-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SZt5/AqJXBnR5ZVoWG2IVocJcUsulkYo/k9dOFqrOt3hSPLeoUlbm8SOtJmoAvQD 7mDZZihLSnJZmdryv7IIMA== 0000950117-99-001703.txt : 19990816 0000950117-99-001703.hdr.sgml : 19990816 ACCESSION NUMBER: 0000950117-99-001703 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990703 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARK RESTAURANTS CORP CENTRAL INDEX KEY: 0000779544 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133156768 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09453 FILM NUMBER: 99686820 BUSINESS ADDRESS: STREET 1: 85 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10003-3019 BUSINESS PHONE: 2122068800 MAIL ADDRESS: STREET 1: 85 FIFTH AVENUE STREET 2: 85 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10003-3019 10-Q 1 ARK RESTAURANTS CORP. 10-Q 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) 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 ---------------------
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 August 12, 1999 - ------------------------------ ------------------------------------- (Common stock, $.01 par value) 3,296,599
ARK RESTAURANTS CORP. AND SUBSIDIARIES - -------------------------------------------------------------------------------- INDEX - --------------------------------------------------------------------------------
PAGE ----- 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
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ARK RESTAURANTS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) - --------------------------------------------------------------------------------
July 3, October 3, 1999 1998 ------- ------- (unaudited) 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 ======= =======
See notes to consolidated condensed financial statements 1 ARK RESTAURANTS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (Unaudited) (In Thousands, Except per share amounts) - --------------------------------------------------------------------------------
13 Weeks Ended 39 Weeks Ended ----------------------- ----------------------- July 3, June 27, July 3, June 27, 1999 1998 1999 1998 -------- -------- -------- -------- 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 ===== ===== ===== =====
See notes to consolidated condensed financial statements 2 ARK RESTAURANTS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands) - --------------------------------------------------------------------------------
39 Weeks Ended -------------- July 3, June 27, 1999 1998 ------- ------- 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 ======= =======
See notes to consolidated condensed financial statements. 3 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 A reconciliation of the numerators and denominators of the basic and diluted per share computations follow:
13-weeks ended July 3, 1999: Income Shares Per-Share (Numerator) (Denominator) Amount --------- ----------- ----- 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 --------- --------- ----
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 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 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 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 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 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 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 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 EX-27 2 EXHIBIT 27
5 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 1,000 9-MOS OCT-03-1998 JUL-03-1999 372 0 2,286 0 2,091 6,802 45,295 18,134 44,270 9,167 6,559 52 0 0 28,191 44,270 81,842 81,842 21,627 21,627 56,165 0 237 4,975 1,990 2,985 0 0 0 2,985 .85 .85
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