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 April 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.
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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
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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
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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 17, 1999
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(Common stock, $.01 par value) 3,311,599
ARK RESTAURANTS CORP. AND SUBSIDIARIES
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INDEX
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PART I - FINANCIAL INFORMATION: PAGE
----
Item 1. Consolidated Financial Statements:
Consolidated Condensed Balance Sheets - April 3, 1999
(Unaudited) and October 3, 1998 1
Consolidated Condensed Statements of Operations and Retained Earnings -
13-week periods ended April 3, 1999 (Unaudited) and March 28, 1998
(Unaudited) and 26-week periods ended April 3, 1999 (Unaudited) and March
28, 1998 (Unaudited) 2
Consolidated Condensed Statements of Cash Flows - 26-week periods ended April
3, 1999 (Unaudited) and March 28, 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 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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
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April 3, October 3,
1999 1998
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ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,177 $ 1,023
Accounts receivable 2,143 2,507
Inventories 1,928 1,950
Current portion of long-term receivables 457 416
Prepaid expenses and other current assets 534 491
Refundable and prepaid income taxes 158 -
Deferred income taxes 909 909
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Total current assets 7,306 7,296
LONG-TERM RECEIVABLES 1,293 1,119
ASSETS HELD FOR SALE 1,085 1,768
FIXED ASSETS - At Cost:
Leasehold improvements 22,507 22,465
Furniture, fixtures and equipment 18,692 18,592
Leasehold improvements in progress 1,683 19
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42,882 41,076
Less accumulated depreciation and
amortization 17,361 15,834
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25,521 25,242
INTANGIBLE ASSETS - Less accumulated
amortization of $3,117 and $2,829 5,245 5,515
DEFERRED INCOME TAXES 981 1,031
OTHER ASSETS 1,615 1,131
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TOTAL ASSETS $43,046 $43,102
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 3,092 $ 3,563
Accrued expenses and other current
liabilities 3,218 2,908
Current maturities of long-term debt 975 609
Current maturities of capital lease obligations 192 230
Accrued income taxes - 705
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Total current liabilities 7,477 8,015
LONG-TERM DEBT - net of current maturities 5,742 4,405
OBLIGATIONS UNDER CAPITAL LEASES - net of current
maturities 51 149
OPERATING LEASE DEFERRED CREDIT 1,471 1,471
SHAREHOLDERS' EQUITY:
Common stock, par value $.01 per share -
authorized, 10,000 shares;
issued, 5,188 52 52
Additional paid-in capital 14,215 14,215
Retained earnings 18,434 17,565
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32,701 31,832
Less treasury stock, 1,671 and 1,504 shares 4,396 2,770
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Total shareholders' equity 28,305 29,062
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $43,046 $43,102
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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)
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13 Weeks Ended 26 Weeks Ended
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April 3, March 28, April 3, March 28,
1999 1998 1999 1998
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NET SALES $23,345 $25,198 $50,278 $52,138
COST OF SALES 6,361 6,853 13,471 14,101
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GROSS RESTAURANT PROFIT 16,984 18,345 36,807 38,037
MANAGEMENT FEE INCOME 447 440 511 637
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17,431 18,785 37,318 38,674
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OPERATING EXPENSES
Payroll and payroll benefits 8,987 9,616 18,748 19,372
Occupancy 3,174 3,354 6,470 6,530
Depreciation and amortization 959 948 1,951 1,894
Other 3,075 3,535 5,711 7,025
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16,195 17,453 32,880 34,821
GENERAL AND ADMINISTRATIVE
EXPENSES 1,608 1,734 3,143 3,126
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17,803 19,187 36,023 37,947
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OPERATING INCOME (LOSS) (372) (402) 1,295 727
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OTHER EXPENSE (INCOME):
Interest expense, net 72 168 136 253
Other income (183) (147) (290) (314)
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(111) 21 (154) (61)
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INCOME (LOSS) before provision
(benefit) for income taxes (261) (423) 1,449 788
PROVISION (BENEFIT) for income taxes (104) (169) 580 315
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NET INCOME (LOSS) (157) (254) 869 473
RETAINED EARNINGS, Beginning
of period 18,591 13,680 17,565 12,953
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RETAINED EARNINGS, End of period $18,434 $13,426 $18,434 $13,426
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NET INCOME (LOSS) PER SHARE -
BASIC & DILUTED $(.04) $(.07) $.24 $.12
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WEIGHTED AVERAGE NUMBER OF SHARES-BASIC 3,562 3,842 3,604 3,839
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WEIGHTED AVERAGE NUMBER OF SHARES-DILUTED 3,562 3,842 3,611 3,863
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See notes to consolidated condensed
financial statements
2
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in Thousands)
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26 Weeks Ended
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April 3, March 28,
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 869 $ 473
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization of fixed assets 1,630 1,680
Amortization of intangibles 321 214
Gain on sale of restaurants (681) (185)
Deferred income taxes 50 -
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable 364 (512)
Decrease (Increase) in inventories 22 (24)
Decrease (Increase) in prepaid expenses and other
current assets (43) (137)
Decrease (Increase) in refundable and prepaid income taxes (158) (218)
Decrease (Increase) in other assets (523) 69
Increase (Decrease) in accounts payable - trade (471) (99)
Increase (Decrease) in accrued expenses and other
current liabilities 235 (371)
Increase (Decrease) in accrued income taxes (705) (414)
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Net cash provided by operating activities 910 476
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets (1,806) (365)
Additions to intangible assets (18) (61)
Payments received on long-term receivables 153 161
Restaurant acquisition - (2,735)
Restaurant sales 975 200
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Net cash used in investing activities (696) (2,800)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of long-term debt 4,200 4,100
Principal payment on long-term debt (2,498) (1,734)
Principal payment on capital lease obligations (136) (134)
Purchase of treasury stock (1,626) -
Exercise of stock options - 65
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Net cash provided by (used) in financing activities (60) 2,297
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 154 (27)
CASH AND CASH EQUIVALENTS, beginning of period 1,023 722
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CASH AND CASH EQUIVALENTS, end of period $1,177 $ 695
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during year for:
Interest $ 224 $ 327
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Income taxes $1,392 945
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See notes to consolidated condensed financial statements.
3
ARK RESTAURANTS CORP. AND SUBSIDIARIES
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 April 3, 1999 and results of operations
and changes in cash flows for the periods ended April 3, 1999 and March 28, 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 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 October 3, 1998. The results of operations for the periods ended April 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 $2,000,000 two-year
Letter or Credit Facility for use in lieu of lease security deposits.
4. INCOME PER SHARE OF COMMON STOCK
The Company adopted in the first quarter of fiscal 1998, The Financial
Accounting Standards Board Statement No. 128 "Earnings per Share" which
established new standards for computing and presenting earnings per share. The
4
Company now discloses "Basic Earnings per Share", which is based upon the
weighted average number of shares of common stock outstanding during each period
and "Diluted Earnings per Share" which requires the Company to include common
stock equivalents consisting of dilutive stock options.
A reconciliation of the numerators and denominators of the basic and diluted
per share computations follow:
Income(loss) Shares Per-Share
(Numerator) (Denominator) Amount
------------ ------------ ---------
13-weeks ended April 3, 1999:
BASIC EPS (157,000) 3,562,000 ($.04)
Stock Options &
Warrants -- -- --
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DILUTED EPS ($157,000) 3,562,000 ($.04)
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26-weeks ended April 3, 1999:
BASIC EPS $869,000 3,604,000 $.24
Stock Options &
Warrants -- 7,000 --
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Diluted EPS $869,000 3,611,000 $.24
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Options to purchase 311,500 shares of common stock at a price range of $8.00
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 the 13-week period ended April 3,
1999 for the Company had a loss for such period. Accordingly, stock options were
antidilutive for such period.
Options to purchase 232,500 shares of common stock at a price range of $11.38
to $12 per share and warrants to purchase 35,000 shares of common stock at
$11.63 were not included in the computation of diluted earnings per share for
26-week period ended April 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. Certain of these risks and
uncertainties are discussed under the heading "forward looking statements"in the
Company's annual report on form 10-K for the fiscal year ended October 3, 1998.
NET SALES
Net sales at restaurants owned by the Company decreased 7.4% in the 13-week
period ended April 3, 1999 from the comparable period ended March 28, 1998. Net
sales for the quarter decreased by $2,281,000 from the loss of sales at
restaurants that 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 $647,000 in net sales at
restaurants which the Company either did not operate during the comparable
period last year (Red which opened in August 1998) or operated for only a
portion of the comparable period (the Stage Deli in Las Vegas which was acquired
in February 1998). Net sales in the 13-week period ended April 3, 1999 were also
impacted by the fact that New Year's Eve fell in the first quarter of fiscal
1999 and in the second quarter of fiscal 1998. Same store sales in the quarter
decreased by 1.0%. The components of the decrease consisted of a 3.1% increase
at the Las Vegas operations offset by a 3.6% decrease at the Company's other
operations.
Net sales at restaurants owned by the Company decreased 3.6% in the 26-week
period ended April 3, 1999 from the comparable period ended March 28, 1998. 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). Same store sales in the 26-week period increased by 0.8%. The
components of the increase consisted of a 3.8% increase at the Las Vegas
operations offset by a 0.9% 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 both 13-week periods ended April 3, 1999
and March 28, 1998 cost of sales as a percentage of net sales was 27.2% while
cost of sales as a percentage of net sales for the 26-week period ended April 3,
1999 was 26.8% as compared to 27.0% 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 69.4% for the 13-week period ended April 3, 1999
6
as compared to 69.3% last year and for the 26-week period ended April 3, 1999
were 65.4% as compared to 66.8% last year . Operating expenses in the 26-week
period ended April 3, 1999 is net of gains on sale of restaurants totaling
$681,000, or 1.4% of sales as compared to gains on sale of $185,000 or 0.4% of
sales in the 26-week period ended March 28, 1998.
General and administrative expenses, as a percentage of net sales, remained
constant at 6.9% during the 13-week period ended April 3, 1999 as compared to
last year and were 6.3% during the 26-week period ended April 3, 1999 as
compared to 6.0% 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 6.4% for the 13-week period ended April
3, 1999 as compared to 6.3% last year and would have been 5.8% for the 26-week
period ended April 3, 1999 as compared to 5.4% last year.
The Company had a net loss of $157,000 for the 13-week period ended April
3, 1999 as compared to a net loss of $254,000 last year and had net income of
$869,000 for the 26-week period ended April 3, 1999 as compared to a net income
of $473,000 last year. The results for the 26-week period ended April 3, 1999
include after tax gains of $388,000 from the sale of two restaurants (B. Smith's
DC and Perretti Italian Cafe) and the results for the 13-week period last year
include after tax gains of $111,000 from the sale of one restaurant (Jim
McMullen).
During the 26-week period ended April 3, 1999 the Company managed five
restaurants and during the 26-week period last year the Company managed five
restaurants and two corporate dining facilities owned by third parties. Net
sales of the managed locations were $3,851,000 during the 26-week period ended
April 3, 1999 as compared to $5,827,000 last year. This decrease was primarily
the result of the termination of management agreements in the fiscal year ended
October 3, 1998 at two corporate dining facilities managed by the Company. Net
sales of these 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 the restaurants which operate 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),
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
7
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 $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 April 3, 1999 the Company
had borrowings of $4,600,000 outstanding under its existing facility.
The Company also has a two-year $2,000,000 letter of credit facility for
use in lieu of lease security deposits. At April 3, 1999 the Company had
delivered $564,000 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
April 3, 1999 the Company had $1,720,000 outstanding on this facility.
At April 3, 1999, the Company had a working capital deficit of $171,000 as
compared to a working capital deficit of $719,000 at October 3, 1998. The
8
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 26-weeks ended April 3, 1999 the Company repurchased 166,500
shares of its outstanding common stock at a total cost of $1,626,480. In August
1998 the Company had authorized the repurchase of up to 500,000 shares of the
Company's outstanding common stock. In April 1999 the Company authorized an
another repurchase of up to 300,000 shares.
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 opened in April 1999 a 500 plus seat Southwestern style
restaurant at Union Station in Washington, D.C., (Thunder Grill) where the
Company operates two other restaurants (America & Center Cafe). The Company
incurred approximately $1,600,000 in capital costs and other pre-opening
expenses on this restaurant.
The Company signed leases in April 1999 to construct and operate two fast
food outlets in the recently opened Venetian Hotel & Casino in Las Vegas,
Nevada. The Company opened one such facility (Rialto Deli) in May 1999 and
expects to open the other facility shortly. The Company expects to spend up to
$1,000,000 to open these facilities. The Company is also in negotiations to open
additional fast food and restaurant facilities within the casino.
The Company expects to shortly begin 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 50,000 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 $6,500,000. 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
from the anticipated revision of the 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 $30,000 and estimates that
the additional cost of remediation will not exceed $120,000.
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 1.- LEGAL PROCEEDINGS
In May 1999, an Administrative Law Judge (ALJ) issued a favorable decision
involving unfair labor practice charges filed against the Company before
the National Labor Relations Board with respect to the Company's Las Vegas
subsidiary. The complaint alleged that four employees were terminated and three
other employees disciplined because of their union activities. The ALJ
found that none of the employees were terminated or disciplined for
inappropriate reasons. The ALJ found two violations of management communications
rules for which non-economic remedies were proposed. A second unfair labor
practice matter is pending before the full National Labor Relations Board.
The Company does not believe that an adverse outcome in this proceeding
will have a material adverse effect upon the Company's financial condition
or operations.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of stockholders on March 10, 1999. The
following matters were submitted to a vote of the Company's stockholders:
(i) The election of eight directors;
(ii) The approval of an amendment to the Company's 1996 Stock Option
Plan to increase the maximum number of shares of the Company's
Common Stock available for issuance under the Plan from 270,000 to
470,000; and
(iii) The ratification of the appointment of Deloitte & Touche LLP as
independent auditors for the 1999 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. Approximately 3,227,000 votes were
cast in favor of the re-election of each director, representing approximately
97% of the outstanding shares of common stock.
The Company's stockholders ratified the Amendment to the Company's 1996 Stock
Option Plan by a vote of 1,811,335 for, 381,845 against and 6,930 abstentions.
The Company's stockholders ratified the Board of Director's appointment of
Deloitte & Touche LLP as the Company's independent auditors for the 1999 fiscal
year by a vote of 3,325,856 for, 2,500 against and 3,510 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
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 17, 1999
ARK RESTAURANTS CORP.
By /S/ Michael Weinstein
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Michael Weinstein, President
By /S/ Andrew B. Kuruc
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Andrew B. Kuruc
Vice President, Controller and
Principal Accounting Officer
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