<PAGE>
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 July 3, 1999
/ / 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.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
New York 13-3156768
- ----------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
85 Fifth Avenue, New York, New York 10003
- ----------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (212) 206-8800
---------------------
</TABLE>
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.
<TABLE>
<CAPTION>
Class Outstanding shares at August 12, 1999
- ------------------------------ -------------------------------------
<S> <C>
(Common stock, $.01 par value) 3,296,599
</TABLE>
<PAGE>
ARK RESTAURANTS CORP. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Consolidated Financial Statements:
Consolidated Condensed Balance Sheets - July 3, 1999
(Unaudited) and October 3, 1998 1
Consolidated Condensed Statements of Operations and Retained Earnings -
13-week periods ended July 3, 1999 (Unaudited) and June 27, 1998 (Unaudited)
and 39-week periods ended July 3, 1999 (Unaudited) and June 27, 1998
(Unaudited) 2
Consolidated Condensed Statements of Cash Flows - 39-week periods ended July
3, 1999 (Unaudited) and June 27, 1998 (Unaudited) 3
Notes to Consolidated Condensed Financial
Statements (Unaudited) 4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-10
PART II - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
July 3, October 3,
1999 1998
------- -------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 372 $ 1,023
Accounts receivable 2,286 2,507
Inventories 2,091 1,950
Current portion of long-term receivables 444 416
Prepaid expenses and other current assets 550 491
Deferred income taxes 1,059 909
------- -------
Total current assets 6,802 7,296
LONG-TERM RECEIVABLES 1,268 1,119
ASSETS HELD FOR SALE 1,019 1,768
FIXED ASSETS - At Cost:
Leasehold improvements 23,927 22,465
Furniture, fixtures and equipment 19,536 18,592
Leasehold improvements in progress 1,832 19
------- -------
45,295 41,076
Less accumulated depreciation and
amortization 18,134 15,834
------- -------
27,161 25,242
INTANGIBLE ASSETS - Less accumulated
amortization of $3,252 and $2,829 5,178 5,515
DEFERRED INCOME TAXES 791 1,031
OTHER ASSETS 2,051 1,131
------- -------
TOTAL ASSETS $44,270 $43,102
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 3,393 $ 3,563
Accrued expenses and other current
liabilities 3,611 2,908
Current maturities of long-term debt 974 609
Current maturities of capital lease obligations 196 230
Accrued income taxes 993 705
------- -------
Total current liabilities 9,167 8,015
LONG-TERM DEBT - net of current maturities 5,389 4,405
OBLIGATIONS UNDER CAPITAL LEASES - net of current
maturities -- 149
OPERATING LEASE DEFERRED CREDIT 1,471 1,471
SHAREHOLDERS' EQUITY:
Common stock, par value $.01 per share -
authorized, 10,000 shares;
issued, 5,188 shares 52 52
Additional paid-in capital 14,215 14,215
Retained earnings 20,550 17,565
------- -------
34,817 31,832
Less treasury stock, 1,891 and 1,504 shares 6,574 2,770
------- -------
Total shareholders' equity 28,243 29,062
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $44,270 $43,102
======= =======
</TABLE>
See notes to consolidated condensed financial statements
1
<PAGE>
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)
(In Thousands, Except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
----------------------- -----------------------
July 3, June 27, July 3, June 27,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $ 31,564 $ 33,030 $ 81,842 $ 85,168
COST OF SALES 8,156 8,596 21,627 22,697
-------- -------- -------- --------
GROSS RESTAURANT PROFIT 23,408 24,434 60,215 62,471
MANAGEMENT FEE INCOME 251 250 762 887
-------- -------- -------- --------
23,659 24,684 60,977 63,358
-------- -------- -------- --------
OPERATING EXPENSES
Payroll and payroll benefits 10,430 10,595 29,178 29,967
Occupancy 3,578 3,626 10,048 10,156
Depreciation and amortization 994 1,030 2,945 2,924
Other 3,698 3,929 9,409 10,954
-------- -------- -------- --------
18,700 19,180 51,580 54,001
GENERAL AND ADMINISTRATIVE
EXPENSES 1,442 1,438 4,585 4,564
-------- -------- -------- --------
20,142 20,618 56,165 58,565
-------- -------- -------- --------
OPERATING INCOME (LOSS) 3,517 4,066 4,812 4,793
-------- -------- -------- --------
OTHER EXPENSE (INCOME):
Interest expense, net 101 127 237 380
Other income (110) (110) (400) (424)
-------- -------- -------- --------
(9) 17 (163) (44)
-------- -------- -------- --------
INCOME BEFORE PROVISION FOR
INCOME TAXES 3,526 4,049 4,975 4,837
PROVISION FOR INCOME TAXES 1,410 1,620 1,990 1,935
-------- -------- -------- --------
NET INCOME 2,116 2,429 2,985 2,902
RETAINED EARNINGS, Beginning
of period 18,434 13,426 17,565 12,953
-------- -------- -------- --------
RETAINED EARNINGS, End of period $ 20,550 $ 15,855 $ 20,550 $ 15,855
======== ======== ======== ========
NET INCOME PER SHARE - BASIC $.63 $.63 $.85 $.76
NET INCOME PER SHARE - DILUTED $.63 $.63 $.85 $.75
==== ==== ==== ====
WEIGHTED AVERAGE NUMBER OF SHARES - BASIC 3,335 3,842 3,514 3,840
WEIGHTED AVERAGE NUMBER OF SHARES - DILUTED 3,353 3,880 3,525 3,868
===== ===== ===== =====
</TABLE>
See notes to consolidated condensed financial statements
2
<PAGE>
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
39 Weeks Ended
--------------
July 3, June 27,
1999 1998
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,985 $ 2,902
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of fixed assets 2,450 2,549
Amortization of intangibles 496 375
Gain on sale of restaurants (716) (185)
Deferred income taxes 90 149
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable 221 (839)
Decrease (Increase) in inventories (141) (35)
Decrease (Increase) in prepaid expenses and other
current assets (59) (184)
Decrease (Increase) in other assets (919) (178)
Increase (Decrease) in accounts payable - trade (170) 115
Increase (Decrease) in accrued expenses and other
current liabilities 628 (56)
Increase (Decrease) in accrued income taxes 288 417
------- -------
Net cash provided by operating activities 5,153 5,030
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets (4,219) (1,042)
Additions to intangible assets (106) (121)
Payments received on long-term receivables 257 222
Issuance of demand notes and long term-receivables (72) --
Restaurant acquisition -- (2,735)
Restaurant sales 975 200
------- -------
Net cash used in investing activities (3,165) (3,476)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of long-term debt 6,550 4,100
Principal payment on long-term debt (5,202) (5,925)
Principal payment on capital lease obligations (183) (203)
Purchase of treasury stock (3,804) --
Exercise of stock options -- 65
------- -------
Net cash used in financing activities (2,639) (1,963)
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (651) (409)
CASH AND CASH EQUIVALENTS, beginning of period 1,023 722
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 372 $ 313
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during year for:
Interest $ 379 $ 486
======= =======
Income taxes $ 1,612 1,368
======= =======
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE>
ARK RESTAURANTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
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 July 3, 1999 and results of operations
and changes in cash flows for the periods end July 3, 1999 and June 27, 1998
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 are 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 October 3, 1998. The results of operations for the periods ended July
3, 1999 are not necessarily indicative of the operating results for the full
year.
2. RESTAURANT SALES
In the first quarter of fiscal 1999 the Company sold a restaurant located in
New York City and a restaurant located in Washington, DC for an aggregate
selling price of $1,225,000, of which $975,000 was paid in cash and the balance
of $250,000 was financed by notes. The notes are due in monthly installments of
$5,537, inclusive of interest at 10%, from May 1999 through April 2004. The
Company recognized a gain of $611,000 on these sales.
3. LONG-TERM DEBT
In March 1999 the Company and its main bank (Bank Leumi USA) reached an
agreement to extend the Revolving Credit and Term Loan Facility for an
additional two years until April 2001 and allow the Company to borrow up to
$13,000,000. Loans under this amended facility will bear interest at a rate of
prime plus 1/2% per annum. The Facility also includes a $2,000,000 two-year
Letter of Credit Facility for use in lieu of lease security deposits.
4. 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.
4
<PAGE>
A reconciliation of the numerators and denominators of the basic and diluted
per share computations follow:
<TABLE>
<CAPTION>
13-weeks ended July 3, 1999:
Income Shares Per-Share
(Numerator) (Denominator) Amount
--------- ----------- -----
<S> <C> <C> <C>
BASIC EPS $2,116,000 3,335,000 $.63
Stock Options &
Warrants - 18,000 -
--------- ---------- ----
DILUTED EPS $2,116,000 3,353,000 $.63
--------- --------- ----
39-weeks ended July 3, 1999:
BASIC EPS $2,985,000 3,514,000 $.85
Stock Options &
Warrants -- 11,000 -
--------- --------- ----
Diluted EPS $2,985,000 3,525,000 $.85
--------- --------- ----
</TABLE>
Options to purchase 232,500 shares of common stock at a price range of $11.38
to $12.00 and warrants to purchase 35,000 shares of common stock at $11.63 are
not included in diluted earnings per share for both the 13-week and 39-week
periods ended July 3, 1999 because the exercise prices were greater than the
average market price of the common shares.
5
<PAGE>
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 decreased 4.4% in the 13-week
period ended July 3, 1999 from the comparable period ended June 27, 1998. Net
sales for the quarter decreased by $2,390,000 from the loss of sales at
restaurants which the Company no longer operate (B. Smith's DC and Perretti
Italian Cafe were sold in the 13-week period ended January 2, 1999 and An
American Place and the Beekman 1766 Tavern were sold in the 1998 fiscal year).
This decrease for the quarter was offset in part by $1,086,000 in net sales from
restaurants which either opened in the quarter (Thunder Grill and Rialto Deli)
or did not operate during the comparable period last year (Red which opened in
August 1998). Same store sales in the quarter decreased by 0.5%. The components
of the decrease consisted of a 1.4% decrease at the Las Vegas operations along
with a 0.2% decrease at the Company's other operations.
Net sales at restaurants owned by the Company decreased 3.9% in the 39-week
period ended July 3, 1999 from the comparable period last year. The decrease was
principally from sales at restaurants that the Company no longer operate (B.
Smith's DC, Perretti Italian Cafe, An American Place and the Beekman 1766
Tavern) offset in part by net sales at restaurants which the Company did not
operate during the full comparable period last year (Red and the Stage Deli in
Las Vegas which was acquired in February 1998) and also offset by net sales at
restaurants opened in fiscal 1999 (Thunder Grill and Rialto Deli). Same store
sales in the 39-week period increased by 0.5%. The components of the increase
consisted of a 2.0% increase at the Las Vegas operations offset by a 0.2%
decrease at the Company's other operations.
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 July 3, 1999 cost
of sales as a percentage of net sales was 25.8% as compared to 26.0% last year
and cost of sales for the 39-week period was 26.4% as compared to 26.6% 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 59.2% for the 13-week period ended July 3, 1999 as
compared to 58.1% last year. The Company incurred pre-opening expenses and early
operating losses at newly opened restaurants (Thunder Grill and Rialto Deli) of
approximately $300,000 in the 13-week period ended July 3, 1999. Operating
expenses, as a percentage of net sales, were 63.0% for the 39-week period as
compared to 63.4% last year. Operating expenses for the 39-week
6
<PAGE>
period ended July 3,1999 are net of gains on sale of restaurants totaling
$716,000 or 0.9% of sales as compared to gains on sale of $185,000 or 0.2% of
net sales in the 39-week period ended June 27, 1998.
General and administrative expenses, as a percentage of net sales, were
4.6% for the 13-week period ended July 3, 1999 as compared to 4.4% in the
comparable period last year and was 5.6% for the 39-week period as compared to
5.4% 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 been 4.2% for the 13-week period ended July 3, 1999 as compared
to 4.0% last year and would have been 5.2% for the 39-week period as compared to
4.8% last year.
The Company had net income of $2,116,000 for the 13-week period ended July
3, 1999 as compared to net income of $2,429,000 last year. Net income for the
39-week period ended July 3, 1999 was $2,985,000 as compared to $2,902,000 last
year. The results for the 39-week period ended July 3, 1999 include after tax
gains of $430,000 from the sale of restaurants and the results for the 39-week
period ended June 27, 1998 include after tax gains of $111,000 from the sale of
a restaurant.
During the 13-week period ended July 3, 1999 the Company managed five
restaurants. Net sales of the managed locations were $2,951,000 during the
13-week period ended July 3, 1999 as compared to $3,283,000 last year and net
sales were $6,802,000 during the 39-week period as compared to $9,110,000 last
year. The decrease in net sales of managed operations is principally due to the
termination in fiscal 1998 of two management contracts at corporate dining
facilities. Net sales of managed operations are not included in consolidated net
sales.
INCOME TAXES
The provision 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 restaurants operated in the District of Columbia. Accordingly, the
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 carryforwards. In order to more effectively utilize tax
loss carryforwards at restaurants that were unprofitable, the Company has merged
certain profitable subsidiaries with certain loss subsidiaries.
7
<PAGE>
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 tip income of
restaurant service personnel. The Company estimates that this net credit will be
in excess of $500,000 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 record
keeping 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 March 1999 to
increase and extend the 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
$13,000,000 until April 2001 at which time outstanding loans mature. The loans
will bear interest at a rate of prime plus 1/2%. At July 3, 1999 the Company had
borrowings of $4,400,000 outstanding under its existing facility.
The Company also has commitments from its main bank and another lending
source which will allow the Company to borrow up to $4,000,000 to finance the
acquisition of various kitchen equipment at newly constructed restaurants. The
loans are repayable in 60 equal installments.
The Company also has a two-year $2,000,000 letter of credit facility for
use in lieu of lease security deposits. At July 3, 1999 the Company had
delivered $739,000 in irrevocable letters of credit on this facility.
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
July 3, 1999 the Company had $1,580,000 outstanding on this facility.
8
<PAGE>
At July 3, 1999, the Company had a working capital deficit of $2,365,000 as
compared to a working capital deficit of $719,000 at October 3, 1998. 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.
During the 39-weeks ended July 3, 1999 the Company repurchased 381,900
shares of its outstanding common stock at a total cost of $3,804,000. In August
1998 the Company had authorized the repurchase of up to 500,000 shares of the
Company's outstanding common stock and in April 1999 the Company authorized
another repurchase of up to 300,000 shares. As of July 3, 1999 the Company had
repurchased 540,900 shares since the inception of the repurchase plan.
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
The Company is committed to constructing three restaurants and four fast
food outlets in the recently opened Venetian Hotel & Casino in Las Vegas,
Nevada. The Company opened one fast food facility (Rialto Deli) in May 1999 and
expects to open the three other fast food facilities in the September 1999
fiscal quarter. The three restaurants are scheduled to open in the December 1999
fiscal quarter. The Company expects to spend up to $13,000,000 to open and
operate these facilities.
The Company has begun construction on its previously announced project at a
large theatre development in Southfield, Michigan under a joint venture
agreement with Sony Theatres' Loeks Star Partners and Millennium Partners. There
the Company will develop and operate four restaurants containing a total of
approximately 40,000 square feet. The Company anticipates that its share of the
required capital contributions to meet the construction costs, initial
inventories and pre-opening expenses will be $7,500,000. The project is
currently scheduled to open in the December 1999 fiscal quarter.
Although the Company is not currently committed to any other projects, the
Company is exploring additional opportunities for expansion of its business. The
Company expects to fund its existing projects through cash from operations and
existing credit facilities. Additional expansion may require additional external
financing.
9
<PAGE>
YEAR 2000
The Company has assessed and continues to assess the impact of the Year
2000 issue on its reporting systems and operations. The Year 2000 issue exists
because many computer systems and applications currently use two-digit fields to
designate a year. When the century date occurs, date-sensitive systems may
recognize the year 2000 as 1900 or not at all. This inability to recognize or
properly treat the year 2000 may cause systems to process critical financial and
operational information incorrectly.
The Company is currently reviewing, testing and correcting non-compliant
systems. The review stage was completed by the end of the March 1999 quarter.
Certain non-compliant systems have been remedied and the remainder of all
non-compliant systems should be remedied by the end of the September 1999
quarter. The Company has spent to date approximately $50,000 and estimates that
the additional cost of remediation will not exceed $100,000.
The Company's centralized financial accounting and reporting software
system which processes information generated daily at each of the Company's
restaurants is Year 2000 compliant. However, certain hardware which processes
such information is currently non-compliant and is in the process of being
modified or replaced as needed at both corporate headquarters and the applicable
restaurants. Several of the Company's restaurants have non-compliant
point-of-sale systems. These systems process customer orders and generate
billing information. The Company is modifying those systems which can be
modified and replacing the systems which can not be modified. The Company's
centralized purchasing system which process numerous orders from the Company's
restaurants is Year 2000 compliant.
The Company has initiated communications with its significant vendors and
service providers to determine the extent to which the Company's systems are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. At the Company's facilities at the New York-New York Hotel and Casino,
for example, the Company utilizes and interfaces with systems provided by the
Hotel and failure of the Hotel's computer systems to adequately address the Year
2000 issue may have a material adverse effect upon the Company. The Company has
been advised by the Hotel that its systems are expected to be Year 2000
compliant.
The Company is dependent upon major credit card issuers for the remittance
to the Company of charges incurred by customers. The Company has been advised
that the major credit card issuers in the United States have addressed the Year
2000 issues they confront and do expect that their systems will function
properly in the Year 2000.
Other vendors and service providers with which the Company does business
may not have adequately addressed the year 2000 issue. However, the Company
believes that there are numerous sources for the various products and services
used by the Company and does not anticipate that Year 2000 compliance issues
confronted by its vendors and service providers will have a material effect upon
the Company.
10
<PAGE>
PART II - OTHER INFORMATION
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>
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: August 12, 1999
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and income statement for the 39 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> 9-MOS
<FISCAL-YEAR-END> OCT-03-1998
<PERIOD-END> JUL-03-1999
<CASH> 372
<SECURITIES> 0
<RECEIVABLES> 2,286
<ALLOWANCES> 0
<INVENTORY> 2,091
<CURRENT-ASSETS> 6,802
<PP&E> 45,295
<DEPRECIATION> 18,134
<TOTAL-ASSETS> 44,270
<CURRENT-LIABILITIES> 9,167
<BONDS> 6,559
<COMMON> 52
0
0
<OTHER-SE> 28,191
<TOTAL-LIABILITY-AND-EQUITY> 44,270
<SALES> 81,842
<TOTAL-REVENUES> 81,842
<CGS> 21,627
<TOTAL-COSTS> 21,627
<OTHER-EXPENSES> 56,165
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 237
<INCOME-PRETAX> 4,975
<INCOME-TAX> 1,990
<INCOME-CONTINUING> 2,985
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,985
<EPS-BASIC> .85
<EPS-DILUTED> .85
</TABLE>
