(cid:65)(cid:114)(cid:107)
(cid:82)(cid:101)(cid:115)(cid:116)(cid:97)(cid:117)(cid:114)(cid:97)(cid:110)(cid:116)(cid:115)
(cid:67)(cid:111)(cid:114)(cid:112)(cid:46)
1998 ANNUAL REPORT
THE COMPANY
Ark Restaurants Corp. (the "Company") is a holding company which, through subsidiaries, owns and operates
21 restaurants and manages five restaurants owned by others. Fourteen of the restaurants owned or managed by the
Company are located in New York City, three are located in Washington, D.C., four are located in Las Vegas, Nevada
(three of which are within the New York-New York Hotel & Casino), three are located in Boston, Massachusetts, and
one is located in each of McLean, Virginia and Islamorada, Florida. At the New York-New York Hotel & Casino, the
Company also operates the room service, banquet facilities and employee dining room and a complex of nine smaller
eateries.
The Company's other operations include catering businesses in New York City and Washington, D.C., as well
as wholesale and retail bakeries in New York City, and a café at the Warner Bros. studio store in New York City.
The Company will provide without charge a copy of the Company’s Annual Report on Form 10-K for the fiscal
year ended October 3, 1998, including financial statements and schedules thereto, to each of the Company’s
shareholders of record on February 5, 1999 and each beneficial holder on that date, upon receipt of a written request
therefor mailed to the Company’s offices, 85 Fifth Avenue, New York, New York 10003, attention: Treasurer.
Dear Shareholder:
By all measure we had a wonderful result this past year. In an Ark award speech there would be no time to name all
those contributing. As always I attach to this letter a list of our mangers and executive chefs. Also, we have excellent
employees throughout our company as well as good relationships with our banks, landlords and purveyors. Thank you
all.
This was the year in which operating income from Las Vegas flowed to the bottom line. Paul Gordon our senior v.p.
and Damien McEvoy our executive chef in these operations continue to increase quality and efficiency. Sales at Las
Vegas in 1998 reflect a full 12 months as compared to 9 months of sales in our 1997 fiscal year. Again, we experienced
strong same store sales in our non Las Vegas operations. Bob Towers, Vinnie Pascal, Drew Kuruc oversee all aspects
of our business. The value of their efforts are shown below.
Net Income
Earnings per Share
Shareholders' Equity
Shareholders' Equity per Share
Return on Equity
Sales at Owned Restaurants (including Las Vegas)
Sales at Owned Restaurants (excluding Las Vegas)
Sales at Las Vegas
Increase (Decrease) of Same Store Sales
Cash Position
Long-Term Debt
Capital Lease Obligations
Working Capital Deficit
1998
1997
1996
$4,612,141
1.20
29,062,140
7.54
17.8%
117,398,453
79,657,707
37,740,746
3.1%
1,023,046
5,014,634
378,438
719,343
$1,737,655
.46
25,888,880
6.92
9.8%
$788,762
.24
17,804,394
5.44
4.7%
104,326,3
76,048,425
28,277,961*
2.6%
76,795,940
76,795,940
N/A
(3.0%)
722,283
6,126,797
651,945
2,373,859
907,003
6,403,866
903,202
1,303,920
General and Administrative Expenses
Restaurant Cash Flow (pre-tax, pre-depreciation)
6,052,435
17,659,589
5,445,990
11,648,992
4,474,697
8,381,200
Cost of Sales as a % of sales ( all restaurants)
Cost of Sales (Excluding Las Vegas)
Cost of Sales at Las Vegas
Operating Expenses as a % of sales (all restaurants)
Operating Expenses (Excluding Las Vegas)
Operating Expenses at Las Vegas
Restaurant Payrolls as a % of sales (all restaurants)
Restaurant Payrolls (Excluding Las Vegas)
Restaurant Payrolls at Las Vegas
* 9 Months
26.6%
26.0%
27.9%
62.7%
63.1%
62.0%
35.1%
34.2%
36.9%
27.3%
27.2%
26.3% 27.2%
N/A
29.8%
65.9% 67.9%
64.3% 67.9%
N/A
70.4%
36.9% 36.1%
35.0% 36.1%
42.1% N/A
1
You will notice that shareholders' equity increased by $3,173,260 which is less than net income of $4,612,141. The
primary difference is that shareholders' equity was reduced by $1,522,496 when we purchased 159,000 shares of our
stock in open market transactions as part of our announced intention to purchase 500,000 shares.
I have charted below restaurant cash flow and corporate overhead for all operations. The idea is to increase store cash
flow at an accelerated rate to any increase in corporate overhead.
Restaurant Cash Flow
(Income before income taxes, corporate overhead & depreciation)
s
n
o
i
l
l
i
M
19
17
15
13
11
9
7
5
3
95
97
96
Fiscal Year Ended
98
Restaurant Cash Flow
Corporate Overhead
The company’s sales increased to $117,398,453. General and administrative cost as a percentage of sales remained
at 5.2%. If you include sales of managed (not owned) restaurants which are not included in our consolidated sales
the percentage was 4.6%. We believe this to be efficient. However, we also believe that we are in a position to add
additional sales volume without adding significantly to our general and administrative expense.
We have mostly completed the transition from an operation of moderately sized neighborhood restaurants to that of
an operator of high volume multi-concept food facilities. Consistent with this transition we sold two more restaurants
An American Place and Beekman 1766 Tavern, and at year end were in contract to sell B.Smith’s Washington D.C.
and Perretti Italian Cafe. Our larger sites have competitive advantages. There is a natural flow of customers to
entertainment sites, public parks, waterfronts and train stations. Sales at our restaurants in these locations require
considerable capital and expertise and therefore we generally operate with less competition and healthy demand to
supply ratios.
We have strong catering and corporate party skills. If you would like information you can contact Adrienne Hara at
212-206-8815. You can also visit our website at www.arkrestaurants.com.
In looking back to previous letters to shareholders, I became aware that I have less to say as the numbers get better.
February 1, 1999
Michael Weinstein, President
2
ARK RESTAURANTS CORP.
CORPORATE OFFICE
Michael Weinstein, President
Andrew Kuruc, Vice President-Chief Financial Officer
Mitchell Levy, Vice President
Vincent Pascal, Vice President-Operations
Robert Towers, Vice President-Chief Operating Officer
Paul Gordon, Vice President-Director of Las Vegas Operations
Nancy Alvarez, Assistant Controller
Beth Bardin, Director of Design and Conceptual Development
Heather Cook, Director of Media, Marketing and Creative Development
Marilyn Guy, Director of Human Resources
Adrienne Hara, Director of Catering
Colleen Hennigan, Director of Operations - Washington Division
John Oldweiler, Director of Purchasing
Donna Palamaro, Director of Operations
Jennifer Sutton, Operations and Financial Analysis
Pei Ming Tong, Executive Assistant
Joe Vazquez, Facilities Management
JOINT VENTURE ASSOCIATES
Eberhard Müller, Lutèce
André Soltner, Lutèce
EXECUTIVE CHEFS
Mike Kiernan
Marc Meyer
Damien McEvoy
Chun Liao
3
RESTAURANT GENERAL MANAGERS
Joe Albanese, Gonzalez Y Gonzalez, Las Vegas
Jennifer Baquerizo, El Rio Grande
Marc Campbell, Louisiana Community Bar & Grill
Liz Caro, Metropolitan Cafe
Jack Christou, B.Smith's
Helen Claydon, The Grill Room
Tom Ferretti, Ernie's
Jeff Fuhreng, Stage Deli, Las Vegas
Charles Gerbino, Las Vegas Employee Dining Facility
Bridgeen Hale, America, NY
Deidre Harris, Columbus Bakery
John Hausdorf, Las Vegas Catering and Room Service
Colleen Hennigan, America, DC and Sequoia, DC
Halbert Hernandez, Canyon Road
Robert Ledbetter, Village Streets, Las Vegas
Shephard Lee, Columbus Bakery
Debra Lomurno, Sequoia, NY
John Maloughney, Lor-e-Lei
James Mohn, Marketplace Cafe, Shenandoah and Brewskeller Pub
Danny Ovalles, Gonzalez Y Gonzalez
Christian Pascal, Warner Bros. Cafe
Ben Reid, America, Virginia
Bobbie Rihel, America, Las Vegas
Christina Ruelas, Gallagher's, Las Vegas
Donna Simms, Bryant Park Grill
Ridgely Trufant, Red
Marty Weinstein, Woody's
RESTAURANT CHEFS
Charles Brucculeri, Bryant Park Grill
Chan May Chung, Ernie's
Henry Chung, B.Smith's
Armando Cortes, Metropolitan Cafe
John Dornback, The Grill Room
Avry Dumbrys, America, Las Vegas
Carlos Garcia, Sequoia, NY
Salvador Garcia, Louisiana Community Bar & Grill
Raoul Juarez, El Rio Grande
Alfredo Leal, Warner Bros. Cafe
Teow Chien Lin, America, VA
Chun Liao, Sequoia, Washington, D.C.
Kok Mun Ma, Woody's
John Miller, Las Vegas Employee Dining Facility
Christa Partlow, Lor-e-Lei
Virgilio Ortega, Columbus Bakery
Michael Parker, Gallagher's, Las Vegas
Michael Foo, America, DC
Ruperto Ramirez, Canyon Road Grill
Sergio Salazar, Gonzalez Y Gonzalez, Las Vegas
Mariano Veliz, Gonzalez Y Gonzalez
Gadi Weinreich, America, NY
4
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain financial data for the fiscal years ended 1994 through 1998. This information
should be read in conjunction with the Company's Consolidated Financial Statements and the notes thereto appearing
at page F-1.
October 3,
1998
September 27,
1997
Year Ended
September 28,
1996
September 30,
1995
October 1,
1994
OPERATING DATA:
Net sales
Gross restaurant profit
Operating income
Other income, net
Income before provision
for income taxes and
extraordinary item
Income before
$ 117,398,453
86,132,751
7,589,465
91,417
$ 104,326,386
75,874,499
2,785,713
96,550
$ 76,795,940
55,934,475
497,996
743,615
$ 73,026,907 $ 60,404,339
43,562,653
840,452
507,200
53,001,963
960,794
937,763
7,680,882
2,882,263
1,241,611
1,898,557
1,347,652
extraordinary item
4,612,141
1,737,655
788,762
1,121,126
643,032
NET INCOME
4,612,141
1,737,655
788,762
1,121,126
1,150,802
Income per share
before extraordinary
item and cumulative
effect of accounting change:
Basic
Diluted
NET INCOME
PER SHARE:
Basic
Diluted
Weighted average
number of shares
used in computation
BALANCE SHEET DATA
(end of period):
Total assets
Working capital (deficit)
Long-term debt
Shareholders' equity
Shareholders' equity
per share
Facilities in operation
at end of year, including
managed
$ 1.21
$ 1.20
$ 1.21
$ 1.20
$ 0.47
$ 0.46
$ 0.47
$ 0.46
$ 0.24
$ 0.24
$ 0.34
$ 0.34
$ 0.20
$ 0.20
$ 0.24
$ 0.24
$ 0.34
$ 0.34
$ 0.36
$ 0.36
3,852,019
3,742,811
3,272,857
3,252,669
3,223,833
43,102,179
(719,343)
5,014,634
29,062,140
41,268,098
(2,373,859)
6,126,797
25,888,880
32,379,479
(1,303,920)
6,403,866
17,804,394
28,541,920
40,996
4,014,162
16,706,301
21,768,747
1,517,601
761,386
15,210,202
7.54
42
6.92
46
5.44
5.14
4.72
32
32
27
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Accounting period
The Company's fiscal year ends on the Saturday nearest September 30. The fiscal year ended October 3, 1998
included 53 weeks while the fiscal years ended September 27, 1997 and September 28, 1996 included 52 weeks.
Net Sales
Net sales at restaurants owned by the Company increased by 12.5% from fiscal 1997 to fiscal 1998 and by
35.8% from fiscal 1996 to fiscal 1997. The increase in fiscal 1998 was substantially 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 steakhouse (named Gallagher's under a license agreement with the owner of the New York
restaurant of that name); a 200 seat Mexican restaurant (Gonzalez y Gonzalez); 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 City's Little Italy and Greenwich
Village. The increase in fiscal 1998 was also due in part to the acquisition of a restaurant located in the Forum Shops
at Caesar's Shopping Center in Las Vegas (the Stage Deli of Las Vegas) and to the first full operating year of a
restaurant which the Company opened in fiscal 1997 (The Grill Room). Same store sales in fiscal 1998 increased by
3.1% principally due to increased customer counts.
The increase in fiscal 1997 was primarily due to sales from the Las Vegas facilities which opened in January
1997. Same store sales in fiscal 1997 increased by 2.6% principally due to increased customer counts.
Costs and Expenses
The Company's cost of sales consists principally of food and beverage costs at restaurants owned by the
Company. Cost of sales as a percentage of net sales was 26.6% in fiscal 1998, 27.3% in fiscal 1997, and 27.2% in fiscal
1996. Cost of sales in fiscal 1997 were impacted by higher cost of sales experienced during the early operating period
at the Company's Las Vegas operations.
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 62.7% in fiscal 1998, 65.9% in fiscal 1997 and
67.9% in fiscal 1996. This decrease in operating expenses in fiscal 1998 as compared to fiscal 1997 was principally due
to efficiencies achieved at the Company's Las Vegas facilities and to a lesser extent to a benefit from the 3.1% increase
in same store sales at the Company's other facilities. The decrease in operating expenses in fiscal 1997 as compared to
fiscal 1996 was principally due to benefits achieved from the sale of three restaurants in fiscal 1997 which had operated
at a loss in fiscal 1996 and to a lesser extent to a benefit from the 2.6% increase in same store sales. Restaurant payroll
was 35.1% of net sales in fiscal 1998, 36.9% in fiscal 1997 and 36.1% in fiscal 1996. The increase in fiscal 1997 was
principally due to higher payroll costs at the Company's Las Vegas food and beverage operations as compared to the
Company's other operations and to a lesser extent from increases in minimum wage rates. Occupancy expenses
(consisting of rent, rent taxes, real estate taxes, insurance and utility costs) were 11.7% in fiscal 1998, 12.5% in fiscal
1997 and 12.8% in fiscal 1996.
The Company incurred pre-opening expenses and early operating losses at newly opened restaurants of
approximately $200,000 in fiscal 1998, $2,000,000 in fiscal 1997 and $200,000 in fiscal 1996. The fiscal 1997 expenses
and losses were from the opening of the Company's Las Vegas facilities. The Company typically incurs significant
pre-opening expenses in connection with its new restaurants which are expensed as incurred. Furthermore, it is not
uncommon that such restaurants experience operating losses during the early months of operation.
6
General and administrative expenses, as a percentage of net sales, were 5.2% in both fiscal 1998 and fiscal 1997
as compared to 5.8% in fiscal 1996. The decrease in fiscal 1997 was primarily due to the fact that the Company was able
to manage the 35.8% increase in net sales with a lower percentage increase in general and administrative expenses. If
net sales at managed restaurants were included in consolidated net sales, general and administrative expenses as a
percentage of net sales would have been 4.7% in fiscal 1998, 4.6% in fiscal 1997 and 5.0% in fiscal 1996.
As of October 3, 1998 the Company managed five restaurants owned by others (El Rio Grande and Woody's
in Manhattan, the Marketplace Café, Savannah, and the Brewskeller Pub in Boston, Massachusetts), and a café in a store
in New York City (Warner Bros.). Net sales of these restaurant facilities, which are not included in consolidated net
sales were $12,738,000 in fiscal 1998, $14,151,000 in fiscal 1997 and $12,802,000 in fiscal 1996.
Interest expense was $608,000 in fiscal 1998, $755,000 in fiscal 1997 and $426,000 in fiscal 1996, net of
amounts capitalized. The decrease in fiscal 1998 from fiscal 1997 is principally due to repayments of borrowings
incurred in fiscal 1997. Such borrowings financed the construction costs and working capital requirements of the Las
Vegas restaurant facilities which opened in January 1997.
Interest income was $210,000 in fiscal 1998, $72,000 in fiscal 1997 and $87,000 in fiscal 1996. The increase
in fiscal 1998. as compared to fiscal 1997 is due to interest earned on notes issued in connection with restaurants sold
in fiscal 1997 and fiscal 1998.
Other income, which generally consists of purchasing service fees, and the sale of logo merchandise at various
restaurants, was $490,000 in fiscal 1998, $780,000 in fiscal 1997 and $1,083,000 in fiscal 1996. A significant portion
of the amounts received in fiscal 1997 and fiscal 1996 was principally due to amounts the Company received by a third
party due to the temporary closing in fiscal 1994 and fiscal 1995 of a restaurant (Ernie's).
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 New York 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 tax rate has varied depending on the level of losses incurred at individual subsidiaries. The
Company's overall effective tax rate was 40% in both fiscal 1998 and fiscal 1997 and 37% in fiscal 1996.
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 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, commencing
January 1, 1994, 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 net benefit to the Company was $506,000 in fiscal 1998, $373,000 in fiscal 1997
and $349,000 in fiscal 1996.
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
7
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. The Company utilizes capital primarily to fund the cost of developing and opening
new restaurants and acquiring existing restaurants.
The net cash used in investing activities in fiscal 1998 ($4,179,000), fiscal 1997 ($10,445,000) and fiscal 1996
($6,693,000) was principally from the Company's continued investment in fixed assets associated with constructing new
restaurants and acquiring existing restaurants. In fiscal 1998 the Company acquired an existing restaurant in Las Vegas
(the Stage Deli) and in fiscal 1997 the Company finished and opened the Las Vegas restaurant facilities which had also
been in construction since fiscal 1996.
The net cash used in financing activities in fiscal 1998 ($2,825,000) was principally due to the repurchase of
159,000 shares of the Company's outstanding common stock and repayments of debt on the Company's main credit
facility in excess of borrowings on such facility. The net cash provided by financing activities in fiscal 1997
($5,643,000) was principally due to proceeds of a private placement of 551,454 shares of the Company's common stock.
In fiscal 1996 net cash provided by financing activities ($2,321,000) was principally from the Company's borrowings
on its main credit facility exceeding repayments on such facility.
At October 3, 1998 the Company had a working capital deficit of $719,000 as compared to working capital
deficit of $2,374,000 at September 27, 1997. The working capital deficit at the end of fiscal 1997 was significantly
impacted by cash expended for the construction of the Las Vegas facilities which opened in January 1997. The
restaurant business does not require the maintenance of significant inventories or receivables, thus the Company is able
to operate with negative working capital.
The Company's Revolving Credit and Term Loan Facility with its main bank includes a $10,000,000 facility
for use in construction of and acquisition of new restaurants and for working capital purposes at the Company's existing
restaurants. The facility allows the Company to borrow up to $10,000,000 until April 2000 at which time outstanding
loans mature. The loans bear interest at a rate of prime plus ½%. At October 3, 1998 the Company had borrowings of
$2,600,000 outstanding on the facility.
The Company also has a two year $1,000,000 Letter of Credit Facility for use in lieu of lease security deposits.
At October 3, 1998 the Company had delivered $556,000 in irrevocable letters of credit on this facility.
In December 1996, the Company raised net proceeds of $6,028,000 through a private placement of 551,454
shares of its common stock at $11 per share. The proceeds were used to repay a portion of the Company's outstanding
borrowings on its Revolving Credit and Term Loan Facility and for the payment of capital expenditures on the Las
Vegas restaurant facilities.
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.
Restaurant Expansion
The Company recently began construction on a 500 plus seat Southwestern style restaurant at Union Station
in Washington, D.C., where the Company operates two other restaurants. The Company expects to incur up to
$1,800,000 in capital costs and other pre-opening expenses to open this restaurant. The Company expects to open this
restaurant in the March 1999 fiscal quarter.
8
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
June 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 projects through cash from operations and
existing credit facilities. Additional expansion may require additional external financing.
Recent Developments
In the first quarter of fiscal 1999, the Company sold a restaurant located in New York City (Perretti Italian
Café) and a restaurant located in Washington, D.C. (B. Smith's) for an aggregate selling price of $1,225,000 of which
$975,000 was paid in cash and the balance was financed by notes. The Company expects to record a gain of
approximately $600,000 on these sales.
The Financial Accounting Standards Board has recently issued several new accounting pronouncements:
SFAS No. 132, “Employers' Disclosures about Pensions and Other Postretirement Benefits,” revises employers'
disclosures about pension and other postretirement benefit plans. It standardizes the disclosure requirements for
pensions and other postretirement benefits to the extent practical, requires additional information on changes in the
benefit obligations and fair values of plan assets that will facilitate financial analysis, and eliminates certain disclosures
that are no longer useful as they were under SFAS No. 87, “Employers' Accounting for Pension,” and SFAS No. 88,
“Employers' Accounting for Settlements and Curtailments of Defined Benefits Pension Plans and Termination Benefits.”
SFAS No. 132 is effective for fiscal years beginning after December 15, 1998.
SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” establishes accounting and
reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts,
and for hedging activities. It requires that the Company recognizes all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative
may be specifically designed as a hedge of the exposure to changes in fair value of a recognized asset or liability or
hedge of the exposure to variable cash flows of a forecasted transaction. The accounting for changes in fair value of
a derivative (e.g., through earnings or outside earnings, through comprehensive income) depends on the intended use
of the derivative and the resulting designation. SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999.
Statement of Position 98-5, “Reporting on the Costs of Start-Up Activities” requires costs of start-up activities
and organization costs to be expensed as incurred. Currently some companies capitalize start-up costs whereas others
expense start-up as incurred. Additionally, there is a diverse range of amortization periods among companies that
capitalize start-up costs. The statement is effective for fiscal years beginning after December 15, 1998. The Company
currently expenses all start-up costs as incurred while organization costs are capitalized and amortized over five years.
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 used 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. Based on a review of the Company's computer systems, management does not
currently believe the cost of remediation will exceed $100,000.
9
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 the 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 adverse effect upon the Company.
10
Market Information
The Company's Common Stock, $.01 par value, is traded in the over-the-counter market on the Nasdaq
National Market ("Nasdaq") under the symbol "ARKR". The high and low sale prices for the Common Stock from
September 28, 1997 through October 3, 1998 are as follows:
Calendar 1996
Third Quarter
Fourth Quarter
Calendar 1997
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Calendar 1998
First Quarter
Second Quarter
Third Quarter
Dividends
High
10
12 ¾
15 ¼
11 ¼
11 ½
12 ½
13F
12F
12G
Low
7 ¾
9 ¼
10¼
7 H
8 ¼
10 ¾
11 ½
11
9 ¼
The Company has not any paid cash dividends since its inception and does not intend to pay dividends in
the foreseeable future. Under the terms of the Credit Agreement between the Company and its main lender, the
Company may pay cash dividends and redeem shares of Common Stock in any fiscal year only to the extent of an
aggregate amount equal to 20% of the Company's consolidated operating cash flow for such fiscal year.
Number of Shareholders
As of December 11, 1998, there were 86 holders of record of the Company's Common Stock.
11
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Ark Restaurants Corp.
We have audited the accompanying consolidated balance sheets of Ark Restaurants Corp. and its subsidiaries as of
October 3, 1998 and September 27, 1997, and the related consolidated statements of operations, shareholders' equity
and cash flows for each of the three fiscal years in the period ended October 3, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of
Ark Restaurants Corp. and subsidiaries as of October 3, 1998 and September 27, 1997, and the results of their
operations and their cash flows for each of the three fiscal years in the period ended October 3, 1998, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
November 20, 1998
F-1
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable
Current portion of long-term receivables (Note 2)
Inventories
Deferred income taxes (Note 12)
Prepaid expenses and other current assets
Total current assets
LONG-TERM RECEIVABLES (Note 2)
ASSETS HELD FOR SALE (Note 3)
FIXED ASSETS - At cost (Notes 4 and 7):
Leasehold improvements
Furniture, fixtures and equipment
Leasehold improvements in progress
Less accumulated depreciation and amortization
INTANGIBLE ASSETS - Net (Note 4)
DEFERRED INCOME TAXES (Note 12)
OTHER ASSETS (Note 5)
CURRENT LIABILITIES:
Accounts payable - trade
Accrued expenses and other current liabilities (Note 6)
Current maturities of capital lease obligations (Note 8)
Current maturities of long-term debt (Note 7)
Accrued income taxes (Note 12)
Total current liabilities
OBLIGATIONS UNDER CAPITAL LEASES (Note 8)
LONG-TERM DEBT - Net of current maturities (Notes 4 and 7)
OPERATING LEASE DEFERRED CREDIT (Note 8)
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)
SHAREHOLDERS' EQUITY (Notes 7, 9 and 10):
Common stock, par value $.01 per share - authorized,
10,000,000 shares; issued, 5,187,836 and 5,177,836 shares,
respectively
Additional paid-in capital
Retained earnings
Less treasury stock, 1,504,337 and 1,345,337 shares
October 3,
1998
September 27,
1997
$ 1,023,046
2,507,307
415,755
1,950,146
908,468
491,129
7,295,851
1,119,110
1,767,782
22,464,922
18,591,938
18,906
41,075,766
15,833,403
25,242,363
5,514,932
1,030,908
1,131,233
$43,102,179
$ 3,563,068
2,907,766
229,944
609,283
705,133
8,015,194
148,494
4,405,351
1,471,000
51,879
14,214,898
17,565,258
31,832,035
2,769,895
29,062,140
$43,102,179
$722,283
1,975,434
277,402
2,044,689
915,534
432,816
6,368,158
971,023
1,892,639
22,526,150
18,387,492
50,053
40,963,695
14,037,200
26,926,495
3,346,176
1,081,006
682,601
$41,268,098
$ 3,560,250
3,098,356
245,412
1,424,129
413,870
8,742,017
406,533
4,702,668
1,528,000
51,779
14,131,383
12,953,117
27,136,279
1,247,399
25,888,880
$41,268,098
See notes to consolidated financial statements.
F-2
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
NET SALES
COST OF SALES
Gross restaurant profit
MANAGEMENT FEE INCOME (Note 11)
OPERATING EXPENSES:
Payroll and payroll benefits
Occupancy
Depreciation
Other
GENERAL AND ADMINISTRATIVE EXPENSES
OPERATING INCOME
OTHER EXPENSE (INCOME):
Interest expense (Note 7)
Interest income
Other income (Note 13)
October 3,
1998
Year Ended
September 27,
1997
September 28,
1996
$117,398,453
$104,326,386
$ 76,795,940
31,265,702
86,132,751
28,451,887
75,874,499
20,861,465
55,934,475
1,139,799
87,272,550
1,153,264
77,027,763
1,204,808
57,139,283
41,171,865
13,788,992
3,998,272
14,671,521
73,630,650
6,052,435
79,683,085
7,589,465
38,520,986
13,031,811
3,320,739
13,922,524
68,796,060
5,445,990
74,242,050
2,785,713
27,740,390
9,843,110
2,664,892
11,918,198
52,166,590
4,474,697
56,641,287
497,996
608,278
(209,577)
(490,118)
(91,417)
755,383
(71,652)
(780,281)
(96,550)
425,810
(86,708)
(1,082,717)
(743,615)
INCOME BEFORE PROVISION FOR INCOME TAXES
7,680,882
2,882,263
1,241,611
PROVISION FOR INCOME TAXES (Note 12)
3,068,741
1,144,608
452,849
NET INCOME
$ 4,612,141
$ 1,737,655
$ 788,762
NET INCOME PER SHARE - BASIC
NET INCOME PER SHARE - DILUTED
$ 1.21
$ 1.20
$ .47
$ .46
$ .24
$ .24
WEIGHTED AVERAGE NUMBER OF SHARES - BASIC
3,826,255
3,714,116
3,238,419
WEIGHTED AVERAGE NUMBER OF SHARES - DILUTED 3,852,019
3,742,811
3,272,857
See notes to consolidated financial statements.
F-3
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED OCTOBER 3, 1998, SEPTEMBER 27, 1997, AND SEPTEMBER 28, 1996
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Retained
Earnings
Total
Treasury Shareholders'
Equity
Stock
BALANCE,
SEPTEMBER 30, 1995
4,536,382
$ 45,364
$ 7,481,636
$ 10,426,700
$ (1,247,399) $ 16,706,301
Exercise of stock options
72,500
Tax benefit on exercise of options
--
725
--
183,650
124,956
--
--
--
--
184,375
124,956
Net income
--
--
--
788,762
--
788,762
BALANCE,
SEPTEMBER 28, 1996
4,608,882
46,089
7,790,242
11,215,462
(1,247,399)
17,804,394
Common stock private placement
551,454
5,515
6,023,111
Issuance of warrants
--
Exercise of stock options
17,500
Tax benefit on exercise of options
--
--
175
--
175,000
85,450
57,580
--
--
--
--
--
--
--
--
6,028,626
175,000
85,625
57,580
Net income
--
--
--
1,737,655
--
1,737,655
BALANCE,
SEPTEMBER 27, 1997
5,177,836
51,779
14,131,383
12,953,117
(1,247,399)
25,888,880
Exercise of stock options
10,000
100
64,900
Purchase of treasury stock
Tax benefit on exercise of options
--
--
--
--
--
18,615
--
--
--
--
65,000
(1,522,496)
(1,522,496)
--
18,615
Net income
--
--
--
4,612,141
--
4,612,141
BALANCE,
OCTOBER 3, 1998
5,187,836
$ 51,879
$ 14,214,898
$ 17,565,258
$ (2,769,895) $ 29,062,140
See notes to consolidated financial statements.
F-4
ARK RESTAURANTS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of fixed assets
Amortization of intangibles
Loss (gain) on sale of restaurants
Provision for uncollectible long-term receivables
Operating lease deferred credit
Deferred income taxes
Changes in assets and liabilities:
Increase in accounts receivable
Increase in inventories
Increase (decrease) in prepaid expenses
and other current assets
(Increase) decrease in other assets, net
Increase in accounts payable - trade
Increase in accrued income taxes
Increase (decrease) in accrued expenses and
other current liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to fixed assets
Additions to intangible assets
Issuance of demand notes and long-term receivables
Payments received on demand notes and long-term receivables
Restaurant sales
Restaurant acquisitions
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment on long-term debt
Issuance of long-term debt
Exercise of stock options
Principal payment on capital lease obligations
Purchase of treasury stock
Proceeds from common stock private placement
Net cash provided by (used in) financing activities
October 3,
1998
Year Ended
September 27,
1997
September 28,
1996
$ 4,612,141
$ 1,737,655
$ 788,762
3,432,104
566,168
(258,684)
--
(57,000)
57,164
(531,873)
(17,020)
(58,313)
(543,820)
2,818
291,263
(190,590)
7,304,358
(1,713,847)
(229,524)
(81,580)
315,908
265,000
(2,735,000)
(4,179,043)
(8,012,164)
6,900,000
83,615
(273,507)
(1,522,496)
--
(2,824,552)
3,047,422
445,123
(229,000)
--
(19,000)
(431,966)
(512,935)
(890,567)
112,961
60,008
1,194,311
89,476
13,672
4,617,160
(11,006,116)
(11,639)
--
264,370
308,000
--
(10,445,385)
(10,277,900)
10,000,831
143,205
(251,257)
--
6,028,626
5,643,505
2,324,304
492,207
297,000
96,000
10,000
(692,492)
(184,672)
(65,597)
603,675
(232,205)
330,167
59,025
181,392
4,007,566
(6,833,018)
(110,849)
(63,092)
171,651
250,000
(108,000)
(6,693,308)
(1,857,045)
4,100,000
309,331
(230,825)
--
--
2,321,461
DECREASE IN CASH AND CASH EQUIVALENTS
300,763
(184,720)
(364,281)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
722,283
$ 1,023,046
907,003
$ 722,283
1,271,284
$ 907,003
SUPPLEMENTAL INFORMATION:
Cash payments for the following were:
Interest
Income taxes
$ 608,278
$ 931,383
$ 515,810
$ 2,699,651
$ 1,502,643
$ 966,434
See notes to consolidated financial statements.
F-5
ARK RESTAURANTS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 3, 1998, SEPTEMBER 27, 1997, AND SEPTEMBER 28, 1996
1.
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ark Restaurants Corp. and subsidiaries (the “Company”) own and operate 21 restaurants, and manage five
restaurants, of which 14 are in New York City, three in Washington, D.C., four in Las Vegas, Nevada (three within
the New York New York Hotel and Casino Resort), three in Boston, Massachusetts and one each in McLean,
Virginia; and Islamorada, Florida. Along with the three restaurants within the New York New York Hotel &
Casino Resort, the Company also operates the Resort's room service, banquet facilities, employee dining room and
a complex of nine smaller cafes and food operations.
The Company's other operations include catering businesses in New York City and Washington, D.C. as well as
wholesale and retail bakeries in New York City and, a café at the Warner Bros. store in New York City.
ACCOUNTING PERIOD - The Company's fiscal year ends on the Saturday nearest September 30. The fiscal year
ended October 3, 1998, included 53 weeks and the fiscal years ended September 27, 1997, and September 28,
1996 included 52 weeks.
SIGNIFICANT ESTIMATES - In the process of preparing its consolidated financial statements, the Company
estimates the appropriate carrying value of certain assets and liabilities which are not readily apparent from other
sources. The primary estimates underlying the Company's financial statements include allowances for potential
bad debts on accounts and notes receivable, the useful lives and recoverability of its assets, such as property and
intangibles, fair values of financial instruments, the realizable value of its tax assets and other matters.
Management bases its estimates on certain assumptions, which they believe are reasonable in the circumstances,
and while actual results could differ from those estimates, management does not believe that any change in those
assumptions in the near term would have a material effect on the Company's consolidated financial position or the
results of operation.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of the
Company and its wholly owned and majority owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. Investments in affiliated companies where the Company is able
to exercise significant influence over operating and financial policies even though the Company holds 50% or less
of the voting stock, are accounted for under the equity method.
CASH EQUIVALENTS - Cash equivalents include instruments with original maturities of three months or less.
ACCOUNTS RECEIVABLE - Included in accounts receivable are amounts due from employees of $1,069,852
and $719,871 for fiscal years ended October 3, 1998 and September 27, 1997. Such amounts, which are due on
demand, are principally due to various employees exercising stock options in accordance with the Company's
Stock Option Plan (See note 10).
INVENTORIES - Inventories are stated at the lower of cost (first-in, first-out) or market, and consist of food and
beverages, merchandise for sale and other supplies.
FIXED ASSETS - Leasehold improvements and furniture, fixtures and equipment are stated at cost. Depreciation
of furniture, fixtures and equipment (including equipment under capital leases) is computed using the straight-line
method over the estimated useful lives of the respective assets (7 years). Amortization of improvements to leased
F-6
properties is computed using the straight-line method based upon the initial term of the applicable lease or the
estimated useful life of the improvements, whichever is less, and ranges from 5 to 35 years.
The Company annually assesses any impairments in value of long-lived assets and certain identifiable intangibles
to be held and used. For all periods presented, no impairments were deemed necessary.
Certain costs incurred during the construction period of restaurants, including rental of premises, training and
payroll, were expensed as incurred.
INTANGIBLE AND OTHER ASSETS - Costs associated with acquiring leases and subleases, principally
purchased leasehold rights, have been capitalized and are being amortized on the straight-line method based upon
the initial terms of the applicable lease agreements, which range from 10 to 21 years.
Goodwill recorded in connection with the acquisition of shares of the Company's common stock from a former
shareholder, as discussed in Note 4, is being amortized over a period of 40 years. Goodwill arising from restaurant
acquisitions is being amortized over periods ranging from 10 to 15 years or lease term, whichever period is shorter.
Legal and other costs incurred to organize restaurant corporations are capitalized as organization costs and are
amortized over a period of 5 years.
Covenants not to compete arising from restaurant acquisitions are amortized over the contractual period of 5 years.
Certain legal and bank commitment fees incurred in connection with the Company's Revolving Credit and Term
Loan Facility, as discussed in Note 7, were capitalized as deferred financing fees and are being amortized over four
years, the term of the facility.
The Company periodically assesses the recoverability of intangible assets on an asset by asset basis using the
projected undiscounted operating income.
OPERATING LEASE DEFERRED CREDIT - Several of the Company's operating leases contain predetermined
increases in the rentals payable during the term of such leases. For these leases, the aggregate rental expense over
the lease term is recognized on a straight-line basis over the lease term. The excess of the expense charged to
operations in any year and amounts payable under the leases during that year are recorded as a deferred credit. The
deferred credit subsequently reverses over the lease term (Note 8).
OCCUPANCY EXPENSES - Occupancy expenses include rent, rent taxes, real estate taxes, insurance and utility
costs.
INCOME PER SHARE OF COMMON STOCK - Net income per share is computed in accordance with
Statement of Financial Accounting Standard (“SFAS”) No. 128, “Earnings Per Share,” and is calculated on the
basis of the weighted average number of common shares outstanding during each period plus the additional
dilutive effect of common stock equivalents. Common stock equivalents consist of dilutive stock options.
STOCK OPTIONS - The Company accounts for its stock options granted to employees under the intrinsic
value-based method for employee stock-based compensation and provides pro forma disclosure of net income and
earnings per share as if the accounting provision of SFAS No.123 had been adopted. The company generally does
not grant options to outsiders.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS - The Financial Accounting Standard Board
has issued SFAS No. 130, “Reporting Comprehensive Income,” which establishes standards for reporting and
F-7
display of comprehensive income and its components. The Company believes that there are no items that would
require presentation in a separate statement of comprehensive income. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997.
SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information” established standards for
the way that public business enterprises report information about operating segments in annual financial statements
and requires that those enterprises report selected information about operating segments in interim financial reports
issued to shareholders. It also established standards for related disclosures about products and services, geographic
areas, and major customers. Management believes that there are no items that would require segment presentation.
SFAS No. 131 is effective for fiscal years beginning after December 15, 1997.
FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS - The Financial Accounting
Standards Board has recently issued several new accounting pronouncements. SFAS No. 132, “Employers'
Disclosures about Pensions and Other Postretirement Benefits,” revises employers' disclosures about pension and
other postretirement benefit plans. It standardizes the disclosure requirements for pensions and other postretirement
benefits to the extent practical, requires additional information on changes in the benefit obligations and fair values
of plan assets that will facilitate financial analysis, and eliminates certain disclosures that are no longer as useful
as they were when SFAS No 87, “Employers' Accounting for Pension,” SFAS No. 88, “Employers' Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and Termination Benefits.” SFAS No. 132 is
effective for fiscal years beginning after December 15, 1998.
SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” establishes accounting and
reporting standards for derivative instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that the Company recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions
are met, a derivative may be specifically designed as a hedge of the exposure to changes in fair value of a
recognized asset or liability or hedge of the exposure to variable cash flows of a forecasted transaction. The
accounting for changes in fair value of a derivative (e.g., through earnings or outside earnings, through
comprehensive income) depends on the intended use of the derivative and the resulting designation. SFAS No 133
is effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
Statement of Position 98-5, “Reporting on the Costs of Start-Up activities” requires costs of start-up activities and
organization costs to be expensed as incurred. Currently some companies capitalize start-up costs whereas others
expense start-up costs as incurred. Additionally, there is a diverse range of amortization periods among companies
that capitalize start-up costs. The Statement is effective for fiscal years beginning after December 15, 1998. The
Company currently expenses all start-up costs as incurred while organization costs are capitalized and amortized
over five years.
The effect of the adoption of these Statements on the Company's consolidated financial statements is not expected
to be material.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1997 and 1996 financial statements to
conform to the 1998 presentation.
F-8
2.
LONG-TERM RECEIVABLES
Long-term receivables consist of the following:
Note receivable secured by fixed assets and lease at a
restaurant sold by the Company, at 8% interest; due in
monthly installments through December 2006 (a)
Note receivable secured by fixed assets and lease at a
restaurant sold by the Company, at 7.5% interest; due in
monthly installments through March 2002 (b)
Note receivable secured by fixed assets and lease at a
restaurant sold by the Company, at 7.5% interest; due in
monthly installments through April 2000 (c)
Note receivable secured by fixed assets and lease at a
restaurant sold by the Company, at 7.5% interest; due in
monthly installments commencing May 2000
through December 2008 (c)
Advances for construction and working capital, at one of
the Company's managed locations, at 15% interest; due
in monthly installments through December 2000
Advances for construction, at one of the Company's managed
locations, at prime plus 1%; due in monthly installments
through December 1999
Note receivable, secured by personal guarantees of officers of a
managed restaurant and fixed assets at that location, at 15%
interest; due in monthly installments, through September 2000
Other
Less current portion
October 3,
1998
September 27,
1997
$ 564,769
$ 687,497
153,187
190,798
331,700
207,983
--
--
164,446
225,983
33,662
59,632
79,118
--
1,534,865
415,755
$1,119,110
79,118
5,397
1,248,425
277,402
$ 971,023
(a)
(b)
(c)
In December 1996, the Company sold a restaurant for $900,000. Cash of $50,000 was received on sale and the
balance is due in installments through December 2006.
In October 1996, the Company sold a restaurant for $258,500. Cash of $50,000 was received on sale and the
balance is due in installments through March 2002. The Company recognized a gain of $134,000 on this sale in
the fiscal year ended September 27, 1997.
In October 1997, the Company sold a restaurant for $1,750,000, of which $200,000 was paid in cash and the
balance is due in monthly installments under the terms of two notes bearing interest at a rate of 7.5%. One note,
with an initial principal balance of $400,000, is being paid in 24 monthly installments of $18,569 through April
2000. The second note, with an initial principal balance of $1,150,000, will be paid in 104 monthly installments
F-9
of $14,500 commencing May 2000 and ending December 2008. At December 2008, the then outstanding balance
of $519,260 matures.
The Company recognized a gain on sale of approximately $185,000 in the fiscal year ended October 3, 1998.
Additional deferred gains totaling $1,024,000 could be recognized in future period as the notes are collected. The
Company deferred recognizing this additional gain and recorded an allowance for possible uncollectible notes
against the second outstanding note. This uncertainty is based on the significant length of time of this note (over
10 years) and the substantial balance which matures in December 2008 ($519,260).
The carrying value of the Company's long-term receivables approximates its current aggregate fair value.
3.
ASSETS HELD FOR SALE
At October 3, 1998 the Company was actively pursuing the sale of three restaurants and accordingly reclassified
the net fixed assets ($1,625,834) and inventories ($141,948) as assets held for sale.
At September 27, 1997 the Company was actively pursuing the sale of two restaurants and, accordingly,
reclassified the net fixed assets ($1,669,251), net intangible assets ($180,619) and inventories ($42,769) as assets
held for sale. (See Note 2.)
4. INTANGIBLE ASSETS
Intangible assets consist of the following:
Goodwill (a)
Purchased leasehold rights (b)
Noncompete agreements and other (a)
Organization costs
Less accumulated amortization
October 3,
1998
$6,222,877
652,740
790,000
678,491
8,344,108
2,829,176
$5,514,932
September 27,
1997
$3,802,877
552,740
790,000
586,954
5,732,571
2,386,395
$3,346,176
(a)
In August 1985, certain subsidiaries of the Company acquired approximately one-third of the then outstanding
shares of common stock (964,599 shares), from a former officer and director of the Company for a purchase price
of $3,000,000. The consolidated balance sheets reflect the allocation of $2,946,000 to goodwill.
At September 28, 1996 the Company was actively pursuing the sale of one of the two restaurants it acquired in
fiscal 1996 and, accordingly, reclassified net intangible assets of $452,000 to assets held for sale. In the fiscal year
ended September 27, 1997, the Company completed the sale of such restaurant and also actively pursued the sale
of the other restaurant it had acquired in the fiscal year ended September 28, 1996. Accordingly, the Company
reclassified net intangible assets of $180,619 to assets held for sale at September 27, 1997 (see Note 3).
During fiscal 1998 the Company acquired a restaurant for $2,735,000 in cash. The acquisition was accounted for
as a purchase transaction with the purchase price allocated as follows: leasehold improvements $200,000,
furniture, fixtures and equipment $300,000 and goodwill $2,235,000.
F-10
(b)
Purchased leasehold rights arise from acquiring leases and subleases of various restaurants.
5.
OTHER ASSETS
Other assets consist of the following:
Deposits
Deferred financing fees
Investments in and advances to affiliates (a)
October 3,
1998
$ 353,674
214,192
563,367
$1,131,233
September 27,
1997
$ 408,797
271,292
2,512
$ 682,601
(a)
The Company, through a wholly owned subsidiary, became a general partner with a 19% interest in a
partnership which acquired on July 1, 1987 an existing Mexican food restaurant, El Rio Grande, in New
York City. Several related parties also participate as limited partners in the partnership. The Company's
equity in earnings of the limited partnership was $80,000, $40,000, and $48,000, for the years ended
October 3, 1998, and September 27, 1997 and September 28, 1996, respectively.
The Company also manages El Rio Grande through another wholly owned subsidiary on behalf of the
partnership. Management fee income relating to these services was $421,000, $311,000, and $450,000
for the years ended October 3, 1998, September 27, 1997, and September 28, 1996, respectively (Note
11).
6.
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
Sales tax payable
Accrued wages and payroll related costs
Other current liabilities
October 3,
1998
$ 928,225
675,520
1,304,021
$2,907,766
September 27,
1997
$ 803,805
878,795
1,415,756
$3,098,356
F-11
7.
LONG-TERM DEBT
Long-term debt consists of the following:
Revolving Credit and Term Loan Facility with interest at the
prime rate, plus ½%, payable on April 30, 2000 (a)
Notes issued in connection with refinancing of restaurant
equipment, at 8.75%, payable in monthly installments through
January 2002 (b)
Note issued in connection with acquisition of restaurant site,
at 7.25%, payable in monthly installments through
January 1, 2000 (c)
Note issued in connection with acquisition of restaurant site, at
8.5%, payable in monthly installments through April 2001 (d)
Less current maturities
October 3,
1998
September 27,
1997
$2,600,000
$2,750,000
1,990,827
2,538,581
423,807
475,554
--
5,014,634
609,283
$4,405,351
362,662
6,126,797
1,424,129
$4,702,668
(a)
(b)
The Company's Revolving Credit and Term Loan Facility with its main bank (Bank Leumi USA), as amended May
1998, includes a $10,000,000 facility to finance the development and construction of new restaurants and for
working capital purposes at the Company's existing restaurants. Outstanding loans bear interest at 1/2% above the
bank's prime rate. Any outstanding loans on April 2000 are due in full. The Facility also includes a two-year Letter
of Credit Facility for use in lieu of lease security deposits. The Company generally is required to pay commissions
of 1 1/2% per annum on outstanding letters of credit.
The Company's subsidiaries each guaranteed the obligations of the Company under the foregoing facilities and
granted security interests in their respective assets as collateral for such guarantees. In addition, the Company
pledged stock of such subsidiaries as security for obligations of the Company under such facilities.
The agreement includes restrictions relating to, among other things, indebtedness for borrowed money, capital
expenditures, advances to managed businesses, mergers, sale of assets, dividends, and liens on the property of the
Company. The agreement also contains financial covenants requiring the Company to maintain a minimum ratio
of debt to net worth, minimum shareholders' equity, and a minimum ratio of cash flow prior to debt service. The
Company is in compliance with all covenants.
In January 1997, the Company borrowed from its main bank, $2,851,000 to refinance the purchase of various
restaurant equipment at its food and beverage facilities in a hotel and casino in Las Vegas, Nevada. The notes bear
interest at 8.75% per annum and are payable in 60 equal monthly installments of $58,833 inclusive of interest, until
maturity in January 2002. The Company granted the bank a security interest in such restaurant equipment. In
connection with such financing, the Company granted the bank the right to purchase 35,000 shares of the
Company's common stock at the exercise price of $11.625 per share through December 2001. The fair value of
the warrants was estimated at the date of grant, credited to additional paid-in capital and is being amortized over
the life of the warrant.
(c)
In November 1994, the Company issued a $600,000 note in connection with the acquisition of a restaurant in the
Florida Keys. The Company remits monthly payments of $7,044 inclusive of interest until January 1, 2000, at
F-12
which time the outstanding balance of $358,511 is due. The debt is secured by the leasehold improvements and
tangible personal property at the restaurant.
(d)
In April 1996 the Company acquired a restaurant for $550,000, which was financed by issuing a note payable in
monthly installments of $13,461, inclusive of interest. At September 27, 1997, the Company was actively pursuing
the sale of this restaurant and accordingly has classified the total balance due of $362,662 as a current liability
within the current maturities of long-term debt balance.
Required principal payments on long-term debt are as follows:
Year
1999
2000
2001
2002
Amount
$ 609,283
3,567,899
654,351
183,101
$5,014,634
During the fiscal years ended October 3, 1998, September 27, 1997 and September 28, 1996, interest expense was
$608,278, $931,383 and $515,810, respectively, of which $176,000 and $90,000 was capitalized during the fiscal
years ended September 27, 1997 and September 28, 1996.
The carrying value of the Company's long-term debt approximates its current aggregate fair value.
8.
COMMITMENTS AND CONTINGENCIES
LEASES - The Company leases its restaurants, bar facilities, and administrative headquarters through its
subsidiaries under terms expiring at various dates through 2029. Most of the leases provide for the payment of base
rents plus real estate taxes, insurance and other expenses and, in certain instances, for the payment of a percentage
of the restaurants' sales in excess of stipulated amounts at such facility.
As of October 3, 1998, future minimum lease payments, net of sublease rentals, under noncancellable leases are
as follows:
Year
1999
2000
2001
2002
2003
Thereafter
Total minimum payments
Operating
Leases
$ 6,828,683
6,621,874
6,724,662
6,773,420
6,750,061
31,493,094
$65,191,794
Less amount representing interest
Present value of net minimum lease payments
Capital
Leases
$253,720
154,118
--
--
--
--
407,838
29,400
$378,438
In connection with the leases included in the table above, the Company obtained and delivered irrevocable letters
of credit in the aggregate amount of $556,130 as security deposits under such leases.
F-13
Rent expense was $9,940,639, $9,102,267 and $6,117,296 during the fiscal years ended October 3, 1998,
September 27, 1997 and September 28, 1996, respectively. Rent expense for the fiscal years ended October 3,
1998, September 27, 1997 and September 28, 1996 includes approximately $57,000, $19,000 and $10,000
operating lease deferred credits, representing the difference between rent expense recognized on a straight-line
basis and actual amounts currently payable. Contingent rentals, included in rent expense, were $2,769,721,
$2,432,404 and $547,038 for the fiscal years ended October 3, 1998, September 27, 1997 and September 28, 1996,
respectively.
LEGAL PROCEEDINGS - In the ordinary course of its business, the Company is a party to various lawsuits
arising from accidents at its restaurants and workmen's compensation claims, which are generally handled by the
Company's insurance carriers.
The employment by the Company of management personnel, waiters, waitresses and kitchen staff at a number of
different restaurants has resulted in the institution, from time to time, of litigation alleging violation by the
Company of employment discrimination laws. The Company does not believe that any of such suits will have a
materially adverse effect upon the Company, its financial condition or operations.
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 the his litigation, including those with respect to minimum wages, are
insubstantial. The Company believes that there were certain 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, including the fact that as of December 15, 1998 less
than two percent (2%) of the persons eligible have in fact opted in, 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.
A lawsuit was commenced against the Company in April 1997 in the District Court for Clark County, Nevada by
two former employees and one current employee of the Company's Las Vegas subsidiary alleging that (i) the
Company forced food service personnel at the Company's Las Vegas facilities to pay a portion of their tips back
to the Company in violation of Nevada law and (ii) the Company failed to timely pay wages to terminated
employees. The action was brought as a class action on behalf of all similarly situated employees. The Company
believes that the first allegation is entirely without merit and that the Company will have no liability. The Company
also believes that its liability, if any, from an adverse result in connection with the second allegation would be
inconsequential. The Company intends to vigorously defend against these claims.
In addition, several unfair labor practice charges have been filed against the Company before the National Labor
Relations Board with respect to the Company's Las Vegas subsidiary. One consolidated complaint alleged that
the Company unlawfully terminated seven employees and disciplined seven other employees allegedly in
retaliation for their union activities. An Administrative Law Judge (ALJ) found that five employees were
terminated unlawfully and two were discharged for valid reasons. As far as the discipline, the Judge found that
the Company acted legally in disciplining four employees but not lawfully with respect to three employees. The
Company has appealed the adverse rulings of the ALJ to the National Labor Relations Board in Washington, D.C.
The Company believes that there are reasonable grounds for obtaining a reversal of the unfavorable findings by
the ALJ. Another consolidated complaint issued recently alleges that four employees were terminated and three
F-14
other employees disciplined because of their union activities. A hearing is scheduled on these new charges in
January 1999. The Company believes that these affected employees were terminated or disciplined for appropriate
reasons such as violating reasonable work rules.
The Company does not believe that an adverse outcome in any of the unfair labor practice charges will have a
material adverse effect upon the Company's financial condition or operations. The Company believes that these
unfair labor practice charges and the litigation pending in Nevada described above are part of an ongoing
campaign by the Culinary Workers Union which is seeking to represent employees at the Company's Las Vegas
restaurants. However, rather than pursue the normal election process pursuant to which employees are given the
freedom to choose whether they should be represented by a union, a process which the Company supports, the
Company believes the union is seeking to achieve recognition as the bargaining agent for such employees through
a campaign directed not at the Company's employees but at the Company itself and its stockholders. The Company
intends to continue to support the right of its employees to decide such matters and to oppose the efforts of the
Culinary Workers Union to circumvent that process.
An action was commenced in May 1998 in Superior Court of the District of Columbia against the Company and
its Washington, D.C. subsidiaries by seven 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.
A lawsuit was commenced against the Company in October 1998 in Superior Court of Los Angeles County,
California by a former employee alleging that her employment was terminated on the basis of her age in violation
of the California Fair Employment and Housing Act. The Company believes that the allegations are without merit.
9.
SHAREHOLDERS' EQUITY
COMMON STOCK PRIVATE PLACEMENT - In December 1996, the Company raised net proceeds of
$6,028,626 in a private placement of 551,454 shares of its common stock at $11 per share. The proceeds of such
offering were used to repay a portion of the Company's outstanding bank borrowings and for the payment of
capital expenditures on its Las Vegas restaurant facilities at the New York New York Hotel & Casino in Las Vegas
which opened in January 1997.
COMMON STOCK REPURCHASE PLAN - In August 1998 the Company authorized the repurchase of up to
500,000 shares of the Company outstanding common stock. As of October 3, 1998, the company had repurchased
159,000 shares at a total cost of $1,522,496.
F-15
10.
STOCK OPTIONS
On October 15, 1985, the Company adopted a Stock Option Plan (the “Plan”) pursuant to which the Company
reserved for issuance an aggregate of 175,000 shares of common stock. In May 1991 and March 1994, the
Company amended such Plan to increase the number of shares issuable under the Plan to 350,000 and 447,650,
respectively. In March 1996, the Company adopted a second plan and reserved for issuance an additional 135,000
shares. In March 1997, the Company amended this plan to increase the number of shares included under the plan
to 270,000. Options granted under the Plans to key employees and directors are exercisable at prices at least equal
to the fair market value of such stock on the dates the options were granted. The options expire five years after the
date of grant and are generally exercisable as to 25% of the shares commencing on the first anniversary of the date
of grant and as to an additional 25% commencing on each of the second, third and fourth anniversaries of the date
of grant.
Additional information follows:
1998
Weighted
Average
Exercise
Price
1997
Weighted
Average
Exercise
Price
Shares
Shares
1996
Weighted
Average
Exercise
Price
Shares
Outstanding, beginning of year
227,500
$ 10.38
105,625
$ 7.18
189,125
$ 5.45
Options:
Granted
Exercised
Canceled or expired
Outstanding, end of year (a)
100,000
(10,000)
(6,000)
311,500
11.38
6.50
8.63
10.86
150,000
(17,500)
(10,625)
227,500
11.71
4.89
6.37
10.38
--
(72,500)
(11,000)
105,625
2.54
8.00
7.18
Price Range, Outstanding Shares
$8.00 - $12.00
$6.50 - $12.00
$4.38 - $8.00
Weighted Average Years
Shares available for future grant
Options exercisable (a)
3.2 Years
20,000
117,583
3.53 Years
2.67 Years
10.13
120,000
47,500
7.65
135,000
43,125
6.34
(a)
Options become exercisable at various times until expiration dates ranging from August 1999 through
March 2003.
Statement of Financial Accountings Standards No. 123 “Accounting for Stock-Based Compensation” (“SFAS No.
123”) requires the Company to disclose pro forma net income and pro forma earnings per share information for
employee stock option grants made in the fiscal years ended October 3, 1998, and September 27, 1997 as if the
fair-value method defined in SFAS No. 123 had been applied. The fair value of each stock-option grant is
estimated on the date of grant using the Black-Scholes option pricing. The assumptions for fiscal 1998 include;
risk free interest rate of 5.5%; no dividend yield; expected life of 4 years; and expected volatility of 75%. The
assumptions for fiscal 1997 include; risk-free interest rate of 6.5%; no dividend yield; expected life of 4 years and
expected volatility of 38%.
F-16
The pro forma impact was as follows:
Net earnings as reported
Net earnings - pro forma
Earnings per share as reported - basic
Earnings per share as reported - diluted
Earnings per share pro forma - basic
Earnings per share pro forma - diluted
October 3,
1998
$ 4,612,141
4,464,576
$ 1.21
1.20
1.17
1.16
Year Ended
September 27,
1997
$ 1,737,655
1,694,991
$ .47
.46
.46
.45
No options were granted during fiscal 1996 and therefore no pro forma is required.
The exercise of nonqualified stock options in the fiscal years ended October 3, 1998, September 27, 1997 and
September 28, 1996 resulted in income tax benefits of $18,615, $57,580 and $124,956, respectively, which were
credited to additional paid-in capital. The income tax benefits result from the difference between the market price
on the exercise date and the option price.
11.
MANAGEMENT FEE INCOME
As of October 3, 1998, the Company provides management services to five restaurants owned by outside parties.
In accordance with the contractual arrangements, the Company earns fixed fees and management fees based on
restaurant sales and operating profits as defined by the various management agreements.
Restaurants managed had net sales of $12,738,639, $14,151,888 and $12,802,305 during the management periods
within the years ended October 3, 1998, September 27, 1997 and September 28, 1996, respectively, which are not
included in consolidated net sales of the Company.
12.
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 nonconsolidated basis. For New York. State and City income tax
purposes, the losses incurred by a subsidiary may only be used to offset that subsidiary's income.
F-17
The provision for income taxes consists of the following:
Current provision:
Federal
State and local
Deferred provision (credit):
Federal
State and local
October 3,
1998
$1,892,997
1,117,363
3,010,360
100,486
(42,105)
58,381
$3,068,741
Year Ended
September 27,
1997
September 28,
1996
$ 668,391
908,183
1,576,574
(329,602)
(102,364)
(431,966)
$1,144,608
$ 519,771
625,570
1,145,341
(592,721)
(99,771)
(692,492)
$ 452,849
The provision for income taxes differs from the amount computed by applying the Federal statutory rate due to
the following:
October 3,
1998
Year Ended
September 27,
1997
September 28,
1996
Provision for Federal income taxes (34%)
$ 2,612,000
$ 980,000
$ 426,000
State and local income taxes net of Federal
tax benefit
Amortization of goodwill
Tax credits
Other
710,000
26,000
532,000
26,000
347,000
26,000
(506,000)
(373,000)
(349,000)
226,741
$ 3,068,741
(20,392)
$ 1,144,608
2,849
$ 452,849
F-18
Deferred tax assets or liabilities are established for (a) temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b)
operating loss carry forwards. The tax effects of items comprising the Company's net deferred tax asset are as
follows:
Deferred tax assets:
Operating loss carry forwards
Operating lease deferred credits
Carryforward tax credits
Depreciation and amortization
Valuation allowance
October 3,
1998
$ 839,253
634,516
1,086,025
22,104
(642,522)
$ 1,939,376
September 27,
1997
$ 858,937
657,958
1,157,368
11,045
(688,768)
$ 1,996,540
A valuation allowance for deferred taxes is required if, based on the evidence, it is more likely than not that some
of the deferred tax assets will not be realized. The Company believes that uncertainty exists with respect to future
realization of certain operating loss carry forwards and operating lease deferred credits. Therefore, the Company
provided a valuation allowance of $642,522 at October 3, 1998 and $688,768 at September 27, 1997. The
Company has state operating loss carry forwards of $11,094,610 and local operating loss carry forwards of
$8,083,505 which expire in the years 2002 through 2012.
The Internal Revenue Service is currently examining the Company's federal income tax returns for fiscal years
ended September 28, 1991 through October 1, 1994, and the Internal Revenue Service 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
this examination will have a material effect on the Company's financial condition.
13.
OTHER INCOME
Other income consists of the following:
Purchasing service fees
Insurance proceeds (a)
Sales of logo T-shirts and hats
Other
October 3,
1998
$124,455
--
160,596
205,067
$490,118
Year Ended
September 27,
1997
September 28,
1996
$ 86,073
377,427
171,259
145,522
$780,281
$
55,551
726,415
214,291
86,460
$1,082,717
(a)
In July 1994, the Company was required to close a restaurant in Manhattan (Ernie's) on a temporary basis
to enable structural repairs to be made to the ceiling of the restaurant. The cost of such repairs, other ongoing
restaurant operating expenses and a guaranteed profit were borne by a third party. The restaurant reopened in
February 1995 and the agreement provided that the third party continue to guarantee some level of operating
profits through January 1998. During the fiscal years ended September 27, 1997, the Company received $377,427
and $726,415, respectively, in excess of the continuing restaurant operating expenses.
F-19
14.
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. The Company
also applied the new standard to the periods ended September 27, 1997 and September 28, 1996.
A reconciliation of the numerators and denominators of the basic and diluted per share computations follow.
Income
(Numerator)
Shares
(Denominator)
Per-Share
Amount
Year ended October 3, 1998:
Basic EPS
Stock options and warrants
Diluted EPS
Year ended September 27, 1997:
Basic EPS
Stock options and warrants
Diluted EPS
Year ended September 28, 1996:
Basic EPS
Stock options and warrants
Diluted EPS
$ 4,612,141
--
4,612,141
1,737,655
--
1,737,655
788,762
--
788,762
3,826,255
25,764
3,852,019
3,714,116
28,695
3,742,811
3,238,419
34,438
3,272,857
$ 1.21
0.01
1.20
0.47
0.01
0.46
0.24
--
0.24
F-20
15.
QUARTERLY INFORMATION (UNAUDITED)
The following table sets forth certain quarterly operating data.
December 27,
1997
March 28,
1998
Fiscal Quarter Ended
June 27
1998
October 3
1998
Net sales
$26,940,384
$25,198,012
$33,029,512
$32,230,545
Gross restaurant profit
19,692,165
18,345,554
24,432,866
23,662,166
Net income (loss)
727,441
(254,154)
2,428,676
1,710,178
Net income (loss) per share -
basic and diluted
$ 0.19
$ (0.07)
$ 0.63
$ 0.45
December 28,
1996
March 29,
1997
Fiscal Quarter Ended
June 28
1997
September 27,
1997
Net sales
$18,166,656
$24,887,795
$31,469,304
$29,802,631
Gross restaurant profit
13,068,926
17,775,683
22,922,594
22,107,296
Net income (loss)
(552,503)
(1,108,203)
1,947,476
1,450,885
Net income (loss) per share
basic and diluted
$ (0.16)
$ (0.29)
$ 0.51
$ 0.38
16.
SUBSEQUENT EVENTS (UNAUDITED)
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, D.C. for an aggregate selling price of $1,225,000, of which $975,000
was received in cash and $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 expects to recognize gains of
approximately $600,000 on these sales.
F-21
CORPORATE INFORMATION
BOARD OF DIRECTORS
Ernest Bogen
Chairman
Michael Weinstein
President
Paul Gordon
Vice President – Director of Las Vegas Operations
Andrew Kuruc
Vice President – Chief Financial Officer
Vincent Pascal
Vice President - Operations
Robert Towers
Vice President – Chief Operating Officer
Donald D. Shack
Shack & Siegel, P.C.
Jay Galin
Chairman, G & G Retail, Inc.
EXECUTIVE OFFICE
AUDITORS
85 Fifth Avenue
New York, N.Y. 10003
(212) 206-8800
Deloitte & Touche
Two World Financial Center
New York, N.Y. 10281
TRANSFER AGENT
GENERAL COUNSEL
Continental Stock Transfer &
Trust Company
2 Broadway
New York, N.Y. 10001
Shack & Siegel, P.C.
530 Fifth Avenue
New York, N.Y. 10036
Ark Restaurants Corp.
85 FIFTH AVENUE
NEW YORK, N.Y. 10003-3019
(212) 206-8800