERM RECEIVABLES 1,294 971
ASSETS HELD FOR SALE 1,270 1,893
FIXED ASSETS - At Cost:
Leasehold improvements 22,771 22,526
Furniture, fixtures and equipment 18,875 18,387
Leasehold improvements in progress 183 50
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41,829 40,963
Less accumulated depreciation and
amortization 15,623 14,037
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26,206 26,926
INTANGIBLE ASSETS - Less accumulated
amortization of $2,576 and $2,386 5,452 3,346
DEFERRED INCOME TAXES 1,081 1,081
OTHER ASSETS 604 683
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TOTAL ASSETS $43,154 $41,268
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 3,461 $ 3,560
Accrued expenses and other current
liabilities 2,728 3,099
Current maturities of long-term debt 580 1,424
Current maturities of capital lease obligations 276 245
Accrued income taxes - 414
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Total current liabilities 7,045 8,742
LONG-TERM DEBT - net of current maturities 7,912 4,703
OBLIGATIONS UNDER CAPITAL LEASES - net of current
maturities 242 406
OPERATING LEASE DEFERRED CREDIT 1,528 1,528
SHAREHOLDERS' EQUITY:
Common stock, par value $.01 per share -
authorized, 10,000,000 shares;
issued, 5,187,836 and 5,177,836 shares 52 52
Additional paid-in capital 14,196 14,131
Retained earnings 13,426 12,953
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27,674 27,136
Less treasury stock, 1,345,337 shares 1,247 1,247
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Total shareholders' equity 26,427 25,889
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $43,154 $41,268
======= =======
</TABLE>
See notes to consolidated condensed financial statements
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ARK RESTAURANTS CORP. AND SUBSIDIARIES
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<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (Unaudited)
(In Thousands, Except per share amounts)
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13 Weeks Ended 26 Weeks Ended
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March 28, March 29, March 28, March 29,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
NET SALES $25,198 $24,887 $52,138 $43,054
COST OF SALES 6,853 7,112 14,101 12,210
------- ------- ------- -------
GROSS RESTAURANT PROFIT 18,345 17,775 38,037 30,844
MANAGEMENT FEE INCOME 440 453 637 651
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18,785 18,228 38,674 31,495
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OPERATING EXPENSES
Payroll and payroll benefits 9,616 10,244 19,372 17,602
Occupancy 3,354 3,365 6,530 5,797
Depreciation and amortization 948 858 1,894 1,446
Other 3,535 4,005 7,025 6,555
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17,453 18,472 34,821 31,400
GENERAL AND ADMINISTRATIVE
EXPENSES 1,734 1,587 3,126 3,009
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19,187 20,059 37,947 34,409
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OPERATING INCOME (LOSS) (402) (1,831) 727 (2,914)
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OTHER EXPENSE (INCOME):
Interest expense, net 168 219 253 238
Other income (147) (203) (314) (384)
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21 16 (61) (146)
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INCOME (LOSS) before provision
(benefit) for income taxes (423) (1,847) 788 (2,768)
PROVISION (BENEFIT) for income taxes (169) ( 739) 315 (1,107)
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NET INCOME (LOSS) (254) (1,108) 473 (1,661)
RETAINED EARNINGS, Beginning
of period 13,680 10,663 12,953 11,216
------- ------ ------- -------
RETAINED EARNINGS, End of period $13,426 $9,555 $13,426 $9,555
======= ======= ======= =======
NET INCOME (LOSS) PER SHARE -
BASIC & DILUTED $(.07) $(.29) $.12 $(.46)
====== ====== ==== =====
WEIGHTED AVERAGE NUMBER OF SHARES-BASIC 3,842 3,821 3,839 3,596
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF SHARES-DILUTED 3,842 3,821 3,863 3,596
======= ======= ======= =======
</TABLE>
See notes to consolidated condensed
financial statements
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ARK RESTAURANTS CORP. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
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<TABLE>
<CAPTION>
26 Weeks Ended
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March 28, March 29,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 473 $(1,661)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization of fixed assets 1,680 1,365
Amortization of intangibles 214 206
Loss (Gain) on sale of restaurants (185) (188)
Deferred income taxes - (175)
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable (512) (907)
Decrease (Increase) in inventories (24) (869)
Decrease (Increase) in prepaid expenses and other
current assets (137) (28)
Decrease (Increase) in refundable and prepaid income taxes (218) (1,287)
Decrease (Increase) in other assets 69 21
Increase (Decrease) in accounts payable - trade (99) 1,260
Increase (Decrease) in accrued expenses and other
current liabilities (371) 353
Increase (Decrease) in accrued income taxes (414) (324)
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Net cash provided by (used) in operating activities 476 (2,234)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets (365) (9,539)
Additions to intangible assets (61) (7)
Payments received on long-term receivables 161 21
Restaurant acquisition (2,735)
Restaurant sales 200 267
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Net cash used in investing activities (2,800) (9,258)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of long-term debt 4,100 9,750
Principal payment on long-term debt (1,734) (4,686)
Principal payment on capital lease obligations (134) (123)
Proceeds from common stock private placement, net - 6,029
Exercise of stock options 65 66
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Net cash provided by financing activities 2,297 11,036
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NET DECREASE IN CASH AND CASH EQUIVALENTS (27) (456)
CASH AND CASH EQUIVALENTS, beginning of period 722 907
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CASH AND CASH EQUIVALENTS, end of period $ 695 $ 451
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during year for:
Interest $ 327 $ 629
====== =======
Income taxes $ 945 693
====== =======
</TABLE>
See notes to consolidated condensed financial statements.
3
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ARK RESTAURANTS CORP. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements have been prepared by Ark
Restaurants Corp. (the "Company"), without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position at March 28, 1998 and results of
operations and changes in cash flows for the periods ended March 28, 1998 and
March 29, 1997 have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's annual report on Form 10-K for the year
ended September 27, 1997. The results of operations for the periods ended March
28, 1998 are not necessarily indicative of the operating results for the full
year.
Certain reclassifications have been made to the fiscal 1997 financial
statements to conform to the fiscal 1998 presentation.
2. RESTAURANT SALES
In the first quarter of fiscal 1998 the Company sold a restaurant located in
the borough of Manhattan in New York City. The selling price for the restaurant
was $1,750,000, of which $200,000 was paid in cash and the balance of $1,550,000
is due in monthly installments of $18,569, inclusive of interest at 7.5%, from
May 1998 through April 2000 and monthly installments of $14,500, inclusive of
interest at 7.5%, from May 2000 through December 2008. At December 2008 the
remaining outstanding balance of $519,260 matures. The Company recognized on
this sale a gain of approximately $185,000 in the first quarter of fiscal 1998.
Additional deferred gains totaling approximately $1,000,000 could be recognized
in future periods as the notes are collected. The Company deferred recognition
of the gain on the sale due to the uncertainty as to the ultimate collectibility
of the outstanding notes.
3. CONTINGENCIES
A lawsuit was commenced against the Company in October 1997 in the District
Court for the Southern District of New York by 44 present and former employees
alleging various violations of Federal wage and hour laws. The complaint seeks
an injunction against further violations of the labor laws and payment of unpaid
minimum wages, overtime and other allegedly required amounts, liquidated
damages, penalties and attorneys fees. The Company believes that most of the
claims asserted in this litigation, including those with respect to minimum
wages, are insubstantial. The Company believes that there were certain
4
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violations of overtime requirements, which have today been largely corrected,
for which the Company will have liability. While the Company does not believe
that the liability to any single employee for overtime violations will be
consequential to it, the Company's aggregate liability will depend in large part
on the number of persons who "opt-in" to the lawsuit asserting similar
violations. This uncertainty prevents the Company from making any reasonable
estimate of its ultimate liability. However, based upon information available to
the Company at this time, the Company does not believe that the amount of
liability which may be sustained in this action will have a materially adverse
effect on the Company's business or financial condition.
An action was commenced against the Company and certain of its subsidiaries
in April 1998 in New York State Supreme Court by Larry Forgione, the executive
chef and manager of three of the Company's restaurants. The action seeks to
enjoin the Company from taking control of the restaurant The Grill Room or from
selling either of the restaurants An American Place or Beekman 1766 Tavern and
also seeks unspecified damages. The Company believes that the allegations in the
complaint are without merit.
An action was commenced in May 1998 in Superior Court of the District of
Columbia against the Company and its Washington, DC subsidiaries by 6 present
and former employees of the restaurants owned by such subsidiaries alleging
violations of the District of Columbia Wage & Hours Act relating to minimum
wages and overtime compensation. While the action is in its early stages, the
Company does not believe that its liability, if any, from an adverse result in
this matter would have a material adverse effect upon its business or financial
condition.
4. LONG-TERM DEBT
In March 1998 the Company and its main bank (Bank Leumi USA) reached an
agreement in principle to extend the Revolving Credit and Term Loan Facility for
an additional two years until April 2000 and allow the Company to borrow up to
$10,000,000. Loans under this amended facility are expected to bear interest at
a rate of prime plus 1/2% per annum. The Agreement is expected to be finalized
in the June 1998 quarter.
5. INCOME PER SHARE OF COMMON STOCK
The Company adopted in the first quarter of fiscal 1998, The Financial
Accounting Standards Board Statement No. 128 "Earnings per Share" which
established new standards for computing and presenting earnings per share. The
Company now discloses "Basic Earnings per Share", which is based upon the
weighted average number of shares of common stock outstanding during each period
and "Diluted Earnings per Share" which requires the Company to include common
stock equivalents consisting of dilutive stock options and warrants. For the
periods ended March 28, 1998 and March 29, 1997, Basic Earnings per share and
Fully Diluted Earnings per Share were the same. The Company also applied the new
standard to the periods ended March 29, 1997 and there were no change in the
previously reported earnings per share for such periods.
5
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A reconciliation of the numerators and denominators of the basic and diluted per
share computations follow:
13 Weeks Ended March 28, 1998:
<TABLE>
<CAPTION>
Income(loss) Shares Per-Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
BASIC EPS ($254,000) 3,842,000 ($.07)
Stock Options -- -- --
Warrants -- -- --
DILUTED EPS ($254,000) 3,842,000 ($.07)
</TABLE>
26 Weeks Ended March 28, 1998:
<TABLE>
<CAPTION>
Income(loss) Shares Per-Share
(Numerator) (Denominator) Amount
<S> <C> <C> <C>
BASIC EPS $473,000 3,839,000 $.12
Stock Options -- 24,000 --
Warrants -- -- --
DILUTED EPS $473,000 3,863,000 $.12
</TABLE>
Options to purchase 132,500 shares of common stock at $12 per share and warrants
to purchase 35,000 shares of common stock at $11.625 were not included in the
computation of diluted earnings per share for the 26 weeks ended March 28, 1998
because the exercise prices were greater than the average market price of the
common shares. Options to purchase 317,500 shares of common stock at a price
range of $8.00 to $12.000 are not included in the computation of diluted
earnings for the 13-weeks ended March 28, 1998 for the Company had a net loss
for the quarter. Accordingly stock options were antidulutive for such period.
Options to purchase 223,125 shares of common stock at a price range of $4.38 to
$12.00 are not included in diluted earnings per share for the 26-weeks period
ended March 29, 1997 for the Company had a loss for such period.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements.
NET SALES
Net sales at restaurants owned by the Company increased 1.2% in the 13-week
period ended March 28, 1998 from the comparable period ended March 29, 1997 and
increased 21.1% in the 26-week period ended March 28, 1998 from the comparable
period last year. The increase in sales for the 26-week period ended March 28,
1998 was primarily due to sales from the food and beverage operations in the New
York New York Hotel & Casino resort in Las Vegas ("the Las Vegas facilities")
which opened in January 1997. At the Las Vegas facilities the Company operates a
450 seat, twenty four hour a day restaurant (America); a 160 seat steak house
(Gallagher's); a 200 seat Mexican restaurant (Gonzalez y Gonzalez); and the
resort's room service, banquet facilities and an employee dining facility. The
Company also operates a complex of nine smaller eateries (Village Eateries) in
the resort which simulate the experience of walking through New York's Little
Italy and Greenwich Village.
Same store sales in the 13-week period ended March 28, 1998 decreased by
2.5%. The components of the decrease consisted of a 12.7% decrease at the Las
Vegas facilities from the second quarter last year during with the hotel first
opened, offset by a 2.4% increase at the Company's other operations. Same store
sales in the 26-week period increased by 3.3% principally due to increased
customer counts.
COSTS AND EXPENSES
The Company's cost of sales consists of food and beverage costs at restaurants
owned by the Company. For the 13-week period ended March 28, 1998 cost of sales
as a percentage of net sales was 27.2% as compared to 28.6% last year and cost
of sales as a percentage of net sales for the 26-week period was 27.0% as
compared to 28.4% last year. The decrease in cost of sales as a percentage of
food and beverage sales was principally due to lower food and beverage costs
achieved at the Company's Las Vegas facilities. The Company opened the Las Vegas
facilities in the comparable 13-week period ended March 29, 1997. During that
opening period, the Company experienced inefficient cost of sales which are
typically encountered with new facilities. The Company believes that its cost of
sales as a percentage of net sales will continue to improve in the upcoming
fiscal 1998 quarters in comparison to the comparable periods last year.
Operating expenses of the Company, consisting of restaurant payroll,
occupancy and other expenses at restaurants owned by the Company, as a
percentage of net sales, were 69.3% for the 13-week period ended March 28, 1998
as compared to 74.2% last year and for the 26-week period ended March 28, 1998
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were 66.8% as compared to 72.9% last year . The decrease in operating expenses
as a percentage of net sales in the 13-week and 26-week periods ended March 28,
1998 was principally due operating efficiencies achieved at the Company's Las
Vegas facilities. The Company's payroll expenses as a percentage of net sales
for the 13-week period ended March 28, 1998 decreased to 38.2% of net sales as
compared to 41.2% last year and such expenses for the 26-week period ended March
28, 1998 decreased to 37.2% as compared to 40.9% last year. A significant
portion of this decrease was achieved at the Company's Las Vegas facilities.
General and administrative expenses, as a percentage of net sales, were
6.9% for the 13-week period ended March 28, 1998 as compared to 6.4% last year
and for the 26-week period ended March 28, 1998 were 6.0% as compared to 7.0%
last year. If net sales at managed restaurants and bars were included in
consolidated net sales, general and administrative expenses as a percentage of
net sales would have been 6.3% for the 13-week period ended March 28, 1998 as
compared to 5.7% last year and would have been 5.4% for the 26-week period ended
March 28, 1998 as compared to 6.1% last year. The increase in general and
administrative expenses as a percentage of net sales for the 13-week period
ended March 28, 1998 was principally due to increases in payroll and marketing
costs in connection with the implementation of a customer loyalty program.
The Company had a net loss of $254,000 for the 13-week period ended March
28, 1998 as compared to a net loss of $1,108,000 last year and had a net income
of $473,000 for the 26-week period ended March 28, 1998 as compared to a net
loss of $1,661,000 last year. The results for the 13-week period ended March 29,
1997, were impacted by approximately $700,000 ($420,000 after tax) in
pre-opening expenses and early operating losses at the Company's Las Vegas
restaurant facilities and results for the 26-week period ended March 29, 1997
were impacted by approximately $2,000,000 ($1,200,000 after tax) in pre-opening
and early operating losses at the Company's Las Vegas restaurant facilities. The
Las Vegas restaurant facilities have been profitable since February 1997.
During the 13-week period ended March 29, 1997 the Company managed six
restaurants and a corporate dining facility owned by third parties. Net sales of
the managed locations were $2,361,000 during the 13-week period ended March 28,
1998 as compared to $2,862,000 last year and net sales for the 26-week period
ended March 28, 1998 were $5,827,000 as compared to $6,133,000 last year. These
decreases in the 13-week and 26-week periods ended March 28, 1998 as compared to
last year was principally due to the termination of a management agreement in
January 1998 at a corporate dining facility. Net sales of these operations are
not included in consolidated net sales.
INCOME TAXES
The provision (benefit) for income taxes reflects Federal income taxes
calculated on a consolidated basis and state and local income taxes calculated
by each subsidiary on a non consolidated basis. Most of the restaurants owned or
managed by the Company are owned or managed by a separate subsidiary. For state
and local income tax purposes, the losses incurred by a subsidiary may only be
used to offset that subsidiary's income, with the exception of the restaurants
which operate in the District of Columbia. Accordingly, the
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Company's overall effective income tax rate has varied depending on the level of
the losses incurred at individual subsidiaries.
The Company's overall effective tax rate in the future will be affected by
factors such as the level of losses incurred at the Company's New York
facilities (which cannot be consolidated for state and local tax purposes), the
amount of pre-tax income earned outside of New York City (Nevada has no state
income tax and other states in which the Company operate have income tax rates
substantially lower in comparison to New York) and the utilization of state and
local net operating loss carry forwards. In order to more effectively utilize
tax loss carry forwards at restaurants that were unprofitable, the Company has
merged certain profitable subsidiaries with certain loss subsidiaries.
As a result of the enactment of the Revenue Reconciliation Act of 1993, the
Company is entitled, to a tax credit based on the amount of FICA taxes paid by
the Company with respect to the tip income of restaurant service personnel. The
Company estimates that this credit will be in excess of $400,000 for the current
year.
The Internal Revenue Service is currently examining the Company's Federal
Income Tax returns for the fiscal years ended September 28, 1991 through October
1, 1994, and has proposed certain adjustments, all of which are being contested
by the Company. The adjustments primarily relate to (i) pre-opening, legal and
accounting expenses incurred in connection with new or acquired restaurants that
the Internal Revenue Service asserts should have been capitalized and amortized
rather than currently expensed and (ii) travel and meal expenses for which the
Internal Revenue Service asserts the Company did not comply with certain
recordkeeping requirements of the Internal Revenue Code. The Company does not
believe that any adjustments resulting from such examination will have a
material effect on the Company's financial condition.
LIQUIDITY AND SOURCES OF CAPITAL
The Company's primary source of capital is cash provided by operations and
funds available from the revolving credit agreement with its main bank, Bank
Leumi USA. The Company from time to time also utilizes equipment financing in
connection with the construction of a restaurant and seller financing in
connection with the acquisition of a restaurant. The Company utilizes capital
primarily to fund the cost of developing and opening new restaurants and
acquiring existing restaurants.
The Company and its main bank reached an agreement in principle in March
1998 on a $10,000,000 revolving credit facility for use in the construction and
acquisition of new restaurants and for working capital at the Company's existing
restaurants. The facility will allow the Company to borrow up to $10,000,000
until April 2000 at which time outstanding loans mature. The loans will bear
interest at a rate of prime plus 1/2%. At March 28, 1998 the Company had
borrowings of $5,750,000 outstanding under its existing facility.
The Company also has a two year $1,000,000 letter of credit facility for
use in lieu of lease security deposits. At March 28, 1998 the Company had
delivered $679,000 in irrevocable letters of credit on this facility.
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In January 1997, pursuant to a new equipment financing facility, the
Company borrowed from its main bank $2,851,000 at an interest rate of 8.75% to
refinance the purchase of various restaurant equipment at the Las Vegas
restaurant facilities. The note, which is payable in 60 equal monthly
installments through January 2002, is secured by such restaurant equipment. At
March 28, 1998 the Company had $2,292,000 outstanding on this facility.
At March 28, 1998, the Company had working capital of $202,000 as compared
to a working capital deficit of $2,374,000 at September 27, 1997. The restaurant
business does not require the maintenance of significant inventories or
receivables, thus the Company is able to operate with minimal and even negative
working capital.
The amount of indebtedness that may be incurred by the Company is limited
by the revolving credit agreement with its main bank. Certain provisions of the
agreement may impair the Company's ability to borrow funds. However, the Company
believes that the restrictions do not impair the Company's ability to conduct
its business nor limit the Company's opportunities to expand its business.
RESTAURANT EXPANSION
In February 1998 the Company purchased an existing restaurant (the Stage
Deli of Las Vegas) located in the Forum Shops at Caesar's Shopping Center in Las
Vegas for $2,735,000 in cash. The restaurant which has seating for 200 is
operated under a license agreement with the owner of the New York City
restaurant of that name.
The Company is currently constructing in the South Street Seaport in
downtown New York City a 200 seat Southwestern style bar and restaurant. The
site was formerly occupied by a restaurant and the Company is receiving a
$500,000 landlord construction allowance. The Company expects to incur
approximately $1,200,000 in capital expenditures and other pre-opening expenses
to open this restaurant. The Company expects to open this restaurant in the
September 1998 fiscal quarter.
The Company previously announced that it entered into a joint venture
agreement with Sony Theatres' Loeks Star Partners and Millennium Partners to
develop and operate four restaurants containing a total of approximately 50,000
square feet at a large theater development in Southfield, Michigan. The Company
anticipates that its share of the required capital contributions to meet the
construction costs, initial inventories and pre-opening expenses will be
$6,000,000. The project is currently in the design phase and the Company
expects to open such restaurants in the first half of fiscal 1999.
The Company is exploring additional opportunities for expansion of its
business. However, the Company is not currently committed to any other projects.
The Company expects to fund its existing projects through cash from operations
and credit facilities. Additional expansion may require additional external
financing.
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PART II - OTHER INFORMATION
ITEM 1.- LEGAL PROCEEDINGS
Incorporated by reference to Note 3 of the Notes to the Consolidated
Condensed Financial Statements.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of stockholders on March 25, 1998. The
following matters were submitted to a vote of the Company's stockholders:
(i) The election of eight directors; and
(ii) The ratification of the appointment of Deloitte & Touche LLP as
independent auditors for the 1998 fiscal year.
The Company's stockholders re-elected the entire Board of Directors
consisting of Ernest Bogen, Michael Weinstein, Vincent Pascal, Robert Towers,
Andrew Kuruc, Paul Gordon, Donald D.Shack, and Jay Galin.
The Company's stockholders ratified the Board of Director's appointment of
Deloitte & Touche LLP as the Company's independent auditors for the 1998
fiscal year by a vote of 3,467,316 for, 5 against and 820 abstentions.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - none
11
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 11, 1998
ARK RESTAURANTS CORP.
By /S/ Michael Weinstein
______________________
Michael Weinstein, President
By /S/ Andrew B. Kuruc
______________________
Andrew B. Kuruc
Vice President, Controller and
Principal Accounting Officer
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and income statment for the 26 weeks of Ark Restaurants Corp. and is
qualified in its entirety by reference to such financial statements
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-3-1998
<PERIOD-END> MAR-28-1998
<CASH> 695
<SECURITIES> 0
<RECEIVABLES> 2,487
<ALLOWANCES> 0
<INVENTORY> 2,042
<CURRENT-ASSETS> 7,247
<PP&E> 41,829
<DEPRECIATION> 15,623
<TOTAL-ASSETS> 43,154
<CURRENT-LIABILITIES> 7,045
<BONDS> 9,010
0
0
<COMMON> 52
<OTHER-SE> 26,375
<TOTAL-LIABILITY-AND-EQUITY> 43,154
<SALES> 52,138
<TOTAL-REVENUES> 52,138
<CGS> 14,101
<TOTAL-COSTS> 14,101
<OTHER-EXPENSES> 37,947
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 253
<INCOME-PRETAX> 788
<INCOME-TAX> 315
<INCOME-CONTINUING> 315
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 473
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
